# FTAI Aviation Ltd. (FTAI) Informational only - not investment advice. CIK: 0001590364 SIC: 7350 Services-Miscellaneous Equipment Rental & Leasing SIC breadcrumb: [Services](/division/I/) > [Business Services](/major-group/73/) > [SIC 7350 Services-Miscellaneous Equipment Rental & Leasing](/industry/7350/) Latest 10-K filed: 2026-02-27 SEC page: https://www.sec.gov/edgar/browse/?CIK=1590364 Filing source: https://www.sec.gov/Archives/edgar/data/1590364/000162828026012940/ftai-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 2507409000 | USD | 2025 | 2026-02-27 | | Net income | 501064000 | USD | 2025 | 2026-02-27 | | Assets | 4373758000 | USD | 2025 | 2026-02-27 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001590364.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | | | | | | | 335,583,000 | 708,411,000 | 1,170,896,000 | 1,734,901,000 | 2,507,409,000 | | Net income | | | -40,598,000 | -23,240,000 | -15,704,000 | 207,784,000 | -103,692,000 | -130,706,000 | -212,027,000 | 243,817,000 | 8,682,000 | 501,064,000 | | Diluted EPS | 0.15 | -0.18 | -0.26 | 0.00 | 0.07 | | | | | 2.11 | -0.32 | 4.60 | | Operating cash flow | | | 30,903,000 | 68,497,000 | 133,697,000 | 151,043,000 | 63,106,000 | -22,044,000 | -20,657,000 | 128,982,000 | -187,956,000 | -310,745,000 | | Capital expenditures | | | 57,371,000 | 116,031,000 | 229,963,000 | 331,171,000 | 264,829,000 | 157,332,000 | 144,196,000 | 6,148,000 | 9,220,000 | 27,712,000 | | Dividends paid | | | | 100,058,000 | 110,584,000 | 113,541,000 | 113,572,000 | 118,009,000 | 128,483,000 | 119,847,000 | 121,577,000 | 128,205,000 | | Assets | | | 1,547,312,000 | 1,955,806,000 | 2,638,778,000 | 3,236,922,000 | 3,387,977,000 | 4,863,854,000 | 2,429,577,000 | 2,964,685,000 | 4,037,952,000 | 4,373,758,000 | | Liabilities | | | 381,632,000 | 920,731,000 | 1,584,996,000 | 1,898,065,000 | 2,288,656,000 | 3,739,754,000 | 2,410,175,000 | 2,788,802,000 | 3,956,584,000 | 4,039,584,000 | | Stockholders' equity | | | | | | | | | | 175,349,000 | 81,368,000 | 334,174,000 | | Cash and cash equivalents | | | 68,055,000 | 59,400,000 | 99,601,000 | 226,512,000 | 121,703,000 | 138,206,000 | 33,565,000 | 90,756,000 | 115,116,000 | 300,476,000 | | Free cash flow | | | -26,468,000 | -47,534,000 | -96,266,000 | -180,128,000 | -201,723,000 | -179,376,000 | -164,853,000 | 122,834,000 | -197,176,000 | -338,457,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | | | | | | | -38.95% | -29.93% | 20.82% | 0.50% | 19.98% | | Return on equity | | | | | | | | | | 139.05% | 10.67% | 149.94% | | Return on assets | | | -2.62% | -1.19% | -0.60% | 6.42% | -3.06% | -2.69% | -8.73% | 8.22% | 0.22% | 11.46% | | Liabilities / equity | | | | | | | | | | 15.90 | 48.63 | 12.09 | | Current ratio | | | | | | | | | | 3.69 | 3.53 | 5.28 | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001590364.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2019-Q2 | 2019-06-30 | | | 0.24 | reported discrete quarter | | 2019-Q3 | 2019-09-30 | | | 0.30 | reported discrete quarter | | 2022-Q1 | 2022-03-31 | | | -2.30 | reported discrete quarter | | 2022-Q2 | 2022-06-30 | | | 0.11 | reported discrete quarter | | 2023-Q2 | 2023-03-31 | | 29,397,000 | | reported discrete quarter | | 2023-Q2 | 2023-06-30 | 274,345,000 | | | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 291,096,000 | 41,307,000 | | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 312,737,000 | 118,360,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 326,694,000 | 39,622,000 | 0.31 | reported discrete quarter | | 2024-Q2 | 2024-03-31 | | 39,622,000 | | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 443,594,000 | | -2.26 | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 465,794,000 | 86,482,000 | 0.76 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 498,819,000 | 102,448,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 502,080,000 | 102,386,000 | 0.87 | reported discrete quarter | | 2025-Q2 | 2025-03-31 | | 102,386,000 | | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 676,237,000 | | 1.57 | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 667,064,000 | 117,718,000 | 1.10 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 662,028,000 | 115,562,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 830,697,000 | 137,899,000 | 1.29 | reported discrete quarter | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - 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[HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - 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[USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1590364/000162828026029335/ftai-20260331.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high Filing date: 2026-05-01 Report date: 2026-03-31 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Aviation Ltd. (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q. Overview We are a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. We repair and rebuild engines in our maintenance facilities and with our joint venture partners, and sell or lease the engines to airlines and asset owners around the world. Our primary business model is to sell engines via exchange through our proprietary Maintenance, Repair and Exchange (“MRE”) model which is reported under our Aerospace Products segment. We also own and manage a portfolio of on- and off-lease aircraft and engines through our Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, we launched our Strategic Capital Initiative, which consists of an asset management business that manages third-party capital to invest in on-lease aircraft. We expect our primary investment activities to be through our Strategic Capital Initiative going forward. As of March 31, 2026, we had total consolidated assets of $4.5 billion and total equity of $431.7 million. Internalization of Management On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company’s management function. As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP. In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. In addition, the Former Manager was required to continue to provide the services that were reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%). Strategic Capital Initiative On December 30, 2024, we announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, allows us to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The first partnership under the initiative (the “2025 Partnership”) focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments. The 2025 Partnership, and follow-on partnerships, is the primary buyer of all future on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, provides aircraft management services to the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors. Operating Segments The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aerospace Products and (ii) Aviation Leasing. The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, directly and also through its equity method investment. Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production, and expenses relating to FTAI Power. 28 Adjusted EBITDA (Non-GAAP) Besides net income (loss), the chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance. Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, asset impairment charges, incentive allocations, depreciation and amortization expense, interest expense and dividends on preferred shares, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities, if any. 29 Results of Operations Comparison of the three months ended months ended March 31, 2026 and 2025 The following table presents our consolidated results of operations: Three Months Ended March 31, Change (in thousands) 2026 2025 Revenues Aerospace products revenue $ 522,585  $ 264,425  $ 258,160  MRE Contract revenue 221,230  100,638  120,592  Lease income 39,892  68,440  (28,548) Maintenance revenue 30,599  49,607  (19,008) Asset sales revenue 10,184  18,939  (8,755) Other revenue (1) 6,207  31  6,176  Total revenues 830,697  502,080  328,617  Expenses Cost of sales 524,268  248,714  275,554  Operating expenses 64,987  32,438  32,549  General and administrative 2,413  3,116  (703) Acquisition and transaction expenses 16,361  7,292  9,069  Depreciation and amortization 52,289  59,562  (7,273) Total expenses 660,318  351,122  309,196  Other (expense) income Interest expense (61,407) (62,040) 633  Equity in losses of unconsolidated entities (2) (2,363) (7,614) 5,251  Gain on sale to the 2025 Partnership 15,168  10,870  4,298  Other income 47,582  33,071  14,511  Total other expense (1,020) (25,713) 24,693  Income before income taxes 169,359  125,245  44,114  Provision for income taxes 31,460  22,859  8,601  Net income 137,899  102,386  35,513  Less: Dividends on preferred shares 3,709  6,115  (2,406) Less: Loss on redemption of preferred shares —  6,327  (6,327) Net income attributable to shareholders $ 134,190  $ 89,944  $ 44,246  (1)Includes servicing fees of $5,861 and $0 for the three months ended March 31, 2026 and 2025, respectively, from the 2025 Partnership. (2)Includes the profit elimination of $(10,000) and $(6,950) for the three months ended March 31, 2026 and 2025, respectively, for sales to the 2025 Partnership. 