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美国证券交易所(SEC)
华盛顿特区20549
表格 10-Q
☑根据1934年证券交易法第13或15(d)节的季度报告
 
截至本季度末2024年9月30日
或者
☐根据1934年证券交易法第13或15(d)节的转型报告书

过渡期从____到____。
佣金文件号 001-37386
FTAI Aviation Logo.jpg
FTAI AVIATION LTD.
(按其章程规定的注册人的确切名称)
开曼群岛98-1420784
（设立或组织的其他管辖区域）（纳税人识别号码）
415 West 13th Street，7楼纽约NY10014
，（主要行政办公地址）(邮政编码)

(注册人电话号码，包括区号) (332) 239-7600
（原名称、地址及上一个财政年度，如自上次报告以来发生更改） N/A
在法案第12(b)条的规定下注册的证券：
每类股票名称:交易代码：注册于哪个交易所:
普通股，每股面值为$0.01ftai
纳斯达克全球精选市场
8.25%固定-浮动利率A系列累积永续可赎回优先股ftaip
纳斯达克全球精选市场
(已赎回)
8.00%固定至浮动利率b系列累积永续可赎回优先股ftaio
纳斯达克全球精选市场
8.25% 固定利率重设 C 类累计永续可赎回优先分享ftain
纳斯达克全球精选市场
9.50% F固定利率重设 D 类累计永续可赎回优先分享
ftaim
纳斯达克全球精选市场
请勾选以下选项以指示注册人是否在过去12个月内(或在注册人需要提交此类报告的较短时间内)已提交证券交易法1934年第13或15(d)条所要求提交的所有报告，并且在过去90天内已受到此类报告提交要求的影响。Yes þ 没有 ¨ 
请在以下勾选方框表示注册人是否已在Regulation S-T Rule 405规定的前12个月(或在注册人需要提交此类文件的较短期间内)提交了每个互动数据文件。Yes þ 没有 ¨ 
请勾选标记以说明注册人是大型快速申报人、加速申报人、非加速申报人、较小的报告公司还是新兴成长型公司。请查看《交易所法》第120亿.2条中“大型快速申报人”、“加速申报人”、“较小的报告公司”和“新兴成长型公司”的定义。
大型加速报告人þ加速文件提交人¨
非加速文件提交人¨较小的报告公司☐
新兴成长公司☐
如果是新兴成长型企业，请勾选复选标记，表明注册者已选择不使用延长过渡期来符合根据证券交易法第13(a)条规定提供的任何新财务会计准则。  ¨
在复选框中指示注册者是否为外壳公司（根据交易所法案120亿.2条款定义）。是 ☐ 没有 þ
截至2023年7月31日，续借贷款协议下未偿还的借款额为102,549,679 2024年11月10日未来普通股的发行数量。


前瞻性声明和风险因素总结
本报告包含1995年《私人证券诉讼改革法》意义上的“前瞻性声明”。前瞻性声明不是历史事实的陈述，而是基于我们当前的信念和假设以及我们目前可获得的信息。您可以通过使用“展望”、“相信”、“期望”、“潜在”、“继续”、“可能”、“将”、“应该”、“能够”、“寻求”、“大约”、“预测”、“打算”、“计划”、“估计”、“预期”、“目标”、“项目”、“考虑”等前瞻性词汇或这些词的否定形式或其他可比较词汇来识别这些前瞻性声明。本报告中的任何前瞻性声明均基于我们的历史业绩和我们目前的计划、估计和预期，考虑到我们目前可获得的信息。加入这些前瞻性信息不应被视为我们将实现的未来计划、估计或预期的陈述。
此类前瞻性声明受到与我们的运营、财务结果、财务状况、业务、前景、增长策略和流动性相关的各种风险、不确定性和假设的影响。因此，存在或将存在一些重要因素可能导致我们的实际结果与这些声明中所示的结果有实质性差异。以下是使投资我们的证券具有风险并可能对我们的业务、财务状况、经营结果和现金流产生重大不利影响的首要风险因素摘要。这份摘要应与我们所面临的更完整的风险因素讨论一起阅读，这些风险因素详列于本报告第二部分第1A项“风险因素”。我们认为这些因素包括但不限于：
•经济环境的变化一般性地，特别是在我们的行业板块，以及其他与全球经济相关的风险，包括但不限于俄乌冲突，以及企业和政府的任何相关响应或行动；
•现金流从我们的资产中收到的减少，以及对我们的航空资产使用的合同限制以用于为借款货币提供担保；
•我们有能力以有利的价格利用收购机会；
•我们资产周围流动性不足，可能会妨碍我们适当改变投资组合的能力；
•我们收购资产的收益率与融资成本之间的相对利差；
•我们访问的融资市场发生不利变化，影响我们进行收购的融资能力；
•客户未能履行其义务；
•我们有能力续订现有合同并与现有或潜在客户签订新合同;
•未来收购的资本可用性和成本；
•某种类型资产或特定板块的集中度；
•航空行业内的竞争；
•竞争激烈的收购机会市场；
•通过联营企业、合作伙伴、财团安排或与第三方合作等合作方式所涉及的风险；
•我们成功整合收购业务的能力；
•我们资产过时或无法卖出、再租赁或重新租赁我们的资产；
•面临无法保险的损失和不可抗力事件；
•立法/监管环境和面临增加的经济监管暴露；
•对油气行业波动的油价和燃料币价格的暴露；
•在我们运营的具有较不发达法律体系的司法管辖区获得有效法律救济存在困难；
•我们有能力维持根据1940年投资公司法豁免注册的资格，维持此类豁免会对我们的经营造成限制;
•我们成功利用杠杆进行投资的能力；
•外币风险和风险管理活动;
•我们财务报告内部控制的有效性；
•接触环保母基风险，包括自然灾害、日益严格的环保立法以及气候变化的广泛影响；
•利率期货和/或信贷利差的变化，以及我们可能采取的任何对冲策略在这些变化方面的成功；
•国家、州或省政府采取的行动，包括国有化或征收新税，可能会对我们的资产的财务表现或价值产生实质影响；
•我们吸引和留住高技能管理和其他人才的能力；
•与FIG LLC（“前任经理”）签订“内部化协议（Internalization Agreement）”，可能带来的风险，以及对公司管理职能和业务运营的影响；
2


•我们股票市场价格波动大；
•将来无法向股东支付分红派息；
•过去和未来收购对我们的影响，以及成功整合收购资产和承担债务的能力；和
•本报告"风险因素"部分描述的其他风险。
这些因素不应被视为穷尽，并应与本报告中包含的其他警告性声明一并阅读。本报告中所作的前瞻性声明仅涉及声明发表之日的事件。除非法律要求，我们不承担公开更新或审查任何前瞻性声明的义务，无论是由于新信息、未来发展或其他原因。
如果这些或其他风险或不确定因素中的一个或多个出现，或者如果我们基础假设被证明是错误的，我们的实际结果可能会与我们通过这些前瞻性陈述所表达或暗示的结果存在实质性差异。我们警告您不应过分依赖我们的任何前瞻性陈述。此外，新的风险和不确定因素会不时出现，我们无法预测这些事件或它们如何影响我们。
3


FTAI AVIATION LTD.
10-Q 表格的索引
第一部分 - 财务信息
项目1。
项目2。
项目3。
项目4。
第二部分-其他信息
项目1。
项目1A。
项目2。
项目3。
项目4。
项目5。
项目6。


4



第一部分——财务信息
项目1. 财务报表

ftai aviation有限公司。
合并资产负债表
(千美元，除每股数据外)
（未经审计）
注意事项2024 年 9 月 30 日2023 年 12 月 31 日
资产
现金和现金等价物2$111,888 $90,756 
受限制的现金150 150 
应收账款，净额2166,338 115,156 
租赁设备，网52,066,337 2,032,413 
不动产、厂房和设备，净额2103,605 45,175 
投资619,448 22,722 
无形资产，净额738,001 50,590 
持有待售资产2119,012 — 
善意431,533 4,630 
库存，净额2490,997 316,637 
其他资产2591,601 286,456 
总资产$3,738,910 $2,964,685 
负债
应付账款和应计负债$196,660 $112,907 
债务，净额83,218,343 2,517,343 
抚养押金275,606 65,387 
保证金242,863 41,065 
其他负债86,906 52,100 
负债总额$3,620,378 $2,788,802 
承付款和意外开支15
股权
普通股 ($)0.01 每股面值； 2,000,000,000 已获授权的股份； 102,549,679 和 100,245,905 分别截至2024年9月30日和2023年12月31日的已发行和流通股份）
$1,025 $1,002 
优先股 ($)0.01 每股面值； 200,000,000 已获授权的股份； 15,920,000 和 15,920,000 分别截至2024年9月30日和2023年12月31日的已发行和流通股份）
159 159 
额外已缴资本292,899 255,973 
累计赤字(175,551)(81,785)
股东权益118,532 175,349 
合并子公司股权中的非控股权益— 534 
权益总额118,532 175,883 
负债和权益总额$3,738,910 $2,964,685 




请参见合并基本报表的附注。
5

FTAI Aviation有限公司
合并经营报表 (未经审计)
(以千美元计，除股份和每股数据外)
截至9月30日的三个月截至9月30日的九个月
票据2024202320242023
营业收入
租赁收入$65,450 $45,622 $189,365 $161,141 
维修保养营收59,917 63,925 156,894 141,131 
资产出售收入34,953 61,400 145,993 246,927 
航空产品营业收入303,469 118,675 737,726 296,513 
其他收入2,005 1,474 6,104 12,447 
营业收入总额13465,794 291,096 1,236,082 858,159 
费用
销售成本219,496 116,707 568,157 366,909 
营业费用226,858 33,887 81,274 81,218 
一般管理费用4,045 3,015 10,697 10,270 
收购和交易费用9,341 4,261 23,539 10,195 
管理费和分配给关联公司的激励12— 4,577 8,449 13,137 
内部化费用给关联公司16— — 300,000 — 
折旧和摊销5, 756,775 43,959 163,386 123,399 
资产减值— — 962 1,220 
总开支316,515 206,406 1,156,464 606,348 
其他（费用）收入
对未合并实体的股权（损失）收益6(438)46 (1,799)(1,669)
利息支出(57,937)(40,185)(160,840)(117,976)
债务灭失损失— — (13,920)— 
其他收入2,909 461 3,045 877 
其他费用总计(55,466)(39,678)(173,514)(118,768)
税前收入（亏损）93,813 45,012 (93,896)133,043 
所得税准备（收益）117,331 3,705 (130)7,586 
净利润（亏损）86,482 41,307 (93,766)125,457 
减少：优先股股息8,335 8,334 25,005 23,460 
归属于股东的净利润（亏损）$78,147 $32,973 $(118,771)$101,997 
每股收益（损失）：14
基本$0.76 $0.33 $(1.17)$1.02 
稀释$0.76 $0.33 $(1.17)$1.02 
加权平均流通股数：
基本102,380,659 99,927,594 101,199,356 99,796,736 
稀释103,395,348 100,482,309 101,199,356 100,269,203 






请参见合并基本报表的附注。
6

FTAI Aviation有限公司
合并权益变动表 (未经审计)
(单位：千美元)

截至2024年9月30日的三个月和九个月
普通股优先股额外实收资本累计亏损合并子公司股权中的非控制性权益总资产
股权 - 2023年12月31日$1,002 $159 $255,973 $(81,785)$534 $175,883 
净损失(180,248)(180,248)
总综合损失(180,248)(180,248)
购买非控制性利益 (534)(534)
已宣告分红派息 - 普通股(60,148)(60,148)
已宣告分红派息 - 优先股(16,670)(16,670)
普通股发行20 150,116 150,136 
基于股权的薪酬1,148 1,148 
权益 - 2024年6月30日$1,022 $159 $330,419 $(262,033)$— $69,567 
净利润86,482 86,482 
综合收益总额86,482 86,482 
普通股分红派息(30,661)(30,661)
优先股分红派息(8,335)(8,335)
普通股发行3 46 49 
基于股权的薪酬1,430 1,430 
权益 - 2024年9月30日$1,025 $159 $292,899 $(175,551)$— $118,532 






























请参见合并基本报表的附注。
7

FTAI Aviation有限公司
合并权益变动表 (未经审计)
(单位：千美元)

截至2023年9月30日的三个月和九个月
普通股优先股额外实收资本累计亏损合并子公司股权中的非控制性权益总资产
股本 - 截至2022年12月31日$997 $133 $343,350 $(325,602)$524 $19,402 
净利润84,150 84,150 
综合收益总额84,150 84,150 
来自非控股权益的贡献10 10 
普通股发行389 389 
已宣告分红派息 - 普通股(59,854)(59,854)
优先股的发行26 61,703 61,729 
已宣告分红派息 - 优先股(15,126)(15,126)
基于股权的薪酬618 618 
股权 - 2023年6月30日$997 $159 $331,080 $(241,452)$534 $91,318 
净利润41,307 41,307 
综合收益总额41,307 41,307 
普通股发行5 178 183 
已宣告分红派息 - 普通股(29,922)(29,922)
已宣告分红派息 - 优先股(8,334)(8,334)
基于股权的薪酬510 510 
股权 - 2023年9月30日$1,002 $159 $293,512 $(200,145)$534 $95,062 
































请参见合并基本报表的附注。
8

FTAI Aviation有限公司
合并现金流量表 (未经审计)
(单位：千美元)
截至9月30日的九个月
20242023
经营活动产生的现金流：
净(损失)收入 $(93,766)$125,457 
调整净（亏损）收益与由经营活动提供的净现金（使用）的对账:
未合并实体的亏损权益1,799 1,669 
资产出售收益(244,353)(110,511)
包含在收益中的安防-半导体存款和维护索赔(13,437)(34,458)
债务灭失损失13,920 — 
基于股权的薪酬2,578 1,128 
非现金终止费用给关联公司（普通股发行）150,000 — 
折旧和摊销163,386 123,399 
资产减值962 1,220 
递延所得税的变化(2,470)5,974 
担保公允价值变动1,340 (1,677)
租赁无形资产及激励的摊销30,998 33,685 
递延融资费用摊销7,996 6,429 
信用损失准备金2,784 6,583 
其他(158)(995)
变动项目：
 应收账款(31,234)(34,358)
 存货(163,900)(4,845)
其他资产(16,769)(3,727)
 应付账款和应计负债50,630 321 
 应付管理费用给关联公司(3,967)824 
其他负债(2,492)648 
经营活动产生的净现金（使用）提供(146,153)116,766 
投资活动的现金流：
对未合并实体的投资— (19,500)
融资租赁的本金收款1,872 3,624 
应收票据的本金收款3,874 2,438 
业务收购，扣除获取的现金(143,634)— 
租赁设备的收购(622,366)(506,923)
融资应收款的投资(63,857)— 
购置不动产、厂房和设备(2,968)(3,906)
租赁无形资产的收购1,174 (10,474)
投资于本票— (11,500)
购买飞机和发动机的押金(162,708)(10,533)
资产出售收益542,938 366,065 
出售飞机和发动机的押金所得（退款）2,414 (683)
退还购买飞机和发动机的押金530 300 
投资活动中使用的净现金$(442,731)$(191,092)










请参见合并基本报表的附注。
9

FTAI Aviation有限公司
合并现金流量表 (未经审计)
(单位：千美元)
截至9月30日的九个月
20242023
融资活动产生的现金流:
债务收益$2,069,250 $430,000 
偿还债务(1,367,304)(330,000)
递延融资成本的支付(10,825)(1,805)
根据经营租赁协议收到的安防-半导体保证金6,120 7,355 
根据经营租赁协议退还的安防-半导体保证金 — (2,385)
根据经营租赁协议收到的维护保证金35,583 22,747 
根据经营租赁协议释放维护押金(6,460)(275)
来自非控股权益的资本贡献(534)10 
发行优先股的收益，扣除承销商折扣和发行成本— 61,729 
普通股的现金分红派息(90,809)(89,776)
优先股的现金分红派息(25,005)(23,460)
融资活动提供的净现金$610,016 $74,140 
现金及现金等价物和受限制的现金净增（减）额21,132 (186)
现金及现金等价物和受限现金，期初余额90,906 53,065 
现金及现金等价物和受限现金，期末余额$112,038 $52,879 
非现金投资和融资活动的补充披露（请参见说明2以获取其他非现金信息）：
与飞机和发动机销售相关的应收票据发行$69,826 $27,634 
应收费用中的租赁设备购置 (11,772)(8,825)
从其他资产转至租赁设备的购买押金(19,608)(6,371)
与应收账款结清的安防-半导体押金(4,365)(2,851)
与应收账款结清的维护押金(38,795)(38,754)





























请参见合并基本报表的附注。
10

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)

1. 组织
FTAI Aviation Ltd.（“我们”、“我们”、“我们的”或“公司”，前身为“Fortress Transportation and Infrastructure Investors LLC”）是一家开曼群岛豁免公司，通过其子公司拥有、租赁和销售航空设备，并通过合资企业开发和制造，通过我们的维护设施和独家安排维修和销售飞机发动机的售后元件。此外，我们还拥有和租赁海上能源设备。我们有 两个 可报告的细分领域，（i）航空租赁和（ii）航空航天产品（见注释13）。
2024年5月28日之前，FTAI Aviation Ltd.根据与FIG LLC（“前经理”）和丰泽环球运输和基础设施万事达集团有限责任公司（“Master GP”）签订的管理协议（“管理协议”）运营，两者都是丰泽投资集团有限责任公司（“丰泽”）的子公司。对于他们的服务，前任经理有权获得管理费，而总经理有权获得某些激励性分配，这两项分配均在《管理协议》中定义，也符合管理协议的条款。2024年5月28日，公司与前经理和首席合伙人签订了内部化协议（“内部化协议”），根据该协议，管理协议于2024年5月28日（“生效日期”）终止，但某些赔偿和其他义务仍然有效，并且公司内部化了其管理职能（此类交易，“内部化”）。由于内部化，公司不再接受外部管理，而是作为内部管理的公司运营。关于管理协议的终止，公司 (i) 同意向前经理（为自己和代表总合伙人，视情况而定）支付美元150.0百万美元（“现金对价”）、根据管理协议应计和应付但尚未支付的薪酬，以及根据管理协议可报销但尚未报销的费用；(ii) 发放给前经理（为其本人及代表总合伙人，视情况而定） 1,866,949 公司的普通股（“股份对价”）；以及（iii）从Master GP购买其在公司子公司FTAI Aviation Holdco Ltd.的所有合伙权益，以换取美元30。此外，前任经理向公司偿还了在2024日历年度按比例向公司提供服务的前任经理或其关联公司的某些员工的某些年度奖金。公司通过一项或多项债务融资为现金支付以及手头现金提供资金。
2024年5月28日，公司与前管理者签订了过渡服务协议（以下简称“过渡服务协议”）。根据过渡服务协议，前管理者需要继续向公司及其关联公司提供在2024年5月28日前立即提供的所有服务（以下简称“服务”），过渡期至2024年10月31日，期间公司将为服务寻找替代方案。服务的费用为前管理者提供服务的成本加上百分之十的利润（10）。此外，前管理者还需继续提供公司合理要求的服务，以准备公司季度和年度基本报表，直至2025年5月31日。过渡服务协议可以提前终止（x）双方的共同协议，（y）如果前管理者或公司一方在非终止方未在书面通知后30（30）天内纠正物质违约的情况下，（z）如果公司未能支付任何未争议的到期金额且逾期至少30（30）天，前管理者可以终止协议。
2. 重要会计政策概述
会计基础—附带的合并基本报表是根据美国公认会计原则（“U.S. GAAP”）编制的，包括我们及我们的子公司的账户。这些基本报表及相关附注应与公司截至2023年12月31日的10-K表格年报中包含的合并基本报表和相关附注一并阅读。
合并原则—我们合并了所有我们拥有控制性财务利益和对重要运营决策有控制的实体。所有被认为对公正表述必要的调整（包含正常的经常性应计项）均已包括在内。其他投资者在合并子公司的所有权利益被记录为非控制性利益。
我们对那些我们施加重大影响但不符合合并要求的实体的投资使用权益法会计。在权益法下，我们记录这些实体基础上净利润（亏损）的按比例分享。
估计的使用—按照美国通用会计准则准备基本报表需要管理层做出影响资产和负债报告金额、在合并基本报表日披露或有资产和负债以及报告期内收入和费用报告金额的估计和假设。实际结果可能与这些估计有所不同。
重组费用—管理协议的终止是业务管理结构的重大变化，按照ASC 420进行会计处理， 退出或处置成本义务根据内部化协议向前管理者支付的终止费用在合并的经营报表中记录为对附属公司的内部化费用。 有关内部化的重组费用的更多讨论，请参见第16条。
11

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
重新分类—公司合并基本报表中某些来自前期的金额已重新分类，以与当前期间的展示保持一致。
风险与不确定性—在正常的业务过程中，我们会遇到几种重要的经济风险，包括信用风险、市场风险和资本市场风险。信用风险是指承租人或客户无法或不愿按照合同要求进行支付或履行其他合同义务的风险。市场风险反映了我们运营的基础行业板块中的经济下滑或波动的风险，这可能会对我们提供的服务的定价产生不利影响，或影响承租人或客户的支付能力，增加非计划性租约终止的风险，并压低租赁费率及我们租赁设备或运营资产的价值。资本市场风险是指我们无法以合理的利率获得资本以支持业务的增长或再融资现有的债务工具的风险。通过我们的子公司，我们还在美国以外的地区进行运营；这些国际业务面临着与我们美国业务相关的相同风险，以及额外的风险，包括监管要求的意外变化、政治和经济不稳定的风险加大、潜在的不利税务后果以及遵守外国法律的负担。由于我们所有的租赁安排均以美元计价，因此我们并没有显著的外汇风险。
现金及现金等价物—我们将所有在购买时到期不超过90天的高度流动性短期投资视为现金及现金等价物。
存货净额—我们持有航空发动机、发动机模块、备件和用于交易、维修及支持运营的使用材料库存。库存按照成本或净可变现价值中的较低者入账。
营业收入—我们将营业收入按照产品和服务进行分类。营业收入符合ASC 842, 租赁， 以及ASC 606， 与客户合同的营业收入，除非另有说明。我们选择将销售和其他类似税项从营业收入中排除。
经营租赁—我们根据经营租赁租赁设备。固定租金和逐步租金的经营租赁在租赁期限内按直线法确认，假设没有续租。当收款不具备合理保证时，收入不被确认。当收款不具备合理保证时，客户会被列为非应计状态，收入在收到现金支付时确认。
一般情况下，根据我们的飞机租赁和发动机协议，承租人需要根据其对租赁资产的使用情况或租赁结束时定期支付维护费用。通常，根据我们的飞机租赁协议，承租人在租赁期间负责维护、修理和其他营业费用。这些定期维护费用在租赁期间累积，以资助重大维护活动，我们在合同上有义务将维护费用返还给承租人，最高不超过承租人支付的维护活动费用。如果在租赁期间的维护活动总费用低于累计维护费用，我们不需要将任何未使用或多余的维护费用返还给承租人。
收到的维护费用，如果我们预计会偿还给承租人，则记作维护存款。所有我们不预计会偿还给承租人的多余维护费用则记录为维护营业收入。确认营业收入的估计包括拆卸之间的平均时间、发动机维护的预测成本以及受历史使用模式、整体行业板块、市场和经济条件影响的飞机利用率。对这些估计的重大变更可能会对确认的营业收入金额产生实质性影响。
对于购买和回租交易，我们将交易视为单一安排。我们根据飞机、租赁及其他相关资产/负债的相对公允价值分配支付的对价。租赁的公允价值可能包括租赁溢价或折扣，记录为有利或不利的租赁无形资产。
融资租赁——不时我们会进入财务租赁安排，其中包括承租方在租期结束时购买租赁设备的义务、优惠购置选项，或提供最低租金支付的现值等于或超过租赁开始日期租赁设备公允价值的绝大部分。财务租赁的净投资代表承租人应付的最低租金，扣除尚未赚取的收入。租赁支付分为本金和利息部分，类似于贷款。本金部分的租赁支付作为财务租赁净投资的减少反映。营业收入在收款不合理保证时不会被确认。当收款不合理保证时，客户将被置于非应计状态，营业收入在收到现金支付时确认。
资产出售收入—资产销售收入主要由我们航空租赁部门出售飞机和飞机发动机相关的交易价格组成。公司不时可能将与这些资产销售相关的租赁协议分配给客户。我们定期向客户出售租赁设备，这类交易在我们的业务中被视为经常性和普通的。因此，这些销售在ASC 606的范围内进行 accounted。收入在满足将资产控制权转移给客户的履约义务时确认。收入与相应的销售成本一同记录，以总额呈现。
12