30 The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA: Three Months Ended March 31, Change (in thousands) 2026 2025 Net income attributable to shareholders $ 134,190  $ 89,944  $ 44,246  Add: Provision for income taxes 31,460  22,859  8,601  Add: Equity-based compensation expense 6,347  4,889  1,458  Add: Acquisition and transaction expenses 16,361  7,292  9,069  Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations —  6,327  (6,327) Add: Asset impairment charges —  —  —  Add: Incentive allocations —  —  —  Add: Depreciation and amortization expense (1) 59,513  68,387  (8,874) Add: Interest expense and dividends on preferred shares 65,116  68,155  (3,039) Add: Internalization fee to affiliate —  —  —  Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 20,227  41  20,186  Less: Equity in (earnings) losses of unconsolidated entities (3) (7,637) 664  (8,301) Adjusted EBITDA (non-GAAP) $ 325,577  $ 268,558  $ 57,019  (1)Includes the following items for the three months ended March 31, 2026 and 2025: (i) depreciation and amortization expense of $52,289 and $59,562, (ii) lease intangible amortization of $337 and $3,206 and (iii) amortization for lease incentives of $6,887 and $5,619, respectively. (2)Includes the following items for the three months ended March 31, 2026 and 2025: (i) net income of $7,637 and net loss of $664, (ii) interest expense of $3,496 and $0, (iii) depreciation and amortization expense of $9,067 and $158, (iv) acquisition and transaction expenses of $0 and $547, and (v) tax expense of $27 and $0, respectively. (3)Excludes the profit elimination of $10,000 and $6,950 for the three months ended March 31, 2026 and 2025, respectively, for sales to the 2025 Partnership. Revenues Comparison of the three months ended March 31, 2026 and 2025 Total revenues increased by $328.6 million, driven by the following: •Aerospace products revenue increased by $258.2 million, primarily due to a $246.8 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales. •MRE Contract revenue increased by $120.6 million, primarily due to an increase in engine and module sales made to the 2025 Partnership. •Lease income decreased by $28.5 million, primarily due to decreases in aircraft lease revenue of $24.9 million, driven by the sale of Seed Assets to the 2025 Partnership. •Maintenance revenue decreased by $19.0 million, due to decreases in aircraft maintenance revenue of $8.1 million and engine maintenance revenue of $10.9 million, both driven by a decrease in revenue generating assets on lease. Expenses Comparison of the three months ended March 31, 2026 and 2025 Total expenses increased by $309.2 million, driven by the following: •Cost of sale [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Aviation Ltd. (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes, and with Part I, Item 1A, “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K. A discussion of our cash flows for 2025 compared to 2024 is included in our Annual Report on Form 10-K for the year ended December 31, 2025, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview We are a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. We repair and rebuild engines in our maintenance facilities and with our joint venture partners, and sell or lease the engines to airlines and asset owners around the world. Our primary business model is to sell or lease engines via exchange through our proprietary Maintenance, Repair and Exchange (“MRE”) model which is reported under our Aerospace Products segment. We also own and manage a portfolio of on- and off-lease aircraft and engines through our Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, we launched our Strategic Capital Initiative, which consists of an asset management business that manages third-party capital to invest in on-lease aircraft and engines. We expect our primary investment activities to be through our Strategic Capital Initiative going forward. As of December 31, 2025, we had total consolidated assets of $4.4 billion and total equity of $334.2 million. Internalization of Management On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company’s management function. As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; and (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP. In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. In addition, the Former Manager was required to continue to provide the services that were reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%). Impact of Russia’s Invasion of Ukraine Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the three months ended March 31, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. We determined that it is unlikely that we will regain possession of the aircraft and engines that had not yet been recovered from Ukraine and Russia. As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits for the year ended December 31, 2022, to write-off the entire carrying value of leasing equipment assets that we did not expect to recover from Ukraine and Russia. As of December 31, 2025, eight aircraft and seventeen engines were still located in Russia. Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Russia is $210.7 million. We intend to pursue all of our claims under these policies. However, the timing and amount of any recoveries under these policies are uncertain. The extent of the impact of Russia’s invasion of Ukraine and the related sanctions on our results, including the ability for us to recover our leasing equipment in the region, will depend on future developments, including the duration of the conflict, sanctions and restrictions imposed by Russian and international governments, all of which remain uncertain. 27 Strategic Capital Initiative On December 30, 2024, we announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, allows us to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The first partnership under the initiative (the “2025 Partnership”) focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments. The 2025 Partnership, and follow-on partnerships, is the primary buyer of all future on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, provides aircraft management services to the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors. Operating Segments The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aerospace Products and (ii) Aviation Leasing. The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, directly and also through its equity method investment. Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production. Adjusted EBITDA (Non-GAAP) Besides net income (loss), the chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance. Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, 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, if any. 28 Results of Operations   The following table presents our consolidated results of operations: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Revenues Aerospace products revenue $ 1,600,456  $ 1,079,821  $ 454,970  $ 520,635  $ 624,851  MRE Contract revenue 335,788  —  —  335,788  —  Lease income 235,210  255,338  207,936  (20,128) 47,402  Maintenance revenue 218,499  200,809  191,347  17,690  9,462  Asset sales revenue 106,945  192,176  303,141  (85,231) (110,965) Other revenue (1) 10,511  6,757  13,502  3,754  (6,745) Total revenues 2,507,409  1,734,901  1,170,896  772,508  564,005  Expenses Cost of sales 1,349,719  825,884  502,132  523,835  323,752  Operating expenses 152,541  115,861  110,163  36,680  5,698  General and administrative 9,478  14,263  13,700  (4,785) 563  Acquisition and transaction expenses 28,587  32,296  15,194  (3,709) 17,102  Management fees and incentive allocation to affiliate —  8,449  18,037  (8,449) (9,588) Internalization fee to affiliate —  300,000  —  (300,000) 300,000  Depreciation and amortization 225,797  218,064  169,877  7,733  48,187  Asset impairment —  962  2,121  (962) (1,159) Gain on sale of assets, net —  (18,705) —  18,705  (18,705) Total expenses 1,766,122  1,497,074  831,224  269,048  665,850  Other income (expense) Interest expense (247,751) (221,721) (161,639) (26,030) (60,082) Loss on extinguishment of debt —  (17,101) —  17,101  (17,101) Equity in losses of unconsolidated entities (2) (6,818) (2,200) (1,606) (4,618) (594) Gain on sale to the 2025 Partnership 46,380  —  —  46,380  —  Other income 73,586  17,364  7,590  56,222  9,774  Total other expense (134,603) (223,658) (155,655) 89,055  (68,003) Income before income taxes 606,684  14,169  184,017  592,515  (169,848) Provision for (benefit from) income taxes 105,620  5,487  (59,800) 100,133  65,287  Net income 501,064  8,682  243,817  492,382  (235,135) Less: Dividends on preferred shares 17,243  32,763  31,795  (15,520) 968  Less: Loss on redemption of preferred shares 6,327  7,998  —  (1,671) 7,998  Net income (loss) attributable to shareholders $ 477,494  $ (32,079) $ 212,022  $ 509,573  $ (244,101) (1) Includes servicing fees of $10,150 for the year ended December 31, 2025 from the 2025 Partnership. (2) Includes the profit elimination of $(22,829) for the year ended December 31, 2025 for sales to the 2025 Partnership. 29 The following table sets forth a reconciliation of net (loss) income attributable to shareholders from continuing operations to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Net income (loss) attributable to shareholders $ 477,494  $ (32,079) $ 212,022  $ 509,573  $ (244,101) Add: Provision for (benefit from) income taxes 105,620  5,487  (59,800) 100,133  65,287  Add: Equity-based compensation expense 21,733  6,006  1,638  15,727  4,368  Add: Acquisition and transaction expenses 28,587  32,296  15,194  (3,709) 17,102  Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 6,327  25,099  —  (18,772) 25,099  Add: Asset impairment charges —  962  2,121  (962) (1,159) Add: Incentive allocations —  7,456  17,116  (7,456) (9,660) Add: Depreciation & amortization expense (1) 267,639  262,031  213,641  5,608  48,390  Add: Interest expense and dividends on preferred shares 264,994  254,484  193,434  10,510  61,050  Add: Internalization fee to affiliate —  300,000  —  (300,000) 300,000  Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 34,539  (1,892) 310  36,431  (2,202) Less: Equity in losses (earnings) of unconsolidated entities (3) (16,011) 2,200  1,606  (18,211) 594  Adjusted EBITDA (non-GAAP) $ 1,190,922  $ 862,050  $ 597,282  $ 328,872  $ 264,768  (1) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) depreciation and amortization expense of $225,797, $218,064 and $169,877, (ii) lease intangible amortization of $6,710, $15,597 and $15,126 and (iii) amortization for lease incentives of $35,132, $28,370 and $28,638, respectively. (2) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) net income of $16,011, net loss of $2,200 and $1,606, (ii) interest expense of $6,899 $0 and $0, (iii) depreciation and amortization expense of $10,932, $308 and $1,488, (iv) acquisition and transaction expense of $769, $0 and $428 and (v) tax benefit of $72, $0 and $0, respectively. (3) Excludes the profit elimination of $22,829 for the year ended December 31, 2025 for sales to the 2025 Partnership. Comparison of the years ended December 31, 2025 and 2024 Revenues Total revenues increased by $772.5 million, driven by the following: •Aerospace products revenue increased by $520.6 million, primarily due to a $499.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $4.8 million increase in other maintenance service revenues. •MRE Contract revenue increased by $335.8 million, due to engine and module sales made to the 2025 Partnership. •Asset sales revenue decreased by $85.2 million, primarily due to change in product mix of assets sold in the current period as compared to the prior period. Specifically, the number of engines sold in the prior period was higher than the current period. Expenses Total expenses increased by $269.0 million, driven by the following: •Cost of sales increased by $523.8 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. •Operating expenses increased by $36.7 million, primarily due to higher compensation and benefits expense incurred during the current year. •Internalization fee to affiliate decreased by $300.0 million relating to the Internalization effective May 28, 2024. Other expense Total other expense increased by $89.1 million due to the following: •Other income increased by $56.2 million, primarily due to a $54.3 million insurance settlement related to aircraft and engines located in Russia. •Gain on sale to the 2025 Partnership increased by $46.4 million, primarily resulting from the sale of 45 aircraft to the 2025 Partnership within the Aviation Leasing Segment. 30 •Loss on debt extinguishment decreased by $17.1 million, driven by the 2024 redemption of Senior Notes due 2025 and Senior Notes due 2027. •Interest expense increased by $26.0 million, reflecting increases in interest expense in (i) the 7.00% Senior Notes due 2032 of $26.0 million, (ii) the 5.875% Senior Notes due 2033 of $22.7 million, and (iii) the 7.00% Senior Notes due 2031 of $13.8 million. These were partially offset by decreases in interest expense in (i) the 9.75% senior notes due 2027 of $22.3 million, and (ii) the 6.5% senior notes due 2025 of $13.0 million. Provision for (benefit from) income taxes The Provision for income taxes increased $100.1 million, primarily driven by the higher income generated in the Aerospace Products segment within taxable jurisdictions for the twelve months ended December 31, 2025, and the higher income generated in the Aviation Leasing segment within taxable jurisdictions for the twelve months ended December 31, 2025. Net income (loss) Net income increased by $492.4 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $328.9 million, primarily due to the changes noted above. Comparison of the years ended December 31, 2024 and 2023 Total revenues increased by $564.0 million, driven by the following: •Aerospace products revenue increased by $624.9 million, primarily due to a $546.0 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $28.5 million increase in parts inventory sales, and other revenues of $47.7 million from the QuickTurn and LMCES acquisitions. •Lease income increased by $47.4 million, primarily due to an increase in engine lease revenue of $37.3 million and an increase in aircraft lease revenue of $17.5 million, driven by an increased number of aircraft and engines on lease. This was partially offset by a decrease of $7.3 million in the Offshore Energy business driven by one of our vessels having fewer days on-hire in 2024 compared to 2023, as well as the sale of the two vessels during 2024. •Maintenance revenue increased by $9.5 million. Engine maintenance revenue increased by $43.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $32.7 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023, partially offset by an increased number of aircraft on lease in 2024. •Asset sales revenue decreased by $111.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, three aircraft and 14 engines were sold in 2024 as compared to 13 aircraft and 41 engines sold in 2023. •Other revenue decreased by $6.7 million, primarily due to a decrease in assets with end-of-lease redelivery compensation. During 2024, one aircraft and three engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023. Expenses Total expenses increased $665.9 million, driven by the following: •Cost of sales increased by $323.8 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. This was partially offset by a decrease of $69.