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
航空产品营业收入—航空产品营业收入主要由与销售CFM-70亿、CFM-50亿和V2500发动机、发动机模块、备件和废旧材料库存相关的交易价格构成，并在ASC 606的范围内进行会计处理。营业收入在满足履行义务时，由向客户转移相关资产的控制权而确认。营业收入与相应的销售成本一同记录，并以毛利表述。航空产品营业收入还包括发动机管理服务合同，其中公司有义务在合同期间向客户提供替代的CFM56-70亿和CFM56-50亿发动机，以替换在服务期间变得无法使用的发动机。公司采用直线分配法随时间确认收入，与履行义务相关的成本在发生时计入费用。
信贷风险集中度—我们面临客户欠款的信用风险集中。我们通过持续进行信用评估来尽量限制我们的信用风险。在截至2024年9月30日和2023年9月30日的三个月和九个月期间，没有单一客户占总营业收入的超过10%。
截至2024年9月30日和2023年12月31日，没有任何单一客户占应收账款净额的比例超过10%。
我们保持现金和受限现金余额，这些余额通常超过联邦保险限额，因此使我们面临信贷风险，储存在高信用质量的金融机构中。我们监测这些机构的财务控件，并且没有因这些账户而遭受任何损失。
坏账准备和信贷损失—对于与经营租赁相关的应收款，我们根据对客户逐个评估的收款能力来判断坏账准备。 截至2024年9月30日和2023年12月31日，坏账准备为$74.9 百万和$72.2 百万。我们判断与票据应收款、融资租赁应收款和库存销售相关的信贷损失准备。 信贷损失准备为$2.7 截至2024年9月30日的三个月和九个月的损失准备为百万美元。5.6 百万和$6.6截至2023年9月30日的三个月和九个月的损失准备为百万美元。
综合收入—综合收益被定义为企业在一段时间内因交易和其他事件及情况而导致的权益变化，不包括来自所有者的投资和分配。我们的综合收益代表净利润，如合并运营报表中所示。
其他资产—其他资产主要包括租赁激励金 $58.3 百万和$43.5 百万，购置押金 $46.5 百万和$23.9 百万，应收账款来自销售和交换 $152.2 百万和$102.3 百万，营运租赁使用权资产，净额 $12.2 百万和$3.4 百万，融资租赁，净额 $0.9 百万和$3.0 百万，维护权资产 $21.5 百万和$16.3 百万，因失败的售后回租交易而产生的融资应收款 $63.9 百万和$0.0 百万，预付费用，包括尚未发生的维护预付款 $132.5 百万和$7.8 百万。
待售资产— 当公司承诺进行出售计划并且出售在一年内很可能完成时，我们将资产归类为待售资产。这些资产的记录以其账面价值或公允市场价值中的较低者为准，减去销售成本，从满足此分类标准的期间开始。
在2024年9月，公司承诺采取正式计划出售 两个 企业和其他部门的船只，包括与离岸能源相关的资产。因此，这些船只符合被归类为待售资产的标准，并已单独呈现。在出售之前，对这些资产的公允价值或销售成本的任何后续估计变动将被记录为收益或损失，并相应调整其账面价值。预计处置将在2024年第四季度进行。
截至2024年9月30日，这些船舶的净账面价值为$119.0 百万的所得税收益。
分红派息—分红派息在董事会宣布时被记录。 截至2024年和2023年9月30日的三个月和九个月，董事会宣布现金分红派息为$0.30 和 $0.90 每普通股分别为。
此外，截至2024年9月30日的季度，董事会宣布对B系列优先股、C系列优先股和D系列优先股的现金分红派息为$0.50, $0.52 和 $0.59 每股，分别为。
现金流量展示—在经营活动所提供或使用的现金净额中，包括来自引擎模块和部件销售的流入，这些模块和部件最初是作为租赁设备净额购买并在合并资产负债表中报告的。原引擎的购买在当时通过租赁设备的购置项目报告为投资活动中使用的现金流出。作为航空航天产品业务的一部分，公司对通常不可用的引擎进行拆解，目的是制造模块和部件以创建和销售新资产。为了制造这些模块和部件并使其达到可销售的状态，公司在多个报告期间内为新库存和可资本化劳动（例如，工程）花费了显著的成本，这些成本被包含在经营活动所提供或使用的现金净额中，作为相关营运资金账户变化的元件。
13

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
因此，当制造资产的成本高于（主要是）从租赁设备转移到库存的估计价值时，相关的现金收入已被记录为经营活动提供的净现金流入（使用中）。
此外，公司从第三方采购库存，计划将这些零件用于上述项目的制造，这在净现金流量（用于）经营活动中报告为流出。当重新组装整台引擎以进行转售时，出售时的现金流入被报告为投资活动的现金流入，公司将所需的模块和零件（包括从第三方购买的部件以及之前转入库存的租赁设备引擎的部件）从库存转移到租赁设备中进行重建。
截至2024年和2023年9月30日的九个月期间，上述现金和非现金相关活动的详细情况如下：
截至9月30日的九个月
(以千为单位)20242023
从租赁设备中采购的模块和零件的成本$33,663 $30,045 
将发动机从租赁设备转移到制造和销售库存中 143,678 147,285 
将库存转移到租赁设备以重建和销售发动机 (159,876)(53,533)
与制造模块和零件相关的总流出 - 包含在经营活动提供的净现金（使用中） (270,679)(81,109)
出售自租赁设备的资产所收现金 - 流入包含在经营活动提供的现金（使用中）56,670 59,115 
近期会计公告—在2023年11月，FASB发布了ASU 2023-07， 分段报告（主题280） - 可报告分段披露的改进. 此ASU修改了可报告细分的披露和呈现要求。新指引要求披露定期提供给首席运营决策者的重要细分费用，并纳入每个报告的细分利润和损失指标中。此外，新指引增强了中期披露要求，明确了实体可以披露多个利润或损失的细分指标的情况，为只有一个可报告细分的实体提供了新的细分披露要求，并包含其他披露要求。该标准自2023年12月15日后开始的财政年度起，针对所有公共实体追溯生效，并在2024年12月15日后开始的财政年度中的中期部分适用，允许提前采用。我们目前正在评估这些指引将对我们的合并基本报表和相关披露产生的影响。
在2023年12月，FASB发布了ASU 2023-09， 所得税（主题740） - 所得税披露的改进. 此ASU通过扩大实体的所得税率调节和所得税支付与所得税费用的细分，提高了所得税披露的透明度和决策有效性。根据新指导方针，公共业务实体必须每年披露税率调解中的特定类别，并为符合数量阈值的调节项目提供额外信息，如果这些调节项目的影响等于或大于将所得税前收入（亏损）乘以适用法定所得税率计算的金额的5%。该标准自2024年12月15日后的年度期间起对所有公共实体有效，允许提前采用和追溯应用。我们正在评估该指导方针对我们合并基本报表及相关披露的影响。
2024年3月，FASB发布了ASU 2024-02， 编纂改进 - 修改以删除对概念板块的引用。 此ASU修订了编纂，删除了对各种概念板块的引用，并影响编纂中的多个话题。这些修订适用于所有在受影响的会计指导范围内的报告实体。一般来说，ASU 2024-02中的修订并不打算为大多数实体带来重大会计变化。ASU 2024-02自2025年1月1日起生效，我们目前正在评估该指导对我们合并基本报表及相关披露的影响。
3. 收购洛克希德马丁商业引擎解决方案
2024年9月9日，公司通过其子公司FTAIC航空公司（"FTAIC"）于2024年4月25日成立，收购了洛克希德马丁商业引擎解决方案（"LMCES"）的某些资产并承担了某些负债，来自洛克希德马丁加拿大公司。 总现金对价为$170.0 百万。LMCES是一个位于魁北克省蒙特利尔的 526,000-平方英尺的飞机引擎维修修理设施。我们收购LMCES是为了进一步增强我们的维护、修理和交易所业务，并在加拿大建立永久的引擎和模块制造能力。该设施在我们的航空产品部门内运营，为CFM56引擎提供广泛的引擎和零件维修能力。有关更多信息，请参见第13条。LMCES的运营结果已在收购生效日的合并运营报表中列示。与收购相关，我们在截至2024年9月30日的三个月和九个月内分别记录了 $4.8百万 和 $5.2 百万的收购和交易费用。
14

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
LMCES的收购被视为一项业务组合，因此，根据管理层的估计和假设，以下公允价值被分配给所获得的资产和承担的负债，这些评估是初步的。用于估算物业、厂房和设备及存货公允价值的重要假设包括替代成本估算和相似资产的市场数据（如有）。最终的估值和相关的购买价分配可能会有所变动，具体取决于收到的额外信息，并将于交易完成后的12个月内完成。最终的收购会计调整可能会有重大差异，并可能包括(i) 物业、厂房和设备的公允价值及相关残值的变化；(ii) 存货公允价值的变化；(iii) 无形资产的分配变化，包括商誉；(iv) 净营运资本调整的变化；(v) 递延税项的变化；以及(vi) 其他资产和其他负债的变化。
下表总结了所获得净资产的初步分配：
2024年9月9日
获得资产的公允价值:
应收账款$12,273 
财产、厂房和设备71,376 
租赁设备5,675 
库存47,445 
其他资产 (1)
12,804 
总资产149,573 
假设负债的公允价值：
应付账款和应计负债9,847 
其他负债22,996 
总负债32,843 
商誉 (2)
26,904 
净资产收购 (3)
$143,634 
________________________________________________________
(1) 收购的其他资产包括一项估计公允价值为$的有利市场外租赁组件。2,340.
(2) 商誉主要归因于FTAIC组建的员工队伍和预期实现的协同效应。该商誉被分配给航空产品部门，且可用于所得税扣除。
(3) 总对价是以支付的现金为基础，调整与之前关系的结算。现金对价也是初步的，因为它需要进行净营运资本的调整。

下表列出了购置的房产、厂房和设备各元件的初步公允价值及其预计使用寿命：
预计使用年限预计公允价值
建筑物及改善
25
$40,602 
机械和设备
2 - 21
29,973 
其他 不适用801 
总计$71,376 
被收购业务的运营结果已包含在随附的合并运营报表中，从收购日开始计算。
下表呈现了补充的临时信息，假设收购在2023财年的开始时发生。临时信息不一定反映如果收购在2023年1月1日发生时会产生的运营结果。 成本节省也未反映在下面呈现的临时金额中。
15

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
截至9月30日的三个月截至9月30日的九个月
2024202320242023
总营业收入$479,277 $315,666 $1,283,520 $929,297 
归属于股东的净利润（亏损）$83,727 $34,753 $(122,542)$89,716 
4. 收购QUICKTURN
2023年12月1日，我们完成了从Unical Aviation Inc.（“Unical”）收购Quick Turn Engine Center LLC（“QuickTurn”）剩余股权，现金总对价为$30.3 百万美元，以获得完全所有权。
我们收购了QuickTurn，以便更好地使公司在航空航天产品的开发和交付上实现更紧密的整合。QuickTurn是位于佛罗里达州迈阿密的一家医院维护和测试设施，专注于CFM56发动机，隶属于我们的航空航天产品部门。QuickTurn的运营结果已从收购日期起纳入合并经营报表。
对QuickTurn的收购被视为业务合并，因此，根据管理层的估计和假设，以下公允价值被分配给所收购的资产和假定的负债，并且这些数据是初步的。用于估算物业、厂房和设备公允价值的重要假设包括替代成本估计和可用的类似资产的市场数据。用于估算客户关系无形资产价值的重要假设包括折现率和未来收入及营业费用。购买价格的最终评估和相关分配可能会根据收到的附加信息而发生变化，且将在交易结束后不迟于12个月内完成。最终的收购会计调整可能会有实质性差异，并可能包括库存公允价值的变化。
下表总结了所获得净资产的初步分配：
2023年12月1日
获得资产的公允价值:
现金及现金等价物$518 
受限制现金150 
应收账款5,133 
财产、厂房和设备30,559 
无形资产2,377 
库存9,332 
其他资产4,301 
总资产52,370 
假设负债的公允价值：
应付账款和应计负债3,994 
其他负债2,410 
总负债6,404 
商誉 (1)
4,630 
净资产收购 $50,596 
________________________________________________________
(1) 商誉主要归因于QuickTurn的组建劳动力和预期实现的协同效应。这项商誉分配给航空产品部门，并可用于所得税抵扣。

以下表格列出了可识别的无形资产及其估计的使用寿命：
估计有效使用年限估计公允价值
高于市场租赁4$470 
客户关系5$1,907 
总计$2,377 
16

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
以下表格展示了物业、厂房及设备以及它们的预计使用年限：
估计有效使用年限估计公允价值
土地
不适用
$2,840 
建筑物及改善2513,790 
机械和设备
6 - 23
13,631 
其他
5 - 7
298 
总计$30,559 
下面表格中的财务信息汇总了FTAI和QuickTurn在形式上的合并运营结果。这些形式结果是基于我们认为合理的估算和假设。形式调整主要包括以下内容：
•购买价格及相关调整的分配，包括与获得的物业、厂房和设备以及无形资产的公允价值相关的折旧和摊销费用的调整；
•与调整相关的税务影响。
以下的形式财务信息仅供参考，并不能表明如果收购在2023年1月1日进行，将会实现的经营结果。
截止三个月 截止九个月
2023年9月30日2023年9月30日
总营业收入$296,480 $875,066 
归属于股东的净利润$31,350 $97,633 
5. 租赁设备，净值
租赁设备，净额总结如下：
2024年9月30日2023年12月31日
租赁设备$2,621,016 $2,574,394 
减：累计折旧(554,679)(541,981)
租赁设备，净值$2,066,337 $2,032,413 
由于特定交易，我们在租赁设备组合中识别出某些资产存在减值因子。因此，我们将这些资产的账面价值调整为公允价值，并确认了交易性减值费用$1.0 百万和$1.2 百万，扣除重新交付补偿，针对截至2024年和2023年9月30日的九个月。针对截至2024年和2023年9月30日的三个月，没有记录交易性减值费用。
租赁设备的折旧费用总结如下：
截至9月30日的三个月截至9月30日的九个月
2024202320242023
租赁设备的折旧费用$55,376 $43,765 159,936 122,867 
6. 投资
下表展示了我们投资的所有权权益和账面价值：
账面价值
投资持有比例2024年9月30日2023年12月31日
爱文思控股引擎修理合资公司权益法25%$19,448 $21,040 
猎鹰MSN 177有限责任公司权益法50%— 1,682 
$19,448 $22,722 
截至2024年和2023年9月30日的三个月和九个月中，我们未识别出任何其他非临时性减值。
17

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
下表展示了我们在（损失）收益中所占的比例：
截至9月30日的三个月截至9月30日的九个月
2024202320242023
爱文思控股发动机修理合资公司$(438)$1,063 $(1,592)$1,336 
猎鹰MSN 177有限责任公司— (108)(207)(242)
快速转运发动机中心有限责任公司— (909)— (2,763)
总计$(438)$46 $(1,799)$(1,669)
权益法投资
爱文思控股发动机修理合资企业
在2016年12月，我们投资了$15 百万用于一个 25百分之利息的爱文思控股发动机修理创业公司。该创业公司专注于开发新的节省发动机维修成本的项目。
在2019年8月，我们扩大了合资公司的范围，并额外投资了$13.5 百万，并维持了 25% 的权益。 我们对这项投资行使显著影响，并将这项投资作为权益法投资进行会计处理。
Falcon MSN 177 LLC
在2021年11月，我们投资了$1.6百万的租金将飞机租给公司，租期为 50%的权益投资于Falcon MSN 177 LLC（“Falcon”），该实体由一架达索猎鹰2000飞机组成。Falcon将飞机租赁给包机运营商，涉及飞机、机组人员维护和保险合同。我们将对Falcon的投资作为权益法投资进行核算，因为我们通过我们的股份对其有重大影响。
在2024年5月3日，我们以现金总额$购买了S7 Aerospace剩余的权益，0.8百万，并获得了该飞机的全部所有权， 100持有百分之% 的股权。 在收购日，公司以合并基础会计处理猎鹰投资，并将其从权益法投资中注销。
快速转向引擎中心有限责任公司
截至2023年10月，我们投资了$19.5百万的租金将飞机租给公司，租期为 50%的利息（45%的按比例分配收入，直至合资伙伴的初始投资回收）在Quick Turn Engine Center LLC（之前为iAero Thrust LLC）进行，该公司是一家专注于CFM56发动机的医院维护和测试设施。由于我们通过持股对QuickTurn具有重要影响，因此我们将其投资视为权益法投资。
2023年12月1日，我们以总现金对价$购买了来自合资伙伴的QuickTurn剩余权益。30.3百万，以获得%股权的完全所有权。 100在收购日期，公司将QuickTurn作为合并基础进行会计处理，并不再将其作为权益法投资确认。有关更多信息，请参见注释4。
18

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
7. 无形资产和负债，净额
无形资产和负债，净额汇总如下：
2024年9月30日2023年12月31日
无形资产
获得的有利租赁无形资产$66,535 $68,041 
减：累计摊销(30,123)(19,347)
获得的有利租赁无形资产，净额36,412 48,694 
获得的客户关系 1,907 1,907 
减：累计摊销(318)(11)
获得的客户关系，净值1,589 1,896 
总无形资产净额$38,001 $50,590 
无形负债
获得的不利租赁无形资产$3,085 $3,151 
减：累计摊销(1,040)(1,389)
获得的不利租赁无形资产，净值$2,045 $1,762 
无形负债涉及不利租赁无形资产，并作为其他负债的一部分。
无形资产和负债的摊销记录如下：
合并经营报表中的分类截至9月30日的三个月截至9月30日的九个月
2024202320242023
租赁无形资产租赁收入$3,720 $3,726 $11,482 $11,325 
客户关系折旧和摊销95 — 307 — 
总计$3,815 3,726 $11,789 11,325 
截至2024年9月30日，预计无形资产的年摊销如下：
2024年剩余时间$3,849 
202512,652 
20269,356 
20274,348 
20283,759 
之后1,992 
总计$35,956 
19

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
8. 净债务
我们的净债务概要如下：
2024年9月30日2023年12月31日
未偿还借款规定利率到期日未偿还借款
应付贷款
循环信贷设施 (1)
$150,000 
(i) 基础利率 + 1.75%; 或
(ii) 调整后的Term SOFR利率 + 2.75%
5/22/27$— 
应付贷款总额150,000 — 
应付债券
2025年到期的高级票据 (2)
— 6.50%10/1/25652,043 
2027年到期的高级票据130,500 9.75%8/1/27400,000 
到期于2028年的高级票据 (3)
1,001,475 5.50%5/1/281,001,746 
到期于2030年的高级票据 (4)
496,976 7.88%12/1/30496,704 
到期于2031年的高级票据 700,000 7.00%5/1/31— 
到期于2032年的高级票据800,000 7.00%6/15/32— 
应付债券总额3,128,951 2,550,493 
债务3,278,951 2,550,493 
减：债务发行成本(60,608)(33,150)
总债务，净额$3,218,343 $2,517,343 
一年内到期的总债务$— $— 
________________________________________________________
(1) 需要按季度支付承诺费用，费用比例为 0.50 % 适用于平均每日未使用部分，还包括惯常的信用证费用和代理费用。
(2) 包括未摊销的折扣 $866 截至2023年12月31日，有未摊销的溢价 $2,908 截至2023年12月31日。
(3) 包括未摊销的溢价$1,475 和 $1,746 截至2024年9月30日和2023年12月31日，分别为。
(4) 包括未摊销的折扣$3,024 和 $3,296 截至2024年9月30日和2023年12月31日，分别为。
循环信贷设施—2024年5月23日，公司通过签署第三次修订和重述的信用协议（“循环贷款修订”）对其循环信用设施进行了修订。循环贷款修订规定可向公司提供的循环贷款总本金金额最高可达$400.0百万（其中的使用不会减少新循环信贷额度的可用性）。公司在L/C额度和额外L/C额度下可发行的信用证总金额在任何时候不得超过$25.0 百万可用于信用证的发行。
2031年到期的优先票据—2024 年 4 月 11 日，我们发行了 $700.02031年到期的优先无担保票据（“2031年到期的优先票据”）本金总额为百万美元。2031年到期的优先票据的利率为 7.00每年百分比，自2024年11月1日起，每半年在每年的5月1日和11月1日分期支付。使用部分净收益，公司以美元的价格完成了现金要约324.62024年4月11日有效投标的2025年票据本金总额为百万元。票据获准购买的持有人每1,000美元本金的2025年票据获得同等报酬，外加截至但不包括2024年4月11日的应计和未付利息。公司使用剩余的净收益来赎回剩余的美元325.42025年到期的优先票据本金总额为百万美元，外加应计和未付利息，并确认了清偿债务的损失 $2.7百万。剩余的净收益用于一般公司用途，包括为收购和投资融资。
到期于2032年的高级票据—在2024年6月17日，我们发行了$800.0百万总本金金额的2032年到期的高级无担保票据（“2032年到期的高级票据”）。这些票据的年度利率为 7.00%，利息每年支付两次，分别在每年的6月15日和12月15日支付，首次支付于2024年12月15日。公司将发行所得的净收益用于多个用途：(i) 完全偿还根据《再融资修正案》项下我们的循环信贷便利而产生的未偿还金额，承诺不减少，(ii) 支付根据第12条的管理内部化的现金终止费用，(iii) 完成价值$300.0百万的2037年到期的高级票据的现金招标， validly 在2024年6月18日被投标，外加应计和未支付的利息，并确认了债务清偿损失 $11.2百万，(iv) 以支付与上述交易相关的费用和开支，以及(v) 一般企业用途。
截至2024年9月30日，我们遵守所有债务契约。
20