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. •Internalization fee to affiliate increased by $300.0 million relating to the Internalization effective May 28, 2024. •Depreciation and amortization increased by $48.2 million, primarily driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered. •Acquisition and transaction expenses increased by $17.1 million, primarily due to higher professional fees incurred in evaluating and completing strategic transactions and fees associated with the Internalization and the acquisition of LMCES in Q3 2024. •Operating expenses increased by $5.7 million, primarily due to the acquisition of LMCES in Q3 2024. •Gain on sale of assets, net increased $18.7 million driven by the sale of two vessels within the Offshore Energy business during the fourth quarter of 2024. •Management fees and incentive allocation to affiliate decreased by $9.6 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024. 31 Other income (expense) Total other expense increased by $68.0 million due to the following: •Interest expense increased by $60.1 million, reflecting an increase in the average debt outstanding of approximately $779.3 million, primarily due to increases in (i) the Senior Notes due 2030 of $414.1 million, issued in November 2023 (ii) Senior Notes due 2031 of $525.0 million, issued in April 2024 (iii) Senior Notes due 2032 of $466.7 million, issued in June 2024, (iv) Senior Notes due 2033 of $124.4 million, issued in October 2024, partially offset by decreases in the (v) Senior Notes due 2025 of $489.6 million, which were redeemed in April 2024, (vi) Senior Notes due 2027 of $189.8 million, which were fully redeemed in October 2024, and the (vii) Revolving Credit Facility of $70.4 million. •Loss on extinguishment of debt increased by $17.1 million, primarily due to the redemption of the Senior Notes due 2025 and Senior Notes due 2027. •Other income increased by $9.8 million, primarily driven by a $10.8 million insurance settlement received within our Aviation Leasing Segment. Provision for (benefit from) income taxes The Provision for income taxes increased $65.3 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from leasing and Aerospace Products activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. This increase was partially offset by the tax benefit from the Internalization fee paid to the affiliate. Net income (loss) from continuing operations Net income from continuing operations decreased by $235.1 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $264.8 million, primarily due to the changes noted above. 32 Aerospace Products Segment The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes, and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B, and V2500 commercial aircraft engines. Our engine, module, and parts sales are facilitated through a dedicated commercial maintenance program designed to focus on modular and parts repair and refurbishment of CFM56-7B and CFM56-5B engines. In addition, other serviceable used modules and parts are sold through our exclusive partnership, which is responsible for the teardown, repair, marketing, and sales of parts from our CFM56 engine pool. On December 30, 2025, the Company announced the launch of FTAI Power, a platform focused on converting CFM56 engines to power turbines. In 2023, we acquired the remaining interest in Quick Turn Engine Center LLC (“QuickTurn”), a dedicated hospital maintenance and testing facility specializing in the CFM56-7B and CFM56-5B engines. In 2024, we acquired Lockheed Martin Commercial Engine Solutions (“LMCES”) to establish permanent engine and module manufacturing capabilities. In 2025, we entered into an agreement within our MRE business to supply replacement aircraft engines and modules for the life of the 2025 Partnership. We also acquired Pacific Aerodynamic Inc. (“Pac Aero”), a specialist in CFM56 compressor blade and vane repairs, expanding our repair capabilities, and the MRE business of AerotechOPS (“ATOPS”), expanding our MRE business in Miami. Additionally, we maintain a (i) 25% equity interest in the Advanced Engine Repair joint venture, which focuses on developing innovative cost-saving programs for engine repairs, and a (ii) 50% equity interest in QuickTurn Europe, which operates as a dedicated maintenance, repair, and overhaul facility for CFM56 engines. The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Revenues Aerospace products revenue $ 1,600,456  $ 1,079,821  $ 454,970  $ 520,635  $ 624,851  MRE Contract Revenue 335,788  —  —  335,788  —  Total Revenues 1,936,244  1,079,821  454,970  856,423  624,851  Expenses Cost of sales 1,240,368  673,907  280,280  566,461  393,627  Operating expenses 34,514  23,818  20,459  10,696  3,359  Acquisition and transaction expenses 3,198  4,906  1,722  (1,708) 3,184  Depreciation and amortization 15,764  6,630  661  9,134  5,969  Total expenses 1,293,844  709,261  303,122  584,583  406,139  Other income (expense) Equity in earnings (losses) of unconsolidated entities 2,896  (1,993) (1,458) 4,889  (535) Other income 5,441  —  5,347  5,441  (5,347) Total other income (expense) 8,337  (1,993) 3,889  10,330  (5,882) Income before income taxes 650,737  368,567  155,737  282,170  212,830  Provision for (benefit from) income taxes 102,391  22,221  (24,440) 80,170  46,661  Net income attributable to shareholders $ 548,346  $ 346,346  $ 180,177  $ 202,000  $ 166,169  33 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Net income attributable to shareholders $ 548,346  $ 346,346  $ 180,177  $ 202,000  $ 166,169  Add: Provision for (benefit from) income taxes 102,391  22,221  (24,440) 80,170  46,661  Add: Equity-based compensation expense 671  309  225  362  84  Add: Acquisition and transaction expenses 3,198  4,906  1,722  (1,708) 3,184  Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations —  —  —  —  —  Add: Asset impairment charges —  —  —  —  —  Add: Incentive allocations —  —  —  —  —  Add: Depreciation and amortization expense 15,764  6,630  661  9,134  5,969  Add: Interest expense and dividends on preferred shares —  —  —  —  —  Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 3,778  (1,769) 206  5,547  (1,975) Less: Equity in (earnings) losses of unconsolidated entities (2,896) 1,993  1,458  (4,889) 535  Adjusted EBITDA (non-GAAP) $ 671,252  $ 380,636  $ 160,009  $ 290,616  $ 220,627  (1) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) net income of $2,896, net loss of $1,993 and net loss of $1,458 (ii) depreciation and amortization of $954, $224 and $1,236 (iii) acquisition and transaction expense of $0, $0, and $428 and (iv) tax benefit of $72, $0 and $0, respectively. Comparison of the years ended December 31, 2025 and 2024 Revenues Total revenues increased by $856.4 million, due to the following: •Aerospace Products revenue increased by $520.6 million, primarily due to a $499.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $4.8 million increase in other maintenance service revenues. •MRE Contract revenue increased by $335.8 million, primarily due to an increase in engine and module sales made to the 2025 Partnership. Expenses Total expenses increased by $584.6 million, due to the following: •Cost of sales increased by $566.5 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period. •Operating expenses increased by $10.7 million, primarily due to higher compensation and benefits expense due to the acquisition of LMCES. •Depreciation and amortization increased by $9.1 million due to the acquisition of LMCES in the third quarter of 2024. Provision for (benefit from) income taxes The Provision for income taxes increased by $80.2 million, primarily due to the increase in income discussed above from Aerospace Products activities in jurisdictions subject to taxes. Net income Net income increased by $202.0 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $290.6 million, primarily due to the changes noted above. Comparison of the years ended December 31, 2024 and 2023 Revenues Total Aerospace products revenue increased by $624.9 million, primarily due to a $546.0 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $28.5 million increase in parts inventory sales, and other revenues of $47.7 million from the QuickTurn and LMCES acquisitions. 34 Expenses Total expenses increased by $406.1 million, due to the following: •Cost of sales increased by $393.6 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. •Depreciation and amortization increased by $6.0 million due to the acquisitions of LMCES in Q3 2024 and QuickTurn in Q4 2023. •Operating expenses increased by $3.4 million, primarily due to the acquisition of LMCES in Q3 2024. •Acquisition and transaction expenses increased by $3.2 million, primarily driven by higher professional fees incurred in evaluating and completing strategic transactions Provision for (benefit from) income taxes The Provision for income taxes increased by $46.7 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from Aerospace Products activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. Net income Net income increased by $166.2 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $220.6 million, primarily due to the changes noted above. Aviation Leasing Segment As of December 31, 2025, in our Aviation Leasing segment, we own and manage 290 aviation assets, consisting of 47 commercial aircraft and 243 engines, including eight aircraft and seventeen engines that were still located in Russia. As of December 31, 2025, 37 of our commercial aircraft and 143 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 77% utilized during the three months ended December 31, 2025, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 44 months, and our engines currently on-lease have an average remaining lease term of 38 months. The table below provides additional information on the assets in our Aviation Leasing segment, including transfers which involve aircraft breakdowns, engine transfers from leasing equipment to inventory for manufacturing and sales, and engine transfers from inventory to leasing equipment for rebuilding and sales: Aviation Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2025 5  104  109  Purchases —  28  28  Sales —  (47) (47) Transfers —  (43) (43) Assets at December 31, 2025 5  42  47  Engines Assets at January 1, 2025 23  289  312  Purchases —  113  113  Sales (5) (216) (221) Transfers —  39  39  Assets at December 31, 2025 18  225  243  35 The following table presents our results of operations for our Aviation Leasing segment: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Revenues Lease income $ 235,210  $ 234,411  $ 179,704  $ 799  $ 54,707  Maintenance revenue 218,499  200,809  191,347  17,690  9,462  Asset sales revenue 106,945  192,176  303,141  (85,231) (110,965) Other revenue (1) 10,507  1,041  7,419  9,466  (6,378) Total revenues 571,161  628,437  681,611  (57,276) (53,174) Expenses Cost of sales 109,351  151,977  221,852  (42,626) (69,875) Operating expenses 37,307  35,495  37,876  1,812  (2,381) Acquisition and transaction expenses 9,182  9,740  7,150  (558) 2,590  Depreciation and amortization 205,687  201,497  158,354  4,190  43,143  Asset impairment —  962  2,121  (962) (1,159) Total expenses 361,527  399,671  427,353  (38,144) (27,682) Other income (expense) Equity in (losses) earnings of unconsolidated entities 13,115  (207) (148) 13,322  (59) Gain on sale to the 2025 Partnership 46,380  —  —  46,380  —  Other income 64,455  14,669  1,300  49,786  13,369  Total other income 123,950  14,462  1,152  109,488  13,310  Income before income taxes 333,584  243,228  255,410  90,356  (12,182) Provision for (benefit from) income taxes 62,232  32,979  (36,193) 29,253  69,172  Net income attributable to shareholders $ 271,352  $ 210,249  $ 291,603  $ 61,103  $ (81,354) (1) Includes servicing fees of $10,150 for the year ended December 31, 2025 from the 2025 Partnership. 36 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Net income attributable to shareholders $ 271,352  $ 210,249  $ 291,603  $ 61,103  $ (81,354) Add: Provision for (benefit from) income taxes 62,232  32,979  (36,193) 29,253  69,172  Add: Equity-based compensation expense 971  584  337  387  247  Add: Acquisition and transaction expenses 9,182  9,740  7,150  (558) 2,590  Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations —  —  —  —  —  Add: Asset impairment charges —  962  2,121  (962) (1,159) Add: Incentive allocations —  —  —  —  —  Add: Depreciation and amortization expense (1) 247,529  245,464  202,118  2,065  43,346  Add: Interest expense and dividends on preferred shares —  —  —  —  —  Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 30,761  (123) 104  30,884  (227) Less: Equity in losses (earnings) of unconsolidated entities (13,115) 207  148  (13,322) 59  Adjusted EBITDA (non-GAAP) $ 608,912  $ 500,062  $ 467,388  $ 108,850  $ 32,674  (1) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) depreciation expense of $205,687, $201,497 and $158,354, (ii) lease intangible amortization of $6,710, $15,597 and $15,126 and (iii) amortization for lease incentives of $35,132, $28,370 and $28,638, respectively. (2) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) net income of $13,115, net loss of $207 and $148 (ii) interest expense of $6,899, $0 and $0 (iii) depreciation and amortization of $9,978, $84 and $252 and (iv) acquisition and transaction expenses of $769, $0 and $0, respectively. Comparison of the years ended December 31, 2025 and 2024 Revenues Total revenues decreased by $57.3 million, driven by the following: •Asset sales revenue decreased by $85.2 million, primarily due to change in product mix of assets sold in the current period as compared to the prior period. Specifically, the number of engines sold in the prior period was higher than the current period. •Maintenance revenue increased by $17.7 million, primarily due to an increase in aircraft maintenance revenue of $18.1 million, driven by higher end-of-lease return compensation and an increase in the recognition of maintenance deposits due to aircraft redelivery, partially offset by the sale of Seed Assets to the 2025 Partnership, as well as a decrease in utilization. •Other revenue increased by $9.5 million, primarily as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership. Expenses Total expenses decreased by $38.1 million, driven by the following: •Cost of sales decreased by $42.6 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue. •Depreciation and amortization expense increased by $4.2 million, primarily driven by a higher average book value of engines on lease, partially offset by the sale of Seed Assets to the 2025 Partnership during the period. Other income Total other income increased by $109.5 million, primarily due to the following: •Gains on sale to the 2025 Partnership of $46.4 million. •Equity in earnings of unconsolidated entities increased by $13.3 million, driven by net income realized by the 2025 Partnership in the current period. •$54.3 million from an insurance settlement in the current year, compared to $10.8 million from an insurance settlement in the prior year. 37 Provision for (benefit from) income taxes The Provision for income taxes increased by $29.3 million, primarily due to the respective changes in income discussed above from leasing activities in jurisdictions subject to taxes. Net income Net income decreased by $61.1 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $108.9 million, primarily due to the changes noted above. Comparison of the years ended December 31, 2024 and 2023 Revenues Total revenues decreased by $53.2 million, driven by the following: •Asset sales revenue decreased by $111.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, three aircraft and 14 engines were sold in 2024 as compared to 13 aircraft and 41 engines sold in 2023. •Other revenue decreased by $6.4 million, primarily due to a decrease in end-of-lease redelivery compensation. During 2024, one aircraft and three engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023. •Lease income increased by $54.7 million, due to an increase in engine lease revenue of $37.3 million and an increase in aircraft lease revenue of $17.5 million, driven by an increased number of engines and aircraft on lease. •Maintenance revenue increased by $9.5 million. Engine maintenance revenue increased by $43.