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
9. 公允价值测量
公允价值的计量和披露要求使用估值技术来测量公允价值，最大限度地使用可观察输入，最小化不可观察输入的使用。这些输入的优先级如下：
•等级1：可观察的输入，例如相同资产或负债在活跃市场中的报价。
•第二级：除了报价价格以外的与第一级相关的可观察的输入，这些输入可以是直接或间接的，例如类似资产或负债的报价价格或市场确认的输入。
•第三级：不可观察的输入，几乎没有市场数据，需要我们自行制定假设，以确定市场参与者如何为资产或负债定价。
用于测量公允价值的估值技术如下：
•市场方法——利用市场交易中涉及相同或可比资产或负债的价格和其他相关信息。
•收入法——使用估值技术将未来金额转换为基于当前市场对这些未来金额的预期的单一现值。
•成本法—基于当前需要的替代资产服务能力的金额（替代成本）。
我们的现金及现金等价物和限制性现金主要由购买时到期日为90天或更短的需求存款账户组成，这些账户被视为高度流动性。这些工具的估值使用在活跃市场中可观察到的相同工具的输入，因此在公允价值层次结构中被归类为一级。
除下文所述外，我们的金融工具（不包括现金及现金等价物和受限现金）主要包括应收账款、应收票据、应付账款和应计负债、应付贷款、安防-半导体保证金、维护保证金以及应付管理费用，其公允价值基于定价数据、供应商报价和历史交易活动的评估，近似于其账面价值，或者由于其短期到期特征。
我们的应付债券的公允价值在下表中列出，并在公允价值层级中分类为第2级：
2024年9月30日2023年12月31日
2025年到期的高级票据$— $649,383 
2027年到期的高级票据133,883 416,432 
2028年到期的高级票据997,080 963,630 
2030年到期的高级票据539,175 521,440 
2031年到期的高级票据736,162 — 
到期于2032年的高级票据840,312 — 
根据ASC 460的规定，公司有或有债务， 担保，与租赁飞机的某些销售有关，这些销售按公允价值计量。担保金的价值为 $8.1百万和美元6.8截至2024年9月30日和2023年12月31日，分别为百万美元，并作为其他负债的组成部分反映出来。担保的公允价值是根据估计值确定的每个租赁期结束时发动机的状况以及估计的更换成本和适用的折扣率，被归类为三级。 在截至2024年9月30日的三个月和九个月中，公司记录了美元0.3百万和美元1.3与公允价值的变动相关的增长了100万英镑，公允价值被记录为资产销售收入。 在截至2023年9月30日的九个月中，该公司的收入为美元4.9与出售商品相关的担保增加了100万英镑 七 飞机和一美元1.7减少100万美元与公允价值的变动有关，公允价值计为资产销售收入。在截至2024年9月30日和2023年9月30日的三个月和九个月中，没有重大资金转入或移出第三级.
当美国公认会计原则要求应用公允价值时，包括表明资产账面金额可能无法收回的事件或情况变化，我们以非经常性方式衡量某些资产的公允价值。受这些衡量标准的资产包括无形资产、不动产、厂房和设备以及租赁设备。当确定账面价值可能无法收回时，我们会按公允价值记录此类资产。受减值测试的资产的公允价值衡量基于收入法，该方法使用三级输入，其中包括我们对资产运营未来现金流的假设 l放松并最终出售资产。
10. 基于股权的补偿
我们有一个非合格股票期权和激励奖励计划（“激励计划”），该计划提供了以股票期权形式向符合条件的员工、顾问、董事和其他提供服务的个人授予股权补偿奖的能力，这些资格由董事会薪酬委员会决定。
21

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
截至2024年9月30日，激励计划提供最多发行 29.8 基于股权的薪酬费用在营业费用和管理费用中报告。
合并经营报表包括与我们的股票薪酬安排相关的以下费用：
截至9月30日的三个月截至9月30日的九个月如果所有归属条件都满足，剩余需确认的费用剩余合同的加权平均期限（单位：年）
2024202320242023
股票期权$128 $— $170 $— $1,905 3.8 年
受限股份1,302 510 2,408 1,128 16,112 2.9 年
总计$1,430 $510 $2,578 $1,128 $18,017 
选项
截至2024年9月30日的九个月期间，前经理转让了 37,343 给某些前经理的员工。这些期权都是在内部化之前发行的。
此外，公司向FTAI Aviation LLC（公司的全资子公司）选定员工授予期权，涉及 60,000 普通股，行使价格为$79.13，其授予日期公允价值为$2.1百万。用于评估期权的假设包括： 4.52一种%无风险利率， 1.50一种%股息收益率， 43.00一种%波动率， 6.8 以及一个年的期限。
受限股份
在截至2024年9月30日的九个月期间，我们向FTAI Aviation LLC的部分员工和高管发行了以下限制性股份：
在2024年5月，我们向(i) 选定的高管发行了限制性股票，授予日期公允价值为$5.5百万，分期归属，持续 3.0 年和(ii) 选定的员工，授予日期公允价值为$5.7百万，分期归属 4.0 年。
在2024年9月，我们向部分员工发放了限制性股票，授予日期的公允价值为$0.8百万，分期归属 3.0 年。
所有板块的奖励都需要在继续雇佣的情况下才能获得，补偿费用将在归属期间内均匀计入。公平价值基于FTAI Aviation Ltd.在各自授予日期的普通股收盘价。
22

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
11. 所得税
合并运营报表中包含的当前和递延所得税准备金的元件如下：
截至9月30日的三个月截至9月30日的九个月
2024202320242023
当前：
开曼群岛$— $— $— $— 
百慕大— — — — 
美国：— — — — 
联邦(296)(32)888 (77)
州和地方(72)39 217 20 
非美国446 851 1,235 1,669 
当前总准备金78 858 2,340 1,612 
递延:
开曼群岛— — — — 
百慕大4,738 — (3,088)— 
美国：— — — — 
联邦1,422 1,521 2,733 2,344 
州和地方317 (430)584 68 
非美国776 1,756 (2,699)3,562 
总递延准备金7,253 2,847 (2,470)5,974 
所得税的总准备金$7,331 $3,705 $(130)$7,586 
公司是一家在开曼群岛注册的豁免实体，那里没有征收所得税。根据美国所得税的规定，公司被视为被动外国投资公司，某些所得税则会对我们的所有者征收。我们的企业子公司产生的应税收入或损失需在其开展业务的地方缴纳企业所得税。
从历史上看，该公司在百慕大的业务无需缴纳百慕大所得税。但是，百慕大政府于2023年12月27日颁布了15％的企业所得税制度（“百慕大CIT”），适用于属于年收入在7.5亿欧元或以上的跨国企业集团的百慕大企业，对2025年1月1日或之后开始的纳税年度有效。由于百慕大企业所得税的实施，公司百慕大某些子公司的百慕大企业所得税的豁免将于2025年停止。在截至2023年12月31日的年度中，我们记录的递延所得税资产为美元72.2百万美元与百慕大法律变更有关。截至2024年9月30日，我们预计百慕大子公司在截至2024年12月31日的年度中将产生净营业亏损。因此，公司录得的税收优惠为 $3.1百万美元，用于增加其百慕大递延所得税资产。
我们的有效税率与美国联邦税率21%存在差异，主要是由于我们收入的很大一部分不受美国公司税率的约束，或者被认为是境外收入，因此要么不征税，要么按有效较低的税率征税。
截至2024年9月30日的九个月期间，我们尚未就不确定的税务事项建立负债，因为不存在此类事项。一般而言，我们的税务申报表及我们公司子公司的税务申报表均受到美国联邦、州、地方及外国税务机关的检查。通常，对于2020年之前的税务年度，我们并不受到税务机关的检查。我们认为，未确认税收收益的总额在报告日期后的12个月内不会有显著变化。
12. 合作伙伴交易
2024年5月28日，公司与前经理兼首席合伙人签订了最终协议，以内部化公司的管理职能。作为管理协议终止的一部分，公司 (i) 向前经理（为自己和代表总合伙人，视情况而定）向前经理（视情况而定）支付了现金对价、根据管理协议应计和应付但尚未支付的薪酬以及根据管理协议可报销但尚未报销的费用；(ii) 向前经理（为自己和代表总合伙人，视情况而定）发放给前任经理股份对价；以及（iii）从Master GP购买其在FTAI Aviation的所有合伙权益该公司的子公司Holdco Ltd.，以换取美元30。内部化后，公司不再向前经理和首席合伙人支付管理费或激励分配。
23

FTAI Aviation有限公司
合并基本报表附注 (未经审计)
(除非另有说明，表格中的金额以千美元计)
关于管理协议的终止，公司还与前经理签订了过渡服务协议。在过渡服务协议下，前经理需要在过渡期内继续为公司及其附属公司提供所有服务，直到2024年10月31日，期间公司会进行服务替代。这些服务的费用等于前经理提供服务的成本，加上百分之十的利润。10）。此外，前管理者还需继续提供公司合理要求的服务，以准备公司季度和年度基本报表，直至2025年5月31日。过渡服务协议可以提前终止（x）双方的共同协议，（y）如果前管理者或公司一方在非终止方未在书面通知后30（30）天内纠正物质违约的情况下，（z）如果公司未能支付任何未争议的到期金额且逾期至少30（30）天，前管理者可以终止协议。
在内化之前，前经理每年收取顾问费用，以指导我们处理业务的各个方面，制定投资战略，安排资产的收购和处置，安排融资，监控绩效，并管理我们的日常运营，包括所有相关费用。此外，前经理因代表我们产生的各种费用也得到了报销，包括法律、会计和其他行政活动的费用。此外，我们与拥有大约的Master GP签订了某些激励分配协议。 0.01% 的FTAI Aviation Holdco Ltd.（为公司的全资子公司）.
前经理有权获得管理费和某些费用的报销。管理费是通过在最近完成的两个月末，根据美国通用会计准则，以合并基础确定的总权益（不包括非控股权益）的平均值乘以年利率来计算的， 1.50%，并按月以现金的方式支付。
在2024年5月28日内部化和管理协议终止之前，主GP有权获得激励分配（包括收入激励分配和资本收益激励分配，如下所定义）。收入激励分配是根据上一日历季度的激励分配前净利润按季度计算和分配的（“收入激励分配”）。为此，激励分配前的净利润是指与某个日历季度相关的净利润，是根据美国公认会计原则计算，排除我们的按比例份额（1）已实现或未实现的收益和损失，以及（2）某些非现金或一次性项目，和（3）任何可能由我们的独立董事批准的其他调整。激励分配前的净利润不包括在相关季度支付给主GP的任何收入激励分配或资本收益激励分配（如下所述）。
Prior to the Internalization, one of our subsidiaries allocated and distributed to Master GP an Income Incentive Allocation with respect to its pre-incentive allocation net income in each calendar quarter as follows: (1) no Income Incentive Allocation in any calendar quarter in which pre-incentive allocation net income, expressed as a rate of return on the average value of our net equity capital (excluding non-controlling interests) at the end of the two most recently completed calendar quarters, does not exceed 2% for such quarter (8% annualized); (2) 100% of pre-incentive allocation net income with respect to that portion of such pre-incentive allocation net income, if any, that is equal to or exceeds 2% but does not exceed 2.2223% for such quarter; and (3) 10% of the amount of pre-incentive allocation net income, if any, that exceeds 2.2223% for such quarter. These calculations were prorated for any period of less than three months.
Prior to the Internalization, Capital Gains Incentive Allocation was calculated and distributable in arrears as of the end of each calendar year and was equal to 10% of our pro rata share of cumulative realized gains from the date of the IPO through the end of the applicable calendar year, net of our pro rata share of cumulative realized or unrealized losses, the cumulative non-cash portion of equity-based compensation expenses and all realized gains upon which prior performance-based Capital Gains Incentive Allocation payments were made to Master GP.
The following table summarizes the management fees, income incentive allocation and capital gains incentive allocation prior to the Internalization on May 28, 2024:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Management fees$— $303 $993 $597 
Income incentive allocation— 4,274 7,456 12,540 
Total$— $4,577 $8,449 $13,137 
24

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
We paid all of our operating expenses, except those specifically required to be borne by the Former Manager under the Management Agreement. The expenses required to be paid by us included, but were not limited to, issuance and transaction costs incident to the acquisition, disposition and financing of our assets, legal and auditing fees and expenses, the compensation and expenses of our independent directors, the costs associated with the establishment and maintenance of any credit facilities and other indebtedness of ours (including commitment fees, legal fees, closing costs, etc.), expenses associated with other securities offerings of ours, costs and expenses incurred in contracting with third parties (including affiliates of the Former Manager), the costs of printing and mailing proxies and reports to our shareholders, costs incurred by the Former Manager or its affiliates for travel on our behalf, costs associated with any computer software or hardware that was used by us, costs to obtain liability insurance to indemnify our directors and officers and the compensation and expenses of our transfer agent.
We paid or reimbursed the Former Manager and its affiliates for performing certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, provided that such costs and reimbursements were no greater than those which would be paid to outside professionals or consultants. The Former Manager was responsible for all of its other costs incident to the performance of its duties under the Management Agreement, including compensation of the Former Manager’s employees, rent for facilities and other “overhead” expenses; we did not reimburse the Former Manager for these expenses.
The following table summarizes our reimbursements to the Former Manager:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Classification in the Consolidated Statements of Operations:
General and administrative$2,557 $1,592 $6,115 $5,096 
Acquisition and transaction expenses967 172 1,654 381 
Total$3,524 $1,764 $7,769 $5,477 
Upon the successful completion of an offering of our ordinary shares or other equity securities (including securities issued as consideration in an acquisition), we granted the Former Manager options to purchase ordinary shares in an amount equal to 10% of the number of ordinary shares being sold in the offering (or if the issuance relates to equity securities other than our ordinary shares, options to purchase a number of ordinary shares equal to 10% of the gross capital raised in the equity issuance divided by the fair market value of a ordinary share as of the date of issuance), with an exercise price equal to the offering price per share paid by the public or other ultimate purchaser or attributed to such securities in connection with an acquisition (or the fair market value of a ordinary share as of the date of the equity issuance if it relates to equity securities other than our ordinary shares). Any ultimate purchaser of ordinary shares for which such options are granted may have been an affiliate of the Former Manager.
The following table summarizes amounts due to the Former Manager, which are included within accounts payable and accrued liabilities in the Consolidated Balance Sheets:
September 30, 2024December 31, 2023
Accrued management fees$— $224 
Other payables2,500 6,200 
As of September 30, 2024 and December 31, 2023, there were no receivables from the Former Manager.
13. SEGMENT INFORMATION
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 customers. The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines. During the fourth quarter of 2023, the Company changed the composition of its operating segments to include V2500 engines within the Aerospace Products segment. Prior periods have been restated to reflect the change in accordance with the requirements ASC 280, Segment Reporting. See Note 2 for additional information.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases.
25

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The accounting policies of the segments are the same as those described in the summary of significant accounting policies; however, financial information presented by segment includes the impact of intercompany eliminations. Our Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). Segment information is presented in the same manner that our CODM reviews the operating results in assessing performance and allocating resources. The CODM evaluates performance for each reportable segment primarily based on Adjusted EBITDA. Historically, the CODM’s assessment of segment performance included asset information. The CODM determined that segment asset information is not a key factor in measuring performance or allocating resources. Therefore, segment asset information is not included in the tables below as it is not provided to or reviewed by our CODM.
Adjusted EBITDA is defined as net income (loss) attributable to shareholders, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities, and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.
We believe that net income (loss) attributable to shareholders, as defined by U.S. GAAP, is the most appropriate earnings measurement with which to reconcile Adjusted EBITDA. Adjusted EBITDA should not be considered as an alternative to net income (loss) attributable to shareholders as determined in accordance with U.S. GAAP. The following tables set forth certain information for each reportable segment:
I. For the Three Months Ended September 30, 2024
Three Months Ended September 30, 2024
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$57,322 $— $8,128 $65,450 
Maintenance revenue59,917 — — 59,917 
Asset sales revenue34,953 — — 34,953 
Aerospace products revenue— 303,469 — 303,469 
Other revenue74 — 1,931 2,005 
Total revenues$152,266 $303,469 $10,059 $465,794 
Expenses
Cost of sales20,684 198,812 — 219,496 
Operating expenses9,995 2,617 14,246 26,858 
General and administrative— — 4,045 4,045 
Acquisition and transaction expenses2,620 2,100 4,621 9,341 
Depreciation and amortization52,455 1,306 3,014 56,775 
Total expenses85,754 204,835 25,926 316,515 
Other income (expense)
Equity in losses of unconsolidated entities— (438)— (438)
Interest expense— — (57,937)(57,937)
Other income1,982 — 927 2,909 
Total other income (expense)1,982 (438)(57,010)(55,466)
Income (loss) before income taxes68,494 98,196 (72,877)93,813 
Provision for (benefit from) income taxes8,898 4,408 (5,975)7,331 
Net income (loss)59,596 93,788 (66,902)86,482 
Less: Dividends on preferred shares— — 8,335 8,335 
Net income (loss) attributable to shareholders$59,596 $93,788 $(75,237)$78,147 
26

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:
Three Months Ended September 30, 2024
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Adjusted EBITDA$136,423 $101,814 $(6,207)$232,030 
Add: Non-controlling share of Adjusted EBITDA— 
Add: Equity in losses of unconsolidated entities(438)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities382 
Less: Interest expense and dividends on preferred shares(66,272)
Less: Depreciation and amortization expense(69,453)
Less: Incentive allocations— 
Less: Asset impairment charges— 
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations— 
Less: Acquisition and transaction expenses(9,341)
Less: Equity-based compensation expense(1,430)
Less: Provision for income taxes(7,331)
Net income attributable to shareholders$78,147 
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Three Months Ended September 30, 2024
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Africa$1,266 $— $— $1,266 
Asia46,459 65,714 10,059 $122,232 
Europe56,750 84,136 — $140,886 
North America34,700 149,530 — $184,230 
South America13,091 4,089 — $17,180 
Total revenues (1)
$152,266 $303,469 $10,059 $465,794 
_______________________________________________________
(1) The United States, included in North America, and Ireland, included in Europe, represent 35% and 15% of total revenues, respectively, based on the location of our customers and lessees. No other country represents more than 10% of total revenues.












27

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
II. For the Nine Months Ended September 30, 2024
Nine Months Ended September 30, 2024
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$168,927 $— $20,438 $189,365 
Maintenance revenue156,894 — — 156,894 
Asset sales revenue145,993 — — 145,993 
Aerospace products revenue— 737,726 — 737,726 
Other revenue199 — 5,905 6,104 
Total revenues$472,013 $737,726 $26,343 $1,236,082 
Expenses
Cost of sales111,542 456,615 — 568,157 
Operating expenses26,984 16,510 37,780 81,274 
General and administrative— — 10,697 10,697 
Acquisition and transaction expenses7,350 2,871 13,318 23,539 
Management fees and incentive allocation to affiliate— — 8,449 8,449 
Internalization fee to affiliate— — 300,000 300,000 
Depreciation and amortization151,211 3,177 8,998 163,386 
Asset impairment962 — — 962 
Total expenses298,049 479,173 379,242 1,156,464 
Other income (expense)
Equity in losses of unconsolidated entities(207)(1,592)— (1,799)
Interest expense— — (160,840)(160,840)
Loss on extinguishment of debt— — (13,920)(13,920)
Other income1,440 — 1,605 3,045 
Total other income (expense)1,233 (1,592)(173,155)(173,514)
Income (loss) before income taxes175,197 256,961 (526,054)(93,896)
Provision for (benefit from) income taxes20,224 11,865 (32,219)(130)
Net income (loss)154,973 245,096 (493,835)(93,766)
Less: Dividends on preferred shares— — 25,005 25,005 
Net income (loss) attributable to shareholders$154,973 $245,096 $(518,840)$(118,771)











28

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table sets forth a reconciliation of Adjusted EBITDA to net loss attributable to shareholders:
Nine Months Ended September 30, 2024
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Adjusted EBITDA$366,211 $263,331 $(19,507)$610,035 
Add: Non-controlling share of Adjusted EBITDA— 
Add: Equity in losses of unconsolidated entities(1,799)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities1,547 
Less: Internalization fee to affiliate(300,000)
Less: Interest expense and dividends on preferred shares(185,845)
Less: Depreciation and amortization expense(194,384)
Less: Incentive allocations(7,456)
Less: Asset impairment charges(962)
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations(13,920)
Less: Acquisition and transaction expenses(23,539)
Less: Equity-based compensation expense(2,578)
Less: Benefit from income taxes130 
Net loss attributable to shareholders$(118,771)
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Nine Months Ended September 30, 2024
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Africa$3,389 $8,271 $— $11,660 
Asia105,220 122,744 26,343 $254,307 
Europe235,367 256,752 — $492,119 
North America81,709 336,672 — $418,381 
South America46,328 13,287 — $59,615 
Total revenues (1)
$472,013 $737,726 $26,343 $1,236,082 
________________________________________________________
(1) The United States, included in North America, and Ireland, included in Europe, represent 32% and 18% of total revenues, respectively, based on the location of our customers and lessees. No other country represents more than 10% of total revenues.

Presented below are the contracted minimum future annual revenues to be received under existing operating leases as of September 30, 2024:
Operating Leases
Remainder of 2024$73,112 
2025203,217 
2026148,127 
2027111,158 
2028101,250 
Thereafter108,318 
Total$745,182 

29

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
III. For the Three Months Ended September 30, 2023
Three Months Ended September 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$35,981 $— $9,641 $45,622 
Maintenance revenue63,925 — — 63,925 
Asset sales revenue61,400 — — 61,400 
Aerospace products revenue— 118,675 — 118,675 
Other revenue82 — 1,392 1,474 
Total revenues$161,388 $118,675 $11,033 $291,096 
Expenses
Cost of sales46,511 70,196 — 116,707 
Operating expenses13,944 5,947 13,996 33,887 
General and administrative— — 3,015 3,015 
Acquisition and transaction expenses2,329 110 1,822 4,261 
Management fees and incentive allocation to affiliate — — 4,577 4,577 
Depreciation and amortization41,141 115 2,703 43,959 
Total expenses103,925 76,368 26,113 206,406 
Other income (expense)
Equity in (losses) earnings of unconsolidated entities(108)154 — 46 
Interest expense— — (40,185)(40,185)
Other income444 — 17 461 
Total other income (expense)336 154 (40,168)(39,678)
Income (loss) before income taxes57,799 42,461 (55,248)45,012 
Provision for income taxes2,332 1,131 242 3,705 
Net income (loss)55,467 41,330 (55,490)41,307 
Less: Dividends on preferred shares— — 8,334 8,334 
Net income (loss) attributable to shareholders$55,467 $41,330 $(63,824)$32,973 
30

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:
Three Months Ended September 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Adjusted EBITDA$116,858 $43,289 $(5,929)$154,218 
Add: Non-controlling share of Adjusted EBITDA— 
Add: Equity in earnings of unconsolidated entities46 
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities(642)
Less: Interest expense and dividends on preferred shares(48,519)
Less: Depreciation and amortization expense(59,380)
Less: Incentive allocations(4,274)
Less: Asset impairment charges— 
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations— 
Less: Acquisition and transaction expenses(4,261)
Less: Equity-based compensation expense(510)
Less: Provision for income taxes(3,705)
Net income attributable to shareholders$32,973 
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Three Months Ended September 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Africa$154 $— $— $154 
Asia48,267 952 11,033 60,252 
Europe56,679 34,961 — 91,640 
North America44,369 77,213 — 121,582 
South America11,919 5,549 — 17,468 
Total revenues (1)
$161,388 $118,675 $11,033 $291,096 
________________________________________________________
(1) The United States, included in North America, and Ireland, included in Europe, represent 35% and 10% of total revenues, respectively, based on the location of our customers and lessees. No other country represents more than 10% of total revenues.











31

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
III. For the Nine Months Ended September 30, 2023
Nine Months Ended September 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Lease income$132,978 $— $28,163 $161,141 
Maintenance revenue141,131 — — 141,131 
Asset sales revenue246,927 — — 246,927 
Aerospace products revenue— 296,513 — 296,513 
Other revenue6,773 — 5,674 12,447 
Total revenues$527,809 $296,513 $33,837 $858,159 
Expenses
Cost of sales188,343 178,566 — 366,909 
Operating expenses28,610 12,838 39,770 81,218 
General and administrative— — 10,270 10,270 
Acquisition and transaction expenses4,960 1,137 4,098 10,195 
Management fees and incentive allocation to affiliate— — 13,137 13,137 
Depreciation and amortization114,994 298 8,107 123,399 
Asset impairment1,220 — — 1,220 
Total expenses338,127 192,839 75,382 606,348 
Other income (expense)
Equity in losses of unconsolidated entities(242)(1,427)— (1,669)
Interest expense— — (117,976)(117,976)
Other income860 — 17 877 
Total other income (expense)618 (1,427)(117,959)(118,768)
Income (loss) before income taxes190,300 102,247 (159,504)133,043 
Provision for income taxes4,414 2,631 541 7,586 
Net income (loss)185,886 99,616 (160,045)125,457 
Less: Dividends on preferred shares— — 23,460 23,460 
Net income (loss) attributable to shareholders$185,886 $99,616 $(183,505)$101,997 
32

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
The following table sets forth a reconciliation of Adjusted EBITDA to net income attributable to shareholders:
Nine Months Ended September 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Adjusted EBITDA$345,580 $105,413 $(16,042)$434,951 
Add: Non-controlling share of Adjusted EBITDA— 
Add: Equity in losses of unconsolidated entities(1,669)
Less: Pro-rata share of Adjusted EBITDA from unconsolidated entities(96)
Less: Interest expense and dividends on preferred shares(141,436)
Less: Depreciation and amortization expense(157,084)
Less: Incentive allocations(12,540)
Less: Asset impairment charges(1,220)
Less: Changes in fair value of non-hedge derivative instruments— 
Less: Losses on the modification or extinguishment of debt and capital lease obligations— 
Less: Acquisition and transaction expenses(10,195)
Less: Equity-based compensation expense(1,128)
Less: Provision for income taxes(7,586)
Net income attributable to shareholders$101,997 
Summary information with respect to our geographic sources of revenue, based on location of customer, is as follows:
Nine Months Ended September 30, 2023
Aviation LeasingAerospace ProductsCorporate and OtherTotal
Revenues
Africa$154 $875 $— $1,029 
Asia81,285 2,737 33,837 117,859 
Europe188,498 84,547 — 273,045 
North America225,769 198,359 — 424,128 
South America32,103 9,995 — 42,098 
Total revenues (1)
$527,809 $296,513 $33,837 $858,159 
________________________________________________________
(1) The United States, included in North America, represents 46% of total revenues based on the location of our customers and lessees. No other country represents more than 10% of total revenues.
V. Location of Long-Lived Assets
The following tables sets forth the geographic location of property, plant and equipment and leasing equipment, net:
September 30, 2024December 31, 2023
Property, plant and equipment and leasing equipment, net
Africa$35,419 $18,380 
Asia446,744 478,120 
Europe939,380 934,817 
North America559,433 416,811 
South America188,966 229,460 
Total property, plant and equipment and leasing equipment, net (1)
$2,169,942 $2,077,588 
________________________________________________________
(1) The United States, included in North America, and Italy, included in Europe, represent 21% and 14% of property, plant and equipment and leasing equipment, net as of September 30, 2024, and 17% as of December 31, 2023, respectively. No other country represents more than 10% of property, plant and equipment and leasing equipment, net.
33

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
14. EARNINGS PER SHARE AND EQUITY
Basic earnings per ordinary share (“EPS”) is calculated by dividing net income attributable to shareholders by the weighted average number of ordinary shares outstanding, plus any participating securities. Diluted EPS is calculated by dividing net income attributable to shareholders by the weighted average number of ordinary shares outstanding, plus any participating securities and potentially dilutive securities. Potentially dilutive securities are calculated using the treasury stock method.
The calculation of basic and diluted EPS is presented below:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except share and per share data)2024202320242023
Net income (loss)$86,482 $41,307 $(93,766)$125,457 
Less: Dividends on preferred shares8,335 8,334 25,005 23,460 
Net income (loss) attributable to shareholders$78,147 $32,973 $(118,771)$101,997 
Weighted Average Ordinary Shares Outstanding - Basic 102,380,659 99,927,594 101,199,356 99,796,736 
Weighted Average Ordinary Shares Outstanding - Diluted103,395,348 100,482,309 101,199,356 100,269,203 
Earnings (loss) per share:
Basic$0.76 $0.33 $(1.17)$1.02 
Diluted$0.76 $0.33 $(1.17)$1.02 
For both the three months ended September 30, 2024 and 2023, 0 shares, and for the nine months ended September 30, 2024 and 2023, 859,940 and 0 shares, respectively, were excluded from the calculation of diluted EPS due to an anti-dilutive impact.
During the three months ended September 30, 2024 and 2023, 482 and 0 ordinary shares, respectively, and for the nine months ended September 30, 2024 and 2023, 4,852 and 18,457 ordinary shares, respectively, were issued to certain directors as compensation.
15. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company and its subsidiaries may be involved in various claims, legal proceedings, or may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. Within our offshore energy business, a lessee did not fulfill its obligation under its charter arrangement, therefore we are pursuing rights afforded to us under the charter and the range of potential losses against the obligation is $0.0 million to $3.3 million. Our maximum exposure under other arrangements is unknown as no additional claims have been made. We believe the risk of loss in connection with such arrangements is remote.
The Company has contingent obligations under ASC 460, Guarantees, in connection with certain sales of aircraft on lease. Under the agreements, we provide certain guarantees at the end of the lease term for the condition of the aircraft engines that were sold to the buyer. The guarantees are valued at $8.1 million and $6.8 million as of September 30, 2024 and December 31, 2023, respectively, and are reflected as a component of Other liabilities.
Given variability in the condition of the engines at the end of the lease terms, which range from 4 to 8 years, the maximum potential amount of undiscounted future payments that could be required under the guarantees at September 30, 2024 was $37.2 million, which is not reasonably expected.
Internalization—During the second quarter of 2024, the Company entered into the Internalization Agreement with the Former Manager and Master GP. Pursuant to the Internalization Agreement, the Management Agreement was terminated effective May 28, 2024, except that certain indemnification and other obligations survive, and the Company was no longer required to pay management fees or incentive distributions with respect to any period thereafter. As a result of the Internalization, the Company ceased to be externally managed and operates as an internally managed company. In connection with the termination of the Management Agreement, the Company (i) agreed to pay the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; and (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30.




34

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(Dollars in tables in thousands, unless otherwise noted)
16. RESTRUCTURING CHARGES
In connection with the Internalization and termination of the Management Agreement, the Company agreed to pay a total of $300.0 million to its Former Manager (for itself and on behalf of the Master GP, as applicable). At closing, the Company issued 1,866,949 ordinary shares valued at $150.0 million. The remaining balance was paid in cash on June 17, 2024. The restructuring charge paid in connection with the Internalization and termination of the Management Agreement is reflected in Internalization Fee to Affiliate expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2024. See Note 12 for additional discussion. There were no restructuring charges recorded for the three and nine months ended September 30, 2023.
17. SUBSEQUENT EVENTS
Senior Notes due 2033
On October 9, 2024, we issued $500.0 million aggregate principal amount of senior unsecured notes due 2033 (the “Senior Notes due 2033”). The Senior Notes due 2033 bear interest at a rate of 5.875% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2025. Using a portion of the net proceeds, the Company redeemed the remaining $130.5 million aggregate principal amount of Senior Notes due 2027, plus accrued and unpaid interest. The Company used the remaining net proceeds to pay down in full the Company’s Revolving Credit Facility, with any excess proceeds intended for general corporate purposes, including funding acquisitions and investments.
Series A Shares
On October 29, 2024, the Company redeemed in full the outstanding 4,180,000 8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares at a redemption price equal to $25.00 per share in cash, plus $1.6 million of accumulated and unpaid distributions thereon to, but not including, the redemption date of October 29, 2024.
Dividends
On October 30, 2024, our Board of Directors declared a cash dividend on our ordinary shares and eligible participating securities of $0.30 per share for the quarter ended September 30, 2024, payable on November 25, 2024 to the holders of record on November 14, 2024.
Additionally, on October 30, 2024, our Board of Directors also declared cash dividends on the Series B Preferred Shares, Series C Preferred Shares and Series D Preferred Shares of $0.50, $0.52 and $0.59 per share, respectively, payable on December 16, 2024 to the holders of record on December 2, 2024.
35



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 own, lease and sell aviation equipment. We also develop and manufacture through a joint venture, and repair and sell, through our maintenance facilities and exclusivity arrangements, aftermarket components for aircraft engines. Additionally, we own and lease offshore energy equipment. We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation. We believe that there is a large number of acquisition opportunities in our markets and that our expertise and business and financing relationships, together with our access to capital, will allow us to take advantage of these opportunities. As of September 30, 2024, we had total consolidated assets of $3.7 billion and total equity of $118.5 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) agreed to pay the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP.
In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%). The Company was required to use commercially reasonable efforts to make available to the Former Manager certain employees of the Company who were previously employees of the Former Manager to provide the Reverse Services, subject to certain exceptions. In addition, the Former Manager is required to continue to provide the services that are reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Company is required to continue to provide the Reverse Services until the later to occur of the dissolution or sale of the entities receiving Reverse Services. The Transition Services Agreement may be terminated earlier (x) by mutual agreement of the parties, (y) by either the Former Manager or the Company in the event of a material breach by the non-terminating party that is not cured within thirty (30) days following written notification thereof, or (z) by the Former Manager if the Company fails to pay any undisputed sum overdue and payable for a period of at least thirty (30) days.
Impact of Russia’s Invasion of Ukraine
Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the three months ended March 31, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. We determined that it is unlikely that we will regain possession of the aircraft and engines that had not yet been recovered from Ukraine and Russia. As a result we recognized an impairment charge totaling $120.0 million, net of maintenance deposits, 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, 2024, eight aircraft and seventeen engines were still located in Russia.
Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Russia is approximately $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 operational and financial performance, 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.
36


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 customers. The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines. During the fourth quarter of 2023, the Company changed the composition of its operating segments to include product offerings for V2500 engines within the Aerospace Products segment. Prior periods have been restated to reflect the change in accordance with the requirements of ASC 280, Segment Reporting.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, and management fees. Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases.
Results of Operations
Adjusted EBITDA (Non-GAAP)
The chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as the 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, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA.






















37




Comparison of the three and nine months ended September 30, 2024 and 2023
The following table presents our consolidated results of operations:
Three Months Ended September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Revenues
Lease income$65,450 $45,622 $19,828 $189,365 $161,141 $28,224 
Maintenance revenue59,917 63,925 (4,008)156,894 141,131 15,763 
Asset sales revenue34,953 61,400 (26,447)145,993 246,927 (100,934)
Aerospace products revenue303,469 118,675 184,794 737,726 296,513 441,213 
Other revenue2,005 1,474 531 6,104 12,447 (6,343)
Total revenues465,794 291,096 174,698 1,236,082 858,159 377,923 
Expenses
Cost of sales219,496 116,707 102,789 568,157 366,909 201,248 
Operating expenses26,858 33,887 (7,029)81,274 81,218 56 
General and administrative4,045 3,015 1,030 10,697 10,270 427 
Acquisition and transaction expenses9,341 4,261 5,080 23,539 10,195 13,344 
Management fees and incentive allocation to affiliate— 4,577 (4,577)8,449 13,137 (4,688)
Internalization fee to affiliate— — — 300,000 — 300,000 
Depreciation and amortization56,775 43,959 12,816 163,386 123,399 39,987 
Asset impairment— — — 962 1,220 (258)
Total expenses316,515 206,406 110,109 1,156,464 606,348 550,116 
Other (expense) income
Equity in (losses) earnings of unconsolidated entities(438)46 (484)(1,799)(1,669)(130)
Interest expense(57,937)(40,185)(17,752)(160,840)(117,976)(42,864)
Loss on extinguishment of debt— — — (13,920)— (13,920)
Other income2,909 461 2,448 3,045 877 2,168 
Total other expense(55,466)(39,678)(15,788)(173,514)(118,768)(54,746)
Income (loss) from before income taxes93,813 45,012 48,801 (93,896)133,043 (226,939)
Provision for (benefit from) income taxes7,331 3,705 3,626 (130)7,586 (7,716)
Net income (loss)86,482 41,307 45,175 (93,766)125,457 (219,223)
Less: Dividends on preferred shares8,335 8,334 1 25,005 23,460 1,545 
Net income (loss) attributable to shareholders$78,147 $32,973 $45,174 $(118,771)$101,997 $(220,768)

38


The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA:
Three Months Ended September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Net income (loss) attributable to shareholders$78,147 $32,973 $45,174 $(118,771)$101,997 $(220,768)
Add: Provision for (benefit from) income taxes7,331 3,705 3,626 (130)7,586 (7,716)
Add: Equity-based compensation expense1,430 510 920 2,578 1,128 1,450 
Add: Acquisition and transaction expenses9,341 4,261 5,080 23,539 10,195 13,344 
Add: Losses on the modification or extinguishment of debt and capital lease obligations— — — 13,920 — 13,920 
Add: Changes in fair value of non-hedge derivative instruments— — — — — — 
Add: Asset impairment charges— — — 962 1,220 (258)
Add: Incentive allocations— 4,274 (4,274)7,456 12,540 (5,084)
Add: Depreciation and amortization expense (1)
69,453 59,380 10,073 194,384 157,084 37,300 
Add: Interest expense and dividends on preferred shares66,272 48,519 17,753 185,845 141,436 44,409 
Add: Internalization fee to affiliate— — — 300,000 — 300,000 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
(382)642 (1,024)(1,547)96 (1,643)
Less: Equity in losses (earnings) of unconsolidated entities438 (46)484 1,799 1,669 130 
Less: Non-controlling share of Adjusted EBITDA— — — — — — 
Adjusted EBITDA (non-GAAP)$232,030 $154,218 $77,812 $610,035 $434,951 $175,084 
________________________________________________________
(1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) depreciation and amortization expense of $56,775 and $43,959, (ii) lease intangible amortization of $3,720 and $3,726 and (iii) amortization for lease incentives of $8,958 and $11,695, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) depreciation and amortization expense of $163,386 and $123,399, (ii) lease intangible amortization of $11,482 and $11,325 and (iii) amortization for lease incentives of $19,516 and $22,360, respectively.
(2) Includes the following items for the three months ended September 30, 2024 and 2023: (i) net (loss) income of $(438) and $46, (ii) depreciation and amortization expense of $56 and $367, and (iii) acquisition and transaction expenses of $0 and $229, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) net loss of $1,799 and $1,669, (ii) depreciation and amortization expense of $252 and $1,202, and (iii) acquisition and transaction expenses of $0 and $563, respectively.
Revenues
Comparison of the three months ended September 30, 2024 and 2023
Total revenues increased by $174.7 million, driven by the following:
•Aerospace products revenue increased by $184.8 million, primarily due to a $164.3 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $9.6 million increase in parts inventory sales, and other sales revenue of $7.7 million from the QuickTurn and LMCES acquisitions.
•Lease income increased by $19.8 million, primarily due to increases in aircraft lease revenue of $10.0 million, engine lease revenue of $7.2 million, and a decrease in lease incentive amortization of $4.1 million. Aircraft and engine revenue both increased due to an increased number of assets on lease in Q3 2024 compared to Q3 2023. This was partially offset by a decrease of $1.5 million in the Offshore Energy business driven by one of our vessels in the Offshore Energy business having fewer days on-hire in 2024 compared to 2023.
•Asset sales revenue decreased by $26.4 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one aircraft was sold in Q3 2024 as compared to one aircraft and eight engines sold in Q3 2023.
•Maintenance revenue decreased by $4.0 million. Aircraft maintenance revenue decreased by $14.8 million from Q3 2023 to Q3 2024, due to $18.2 million of higher maintenance reserves taken into revenue in Q3 2023, partially offset by an increased number of aircraft on lease in Q3 2024 generating maintenance revenue as compared to Q3 2023. This decrease in aircraft maintenance revenue was partially offset by increased engine maintenance revenue of $10.8 million, driven by an increased number of engines on lease in Q3 2024 generating maintenance revenue as compared to Q3 2023.
39


Comparison of the nine months ended September 30, 2024 and 2023
Total revenues increased by $377.9 million, driven by the following:
•Aerospace products revenue increased by $441.2 million, primarily due to a $387.2 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $26.0 million increase in parts inventory sales, and other sales revenue of $22.5 million from the QuickTurn and LMCES acquisitions.
•Lease income increased by $28.2 million, primarily due to an increase in engine lease revenue of $30.4 million, driven by an increased number of engines on lease, and a decrease in lease amortization of $6.6 million, partially offset by a $7.7 million decrease in the Offshore Energy business due to one of our vessels having fewer days on-hire in 2024 compared to 2023 and a decrease in aircraft lease revenue of $0.9 million.
•Maintenance revenue increased by $15.8 million. Engine maintenance revenue increased by $41.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $25.5 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023 as well as lower utilization.
•Asset sales revenue decreased by $100.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one aircraft and 12 engines were sold in 2024 as compared to 11 aircraft and 18 engines sold in 2023.
•Other revenue decreased by $6.3 million, primarily due to a decrease in assets with end-of-lease redelivery compensation. During 2024, one aircraft and six engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023.
Expenses
Comparison of the three months ended September 30, 2024 and 2023
Total expenses increased by $110.1 million, driven by the following:
•Cost of sales increased by $102.8 million, driven by a $128.6 million increase in the Aerospace Products segment, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. This increase was partially offset by a $25.8 million decrease in the Aviation Leasing segment, 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. Specifically, one aircraft was sold in Q3 2024 as compared to one aircraft and eight engines sold in Q3 2023.
•Depreciation and amortization increased by $12.8 million, primarily driven by an increase in the number of assets owned and on lease, the acquisitions of LMCES and QuickTurn, partially offset by an increase in the number of aircraft redelivered.
•Acquisition and transaction expenses increased by $5.1 million, primarily due to higher legal and other professional fees incurred for the acquisition of LMCES on September 9, 2024.
•General and administrative expense increased by $1.0 million, primarily due to higher reimbursements to the Former Manager for certain services provided to the Company subsequent to the Internalization effective May 28, 2024.
•Operating expenses decreased by $7.0 million, primarily due to a $3.9 million decrease in the Aviation Leasing segment, driven by a decrease in bad debt expense of $5.6 million, partially offset by increases in insurance expense of $0.9 million and repairs and maintenance expense of $0.3 million. The Aerospace Products segment contributed a $3.3 million decrease, primarily due to a $1.1 million decrease in shipping and storage fees, a $0.6 million decrease in professional fees, and a $0.5 million decrease in insurance expense.
•Management fees and incentive allocation to affiliate decreased by $4.6 million, due to the absence of any management or incentive fee to the Former Manager in the current quarter, since the Internalization was effective May 28, 2024.
Comparison of the nine months ended September 30, 2024 and 2023
Total expenses increased by $550.1 million, driven by the following:
•Internalization fee to affiliate increased by $300.0 million relating to the Internalization effective May 28, 2024.
•Cost of sales increased by $201.2 million, primarily due to an increase of $278.0 million in our Aerospace Products segment, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. This was partially offset by a decrease of $76.8 million in the Aviation Leasing segment 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. Specifically, one aircraft and 12 engines were sold in 2024 compared to 11 aircraft and 18 engines sold in 2023.
40


•Depreciation and amortization increased by $40.0 million, primarily driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered.
•Acquisition and transaction expenses increased by $13.3 million, primarily due to higher professional fees incurred in evaluating and completing strategic transactions and fees associated with the Internalization and the acquisition of LMCES on September 9, 2024.
•Management fees and incentive allocation to affiliate decreased by $4.7 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024, as compared to fees paid for the full nine months ended September 30, 2023.
Other (expense) income
Total other expense increased by $15.8 million during the three months ended September 30, 2024, due to the following:
•Interest expense increased by $17.8 million, reflecting an increase in the average debt outstanding of approximately $913.0 million, primarily due to increases in the (i) Senior Notes due 2032 of $800.0 million, which were issued in June 2024, (ii) Senior Notes due 2031 of $700.0 million, which were issued in April 2024, and the (iii) Senior Notes due 2030 of $497.0 million, which were issued in November 2023, partially offset by decreases in the (iv) Senior Notes due 2025 of $652.4 million, which were redeemed in April 2024, (v) Senior Notes due 2027 of $269.5 million, which were partially redeemed in June 2024, and the (vi) Revolving Credit Facility of $161.7 million.
•Other income increased by $2.4 million primarily driven by $1.6 million of interest income earned on financing receivables within our Aviation Leasing Segment and $0.9 million of interest income from the Company’s investments in money market funds.
Total other expense increased by $54.7 million during the nine months ended September 30, 2024, due to the following:
•Interest expense increased by $42.9 million, reflecting an increase in the average debt outstanding of approximately $694.8 million, primarily due to increases in the (i) Senior Notes due 2030 of $496.9 million, which were issued in November 2023, (ii) Senior Notes due 2031 of $466.7 million, issued in April 2024, and (iii) Senior Notes due 2032 of $355.6 million, which were issued in June 2024, partially offset by decreases in the (iv) Senior Notes due 2025 of $435.4 million, which were redeemed in April 2024, (v) Senior Notes due 2027 of $119.7 million, which were partially redeemed in June 2024, and the (vi) Revolving Credit Facility of $68.9 million
•Loss on extinguishment of debt increased by $13.9 million driven by the redemption of Senior Notes due 2025 and a partial redemption of Senior Notes due 2027.
•Other income increased by $2.2 million primarily driven by $1.6 million of interest income generated from the Company’s investments in money market funds and $0.6 million of interest income earned on financing receivables within our Aviation Leasing Segment.
Provision for (benefit from) income taxes
The provision for income taxes increased by $3.6 million during the three months ended September 30, 2024. This increase is primarily attributable to an increase in income generated from leasing and aerospace activities in jurisdictions subject to taxes. As the Company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes.

The benefit from income taxes increased by $7.7 million during the nine months ended September 30, 2024. This increase was primarily attributable to a substantial tax benefit arising from the Internalization fee paid to the affiliate. The fee provided a favorable impact on the Company's overall tax position, despite being partially offset by higher income from leasing and aerospace activities. As the Aviation Leasing and Aerospace Products segments experienced growth, the associated income increased, leading to a greater tax expense that reduced the tax benefit received from the Internalization fee.
Net income (loss)
Net income increased by $45.2 million and decreased $219.2 million for the three and nine months ended September 30, 2024 as compared to prior years, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $77.8 million and $175.1 million during the three and nine months ended September 30, 2024, respectively, primarily due to the changes noted above.