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $32.7 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023, partially offset by an increased number of aircraft on lease in 2024. Expenses Total expenses decreased by $27.7 million, driven by the following: •Cost of sales decreased by $69.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines and is in line with an overall decrease in the corresponding asset sales revenue. Specifically, three aircraft and 14 engines were sold in 2024 compared to 13 aircraft and 41 engines sold in 2023. •Operating expenses decreased by $2.4 million, primarily driven by a decrease in bad debt expense of $5.9 million, partially offset by increases in legal fees of $2.7 million and repairs and maintenance expense of $1.0 million. •Depreciation and amortization expense increased by $43.1 million, driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool. •Acquisition and transaction expenses increased by $2.6 million, primarily due to higher legal fees incurred in evaluating and completing strategic transactions. Other income (expense) Total other income increased by $13.3 million primarily driven by a $10.8 million insurance settlement as well as a $3.9 million increase in interest income earned on financing receivables during 2024. Provision for (benefit from) income taxes The Provision for income taxes increased by $69.2 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from leasing activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. Net income Net income decreased by $81.4 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased by $32.7 million, primarily due to the changes noted above. 38 Corporate and Other The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Revenues Lease income $ —  $ 20,927  $ 28,232  $ (20,927) $ (7,305) Other revenue 4  5,716  6,083  (5,712) (367) Total revenues 4  26,643  34,315  (26,639) (7,672) Expenses Operating expenses 80,720  56,548  51,828  24,172  4,720  General and administrative 9,478  14,263  13,700  (4,785) 563  Acquisition and transaction expenses 16,207  17,650  6,322  (1,443) 11,328  Management fees and incentive allocation to affiliate —  8,449  18,037  (8,449) (9,588) Internalization fee to affiliate —  300,000  —  (300,000) 300,000  Depreciation and amortization 4,346  9,937  10,862  (5,591) (925) Gain on sale of assets, net —  (18,705) —  18,705  (18,705) Total expenses 110,751  388,142  100,749  (277,391) 287,393  Other income (expense) Loss on extinguishment of debt —  (17,101) —  17,101  (17,101) Interest expense (247,751) (221,721) (161,639) (26,030) (60,082) Other income (expense) 3,690  2,695  943  995  1,752  Total other expense (244,061) (236,127) (160,696) (7,934) (75,431) Loss before income taxes (354,808) (597,626) (227,130) 242,818  (370,496) (Benefit from) provision for income taxes (59,003) (49,713) 833  (9,290) (50,546) Net loss (295,805) (547,913) (227,963) 252,108  (319,950) Less: Dividends on preferred shares 17,243  32,763  31,795  (15,520) 968  Less: Loss on redemption of preferred shares 6,327  7,998  —  (1,671) 7,998  Net loss attributable to shareholders $ (319,375) $ (588,674) $ (259,758) $ 269,299  $ (328,916) 39 The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23 Net loss attributable to shareholders $ (319,375) $ (588,674) $ (259,758) $ 269,299  $ (328,916) Add: (Benefit from) provision for income taxes (59,003) (49,713) 833  (9,290) (50,546) Add: Equity-based compensation expense 20,091  5,113  1,076  14,978  4,037  Add: Acquisition and transaction expenses 16,207  17,650  6,322  (1,443) 11,328  Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 6,327  25,099  —  (18,772) 25,099  Add: Asset impairment charges —  —  —  —  —  Add: Incentive allocations —  7,456  17,116  (7,456) (9,660) Add: Depreciation and amortization expense 4,346  9,937  10,862  (5,591) (925) Add: Interest expense and dividends on preferred shares 264,994  254,484  193,434  10,510  61,050  Add: Internalization fee to affiliate —  300,000  —  (300,000) 300,000  Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities —  —  —  —  —  Less: Equity in (earnings) losses of unconsolidated entities —  —  —  —  —  Adjusted EBITDA (non-GAAP) $ (66,413) $ (18,648) $ (30,115) $ (47,765) $ 11,467  Comparison of the years ended December 31, 2025 and 2024 Revenues Total revenues decreased by $26.6 million, primarily due to the sale of the two vessels within the Offshore Energy business during the fourth quarter of 2024. Expenses Total expenses decreased by $277.4 million, primarily due to the Internalization effective May 28, 2024, which resulted in an internalization fee to affiliate of $300.0 million in 2024. Other expense Total other expense increased by $7.9 million, due to the following: •Interest expense increased by $26.0 million, reflecting increases in interest expense in (i) the 7.00% Senior Notes due 2032 of $26.0 million, (ii) the 5.875% Senior Notes due 2033 of $22.7 million, and (iii) the 7.00% Senior Notes due 2031 of $13.8 million. These were partially offset by decreases in interest expense in (i) the 9.75% senior notes due 2027 of $22.3 million, and (ii) the 6.5% senior notes due 2025 of $13.0 million. •Loss on extinguishment of debt decreased by $17.1 million, driven by the 2024 redemption of Senior Notes due 2025 and Senior Notes due 2027. (Benefit from) provision for income taxes The benefit from income taxes increased by $9.3 million. The increase was mainly driven by higher corporate overhead expenses deductible for 2025 tax purposes. Net loss Net loss decreased by $252.1 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased by $47.8 million, primarily due to the changes noted above. Comparison of the years ended December 31, 2024 and 2023 Revenues Total revenues decreased by $7.7 million, primarily due to a $7.3 million decrease in the Lease income. Lease income declined primarily due to one of our vessels in the Offshore Energy business having fewer days on-hire in 2024 compared to 2023, as well as the sale of the two vessels during 2024. Expenses Total expenses increased by $287.4 million, due to the following: •Internalization fee to affiliate increased by $300.0 million for the Internalization effective May 28, 2024. 40 •Acquisition and transaction expenses increased by $11.3 million, primarily due to higher legal and other professional fees incurred for the Internalization on May 28, 2024 and the acquisition of LMCES on September 9, 2024. •Gain on sale of assets, net, increased $18.7 million due to the sale of the two vessels within the Offshore Energy business. •Management fees and incentive allocation to affiliate decreased by $9.6 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024, as compared to fees paid during the year ended 2024 compared to 2023. Other income (expense) Total other expense increased by $75.4 million, due to the following: •Interest expense increased by $60.1 million, reflecting an increase in the average debt outstanding of approximately $779.3 million, primarily due to increases in (i) the Senior Notes due 2030 of $414.1 million, issued in November 2023 (ii) Senior Notes due 2031 of $525.0 million, issued in April 2024 (iii) Senior Notes due 2032 of $466.7 million, issued in June 2024, (iv) Senior Notes due 2033 of $124.4 million, issued in October 2024, partially offset by decreases in the (v) Senior Notes due 2025 of $489.6 million, which were redeemed in April 2024, (vi) Senior Notes due 2027 of $189.8 million, which were fully redeemed in October 2024, and the (vii) Revolving Credit Facility of $70.4 million. •Loss on extinguishment of debt increased by $17.1 million, driven by the redemption of Senior Notes due 2025 and a redemption of Senior Notes due 2027. •Other income increased by $1.8 million, driven by interest income generated from the Company’s investments in money market funds. (Benefit from) provision for income taxes The benefit from income taxes increased by $50.5 million. This increase was primarily attributable to a substantial tax benefit arising from the Internalization fee paid to the affiliate. The fee provided a favorable impact on the company's overall tax position. Net loss Net loss increased by $320.0 million, primarily due to the changes noted above. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $11.5 million, primarily due to the changes noted above. Transactions with Affiliates and Affiliated Entities Former Management Agreement Prior to May 28, 2024, FTAI Aviation Ltd. operated under the Management Agreement with the Former Manager, and the Master GP, each an affiliate of Fortress. For their services, the Former Manager was entitled to management fees and the Master GP was entitled to certain incentive allocations, both defined in, and in accordance with the terms of, the Management Agreement. On May 28, 2024, the Company entered into the Internalization Agreement, pursuant to which the Management Agreement was terminated effective May 28, 2024 (the “Effective Date”), except that certain indemnification and other obligations survive, and the Company internalized its management functions (such transactions, the “Internalization”). As a result of the Internalization, the Company ceased to be externally managed and operates as an internally managed company. In connection with the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) $150.0 million (the “Cash Consideration”), the compensation accrued and payable, but not yet paid, under the Management Agreement, and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) 1,866,949 ordinary shares of the Company (the “Share Consideration”); and (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. In addition, the Former Manager repaid to the Company certain annual bonus payments due to certain employees of the Former Manager or its affiliates who provide services to the Company with respect to the 2024 calendar year on a pro rata basis. The Company financed the cash payments through one or more debt financings, along with cash on hand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP. Strategic Capital Initiative Potential conflicts of interest may arise with respect to our decisions regarding how to allocate investment opportunities between us and partnerships in our Strategic Capital Initiative. Allocating investment opportunities appropriately frequently involves significant and subjective judgments. Investors in our Strategic Capital Initiative and our shareholders may perceive conflicts of interest regarding such investment decisions, which could harm our reputation with such investors and our shareholders. See “Risks Related to Our Business-Our Strategic Capital Initiative involves certain risks which could adversely affect our business, prospects, financial condition, results of operations and cash flows.” 41 Geographic Information Please refer to Note 13 of our consolidated financial statements included in Item 8 in this Annual Report on Form 10-K for a report, by geographic area for each segment, of revenues from our external customers and lessees, for the years ended December 31, 2025, 2024 and 2023, as well as a report of our total property, plant and equipment as of December 31, 2025 and 2024. Liquidity and Capital Resources We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during various environments. This includes limiting discretionary spending across the organization and re-prioritizing our investments as necessary. On December 30, 2024, the Company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, allows the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The first partnership under the initiative, the 2025 Partnership, focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments. The 2025 Partnership, and follow-on partnerships, is the primary buyer of all future on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, manages the aircraft in the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors. 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 $1,130.3 million, $1,526.2 million and $861.5 million during the years ended December 31, 2025, 2024, and 2023, respectively. •Distributions to shareholders, including cash dividends, were $145.4 million, $154.3 million and $151.6 million during the years ended December 31, 2025, 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 finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales. •Cash flows from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $(260.1) million, $(136.5) million and $163.0 million during the years ended December 31, 2025, 2024, and 2023, respectively. •During the year ended December 31, 2025, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $480.0 million and $480.0 million, respectively. During the year ended December 31, 2024, additional borrowings were obtained in connection with the (i) Senior Notes due 2033 of $500.0 million, (ii) Senior Notes due 2032 of $800.0 million, (iii) Senior Notes due 2031 of $700.0 million and (iv) Revolving Credit Facility of $745.0 million. During the year ended December 31, 2023, additional borrowings were obtained in connection with the (i) Revolving Credit Facility of $455.0 million and (ii) Senior Notes Due 2030 of $500.0 million. •Proceeds from the sale of assets were $1,712.5 million, $969.3 million and $477.9 million during the years ended December 31, 2025, 2024, and 2023, respectively. •Proceeds from the issuance of preferred shares, net of underwriters discount and issuance costs, were $61.7 million during the year ended December 31, 2023. There were no issuances of preferred shares during the years ended December 31, 2025 and 2024. On May 28, 2024, we entered into definitive agreements with the Former Manager and Master GP to internalize our management function. As part of the termination of the Management Agreement, we agreed to pay $150.0 million to the Former Manager. Following the internalization of management on May 28, 2024, we no longer pay a management fee or incentive distribution to the Former Manager or Master GP. Consequently, we have assumed general and administrative, and compensation and benefit expenses directly. We anticipate a savings in operation costs as a result of the Internalization. We are currently evaluating several potential transactions and related financings, including, but not limited to, certain additional debt and equity financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing. 42 Historical Cash Flow The following table presents our historical cash flow from both continuing and discontinued operations: Year Ended December 31, (in thousands) 2025 2024 2023 Cash flow data: Net cash (used in) provided by operating activities $ (310,745) $ (187,956) $ 128,982  Net cash provided by (used in) investing activities 723,314  (469,498) (373,349) Net cash (used in) provided by financing activities (227,209) 681,814  282,208  Comparison of the years ended December 31, 2025 and 2024 Net cash used in operating activities increased $122.8 million, primarily reflecting an increase in our Net income of $492.4 million and certain adjustments to reconcile net income to cash used in operating activities, including an: •increase in Deferred income taxes of $75.8 million; partially offset by •decrease in Changes in net working capital of $448.1 million, •decrease in Non-cash termination fee to affiliate of $150.0 million, •increase in Gain on insurance recoveries of $54.3 million, and •increase in Gain on sale of assets to the 2025 Partnership of $46.4 million. Net cash provided by investing activities increased $1.2 billion, primarily due to an: •increase in Proceeds from the sale of assets to the 2025 partnership of $530.0 million, •increase in Proceeds from the sale of assets of $213.2 million, •decrease in Acquisition of leasing equipment of $488.5 million, •decrease in Acquisition of business, net of cash acquired of $98.5 million, •decrease in Deposits for acquisition of leasing equipment of $92.4 million, •decrease in Investments in financing receivables of $64.1 million, and •increase in Proceeds from settlement of insurance claims of $54.3 million; partially offset by •increase in Investment in unconsolidated entities of $328.5 million. Net cash used in financing activities increased $909.0 million, primarily due to a: •decrease in Proceeds from debt of $2.1 billion, and •increase in Redemption of preferred shares of $18.8 million; partially offset by •decrease in Repayment of debt of $1.2 billion. Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations—As of December 31, 2025, we had outstanding principal and interest payment obligations of $3.5 billion and $1.2 billion, respectively, of which only interest payments of $228.8 million are due in the next twelve months. Refer to Note 8, “Debt” in our “Notes to Consolidated Financial Statements” for additional information about our debt obligations. Lease Obligations—As of December 31, 2025, we had outstanding operating and finance lease obligations of $47.8 million, of which $8.8 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 year ended December 31, 2025, we declared cash dividends of $128.2 million and $17.2 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. 43 Critical Accounting Estimates and Policies The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Operating Leases—We lease equipment pursuant to operating leases. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the lease, assuming no renewals. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the lessee is placed on non-accrual status and revenue is recognized when cash payments are received. Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset or at the end of the lease. Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and other operating expenses throughout the term of the lease. These periodic maintenance payments accumulate over the term of the lease to fund major maintenance events, and we are contractually obligated to return maintenance payments to the lessee up to the cost of maintenance paid by the lessee. In the event the total cost of maintenance events over the term of a lease is less than the cumulative maintenance payments, we are not required to return any unused maintenance payments to the lessee. For purchase and lease back transactions, we account for the transaction as a single arrangement. We allocate the consideration paid based on the relative fair value of the aircraft and lease. The fair value of the lease may include a lease premium or discount, which is recorded as a favorable or unfavorable lease intangible. Maintenance Payments—Typically, under an operating lease of aircraft, the lessee is responsible for performing all maintenance and is generally required to make maintenance payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft or engine. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending on the component, and are generally required to be made monthly in arrears. If a lessee is making monthly maintenance payments, we would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following the completion of the relevant work. Maintenance payments received for which we expect to repay to the lessee are presented as current and non-current Maintenance Deposits in our Consolidated Balance Sheets. Excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenue on our Consolidated Statements of Operations. Estimates in recognizing revenue include mean time between removal for engines on leased aircraft, projected costs for engine maintenance, and forecasted utilization, which are affected by historical usage patterns and overall industry, market and economic conditions. Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period. Reimbursements made to the lessee upon the receipt of evidence of qualifying maintenance work are recorded against the maintenance deposit liability. In certain acquired leases, we or the lessee may be obligated to make a payment to the other party at lease termination based on redelivery conditions stipulated at the inception of the lease. When the lessee is required to return the aircraft in an improved maintenance condition, we record a maintenance right asset, as a component of other assets in the Consolidated Balance sheets, for the estimated value of the end-of-life maintenance payment at acquisition. We recognize payments received as end-of-lease compensation adjustments, within lease income or as a reduction to the maintenance right asset, when payment is received or collectability is assured. In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when we are obligated and can reasonably estimate such payments. Leasing Equipment and Depreciation—Leasing equipment is stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over estimated useful lives, to estimated residual values which are summarized as follows: Asset Range of Estimated Useful Lives Residual Value Estimates Aircraft 25 years from date of manufacture Generally not to exceed 15% of manufacturer’s list price when new Aircraft engines 2 - 6 years, based on maintenance adjusted service life Sum of engine core salvage value plus the estimated fair value of life limited parts In accounting for leasing equipment, the Company makes estimates about the expected useful lives, residual values and the fair value of acquired in-place leases and acquired maintenance liabilities (for aviation equipment). In making these estimates, the Company relies upon observable market data for the same or similar types of equipment and, in the case of aviation equipment, its own estimates with respect to a lessee’s anticipated utilization of the aircraft or engine. When the Company acquires leasing equipment subject to an in-place lease, determining the fair value of the in-place lease requires the Company to make assumptions regarding the current fair values of leases for identical or similar equipment, in order to determine if the in-place lease is within a fair value range of current lease rates. If a lease is below or above the range of current lease rates, the resulting 44 lease discount or premium is recognized as a lease intangible and amortized into lease income over the remaining term of the lease. Impairment of Long-Lived Assets—We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable. Indicators may include, but are not limited to, a significant lease restructuring or early lease termination; significant traffic decline; a significant change in market conditions; or the introduction of newer technology and the length of time an asset is off lease related to leasing equipment, engines or for manufacturing equipment; a significant decrease in market value; adverse changes in use or condition; legal or regulatory changes; or cash flow reductions. When performing a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the asset exceeds its net book value. The undiscounted cash flows consist of cash flows from currently contracted leases and contracts, future projected leases, transition costs, estimated down time and estimated residual or scrap values for leasing equipment or operating cash flows for manufacturing equipment, and maintenance and operating costs. In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge. Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, information received from third party industry sources, usage assumptions, asset lifespan for leasing equipment, and expected operating income and costs associated with operating and maintaining the manufacturing asset. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, residual values, economic conditions, technology, demand for a particular asset type and other factors, expected income and operating costs, maintenance and repairs, capital expenditures, and duration of the cash flows. Recoverability of Goodwill—Goodwill is not amortized but rather is tested at least annually during the fourth quarter for impairment, or more often if events or circumstances indicate the carrying value of an asset may not be recoverable. We assess the recoverability of goodwill using a qualitative evaluation or a quantitative test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The determination of fair value requires management to make assumptions and to apply judgment to estimate industry and economic factors and the profitability of future business strategies. The Company conducts impairment testing based on current business strategy in light of present industry and economic conditions, as well as future expectations. Recent Accounting Pronouncements Please see Note 2 to our consolidated financial statements included elsewhere in this filing for recent accounting pronouncements. 45