41


Aviation Leasing Segment

As of September 30, 2024, in our Aviation Leasing segment, we own and manage 393 aviation assets, consisting of 96 commercial aircraft and 297 engines, including eight aircraft and seventeen engines that were still located in Russia.
As of September 30, 2024, 86 of our commercial aircraft and 184 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 79% utilized during the nine months ended September 30, 2024, based on the percentage 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 45 months, and our engines currently on lease have an average remaining lease term of 21 months. The table below provides additional information on the assets in our Aviation Leasing segment:
Aviation AssetsWidebodyNarrowbodyTotal
Aircraft
Assets at January 1, 20245 91 96 
Purchases— 27 27 
Sales— (1)(1)
Transfers— (26)(26)
Assets at September 30, 20245 91 96 
Engines
Assets at January 1, 202432 235 267 
Purchases4 86 90 
Sales(9)(1)(10)
Transfers— (50)(50)
Assets at September 30, 202427 270 297 
The following table presents our results of operations for our Aviation Leasing segment:
Three Months Ended September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Revenues
Lease income$57,322 $35,981 $21,341 $168,927 $132,978 $35,949 
Maintenance revenue59,917 63,925 (4,008)156,894 141,131 15,763 
Asset sales revenue34,953 61,400 (26,447)145,993 246,927 (100,934)
Other revenue74 82 (8)199 6,773 (6,574)
Total revenues152,266 161,388 (9,122)472,013 527,809 (55,796)
Expenses
Cost of sales20,684 46,511 (25,827)111,542 188,343 (76,801)
Operating expenses9,995 13,944 (3,949)26,984 28,610 (1,626)
Acquisition and transaction expenses2,620 2,329 291 7,350 4,960 2,390 
Depreciation and amortization52,455 41,141 11,314 151,211 114,994 36,217 
Asset impairment— — — 962 1,220 (258)
Total expenses85,754 103,925 (18,171)298,049 338,127 (40,078)
Other income (expense)
Equity in losses of unconsolidated entities— (108)108 (207)(242)35 
Other income1,982 444 1,538 1,440 860 580 
Total other income1,982 336 1,646 1,233 618 615 
Income before income taxes68,494 57,799 10,695 175,197 190,300 (15,103)
Provision for income taxes8,898 2,332 6,566 20,224 4,414 15,810 
Net income attributable to shareholders$59,596 $55,467 $4,129 $154,973 $185,886 $(30,913)

42


The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:
Three Months Ended September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Net income attributable to shareholders$59,596 $55,467 $4,129 $154,973 $185,886 $(30,913)
Add: Provision for income taxes8,898 2,332 6,566 20,224 4,414 15,810 
Add: Equity-based compensation expense176 105 71 409 232 177 
Add: Acquisition and transaction expenses2,620 2,329 291 7,350 4,960 2,390 
Add: Losses on the modification or extinguishment of debt and capital lease obligations— — — — — — 
Add: Changes in fair value of non-hedge derivative instruments— — — — — — 
Add: Asset impairment charges— — — 962 1,220 (258)
Add: Incentive allocations— — — — — — 
Add: Depreciation and amortization expense (1)
65,133 56,562 8,571 182,209 148,679 33,530 
Add: Interest expense and dividends on preferred shares— — — — — — 
Add: Internalization fee to affiliate— — — — — — 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
— (45)45 (123)(53)(70)
Less: Equity in losses of unconsolidated entities— 108 (108)207 242 (35)
Less: Non-controlling share of Adjusted EBITDA— — — — — — 
Adjusted EBITDA (non-GAAP)$136,423 $116,858 $19,565 $366,211 $345,580 $20,631 
________________________________________________________
(1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) depreciation expense of $52,455 and $41,141, (ii) lease intangible amortization of $3,720 and $3,726 and (iii) amortization for lease incentives of $8,958 and $11,695, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) depreciation expense of $151,211 and $114,994, (ii) lease intangible amortization of $11,482 and $11,325 and (iii) amortization for lease incentives of $19,516 and $22,360, respectively.
(2) Includes the following items for the three months ended September 30, 2024 and 2023: (i) net loss of $0 and $108 and (ii) depreciation and amortization of $0 and $63, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) net loss of $207 and $242 and (ii) depreciation and amortization of $84 and $189, respectively.
Revenues
Comparison of the three months ended September 30, 2024 and 2023
Total revenues decreased by $9.1 million, driven by the following:
•Asset sales revenue decreased by $26.4 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one aircraft was sold in Q3 2024 as compared to one aircraft and eight engines sold in Q3 2023.
•Maintenance revenue decreased by $4.0 million. Aircraft maintenance revenue decreased by $14.8 million from Q3 2023 to Q3 2024, due to $18.2 million of higher maintenance reserves taken into revenue in Q3 2023, partially offset by an increased number of aircraft on lease in Q3 2024 as compared to Q3 2023. This decrease in aircraft maintenance revenue was partially offset by increased engine maintenance revenue of $10.8 million, driven by an increased number of engines on lease in Q3 2024 generating maintenance revenue as compared to Q3 2023.
•Lease income increased by $21.3 million, due to increases in aircraft lease revenue of $10.0 million, engine lease revenue of $7.2 million, and a decrease in lease amortization of $4.1 million. Aircraft and engine revenue both increased due to an increased number of assets on lease in Q3 2024 as compared to Q3 2023.
Comparison of the nine months ended September 30, 2024 and 2023
Total revenue decreased by $55.8 million, driven by the following:
•Asset sales revenue decreased by $100.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, one aircraft and 12 engines were sold in 2024 as compared to 11 aircraft and 18 engines sold in 2023.
•Other revenue decreased by $6.6 million, primarily due to a decrease in assets with end-of-lease redelivery compensation. During 2024, one aircraft and five engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023.
43


•Lease income increased by $35.9 million, due to an increase in engine lease revenue of $30.4 million, driven by an increased number of engines on lease, and a decrease in lease amortization of $6.6 million. This increase was partially offset by a slight decrease in aircraft lease revenue of $0.9 million.
•Maintenance revenue increased by $15.8 million. Engine maintenance revenue increased by $41.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $25.5 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023 as well as lower utilization.
Expenses
Comparison of the three months ended September 30, 2024 and 2023
Total expenses decreased by $18.2 million, driven by the following:
•Cost of sales decreased by $25.8 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, and is in line with an overall decrease in the corresponding asset sales revenue. Specifically, one aircraft was sold in Q3 2024 as compared to one aircraft and eight engines sold in Q3 2023.
•Operating expenses decreased by $3.9 million, primarily driven by a decrease in bad debt expense of $5.6 million in connection with the termination of four aircraft leases in Q3 2023, partially offset by increases in insurance expense of $0.9 million and repairs and maintenance expense of $0.3 million.
•Depreciation and amortization expense increased by $11.3 million, driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered.
Comparison of the nine months ended September 30, 2024 and 2023
Total expenses decreased by $40.1 million, driven by the following:
•Cost of sales decreased by $76.8 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, and is in line with an overall decrease in the corresponding asset sales revenue. Specifically, one aircraft and 12 engines were sold in 2024 compared to 11 aircraft and 18 engines sold in 2023.
•Operating expenses decreased by $1.6 million, primarily driven by a decrease in bad debt expense of $5.9 million, partially offset by increases in legal fees of $1.5 million, repairs and maintenance expense of $1.1 million, technical consulting expense of $1.0 million and payroll-related expenses of $0.7 million.
•Depreciation and amortization expense increased by $36.2 million, driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered.
•Acquisition and transaction expenses increased by $2.4 million, primarily due to higher legal fees incurred in evaluating and completing strategic transactions.
Other income
Total other income increased by $1.6 million and $0.6 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, primarily due to interest income earned on financing receivables during 2024.
Provision for income taxes
The provision for income taxes increased by $6.6 million and $15.8 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, primarily due to increases in income from leasing activities in jurisdictions subject to taxes. As the Company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes.
Net income
Net income increased by $4.1 million and decreased by $30.9 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $19.6 million and $20.6 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, primarily due to the changes noted above.




44


Aerospace Products Segment
The Aerospace Products segment, through our maintenance facilities, equity method investment and exclusivity arrangements, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines. Our engine, module and parts sales are facilitated through a dedicated commercial maintenance program, designed to focus on modular and parts repair and refurbishment of CFM56-7B and CFM56-5B engines. In September 2024, we acquired LMCES to further enhance this business and establish permanent engine and module manufacturing capabilities. Refer to Note 3 “Acquisition of Lockheed Martin Commercial Engine Solutions”, for additional information. In addition, other serviceable used modules and parts are sold through our exclusive partnership, who is responsible for the teardown, repair, marketing and sales of parts from our CFM56 engine pool. In December 2023, we acquired the remaining interest in Quick Turn Engine Center LLC or “QuickTurn” (previously iAero Thrust LLC), a hospital maintenance and testing facility dedicated to the CFM56 engine. Refer to Note 4 “Acquisition of QuickTurn”, for additional information. We also hold a 25% interest in the Advanced Engine Repair JV which focuses on developing new cost savings programs for engine repairs.
The following table presents our results of operations:
Three Months Ended September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Aerospace products revenue$303,469 $118,675 $184,794 $737,726 $296,513 $441,213 
Expenses
Cost of sales198,812 70,196 128,616 456,615 178,566 278,049 
Operating expenses2,617 5,947 (3,330)16,510 12,838 3,672 
Acquisition and transaction expenses2,100 110 1,990 2,871 1,137 1,734 
Depreciation and amortization1,306 115 1,191 3,177 298 2,879 
Total expenses204,835 76,368 128,467 479,173 192,839 286,334 
Other (expense) income
Equity in (losses) earnings of unconsolidated entities(438)154 (592)(1,592)(1,427)(165)
Total other (expense) income(438)154 (592)(1,592)(1,427)(165)
Income before income taxes98,196 42,461 55,735 256,961 102,247 154,714 
Provision for income taxes4,408 1,131 3,277 11,865 2,631 9,234 
Net income attributable to shareholders$93,788 $41,330 $52,458 $245,096 $99,616 $145,480 

















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The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:
Three Months Ended September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Net income attributable to shareholders$93,788 $41,330 $52,458 $245,096 $99,616 $145,480 
Add: Provision for income taxes4,408 1,131 3,277 11,865 2,631 9,234 
Add: Equity-based compensation expense156 70 86 154 155 (1)
Add: Acquisition and transaction expenses2,100 110 1,990 2,871 1,137 1,734 
Add: Losses on the modification or extinguishment of debt 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 expense1,306 115 1,191 3,177 298 2,879 
Add: Interest expense and dividends on preferred shares— — — — — — 
Add: Internalization fee to affiliate— — — — — — 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)
(382)687 (1,069)(1,424)149 (1,573)
Less: Equity in losses (earnings) of unconsolidated entities438 (154)592 1,592 1,427 165 
Less: Non-controlling share of Adjusted EBITDA — — — — — — 
Adjusted EBITDA (non-GAAP)$101,814 $43,289 $58,525 $263,331 $105,413 $157,918 
________________________________________________________
(1) Includes the following items for the three months ended September 30, 2024 and 2023: (i) net (loss) income of $(438) and $154, (ii) depreciation and amortization expense of $56 and $304, and (iii) acquisition and transaction expenses of $0 and $229, respectively. Includes the following items for the nine months ended September 30, 2024 and 2023: (i) net loss of $1,592 and $1,427, (ii) depreciation and amortization expense of $168 and $1,013, and (iii) acquisition and transaction expenses of $0 and $563, respectively.
Revenues
Total Aerospace products revenue increased by $184.8 million during the three months ended September 30, 2024 as compared to 2023, primarily due to a $164.3 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $9.6 million increase in parts inventory sales, and other sales revenues of $7.7 million from the QuickTurn and LMCES acquisitions.
Total Aerospace products revenue increased by $441.2 million during the nine months ended September 30, 2024 as compared to 2023, primarily due to a $387.2 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $26.0 million increase in parts inventory sales, and other sales revenues of $22.5 million from the QuickTurn and LMCES acquisitions.
Expenses
Comparison of the three months ended September 30, 2024 and 2023
Total expenses increased by $128.5 million, due to the following:
•Cost of sales increased by $128.6 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period.
•Acquisition and transaction expenses increased by $2.0 million, primarily driven by higher professional fees incurred in evaluating and completing strategic transactions.
•Depreciation and amortization increased by $1.2 million due to the acquisitions of LMCES in Q3 2024 and QuickTurn in Q4 2023.
•Operating expenses decreased by $3.3 million, primarily due to a $1.1 million decrease in shipping and storage fees, a $0.6 million decrease in professional fees, and a $0.5 million decrease in insurance expense.
Comparison of the nine months ended September 30, 2024 and 2023
Total expenses increased by $286.3 million, due to the following:
46


•Cost of sales increased by $278.0 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period.
•Operating expenses increased by $3.7 million, primarily driven by a $2.0 million increase in compensation and benefits expense and a $1.3 million increase in insurance expense.
•Depreciation and amortization increased by $2.9 million due to the acquisitions of LMCES in Q3 2024 and QuickTurn in Q4 2023.
•Acquisition and transaction expenses increased by $1.7 million, primarily driven by higher professional fees incurred in evaluating and completing strategic transactions.
Provision for income taxes
The provision for income taxes increased by $3.3 million and $9.2 million during the three and nine months ended September 30, 2024, respectively, primarily due to an increase in income from aerospace activities in jurisdictions subject to taxes. As the Company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes.
Net income
Net income increased by $52.5 million and $145.5 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $58.5 million and $157.9 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, 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 September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Revenues
Lease income$8,128 $9,641 $(1,513)$20,438 $28,163 $(7,725)
Other revenue1,931 1,392 539 5,905 5,674 231 
Total revenues10,059 11,033 (974)26,343 33,837 (7,494)
Expenses
Operating expenses14,246 13,996 250 37,780 39,770 (1,990)
General and administrative4,045 3,015 1,030 10,697 10,270 427 
Acquisition and transaction expenses4,621 1,822 2,799 13,318 4,098 9,220 
Management fees and incentive allocation to affiliate— 4,577 (4,577)8,449 13,137 (4,688)
Internalization fee to affiliate— — — 300,000 — 300,000 
Depreciation and amortization3,014 2,703 311 8,998 8,107 891 
Total expenses25,926 26,113 (187)379,242 75,382 303,860 
Other (expense) income
Loss on extinguishment of debt— — — (13,920)— (13,920)
Interest expense(57,937)(40,185)(17,752)(160,840)(117,976)(42,864)
Other income927 17 910 1,605 17 1,588 
Total other expense(57,010)(40,168)(16,842)(173,155)(117,959)(55,196)
Loss before income taxes(72,877)(55,248)(17,629)(526,054)(159,504)(366,550)
(Benefit from) provision for income taxes(5,975)242 (6,217)(32,219)541 (32,760)
Net loss(66,902)(55,490)(11,412)(493,835)(160,045)(333,790)
Less: Dividends on preferred shares8,335 8,334 1 25,005 23,460 1,545 
Net loss attributable to shareholders$(75,237)$(63,824)$(11,413)$(518,840)$(183,505)$(335,335)
The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:
Three Months Ended September 30,ChangeNine Months Ended
September 30,		Change
(in thousands)2024202320242023
Net loss attributable to shareholders$(75,237)$(63,824)$(11,413)$(518,840)$(183,505)$(335,335)
Add: (Benefit from) provision for income taxes(5,975)242 (6,217)(32,219)541 (32,760)
Add: Equity-based compensation expense1,098 335 763 2,015 741 1,274 
Add: Acquisition and transaction expenses4,621 1,822 2,799 13,318 4,098 9,220 
Add: Losses on the modification or extinguishment of debt and capital lease obligations— — — 13,920 — 13,920 
Add: Changes in fair value of non-hedge derivative instruments— — — — — — 
Add: Asset impairment charges— — — — — — 
Add: Incentive allocations— 4,274 (4,274)7,456 12,540 (5,084)
Add: Depreciation and amortization expense3,014 2,703 311 8,998 8,107 891 
Add: Interest expense and dividends on preferred shares66,272 48,519 17,753 185,845 141,436 44,409 
Add: Internalization fee to affiliate — — — 300,000 — 300,000 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities— — — — — — 
Less: Equity in losses (earnings) of unconsolidated entities— — — — — — 
Less: Non-controlling share of Adjusted EBITDA— — — — — — 
Adjusted EBITDA (non-GAAP)$(6,207)$(5,929)$(278)$(19,507)$(16,042)$(3,465)
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Revenues
Comparison of the three months ended September 30, 2024 and 2023
Total revenues decreased by $1.0 million, primarily due to a $1.5 million decrease in Lease income, partially offset by a $0.5 million increase in Other revenue. Lease income declined primarily due to one of our vessels in the Offshore Energy business having fewer days on-hire in 2024 compared to 2023. The increase in Other revenue is driven by higher victualling income for one of our vessels from a new lessee that required additional operational support services in 2024 compared to 2023.
Comparison of the nine months ended September 30, 2024 and 2023
Total revenues decreased by $7.5 million, primarily due to a $7.7 million decrease in the Lease income. Lease income declined primarily due to one of our vessels in the Offshore Energy business had fewer days on-hire in 2024 compared to 2023.
Expenses
Comparison of the three months ended September 30, 2024 and 2023
Total expenses decreased by $0.2 million, due to the following:
•Management fees and incentive allocation to affiliate decreased by $4.6 million, due to the absence of any management or incentive fee to the Former Manager in the current quarter, since the Internalization was effective May 28, 2024.
•Acquisition and transaction expense increased by $2.8 million, primarily due to higher legal and other professional fees incurred for the acquisition of LMCES on September 9, 2024.
•General and administrative expense increased by $1.0 million, primarily due to reimbursements to the Former Manager for certain services provided to the Company subsequent to the Internalization effective May 28, 2024.
Comparison of the nine months ended September 30, 2024 and 2023
Total expenses increased by $303.9 million, due to the following:
•Internalization fee to affiliate increased by $300.0 million for the Internalization effective May 28, 2024.
•Acquisition and transaction expense increased by $9.2 million, primarily due to higher legal and other professional fees incurred for the Internalization on May 28, 2024 and the acquisition of LMCES on September 9, 2024.
•Management fees and incentive allocation to affiliate decreased by $4.7 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024, as compared to fees paid for the full nine months ended September 30, 2023.
•Operating expenses decreased by $2.0 million, primarily due to decreases in the Offshore Energy business, driven by decreases in project costs of $7.0 million and crew expenses of $6.0 million as a result of one of our vessels having fewer days on-hire in 2024 compared to 2023. This decrease was partially offset by an increase in bad debt expense of $2.1 million. The decrease was also offset by increases in Corporate expenses, including payroll-related expenses of $2.8 million, IT, marketing, and subscription expenses of $2.7 million and professional fees of $2.1 million.
Other (expense) income
Total other expense increased by $16.8 million during the three months ended September 30, 2024, due to the following:
•Interest expense increased by $17.8 million, reflecting an increase in the average debt outstanding of approximately $913.0 million, primarily due to increases in the (i) Senior Notes due 2032 of $800.0 million, which were issued in June 2024, (ii) Senior Notes due 2031 of $700.0 million, which were issued in April 2024, and the (iii) Senior Notes due 2030 of $497.0 million, which were issued in November 2023, partially offset by decreases in the (iv) Senior Notes due 2025 of $652.4 million, which were redeemed in April 2024, (v) Senior Notes due 2027 of $269.5 million, which were partially redeemed in June 2024, and the (vi) Revolving Credit Facility of $161.7 million.
•Other income increased by $0.9 million, driven by interest income generated from the Company’s investments in money market funds.
Total other expense increased by $55.2 million during the nine months ended September 30, 2024, due to the following:
•Interest expense increased by $42.9 million, reflecting an increase in the average debt outstanding of approximately $694.8 million, primarily due to increases in the (i) Senior Notes due 2030 of $496.9 million, which were issued in November 2023, (ii) Senior Notes due 2031 of $466.7 million, issued in April 2024 (iii) Senior Notes due 2032 of $355.6 million, which were issued in June 2024, partially offset by decreases in the (iv) Senior Notes due 2025 of $435.4 million, which were redeemed in April 2024, (v) Senior Notes due 2027 of $119.7 million, which were partially redeemed in June 2024, and the (vi) Revolving Credit Facility of $68.9 million.
•Loss on extinguishment of debt increased by $13.9 million, driven by the redemption of Senior Notes due 2025 and a partial redemption of Senior Notes due 2027.
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•Other income increased by $1.6 million, driven by interest income generated from the Company’s investments in money market funds.
Benefit from income taxes
The benefit from income taxes increased by $6.2 million and $32.8 million during the three and nine months ended September 30, 2024, respectively, primarily due to the tax benefit from the Internalization fee paid to affiliate. The Internalization fee created a substantial tax benefit, which led to an improved tax position for the Company. The impact of the fee was notable in both the quarterly and year-to-date financials, as it provided a meaningful offset against taxable income from the leasing and aerospace segments.
Net loss
Net loss increased by $11.4 million and $333.8 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $0.3 million and $3.5 million during the three and nine months ended September 30, 2024, respectively, as compared to prior periods, 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.
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 $1.0 billion and $562.8 million during the nine months ended September 30, 2024 and 2023, respectively.
•Distributions to shareholders, including cash dividends, were $115.8 million and $113.2 million during the nine months ended September 30, 2024 and 2023, 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 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 Principal collections on finance leases and Receipt of maintenance deposits under operating lease agreements were $108.7 million during the nine months ended September 30, 2024. Cash flows from operating activities, plus Principal collections on finance leases and Receipt of maintenance deposits under operating lease agreements were $143.1 million during the nine months ended September 30, 2023.
•During the nine months ended September 30, 2024, additional borrowings were obtained in connection with the (i) Senior Notes due 2031 of $800.0 million, (ii) Senior Notes due 2030 of $700.0 million and (iii) Revolving Credit Facility of $590.0 million. We made total principal repayments 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. During the nine months ended September 30, 2023, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $430.0 million and $330.0 million, respectively.
•Proceeds from sales of assets were $542.9 million and $366.1 million during the nine months ended September 30, 2024 and 2023, respectively.
•Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs, were $61.7 million during the nine months ended September 30, 2023.
On May 28, 2024, we entered into definitive agreements with the Former Manager and Master GP to internalize our management function. As part of the termination of the Management Agreement, we agreed to pay $150.0 million to the Former Manager. Following the internalization of management on May 28, 2024, we no longer pay a management fee or incentive distribution to the Former Manager or Master GP. Consequently, we have assumed general and administrative, and compensation and benefit expenses directly. We anticipate a savings in operation costs as a result of the Internalization.
We are currently evaluating several potential transactions and related financings, including, but not limited to, certain additional acquisitions of assets and operating companies in the aviation section or debt and equity financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned
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liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing.
Historical Cash Flow
Comparison of the nine months ended September 30, 2024 and 2023
The following table compares the historical cash flow for the nine months ended September 30, 2024 and 2023:
Nine Months Ended September 30,
(in thousands)20242023
Cash Flow Data:
Net cash (used in) provided by operating activities$(146,153)$116,766 
Net cash used in investing activities(442,731)(191,092)
Net cash provided by financing activities610,016 74,140 

Net cash used in operating activities increased $262.9 million, which primarily reflects an increase in (i) Net loss of $219.2 million and certain adjustments to reconcile net loss to cash provided by operating activities including an increase in (ii) Gain on sale of assets of $133.8 million and decreases in (iii) Changes in net working capital of $126.6 million, (iv) Change in deferred income taxes of $8.4 million and (v) Provision for credit losses of $3.8 million, partially offset by increases in (vi) Non-cash termination fee to affiliate (issuance of ordinary shares) of $150.0 million and (vii) Depreciation and amortization of $40.0 million, a decrease in (viii) Security deposits and maintenance claims included in earnings of $21.0 million and an increase in (ix) Loss on extinguishment of debt of $13.9 million.
Net cash used in investing activities increased $251.6 million, primarily due to increases in (i) Acquisition of business, net of cash acquired of $143.6 million, (ii) Deposits for acquisitions of aircraft and engines of $152.2 million, (iii) Acquisition of leasing equipment of $115.4 million and (iv) Investments in financing receivable of $63.9 million partially offset by higher (v) Proceeds from the sale of assets of $176.9 million, decreases in (vi) Investment in unconsolidated entities of $19.5 million, (vii) Acquisition of lease intangibles of $11.6 million and (viii) Investment in promissory notes of $11.5 million and higher (ix) Proceeds (refunds) from deposits on sale of aircraft and engines of $3.1 million.
Net cash provided by financing activities increased $535.9 million, primarily due to increases in (i) Proceeds from debt of $1.6 billion and (ii) Receipt of maintenance deposits under operating lease agreements of $12.8 million, partially offset by an increase in (iii) Repayment of debt of $1.0 billion, a decrease in (iv) Proceeds from the issuance of preferred shares, net of underwriter’s discount and issuance costs of $61.7 million, and increases in (v) Payment of deferred financing costs of $9.0 million and (vi) Release of maintenance deposits under operating lease agreements of $6.2 million.
Contractual Obligations
Our material cash requirements include the following contractual and other obligations:
Debt Obligations—As of September 30, 2024, we had outstanding principal and interest payment obligations of $3.3 billion and $1.3 billion, respectively, of which only interest payments of $216.4 million are due in the next twelve months. See Note 8 to the consolidated financial statements for additional information about our debt obligations.
Lease Obligations—As of September 30, 2024, we had outstanding operating and finance lease obligations of $19.6 million, of which $2.1 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 $120.9 million and $33.3 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 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, 2023.
Recent Accounting Pronouncements
See Note 2 to our Consolidated Financial Statements for recent accounting pronouncements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.
Interest Rate Risk
Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. Interest rate risk is highly sensitive to many factors, including the U.S. government’s monetary and tax policies, global economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposure relates to our term loan arrangements.
LIBOR and other indices which are deemed “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform. The ICE Benchmark Administration ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021 and the remaining USD LIBOR settings after June 30, 2023, other than certain USD LIBOR settings that are expected to continue to be published under a synthetic methodology until September 2024. In anticipation of LIBOR’s phase out, we amended our revolving credit facility to incorporate SOFR as the successor rate to LIBOR. We continue to monitor related reform proposals and evaluate the related risks; however, it is not possible to predict the effects of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR, SOFR or other benchmark indices could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for financial instruments tied to variable interest rate indices.
Our borrowing agreements generally require payments based on a variable interest rate index, such as SOFR. Therefore, to the extent our borrowing costs are not fixed, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our leases. We may elect to manage our exposure to interest rate movements through the use of interest rate derivatives (interest rate swaps and caps).
The following discussion about the potential effects of changes in interest rates is based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts on our financial condition and results of operations. Although we believe a sensitivity analysis provides the most meaningful analysis permitted by the rules and regulations of the SEC, it is constrained by several factors, including the necessity to conduct the analysis based on a single point in time and by the inability to include the extraordinarily complex market reactions that normally would arise from the market shifts modeled. Although the following results of a sensitivity analysis for changes in interest rates may have some limited use as a benchmark, they should not be viewed as a forecast. This forward-looking disclosure also is selective in nature and addresses only the potential interest expense impacts on our financial instruments and, in particular, does not address the mark-to-market impact on our interest rate derivatives, if any. It also does not include a variety of other potential factors that could affect our business as a result of changes in interest rates. In addition, the following discussion does not take into account our Series B preferred shares, on which distributions currently accrue interest at a fixed rate but will accrue interest at a floating rate based on a certain variable interest rate index plus a spread from and after December 15, 2024.
As of September 30, 2024, assuming we do not hedge our exposure to interest rate fluctuations related to our outstanding floating rate debt, a hypothetical 100-basis point increase/decrease in our variable interest rate on our borrowings would result in an increase of approximately $1.5 million or a decrease of approximately $1.5 million in interest expense over the next 12 months.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of and for the period covered by this report.
Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We are and may become involved in legal proceedings, including but not limited to regulatory investigations and inquiries, in the ordinary course of our business. Although we are unable to predict with certainty the eventual outcome of any litigation, regulatory investigation or inquiry, in the opinion of management, we do not expect our current and any threatened legal proceedings to have a material adverse effect on our business, financial position or results of operations. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material adverse effect on our financial results.
Item 1A. Risk Factors
You should carefully consider the following risks and other information in this Form 10-Q in evaluating us and our shares. Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations or financial condition. The risk factors generally have been separated into the following categories: risks related to our business, risks related to taxation and risks related to the Company’s shares. However, these categories do overlap and should not be considered exclusive.
Risks Related to Our Business
We may not realize some or all of the targeted benefits of the Internalization.
In connection with the Internalization, we entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager is required to continue to provide the Company and its affiliates with certain Services for a transition period during which the Company will procure replacements for the Services. The Services are provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%). The Company is required to use commercially reasonable efforts to make available to the Former Manager certain employees of the Company who were previously employees of the Former Manager to provide the Reverse Services, subject to certain exceptions. The Former Manager is required to continue to provide the services that are reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Company is required to continue to provide the Reverse Services until the later to occur of the dissolution or sale of the entities receiving Reverse Services. The Transition Services Agreement may be terminated earlier (x) by mutual agreement of the parties, (y) by either the Former Manager or the Company in the event of a material breach by the non-terminating party that is not cured within thirty (30) days following written notification thereof, or (z) by the Former Manager if the Company fails to pay any undisputed sum overdue and payable for a period of at least thirty (30) days. The failure to effectively complete the transition of these services to a fully internal basis, efficiently manage the transition with the Former Manager or find adequate internal replacements for these services, could impede our ability to achieve the targeted cost savings of the Internalization and adversely affect our operations. In addition, complexities arising from the Internalization could increase our overhead costs and detract from management’s ability to focus on operating our business. There can be no assurance we will be able to realize the expected cost savings of the Internalization.
We are reliant on certain transition services provided by the Former Manager under the Transition Services Agreement, and may not find a suitable provider for these transition services if the Former Manager no longer provides the transition services to which we are entitled under the Transition Services Agreement.
We remain reliant on the Former Manager during the period of the Transition Services Agreement, and the loss of these transition services could adversely affect our operations. We are subject to the risk that the Former Manager will default on its obligation to provide the transition services to which we are entitled under the Transition Services Agreement, or that we or the Former Manager will terminate the Transition Services Agreement pursuant to its termination provisions, and that we will not be able to find a suitable replacement for the transition services provided under the Transition Services Agreement in a timely manner, at a reasonable cost or at all. In addition, the Former Manager’s liability to us if it defaults on its obligation to provide transition services to us during the transition period is limited by the terms of the Transition Services Agreement, and we may not recover the full cost of any losses related to such a default. We may also be adversely affected by operational risks, including cybersecurity attacks, that could disrupt the Former Manager’s financial, accounting and other data processing systems during the period of the transition services.
Uncertainty relating to macroeconomic conditions may reduce the demand for our assets, result in non-performance of contracts by our lessees or charterers, limit our ability to obtain additional capital to finance new investments, or have other unforeseen negative effects.
Uncertainty and negative trends in general economic conditions in the United States and abroad, including significant tightening of credit markets and commodity price volatility, historically have created difficult operating environments for owners and operators in the transportation industries. Many factors, including factors that are beyond our control, may impact our operating results or financial condition and/or affect the lessees and charterers that form our customer base. For some years, the world has experienced weakened economic conditions and volatility following adverse changes in global capital markets. Excess supply in oil and gas markets can put significant downward pressure on prices for these commodities, and may affect demand for assets used in production, refining and transportation of oil and gas. In the past, a significant decline in oil prices has led to lower
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offshore exploration and production budgets worldwide. These conditions have resulted in significant contraction, deleveraging and reduced liquidity in the credit markets. A number of governments have implemented, or are considering implementing, a broad variety of governmental actions or new regulations for the financial markets. In addition, limitations on the availability of capital, higher costs of capital for financing expenditures or the desire to preserve liquidity, may cause our current or prospective customers to make reductions in future capital budgets and spending.
Further, demand for our assets is related to passenger and cargo traffic growth, which in turn is dependent on general business and economic conditions. Global economic downturns could have an adverse impact on passenger and cargo traffic levels and consequently our lessees’ and charterers’ business, which may in turn result in a significant reduction in revenues, earnings and cash flows, difficulties accessing capital and a deterioration in the value of our assets. We have in the past been exposed to increased credit risk from our customers and third parties who have obligations to us, which resulted in non-performance of contracts by our lessees and adversely impacted our business, financial condition, results of operations and cash flows. We cannot assure you that similar loss events may not occur in the future.
Instability in geographies where we have assets or where we derive revenue could have a material adverse effect on our business, customers, operations and financial results.
Economic, civil, military and political uncertainty exists and may increase in regions where we operate and derive our revenue. Various countries in which we operate are experiencing and may continue to experience military action and civil and political unrest. We have assets in the emerging market economies of Eastern Europe, including some assets in Russia. In late February 2022, Russian military forces launched significant military action against Ukraine. The conflict remains ongoing and sustained conflict and disruption in the region is likely. The impact to Russia and Ukraine, as well as actions taken by other countries, including new and stricter export controls and sanctions by Canada, the United Kingdom, the European Union, the U.S. and other countries and organizations against officials, individuals, regions, and industries in Russia and Ukraine, and each country’s potential response to such sanctions, tensions and military actions, could have a material adverse effect on our business and delay or prevent us from accessing certain of our assets. We are actively monitoring the security of our remaining assets in the region.
The aviation industry has experienced periods of oversupply during which lease rates and asset values have declined, particularly during the most recent economic downturn, and any future oversupply could materially adversely affect our results of operations and cash flows.
The oversupply of a specific asset is likely to depress the lease or charter rates for and the value of that type of asset and result in decreased utilization of our assets, and the industries in which we operate have experienced periods of oversupply during which rates and asset values have declined, particularly during the most recent economic downturn. Factors that could lead to such oversupply include, without limitation:
•general demand for the type of assets that we purchase;
•general macroeconomic conditions, including market prices for commodities that our assets may serve;
•geopolitical events, including war, prolonged armed conflict and acts of terrorism;
•outbreaks of communicable diseases and natural disasters;
•governmental regulation;
•interest rates;
•the availability of credit;
•potential reduced cash flows and financial condition, including potential liquidity restraints;
•restructurings and bankruptcies of companies in the industries in which we operate, including our customers;
•manufacturer production levels and technological innovation;
•manufacturers merging or exiting the industry or ceasing to produce certain asset types;
•retirement and obsolescence of the assets that we own;
•increases in supply levels of assets in the market due to the sale or merging of operating lessors; and
•reintroduction of previously unused or dormant assets into the industries in which we operate.
These and other related factors are generally outside of our control and could lead to persistence of, or increase in, the oversupply of the types of assets that we acquire or decreased utilization of our assets, either of which could materially adversely affect our results of operations and cash flow. In addition, aviation lessees may redeliver our assets to locations where there is oversupply, which may lead to additional repositioning costs for us if we move them to areas with higher demand. Positioning expenses vary depending on geographic location, distance, rates and other factors, and may not be fully covered by drop-off charges collected from the last lessees of the equipment or pick-up charges paid by the new lessees. Positioning expenses can be significant if a large portion of our assets are returned to locations with weak demand, which could materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
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The airline industry is heavily regulated, and if we fail to comply with applicable requirements, our results of operations could suffer.
The Federal Aviation Administration (“FAA”) and equivalent regulatory agencies have increasingly focused on the need to assure that airline industry products are designed with sufficient cybersecurity controls to protect against unauthorized access or other unwanted compromise. A failure to meet these evolving expectations could negatively impact sales into the industry and expose us to legal or contractual liability.
Governmental agencies throughout the world, including the FAA, prescribe standards and qualification requirements for aircraft components, including virtually all commercial airline and general aviation products. Specific regulations vary from country to country, although compliance with FAA requirements generally satisfies regulatory requirements in other countries. If any material authorization or approval qualifying us to supply our products is revoked or suspended, then sale of the product would be prohibited by law, which would have an adverse effect on our business, financial condition and results of operations.
From time to time, the FAA or equivalent regulatory agencies in other countries propose new regulations or changes to existing regulations, which often are more stringent than existing regulations. If such proposals are adopted and enacted, we may incur significant additional costs to achieve compliance, which could have a material adverse effect on our business, financial condition and results of operations.
Recent trends by China’s aviation authority to relax restrictions on airspace may be reversed, and anticipated new regulations loosening airspace restrictions may not materialize, which could impact sales prospects in China for our commercial aerospace businesses.
The retirement or prolonged grounding of commercial aircraft could reduce our revenues and the value of any related inventory.
We sell aircraft components and replacement parts. If aircraft or engines for which we offer aircraft components and replacement parts are retired or grounded for prolonged periods of time and there are fewer aircraft that require these components or parts, our revenues may decline as well as the value of any related inventory.
Contractual defaults may adversely affect our business, prospects, financial condition, results of operations and cash flows by decreasing revenues and increasing storage, positioning, collection, recovery and lost equipment expenses.
The success of our business depends in large part on the success of the operators in the sectors in which we participate. Cash flows from our assets are substantially impacted by our ability to collect compensation and other amounts to be paid in respect of such assets from the customers with whom we enter into leases, charters or other contractual arrangements. Inherent in the nature of the leases, charters and other arrangements for the use of such assets is the risk that we may not receive, or may experience delay in realizing, such amounts to be paid. While we target the entry into contracts with credit-worthy counterparties, no assurance can be given that such counterparties will perform their obligations during the term of the leases, charters or other contractual arrangements. In addition, when counterparties default, we may fail to recover all of our assets, and the assets we do recover may be returned in damaged condition or to locations where we will not be able to efficiently lease, charter or sell them. In most cases, we maintain, or require our lessees to maintain, certain insurances to cover the risk of damages or loss of our assets. However, these insurance policies may not be sufficient to protect us against a loss.
Depending on the specific sector, the risk of contractual defaults may be elevated due to excess capacity as a result of oversupply during the most recent economic downturn. We lease assets to our customers pursuant to fixed-price contracts, and our customers then seek to utilize those assets to transport goods and provide services. If the price at which our customers receive for their transportation services decreases as a result of an oversupply in the marketplace, then our customers may be forced to reduce their prices in order to attract business (which may have an adverse effect on their ability to meet their contractual lease obligations to us), or may seek to renegotiate or terminate their contractual lease arrangements with us to pursue a lower-priced opportunity with another lessor, which may have a direct, adverse effect on us. See “-The industries in which we operate have experienced periods of oversupply during which lease rates and asset values have declined, particularly during the most recent economic downturn, and any future oversupply could materially adversely affect our results of operations and cash flows.” Any default by a material customer would have a significant impact on our profitability at the time the customer defaulted, which could materially adversely affect our operating results and growth prospects. In addition, some of our counterparties may reside in jurisdictions with legal and regulatory regimes that make it difficult and costly to enforce such counterparties’ obligations.
We acquire a high concentration of a particular type of asset, or concentrate our investments in a particular sector, and our business, prospects, financial condition, results of operations and cash flows could be adversely affected by changes in market demand or problems specific to that asset or sector.
If we acquire a high concentration of a particular asset, or concentrate our investments in a particular sector, and our business and financial results could be adversely affected by sector-specific or asset-specific factors. If the market demand for a particular asset declines, it is redesigned or replaced by its manufacturer or it experiences design or technical problems, the value and rates relating to such asset may decline, and we may be unable to lease such asset on favorable terms, if at all. Any decrease in the value and rates of our assets may have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
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We operate in highly competitive markets.
The business of acquiring aviation assets is highly competitive. Market competition for opportunities includes traditional transportation companies, commercial and investment banks, as well as a growing number of non-traditional participants, such as hedge funds, private equity funds and other private investors, including Fortress-related entities. Some of these competitors may have access to greater amounts of capital and/or to capital that may be committed for longer periods of time or may have different return thresholds than us, and thus these competitors may have certain advantages not shared by us. In addition, competitors may have incurred, or may in the future incur, leverage to finance their debt investments at levels or on terms more favorable than those available to us. Strong competition for investment opportunities could result in fewer such opportunities for us, as certain of these competitors have established and are establishing investment vehicles that target the same types of assets that we intend to purchase.
In addition, some of our competitors may have longer operating histories, greater financial resources and lower costs of capital than us, and consequently, may be able to compete more effectively in one or more of our target markets. We likely will not always be able to compete successfully with our competitors and competitive pressures or other factors may also result in significant price competition, particularly during industry downturns, which could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Our business could suffer if we fail to attract and retain management and other highly skilled personnel.
Our future success will depend on our ability to identify, hire, develop, motivate and retain highly qualified management and other personnel for all areas of the Company. Trained and experienced personnel are in high demand and may be in short supply in some areas. We may not be able to attract, develop and maintain an adequate skilled management and workforce necessary to operate our businesses and labor expenses may increase as a result of a shortage in the supply of qualified personnel. If we are unable to attract and retain such personnel, we may not be able to take advantage of acquisitions and other growth opportunities that may be presented to us and this could have a material adverse effect on our business, financial condition, liquidity and results of operations.
Certain liens may arise on our assets.
Certain of our assets are currently subject to liens under separate financing arrangements entered into by certain subsidiaries in connection with acquisitions of assets. In the event of a default under such arrangements by the applicable subsidiary, the lenders thereunder would be permitted to take possession of or sell such assets. In addition, our currently owned assets and assets that we purchase in the future may be subject to other liens based on the industry practices relating to such assets. Until they are discharged, these liens could impair our ability to repossess, re-lease or sell our assets, and to the extent our lessees or charterers do not comply with their obligations to discharge any liens on the applicable assets, we may find it necessary to pay the claims secured by such liens in order to repossess such assets. Such payments could materially adversely affect our operating results and growth prospects.
The values of our assets may fluctuate due to various factors.
The fair market values of our assets may decrease or increase depending on a number of factors, including the prevailing level of charter or lease rates from time to time, general economic and market conditions affecting our target markets, type and age of assets, supply and demand for assets, competition, new governmental or other regulations and technological advances, all of which could impact our profitability and our ability to lease, develop, operate, or sell such assets. In addition, our assets depreciate as they age and may generate lower revenues and cash flows. We must be able to replace such older, depreciated assets with newer assets, or our ability to maintain or increase our revenues and cash flows will decline. In addition, if we dispose of an asset for a price that is less than the depreciated book value of the asset on our balance sheet or if we determine that an asset’s value has been impaired, we will recognize a related charge in our consolidated statement of operations and such charge could be material.
We may not generate a sufficient amount of cash or generate sufficient free cash flow to fund our operations or repay our indebtedness.
Our ability to make payments on our indebtedness as required depends on our ability to generate cash flow in the future. This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If we do not generate sufficient free cash flow to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timeliness and amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Furthermore, our ability to refinance would depend upon the condition of the finance and credit markets. Our inability to generate sufficient free cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms or on a timely basis, would materially affect our business, financial condition and results of operations.
Our use of joint ventures or partnerships may present unforeseen obstacles or costs.
We have acquired and may in the future acquire interests in certain assets in cooperation with third-party partners or co-investors through jointly-owned acquisition vehicles, joint ventures or other structures. In these co-investment situations, our ability to
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control the management of such assets depends upon the nature and terms of the joint arrangements with such partners and our relative ownership stake in the asset, each of which will be determined by negotiation at the time of the investment. . Such arrangements present risks not present with wholly-owned assets, such as the possibility that a co-investor becomes bankrupt, develops business interests or goals that conflict with our interests and goals in respect of the assets, all of which could materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
In addition, we expect to utilize third-party contractors to perform services and functions related to the operation and leasing of our assets. These functions may include billing, collections, recovery and asset monitoring. Because we do not directly control these third parties, there can be no assurance that the services they provide will be delivered at a level commensurate with our expectations, or at all. The failure of any such third-party contractors to perform in accordance with our expectations could materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
We are subject to the risks and costs of obsolescence of our assets.
Technological and other improvements expose us to the risk that certain of our assets may become technologically or commercially obsolete. For example, as manufacturers introduce technological innovations and new types of aircraft, some of our assets could become less desirable to potential lessees. Such technological innovations may increase the rate of obsolescence of existing aircraft faster than currently anticipated by us. In addition, the imposition of increased regulation regarding stringent noise or emissions restrictions may make some of our aircraft less desirable and less valuable in the marketplace. In our offshore energy business, development and construction of new, sophisticated, high-specification assets could cause our assets to become less desirable to potential charterers, and insurance rates may also increase with the age of a vessel, making older vessels less desirable to potential charterers. Any of these risks may adversely affect our ability to lease, charter or sell our assets on favorable terms, if at all, which could materially adversely affect our operating results and growth prospects.
The inability to obtain certain components from suppliers could harm our business.
Our business is affected by the availability and price of the component parts that we use to maintain our products or to manufacture products. Our ability to manage inventory and meet delivery requirements may be constrained by our suppliers’ ability to adjust delivery of long-lead time products during times of volatile demand. The supply chains for our business could also be disrupted by external events such as natural disasters, extreme weather events, pandemics, labor disputes, governmental actions and legislative or regulatory changes. As a result, our suppliers may fail to perform according to specifications when required and we may be unable to identify alternate suppliers or to otherwise mitigate the consequences of their non-performance.
Transitions to new suppliers may result in significant costs and delays, including those related to the required recertification of parts obtained from new suppliers with our customers and/or regulatory agencies. Our inability to fill our supply needs could jeopardize our ability to fulfill obligations under customer contracts, which could result in reduced revenues and profits, contract penalties or terminations, and damage to customer relationships. Further, increased costs of such components could reduce our profits if we were unable to pass along such price in-creases to our customers.
We could be negatively impacted by environmental, social, and governance (ESG) and sustainability-related matters.
Governments, investors, customers, employees and other stakeholders are increasingly focusing on corporate ESG practices and disclosures, and expectations in this area are rapidly evolving. We have announced, and may in the future announce, sustainability-focused investments, partnerships and other initiatives and goals. These initiatives, aspirations, targets or objectives reflect our current plans and aspirations and are not guarantees that we will be able to achieve them. Our efforts to accomplish and accurately report on these initiatives and goals present numerous operational, regulatory, reputational, financial, legal, and other risks, any of which could have a material negative impact, including on our reputation and stock price.
In addition, the standards for tracking and reporting on ESG matters are relatively new, have not been harmonized and continue to evolve. Our selection of disclosure frameworks that seek to align with various voluntary reporting standards may change from time to time and may result in a lack of comparative data from period to period. Moreover, our processes and controls may not always align with evolving voluntary standards for identifying, measuring, and reporting ESG metrics, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals. In this regard, the criteria by which our ESG practices and disclosures are assessed may change due to the quickly evolving landscape, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. The increasing attention to corporate ESG initiatives could also result in increased investigations and litigation or threats thereof. If we are unable to satisfy such new criteria, investors may conclude that our ESG and sustainability practices are inadequate. If we fail or are perceived to have failed to achieve previously announced initiatives or goals or to accurately disclose our progress on such initiatives or goals, our reputation, business, financial condition and results of operations could be adversely impacted.
We may be affected by fluctuating prices for fuel and energy.
Volatility in energy prices could have a significant effect on a variety of items including, but not limited to, the economy and demand for transportation services.
International, political, and economic factors, events and conditions, including current sanctions against Russia related to its invasion of Ukraine, affect the volatility of fuel prices and supplies. Weather can also affect fuel supplies and limit domestic
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refining capacity. A severe shortage of, or disruption to, domestic fuel supplies could have a material adverse effect on our results of operations, financial condition, and liquidity.
Our assets generally require routine maintenance, and we may be exposed to unforeseen maintenance costs.
We may be exposed to unforeseen maintenance costs for our assets associated with a lessee’s or charterer’s failure to properly maintain the asset. We enter into leases and charters with respect to some of our assets pursuant to which the lessees are primarily responsible for many obligations, which generally include complying with all governmental requirements applicable to the lessee or charterer, including operational, maintenance, government agency oversight, registration requirements and other applicable directives. Failure of a lessee or charterer to perform required maintenance during the term of a lease or charter could result in a decrease in value of an asset, an inability to re-lease or charter an asset at favorable rates, if at all, or a potential inability to utilize an asset. Maintenance failures would also likely require us to incur maintenance and modification costs upon the termination of the applicable lease or charter; such costs to restore the asset to an acceptable condition prior to re-leasing, charter or sale could be substantial. Any failure by our lessees or charterers to meet their obligations to perform required scheduled maintenance or our inability to maintain our assets could materially adversely affect our business, prospects, financial condition, results of operations and cash flows.
Some of our customers operate in highly regulated industries and changes in laws or regulations, including laws with respect to international trade, may adversely affect our ability to lease, charter or sell our assets.
Some of our customers operate in highly regulated industries such as aviation and offshore energy. A number of our contractual arrangements-for example, our leasing aircraft engines or offshore energy equipment to third-party operators-require the operator (our customer) to obtain specific governmental or regulatory licenses, consents or approvals. These include consents for certain payments under such arrangements and for the export, import or re-export of the related assets. Failure by our customers or, in certain circumstances, by us, to obtain certain licenses and approvals could negatively affect our ability to conduct our business. In addition, the shipment of goods, services and technology across international borders subjects the operation of our assets to international trade laws and regulations. Moreover, many countries, including the United States, control the export and re-export of certain goods, services and technology and impose related export recordkeeping and reporting obligations. Governments also may impose economic sanctions against certain countries, persons and other entities that may restrict or prohibit transactions involving such countries, persons and entities. If any such regulations or sanctions affect the asset operators that are our customers, our business, prospects, financial condition, results of operations and cash flows may be materially adversely affected.
Certain of our assets are subject to purchase options held by the charterer or lessee of the asset which, if exercised, could reduce the size of our asset base and our future revenues.
We have granted purchase options to the charterers and lessees of certain of our assets. The market values of these assets may change from time to time depending on a number of factors, such as general economic and market conditions affecting the industries in which we operate, competition, cost of construction, governmental or other regulations, technological changes and prevailing levels of charter or lease rates from time to time. The purchase price under a purchase option may be less than the asset’s market value at the time the option may be exercised. In addition, we may not be able to obtain a replacement asset for the price at which the asset is sold. In such cases, our business, prospects, financial condition, results of operations and cash flows may be materially adversely affected.
The profitability of our offshore energy assets may be impacted by the profitability of the offshore oil and gas industry generally, which is significantly affected by, among other things, volatile oil and gas prices.
Demand for assets in the offshore energy business and our ability to secure charter contracts for our assets at favorable charter rates following expiry or termination of existing charters will depend, among other things, on the level of activity in the offshore oil and gas industry. The offshore oil and gas industry is cyclical and volatile, and demand for oil-service assets depends on, among other things, the level of development and activity in oil and gas exploration, as well as the identification and development of oil and gas reserves and production in offshore areas worldwide. The availability of high quality oil and gas prospects, exploration success, relative production costs, the stage of reservoir development, political concerns and regulatory requirements all affect the level of activity for charterers of oil-service vessels. Accordingly, oil and gas prices and market expectations of potential changes in these prices significantly affect the level of activity and demand for oil-service assets. Oil and gas prices can be extremely volatile and are affected by numerous factors beyond our control, such as: worldwide demand for oil and gas; costs of exploring, developing, producing and delivering oil and gas; expectations regarding future energy prices; the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and impact pricing; the level of production in non-OPEC countries; governmental regulations and policies regarding development of oil and gas reserves; local and international political, economic and weather conditions; domestic and foreign tax or trade policies; political and military conflicts in oil-producing and other countries; and the development and exploration of alternative fuels. Any reduction in the demand for our assets due to these or other factors could materially adversely affect our operating results and growth prospects.
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We may not be able to renew or obtain new or favorable charters or leases, which could adversely affect our business, prospects, financial condition, results of operations and cash flows.
Our operating leases are subject to greater residual risk than direct finance leases because we will own the assets at the expiration of an operating lease term and we may be unable to renew existing charters or leases at favorable rates, or at all, or sell the leased or chartered assets, and the residual value of the asset may be lower than anticipated. In addition, our ability to renew existing charters or leases or obtain new charters or leases will also depend on prevailing market conditions, and upon expiration of the contracts governing the leasing or charter of the applicable assets, we may be exposed to increased volatility in terms of rates and contract provisions. For example, we do not currently have long-term charters for our construction support vessel and our ROV support vessel. Likewise, our customers may reduce their activity levels or seek to terminate or renegotiate their charters or leases with us. If we are not able to renew or obtain new charters or leases in direct continuation, or if new charters or leases are entered into at rates substantially below the existing rates or on terms otherwise less favorable compared to existing contractual terms, or if we are unable to sell assets for which we are unable to obtain new contracts or leases, our business, prospects, financial condition, results of operations and cash flows could be materially adversely affected.
Litigation to enforce our contracts and recover our assets has inherent uncertainties that are increased by the location of our assets in jurisdictions that have less developed legal systems.
While some of our contractual arrangements are governed by New York law and provide for the non-exclusive jurisdiction of the courts located in the state of New York, our ability to enforce our counterparties’ obligations under such contractual arrangements is subject to applicable laws in the jurisdiction in which enforcement is sought. While some of our existing assets are used in specific jurisdictions, transportation and aviation assets by their nature generally move throughout multiple jurisdictions in the ordinary course of business. As a result, it is not possible to predict, with any degree of certainty, the jurisdictions in which enforcement proceedings may be commenced. Litigation and enforcement proceedings have inherent uncertainties in any jurisdiction and are expensive. These uncertainties are enhanced in countries that have less developed legal systems where the interpretation of laws and regulations is not consistent, may be influenced by factors other than legal merits and may be cumbersome, time-consuming and even more expensive. For example, repossession from defaulting lessees may be difficult and more expensive in jurisdictions whose laws do not confer the same security interests and rights to creditors and lessors as those in the United States and where the legal system is not as well developed. As a result, the remedies available and the relative success and expedience of collection and enforcement proceedings with respect to the owned assets in various jurisdictions cannot be predicted. To the extent more of our business shifts to areas outside of the United States and Europe, such as Asia and the Middle East, it may become more difficult and expensive to enforce our rights and recover our assets.
Our international operations involve additional risks, which could adversely affect our business, prospects, financial condition, results of operations and cash flows.
We and our customers operate in various regions throughout the world. As a result, we may, directly or indirectly, be exposed to political and other uncertainties, including risks of:
•terrorist acts, armed hostilities, war and civil disturbances;
•acts of piracy;
•potential cybersecurity attacks;
•significant governmental influence over many aspects of local economies;
•seizure, nationalization or expropriation of property or equipment;
•repudiation, nullification, modification or renegotiation of contracts;
•limitations on insurance coverage, such as war risk coverage, in certain areas;
•political unrest;
•foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;
•the inability to repatriate income or capital;
•complications associated with repairing and replacing equipment in remote locations;
•import-export quotas, wage and price controls, imposition of trade barriers;
•U.S. and foreign sanctions or trade embargoes;
•restrictions on the transfer of funds into or out of countries in which we operate;
•compliance with U.S. Treasury sanctions regulations restricting doing business with certain nations or specially designated nationals;
•regulatory or financial requirements to comply with foreign bureaucratic actions;
•compliance with applicable anti-corruption laws and regulations;
•changing taxation policies, including confiscatory taxation;
•other forms of government regulation and economic conditions that are beyond our control; and
•governmental corruption.
Any of these or other risks could adversely impact our customers’ international operations which could materially adversely impact our operating results and growth opportunities.
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We may make acquisitions in emerging markets throughout the world, and investments in emerging markets are subject to greater risks than developed markets and could adversely affect our business, prospects, financial condition, results of operations and cash flows.
To the extent that we acquire assets in emerging markets-which we may do throughout the world-additional risks may be encountered that could adversely affect our business. Emerging market countries have less developed economies and infrastructure and are often more vulnerable to economic and geopolitical challenges and may experience significant fluctuations in gross domestic product, interest rates and currency exchange rates, as well as civil disturbances, government instability, nationalization and expropriation of private assets and the imposition of taxes or other charges by government authorities. In addition, the currencies in which investments are denominated may be unstable, may be subject to significant depreciation and may not be freely convertible or may be subject to the imposition of other monetary or fiscal controls and restrictions.
Emerging markets are still in relatively early stages of their development and accordingly may not be highly or efficiently regulated. Moreover, emerging markets tend to be shallower and less liquid than more established markets which may adversely affect our ability to realize profits from our assets in emerging markets when we desire to do so or receive what we perceive to be their fair value in the event of a realization. In some cases, a market for realizing profits from an investment may not exist locally. In addition, issuers based in emerging markets are not generally subject to uniform accounting and financial reporting standards, practices and requirements comparable to those applicable to issuers based in more developed countries, thereby potentially increasing the risk of fraud and other deceptive practices. Settlement of transactions may be subject to greater delay and administrative uncertainties than in developed markets and less complete and reliable financial and other information may be available to investors in emerging markets than in developed markets. In addition, economic instability in emerging markets could adversely affect the value of our assets subject to leases or charters in such countries, or the ability of our lessees or charters, which operate in these markets, to meet their contractual obligations. As a result, lessees or charterers that operate in emerging market countries may be more likely to default under their contractual obligations than those that operate in developed countries. Liquidity and volatility limitations in these markets may also adversely affect our ability to dispose of our assets at the best price available or in a timely manner.
As we have and may continue to acquire assets located in emerging markets throughout the world, we may be exposed to any one or a combination of these risks, which could adversely affect our operating results.
We are actively evaluating potential acquisitions of assets and operating companies in other aviation sectors which could result in additional risks and uncertainties for our business and unexpected regulatory compliance costs.
While our existing portfolio primarily consists of assets in the aviation sector, we are actively evaluating potential acquisitions of assets and operating companies in sectors of the aviation market in which we do not currently operate and we plan to be flexible as other attractive opportunities arise over time. To the extent we make acquisitions in other sectors, we will face numerous risks and uncertainties, including risks associated with the required investment of capital and other resources and with combining or integrating operational and management systems and controls. Entry into certain lines of business may subject us to new laws and regulations and may lead to increased litigation and regulatory risk. Many types of transportation assets, including certain aviation assets, are subject to registration requirements by U.S. governmental agencies, as well as foreign governments if such assets are to be used outside of the United States. Failing to register the assets, or losing such registration, could result in substantial penalties, forced liquidation of the assets and/or the inability to operate and, if applicable, lease the assets. We may need to incur significant costs to comply with the laws and regulations applicable to any such new acquisition. The failure to comply with these laws and regulations could cause us to incur significant costs, fines or penalties or require the assets to be removed from service for a period of time resulting in reduced income from these assets. In addition, if our acquisitions in other sectors produce insufficient revenues, or produce investment losses, or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected, and our reputation and business may be harmed.
The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing operational flexibility and creating default risks.
The agreements governing our indebtedness, including, but not limited to, the indentures governing our senior unsecured notes due 2027, 2028, 2030, 2031, 2032 and 2033 (“Senior Notes”) and our third amended and restated revolving credit facility (the “Revolving Credit Facility”), contain covenants that place restrictions on us and our subsidiaries. The indentures governing our Senior Notes and the Revolving Credit Facility restrict among other things, our and certain of our subsidiaries’ ability to:
•merge, consolidate or transfer all, or substantially all, of our assets;
•incur additional debt or issue preferred shares;
•make certain investments or acquisitions;
•create liens on our or our subsidiaries’ assets;
•sell assets;
•make distributions on or repurchase our shares;
•enter into transactions with affiliates; and
•create dividend restrictions and other payment restrictions that affect our subsidiaries.
These covenants could impair our ability to grow our business, take advantage of attractive business opportunities, pay dividends on our ordinary shares or successfully compete. A breach of any of these covenants could result in an event of default.
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Cross-default provisions in our debt agreements could cause an event of default under one debt agreement to trigger an event of default under our other debt agreements. Upon the occurrence of an event of default under any of our debt agreements, the lenders or holders thereof could elect to declare all outstanding debt under such agreements to be immediately due and payable.
Terrorist attacks or other hostilities could negatively impact our operations and our profitability and may expose us to liability and reputational damage.
Terrorist attacks may negatively affect our operations. Such attacks have contributed to economic instability in the United States and elsewhere, and further acts of terrorism, violence or war could similarly affect world trade and the industries in which we and our customers operate. In addition, terrorist attacks or hostilities may directly impact airports or aircraft or our physical facilities or those of our customers. In addition, it is also possible that our assets could be involved in a terrorist attack or other hostilities. The consequences of any terrorist attacks or hostilities are unpredictable, and we may not be able to foresee events that could have a material adverse effect on our operations. Although our lease and charter agreements generally require the counterparties to indemnify us against all damages arising out of the use of our assets, and we carry insurance to potentially offset any costs in the event that our customer indemnifications prove to be insufficient, our insurance does not cover certain types of terrorist attacks, and we may not be fully protected from liability or the reputational damage that could arise from a terrorist attack which utilizes our assets.
Projects in the aerospace products and services sector are exposed to a variety of unplanned interruptions which could cause our results of operations to suffer.
Projects in the aerospace products and services sector are exposed to unplanned interruptions caused by breakdown or failure of equipment, aging infrastructure, employee error or contractor or subcontractor failure, limitations that may be imposed by equipment conditions or environmental, safety or other regulatory requirements, fuel supply or fuel transportation reductions or interruptions, labor or legal disputes, difficulties with the implementation or operation of information systems, power outages, pipeline or electricity line ruptures, catastrophic events, such as hurricanes, cyclones, earthquakes, landslides, floods, explosions, fires, or other disasters. Any equipment or system outage or constraint can, among other things, reduce sales, increase costs and affect the ability to meet regulatory service metrics, customer expectations and regulatory reliability and security requirements. Operational disruption, as well as supply disruption, and increased government oversight could adversely impact the cash flows available from these assets. In addition, the cost of repairing or replacing damaged assets could be considerable. Repeated or prolonged interruption may result in temporary or permanent loss of customers, substantial litigation or penalties for regulatory or contractual non-compliance, and any loss from such events may not be recoverable under relevant insurance policies. Although we believe that we are adequately insured against these types of events, no assurance can be given that the occurrence of any such event will not materially adversely affect us.
Our leases and charters typically require payments in U.S. dollars, but many of our customers operate in other currencies; if foreign currencies devalue against the U.S. dollar, our lessees or charterers may be unable to meet their payment obligations to us in a timely manner.
Our current leases and charters typically require that payments be made in U.S. dollars. If the currency that our lessees or charterers typically use in operating their businesses devalues against the U.S. dollar, our lessees or charterers could encounter difficulties in making payments to us in U.S. dollars. Furthermore, many foreign countries have currency and exchange laws regulating international payments that may impede or prevent payments from being paid to us in U.S. dollars. Future leases or charters may provide for payments to be made in euros or other foreign currencies. Any change in the currency exchange rate that reduces the amount of U.S. dollars obtained by us upon conversion of future lease payments denominated in euros or other foreign currencies, may, if not appropriately hedged by us, have a material adverse effect on us and increase the volatility of our earnings.
Our inability to obtain sufficient capital would constrain our ability to grow our portfolio and to increase our revenues.
Our business is capital intensive, and we have used and may continue to employ leverage to finance our operations. Accordingly, our ability to successfully execute our business strategy and maintain our operations depends on the availability and cost of debt and equity capital. Additionally, our ability to borrow against our assets is dependent, in part, on the appraised value of such assets. If the appraised value of such assets declines, we may be required to reduce the principal outstanding under our debt facilities or otherwise be unable to incur new borrowings.
We can give no assurance that the capital we need will be available to us on favorable terms, or at all. Our inability to obtain sufficient capital, or to renew or expand our credit facilities, could result in increased funding costs and would limit our ability to:
•meet the terms and maturities of our existing and future debt facilities;
•purchase new assets or refinance existing assets;
•fund our working capital needs and maintain adequate liquidity; and
•finance other growth initiatives.
In addition, we conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act of 1940 (the “Investment Company Act”). As such, certain forms of financing such as finance leases may not be available to us. Please see “- If we are deemed an “investment company” under the Investment Company Act, it could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.”
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The effects of various environmental regulations may negatively affect the industries in which we operate which could have a material adverse effect on our financial condition, results of operations and cash flows.
We are subject to federal, state, local and foreign laws and regulations relating to the protection of the environment, including those governing the discharge of pollutants to air and water, the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites and noise and emission levels and greenhouse gas emissions. Legislative and regulatory measures currently under consideration or being implemented by government authorities to address climate change could require reductions in our greenhouse gas or other emissions, establish a carbon tax or increase fuel or energy taxes. These legal requirements are expected to result in increased capital expenditures and compliance costs, and could result in higher costs and may require us to acquire emission credits or carbon offsets. These costs and restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our operations. The inconsistent international, regional and/or national requirements associated with climate change regulations also create economic and regulatory uncertainty.
Under some environmental laws in the United States and certain other countries, strict liability may be imposed on the owners or operators of assets, which could render us liable for environmental and natural resource damages without regard to negligence or fault on our part. We could incur substantial costs, including cleanup costs, fines and third-party claims for property damage and personal injury, as a result of violations of or liabilities under environmental laws and regulations in connection with our or our lessee’s or charterer’s current or historical operations, any of which could have a material adverse effect on our results of operations and financial condition. In addition, a variety of new legislation is being enacted, or considered for enactment, at the federal, state and local levels relating to greenhouse gas emissions and climate change. While there has historically been a lack of consistent climate change legislation, as climate change concerns continue to grow, further legislation and regulations are expected to continue in areas such as greenhouse gas emissions control, emission disclosure requirements and building codes or other infrastructure requirements that impose energy efficiency standards. Government mandates, standards or regulations intended to mitigate or reduce greenhouse gas emissions or projected climate change impacts could result in increased energy and transportation costs, and increased compliance expenses and other financial obligations to meet permitting or development requirements that we may be unable to fully recover (due to market conditions or other factors), any of which could result in reduced profits and adversely affect our results of operations. While we typically maintain liability insurance coverage and typically require our lessees to provide us with indemnity against certain losses, the insurance coverage is subject to large deductibles, limits on maximum coverage and significant exclusions and may not be sufficient or available to protect against any or all liabilities and such indemnities may not cover or be sufficient to protect us against losses arising from environmental damage. In addition, changes to environmental standards or regulations in the industries in which we operate could limit the economic life of the assets we acquire or reduce their value, and also require us to make significant additional investments in order to maintain compliance, which would negatively impact our cash flows and results of operations.
The discontinuation of the LIBOR benchmark interest rate may have an impact on our business.
On July 27, 2017, the U.K. Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR rates after 2021. On November 30, 2020, ICE Benchmark Administration, or the IBA, the administrator of LIBOR, with the support of the United States Federal Reserve and the FCA, announced plans to consult on ceasing publication of LIBOR on December 31, 2021, for only the one-week and two-month LIBOR tenors, and on June 30, 2023, for all other LIBOR tenors. The U.S. Federal Reserve concurrently issued a statement advising banks to stop new LIBOR issuances by the end of 2021. The IBA ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021, and the remaining USD LIBOR settings after June 30, 2023, other than certain USD LIBOR settings that are expected to continue to be published under a synthetic methodology until September 2024.
In the United States, the Alternative Reference Rate Committee (“ARRC”), a group of diverse private-market participants assembled by the Federal Reserve Board and the Federal Reserve Bank of New York, was tasked with identifying alternative reference rates to replace LIBOR. The Secured Overnight Finance Rate (“SOFR”) has emerged as the ARRC's preferred alternative rate for LIBOR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities in the repurchase agreement market. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates.
A cyberattack that bypasses our information technology (“IT”), security systems or the IT security systems of our third-party providers, causing an IT security breach, may lead to a disruption of our IT systems and the loss of business information which may hinder our ability to conduct our business effectively and may result in lost revenues and additional costs.
Parts of our business depend on the secure operation of our IT systems and the IT systems of our third-party providers to manage, process, store, and transmit information associated with aircraft leasing. We have, from time to time, experienced threats to our data and systems, including malware and computer virus attacks. A cyberattack that bypasses our IT security systems or the IT security systems of our third-party providers, causing an IT security breach, could adversely impact our daily operations and lead to the loss of sensitive information, including our own proprietary information and that of our customers, suppliers and employees. Such losses could harm our reputation and result in competitive disadvantages, litigation, regulatory enforcement actions, lost revenues, additional costs and liabilities. While we devote substantial resources to maintaining adequate levels of cybersecurity, our resources and technical sophistication may not be adequate to prevent all types of cyberattacks.
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If we are deemed an “investment company” under the Investment Company Act, it could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We conduct our operations so that neither we nor any of our subsidiaries are required to register as an investment company under the Investment Company Act. Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Excluded from the term “investment securities,” among other things, are U.S. government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company for certain privately-offered investment vehicles set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.
We are a holding company that is not an investment company because we are engaged in the business of holding securities of our wholly-owned and majority-owned subsidiaries, which are engaged in transportation and related businesses which lease assets pursuant to operating leases and finance leases. The Investment Company Act may limit our and our subsidiaries’ ability to enter into financing leases and engage in other types of financial activity because less than 40% of the value of our and our subsidiaries’ total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis can consist of “investment securities.”
If we or any of our subsidiaries were required to register as an investment company under the Investment Company Act, the registered entity would become subject to substantial regulation that would significantly change our operations, and we would not be able to conduct our business as described in this report. We have not obtained a formal determination from the SEC as to our status under the Investment Company Act and, consequently, any violation of the Investment Company Act would subject us to material adverse consequences.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs are governed by our Articles, the Companies Act (As Revised) of the Cayman Islands (the ‘‘Cayman Companies Act’’) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a federal court of the United States.
We have been advised by Maples and Calder (Cayman) LLP, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (1) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (2) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
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Risks Related to Taxation
We expect the Company to be a passive foreign investment company (“PFIC”) and it could be a controlled foreign corporation (“CFC”) for U.S. federal income tax purposes, which may result in adverse tax considerations for U.S. shareholders.
We expect the Company to be treated as a PFIC and it could be treated as a CFC for U.S. federal income tax purposes. If you are a U.S. person and do not make a valid qualified electing fund (“QEF”) election with respect to us and each of our PFIC subsidiaries, then, unless we are a CFC and you own 10% or more of our shares (by vote or value), you would generally be subject to special deferred tax with respect to certain distributions on our shares, any gain realized on a disposition of our shares, and certain other events. The effect of this deferred tax could be materially adverse to you. Alternatively, if you are such a shareholder and make a valid QEF election for us and each of our PFIC subsidiaries, or if we are a CFC and you own 10% or more of our shares (by vote or value), you will generally not be subject to those taxes, but could recognize taxable income in a taxable year with respect to our shares in excess of any distributions that we make to you in that year, thus giving rise to so called “phantom income” and to a potential out-of-pocket tax liability. No assurances can be given that any given shareholder will be able to make a valid QEF election with respect to us or our PFIC subsidiaries. See “U.S. Federal Income Tax Considerations —Considerations for U.S. Holders—PFIC Status and Related Tax Considerations.”
Assuming we are a PFIC, distributions made by us to a U.S. person will generally not be eligible for taxation at reduced tax rates generally applicable to “qualified dividends” paid by certain U.S. corporations and “qualified foreign corporations” to individuals. The more favorable rates applicable to other corporate dividends could cause individuals to perceive investment in our shares to be relatively less attractive than investment in the shares of other corporations, which could adversely affect the value of our shares.
Investors should consult their tax advisors regarding the potential impact of these rules on their investment in us.
To the extent we recognize income treated as effectively connected with a trade or business in the United States, we would be subject to U.S. federal income taxation on a net income basis, which could adversely affect our business and result in decreased cash available for distribution to our shareholders.
If we are treated as engaged in a trade or business in the United States, the portion of our net income, if any, that is “effectively connected” with such trade or business would be subject to U.S. federal income taxation at maximum corporate rates, currently 21%. In addition, we may be subject to an additional U.S. federal branch profits tax on our effectively connected earnings and profits at a rate of 30%. The imposition of such taxes could adversely affect our business and would result in decreased cash available for distribution to our shareholders. Although we (or one or more of our non-U.S. corporate subsidiaries) are expected to be treated as engaged in a U.S. trade or business, it is currently expected that only a small portion of our taxable income will be treated as effectively connected with such U.S. trade or business. However, no assurance can be given that the amount of effectively connected income will not be greater than currently expected, whether due to a change in our operations or otherwise.
If there is not sufficient trading in our shares, or if 50% of our shares are held by certain 5% shareholders, we could lose our eligibility for an exemption from U.S. federal income taxation on rental income from our aircraft or ships used in “international traffic” and could be subject to U.S. federal income taxation which would adversely affect our business and result in decreased cash available for distribution to our shareholders.
We expect that we will be eligible for an exemption under Section 883 of the Internal Revenue Code of 1986, as amended (the “Code”), which provides an exemption from U.S. federal income taxation with respect to rental income derived from aircraft and ships used in international traffic by certain foreign corporations. No assurances can be given that we will continue to be eligible for this exemption as changes in our ownership or the amount of our shares that are traded could cause us to cease to be eligible for such exemption. To qualify for this exemption in respect of rental income, the lessor of the aircraft or ships must be organized in a country that grants a comparable exemption to U.S. lessors. The Cayman Islands and the Marshall Islands grant such exemptions. Additionally, certain other requirements must be satisfied. We can satisfy these requirements in any year if, for more than half the days of such year, our shares are primarily and regularly traded on a recognized exchange and certain shareholders, each of whom owns 5% or more of our shares (applying certain attribution rules), do not collectively own more than 50% of our shares. Our shares will be considered to be primarily and regularly traded on a recognized exchange in any year if: (i) the number of trades in our shares effected on such recognized stock exchanges exceed the number of our shares (or direct interests in our shares) that are traded during the year on all securities markets; (ii) trades in our shares are effected on such stock exchanges in more than de minimis quantities on at least 60 days during every calendar quarter in the year; and (iii) the aggregate number of our shares traded on such stock exchanges during the taxable year is at least 10% of the average number of our shares outstanding in that class during that year. If we were not eligible for the exemption under Section 883 of the Code, we expect that our U.S. source rental income would generally be subject to U.S. federal taxation, on a gross income basis, at a rate of not in excess of 4% as provided in Section 887 of the Code. If, contrary to expectations, we or certain of our non-U.S. subsidiaries did not comply with certain administrative guidelines of the U.S. Internal Revenue Service (the “IRS”), such that 90% or more of the U.S. source rental income of the Company or any of such subsidiaries were attributable to the activities of personnel based in the United States (in the case of bareboat leases), or from “regularly scheduled transportation” as defined in such administrative guidelines (in the case of time charter leases), our, or such subsidiary’s, U.S. source rental income would be treated as income effectively connected with the conduct of a trade or business in the United States. In such case, such U.S. source rental income would be subject to U.S. federal income taxation at the maximum corporate rate as well as state and local taxation. In addition, the Company or such subsidiary would be subject to the U.S. federal branch profits tax on its effectively
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connected earnings and profits at a rate of 30%. The imposition of such taxes could adversely affect our business and would result in decreased cash available for distribution to our shareholders.
We or our subsidiaries may become subject to increased and/or unanticipated tax liabilities that may have a material adverse effect on our results of operations.
Some of our subsidiaries are subject to income, withholding or other taxes in certain non-U.S. jurisdictions by reason of their jurisdiction of incorporation, activities and operations, where their assets are used or where the lessees of their assets (or others in possession of their assets) are located, and it is also possible that taxing authorities in any such jurisdictions could assert that we or our subsidiaries are subject to greater taxation than we currently face or otherwise anticipate. Further, the Organisation for Economic Co-operation and Development (the “OECD”) is conducting a project focused on base erosion and profit shifting in international structures, which seeks to establish certain international standards for taxing the worldwide income of multinational companies. In addition, the OECD is working on a “BEPS 2.0” initiative, which is aimed at (i) shifting taxing rights to the jurisdiction of the consumer and (ii) ensuring all companies pay a global minimum tax. On October 8, 2021, the OECD announced an agreement among over 140 countries delineating an implementation plan, on December 20, 2021, the OECD released model rules for the domestic implementation of a 15% global minimum tax, on December 15, 2022, the member states of the European Union unanimously voted to adopt the OECD’s minimum tax rules and phase them into national law, and on February 2, 2023 the OECD released technical guidance on the global minimum tax which was agreed by consensus of the BEPS 2.0 signatory jurisdictions. Numerous countries, including European Union member states, have enacted or are expected to enact minimum tax legislation, and other countries may enact such legislation in the future. Additionally, On December 27, 2023, Bermuda enacted a corporate tax regime with a 15% rate (the “Bermuda CIT”) and with requirements similar to those of the OECD’s minimum tax proposal. The Bermuda CIT will be effective for tax years beginning on or after January 1, 2025 (see footnote 10 to our consolidated financial statements entitled “Income Taxes” included elsewhere in this Quarterly Report). As a result of these developments, the tax laws of certain countries in which we and our affiliates do business are expected to change (and could change on a retroactive basis) and certain of such changes are expected to increase our liabilities for taxes (and possibly interest and penalties) and therefore could harm our business, cash flows, results of operations and financial position. In addition, a portion of certain of our or our non-U.S. corporate subsidiaries’ income is treated as effectively connected with a U.S. trade or business and is accordingly subject to U.S. federal income tax or may be subject to gross-basis U.S. withholding tax. It is possible that the IRS could assert that a greater portion of our or any such non-U.S. subsidiaries’ income is effectively connected income that should be subject to U.S. federal income tax or subject to withholding tax.
Risks Related to Our Shares
The market price and trading volume of our ordinary and preferred shares may be volatile, which could result in rapid and substantial losses for our shareholders.
The market price of our ordinary and preferred shares may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our ordinary and preferred shares may fluctuate and cause significant price variations to occur. If the market price of our ordinary or preferred shares declines significantly, you may be unable to resell your shares at or above your purchase price, if at all. The market price of our ordinary and preferred shares may fluctuate or decline significantly in the future. Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our shares include:
•a shift in our investor base;
•our quarterly or annual earnings, or those of other comparable companies;
•actual or anticipated fluctuations in our operating results;
•changes in accounting standards, policies, guidance, interpretations or principles;
•announcements by us or our competitors of significant investments, acquisitions or dispositions;
•the failure of securities analysts to cover our ordinary shares;
•changes in earnings estimates by securities analysts or our ability to meet those estimates;
•the operating and share price performance of other comparable companies;
•prevailing interest rates or rates of return being paid by other comparable companies and the market for securities similar to our preferred shares;
•additional issuances of preferred shares;
•whether we declare distributions on our preferred shares;
•overall market fluctuations;
•general economic conditions; and
•developments in the markets and market sectors in which we participate.
Stock markets in the United States have experienced extreme price and volume fluctuations. Market fluctuations, as well as general political and economic conditions, such as acts of terrorism, prolonged economic uncertainty, a recession or interest rate or currency rate fluctuations, could adversely affect the market price of our ordinary and preferred shares.
An increase in market interest rates may have an adverse effect on the market price of our shares.
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One of the factors that investors may consider in deciding whether to buy or sell our shares is our distribution rate as a percentage of our share price relative to market interest rates. If the market price of our shares is based primarily on the earnings and return that we derive from our investments and income with respect to our investments and our related distributions to shareholders, and not from the market value of the investments themselves, then interest rate fluctuations and capital market conditions will likely affect the market price of our shares. For instance, if market interest rates rise without an increase in our distribution rate, the market price of our shares could decrease, as potential investors may require a higher distribution yield on our shares or seek other securities paying higher distributions or interest. In addition, rising interest rates would result in increased interest expense on our outstanding and future (variable and fixed) rate debt, thereby adversely affecting cash flows and our ability to service our indebtedness and pay distributions.
We are required by Section 404 of the Sarbanes-Oxley Act to evaluate the effectiveness of our internal controls, and the outcome of that effort may adversely affect our results of operations, financial condition and liquidity.
As a public company, we are required to comply with Section 404 (“Section 404”) of the Sarbanes-Oxley Act. Section 404 requires that we evaluate the effectiveness of our internal control over financial reporting at the end of each fiscal year and to include a management report assessing the effectiveness of our internal controls over financial reporting in our Annual Report on Form 10-K for that fiscal year. Section 404 also requires an independent registered public accounting firm to attest to, and report on, management’s assessment of our internal controls over financial reporting. The outcome of our review and the report of our independent registered public accounting firm may adversely affect our results of operations, financial condition and liquidity. During the course of our review, we may identify control deficiencies of varying degrees of severity, and we may incur significant costs to remediate those deficiencies or otherwise improve our internal controls. As a public company, we are required to report control deficiencies that constitute a “material weakness” in our internal control over financial reporting. If we discover a material weakness in our internal control over financial reporting, our share price could decline and our ability to raise capital could be impaired.
Your percentage ownership in us may be diluted in the future.
Your percentage ownership in FTAI Aviation Ltd. may be diluted in the future because of equity awards that we expect will be granted to our directors, officers and employees, as well as other equity instruments such as debt and equity financing.
Our board of directors has adopted the Incentive Plan, which provides for the grant of equity-based awards, including restricted shares, stock options, stock appreciation rights, performance awards, restricted share units, tandem awards and other equity-based and non-equity based awards, in each case the Former Manager, to the directors, officers, employees, service providers, consultants and advisors of the Former Manager who performed services for us, and to our directors, officers, employees, service providers, consultants and advisors. We initially reserved 30,000,000 ordinary shares for issuance under the Incentive Plan. As of September 30, 2024, rights relating to 112,343 of our ordinary shares were outstanding under the Incentive Plan. In the future on the date of any equity issuance by us during the remaining portion of the ten-year term of the Incentive Plan (including in respect of securities issued as consideration in an acquisition), the maximum number of shares available for issuance under the Plan will be increased to include an additional number of ordinary shares equal to ten percent (10%) of either (i) the total number of ordinary shares newly issued by us in such equity issuance or (ii) if such equity issuance relates to equity securities other than our ordinary shares, a number of our ordinary shares equal to 10% of (A) the gross capital raised in an equity issuance of equity securities other than ordinary shares during the ten-year term of the Incentive Plan, divided by (B) the fair market value of an ordinary share as of the date of such equity issuance.
Sales or issuances of our ordinary shares could adversely affect the market price of our ordinary shares.
Sales of substantial amounts of our ordinary shares in the public market, or the perception that such sales might occur, could adversely affect the market price of our ordinary shares. The issuance of our ordinary shares in connection with property, portfolio or business acquisitions or the exercise of outstanding options or otherwise could also have an adverse effect on the market price of our ordinary shares.
The incurrence or issuance of debt, which ranks senior to our ordinary shares upon our liquidation, and future issuances of equity or equity-related securities, which would dilute the holdings of our existing ordinary shareholders and may be senior to our ordinary shares for the purposes of making distributions, periodically or upon liquidation, may negatively affect the market price of our ordinary shares.
We have incurred and may in the future incur or issue debt or issue equity or equity-related securities to finance our operations, acquisitions or investments. Upon our liquidation, lenders and holders of our debt and holders of our preferred shares (if any) would receive a distribution of our available assets before ordinary shareholders. Any future incurrence or issuance of debt would increase our interest cost and could adversely affect our results of operations and cash flows. We are not required to offer any additional equity securities to existing ordinary shareholders on a preemptive basis. Therefore, additional issuances of ordinary shares, directly or through convertible or exchangeable securities warrants or options, will dilute the holdings of our existing ordinary shareholders and such issuances, or the perception of such issuances, may reduce the market price of our ordinary shares. Any preferred shares issued by us would likely have a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to ordinary shareholders. Because our decision to incur or issue debt or issue equity or equity-related securities in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. Thus, ordinary shareholders bear the risk that our future incurrence or issuance of debt or issuance of equity or equity-related securities will adversely affect the market price of our ordinary shares.
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Our determination of how much leverage to use to finance our acquisitions may adversely affect our return on our assets and may reduce funds available for distribution.
We utilize leverage to finance many of our asset acquisitions, which entitles certain lenders to cash flows prior to retaining a return on our assets. While we target using only what we believe to be reasonable leverage, our strategy does not limit the amount of leverage we may incur with respect to any specific asset. The return we are able to earn on our assets and funds available for distribution to our shareholders may be significantly reduced due to changes in market conditions, which may cause the cost of our financing to increase relative to the income that can be derived from our assets.
While we currently intend to pay regular quarterly dividends to our shareholders, we may change our dividend policy at any time.
Although we currently intend to pay regular quarterly dividends to holders of our ordinary shares, we may change our dividend policy at any time. Our net cash provided by operating activities has been less than the amount of distributions to our shareholders. The declaration and payment of dividends to holders of our ordinary shares are at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including actual results of operations, liquidity and financial condition, net cash provided by operating activities, restrictions imposed by applicable law, our taxable income, our operating expenses and other factors our board of directors deem relevant. There can be no assurance that we will continue to pay dividends in amounts or on a basis consistent with prior distributions to our investors, if at all. Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries. Our indirect intermediate holding company subsidiary FTAI LLC is currently, and may in the future be, subject to certain covenants included in its financing agreements that limit its ability to make distributions to us. In addition, our existing indebtedness does, and our future indebtedness may, limit our ability to pay dividends on our ordinary and preferred shares. Furthermore, the terms of our preferred shares generally prevent us from declaring or paying dividends on or repurchasing our ordinary shares or other junior capital unless all accrued distributions on such preferred shares have been paid in full.
Anti-takeover provisions in our Articles could delay or prevent a change in control.
Provisions in our Articles may make it more difficult and expensive for a third party to acquire control of us even if a change of control would be beneficial to the interests of our shareholders. For example, our Articles provides for a staggered board, requires advance notice for proposals by shareholders and nominations, places limitations on convening shareholder meetings, and authorizes the issuance of preferred shares that could be issued by our board of directors to thwart a takeover attempt. The market price of our shares could be adversely affected to the extent that provisions of our operating agreement discourage potential takeover attempts that our shareholders may favor.
If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our ordinary shares, our share price and trading volume could decline.
The trading market for our ordinary shares are influenced by the research and reports that industry or securities analysts publish about us or our business. If any of the analysts who cover us downgrades our ordinary units or publishes inaccurate or unfavorable research about our business, our ordinary share price may decline. If analysts cease coverage of us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our ordinary share price or trading volume to decline and our ordinary shares to be less liquid.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
Exhibit No. Description
Agreement and Plan of Merger, dated as of August 12, 2022, by and among, FTAI, the Company and FTAI Aviation Merger Sub LLC (incorporated by reference to Annex A to FTAI’s Registration Statement on Form S-4, filed on October 11, 2022).
Separation and Distribution Agreement, dated as of August 1, 2022, between FTAI Infrastructure Inc. and the Company (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed on August 1, 2022).
 Amended and Restated Memorandum and Articles of Association of the Company (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
Share Designation with respect to the 8.00% Fixed-to-Floating Series B Cumulative Perpetual Redeemable Preferred Shares (included as part of Exhibit 3.1 hereto).
Share Designation with respect to the 8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares (included as part of Exhibit 3.1 hereto).
Share Designation with respect to the 9.500% Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form 8-A, filed on March 15, 2023).
Form of Certificate representing the 8.00% Fixed-to-Floating Rate Series B Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (included as part of Exhibit 3.1 hereto).
Form of Certificate representing the 8.25% Fixed-Rate Reset Series C Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (included as part of Exhibit 3.1 hereto).
Form of certificate representing the 9.500% Fixed-Rate Reset Series D Cumulative Perpetual Redeemable Preferred Shares of FTAI Aviation Ltd. (incorporated by reference to Exhibit 4.2 of the Company’s Registration Statement on Form 8-A, filed on March 15, 2023).
Indenture, dated April 12, 2021, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 5.50% senior unsecured notes due 2028 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on April 12, 2021).
Form of global note representing the Company’s 5.50% senior unsecured notes due 2028 (included in Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on April 12, 2021).
First Supplemental Indenture, dated as of September 24, 2021, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 5.50% senior unsecured notes due 2028 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on September 24, 2021).
2028 Notes Guarantee, dated November 10, 2022 (incorporated by reference to Exhibit 4.3 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
Indenture, dated November 21, 2023, between the Company and U.S. Bank National Association, as trustee, relating to the Company’s 7.875% senior unsecured notes due 2030 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on November 22, 2023).
Form of global note representing the Company’s 7.875% senior unsecured notes due 2030 (included in Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on November 22, 2023).
Indenture, dated April 11, 2024, among Fortress Transportation and Infrastructure Investors LLC, the Company as guarantor, and U.S. Bank Trust Company, National Association, as trustee, relating to the Company’s 7.000% senior unsecured notes due 2031 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on April 11, 2024).
Form of global note representing the Company’s 7.000% senior unsecured notes due 2031 (included in Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on April 11, 2024).
Indenture, dated as of June 17, 2024, among Fortress Transportation and Infrastructure Investors LLC, FTAI Aviation Ltd. as guarantor, and U.S. Bank Trust Company, National Association, as trustee relating to the Company’s 7.000% senior unsecured notes due 2032 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on June 17, 2024).
Form of global note representing the Company’s 7.000% senior unsecured notes due 2032 (included in Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on June 17, 2024).
Indenture, dated as of October 9, 2024, among Fortress Transportation and Infrastructure Investors LLC, FTAI Aviation Ltd. as guarantor, and U.S. Bank Trust Company, National Association, as trustee relating to the Company’s 5.875% senior unsecured notes due 2033 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on October 9, 2024).
Form of global note representing the Company’s 5.875% senior unsecured notes due 2033 (included in Exhibit 4.1 of the Company’s Current Report on Form 8-K, filed on October 9, 2024).
Description of Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.15 of the Company’s Annual Report on Form 10-K, filed on February 26, 2024).
†FTAI Aviation Ltd. Nonqualified Stock Option and Incentive Award Plan, dated as of February 23, 2023 (incorporated in Exhibit 10.4 of the Company’s Annual Report on Form 10-K, filed on February 27, 2023).
†Form of FTAI Aviation Ltd. Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-4, filed on October 4, 2022).
†Form of Director Award Agreement pursuant to the FTAI Aviation Ltd. Nonqualified Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-4, filed on October 4, 2022).
†Form of Non-Director Award Agreement under the FTAI Aviation Ltd. Nonqualified Stock Option and Incentive Award Plan (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-4, filed on October 4, 2022).
†Form of Restricted Stock Unit Award Agreement under the FTAI Aviation Ltd. Nonqualified Stock Option and Incentive Award Plan (incorporated in Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q, filed on August 9, 2024).
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Exhibit No. Description
Trademark License Agreement, dated as of August 1, 2022, between Fortress Transportation and Infrastructure Investors LLC and FTAI Infrastructure Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed on August 1, 2022).
*Third Amended and Restated Credit Agreement, dated as of May 22, 2024, between the Company, the lenders and issuing banks from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent. (incorporated by reference to Exhibit 10.7 of the Company’s Quarterly Report on Form 10-Q, filed on August 9, 2024.
Revolver Guarantee, dated November 10, 2022 (incorporated by reference to Exhibit 4.4 of the Company’s Current Report on Form 8-K, filed on November 14, 2022).
*Internalization Agreement, dated May 28, 2024, by and among FTAI Aviation Ltd., FIG LLC and Fortress Worldwide Transportation and Infrastructure Master GP LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on May 28, 2024).
*Transition Services Agreement, dated May 28, 2024, by and between FTAI Aviation Ltd. and FIG LLC (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed on May 28, 2024).
†Letter Agreement, dated May 27, 2024, by and among FTAI Aviation LLC, FTAI Aviation Ltd. and Joseph P. Adams, Jr. (incorporated by reference to Exhibit 10.11 of the Company’s Quarterly Report on Form 10-Q, filed on August 9, 2024).
†Letter Agreement, dated May 27, 2024, by and among FTAI Aviation LLC, FTAI Aviation Ltd. and Eun (Angela) Nam (incorporated by reference to Exhibit 10.12 of the Company’s Quarterly Report on Form 10-Q, filed on August 9, 2024).
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
FTAI Aviation Ltd. Clawback Policy effective as of December 1, 2023 (incorporated by reference to Exhibit 10.7 of the Company’s Annual Report on Form 10-K, filed on February 26, 2024).
101 The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Changes in Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
†Management contracts and compensatory plans or arrangements.
*Certain schedules or similar attachments to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K.

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SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:
FTAI Aviation Ltd.
By:/s/ Joseph P. Adams, Jr.Date:November 12, 2024
Joseph P. Adams, Jr.
Chairman and Chief Executive Officer
By:/s/ Eun (Angela) NamDate:November 12, 2024
Eun (Angela) Nam
Chief Financial Officer and Chief Accounting Officer

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