10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________________

FORM 10-Q

_______________________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File number 001-32959

_______________________________________________________________

AIRCASTLE LIMITED

(Exact name of registrant as specified in its charter)

_______________________________________________________________

Bermuda	98-0444035
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
c/o Aircastle Advisor LLC
201 Tresser Boulevard, Suite 400
Stamford
Connecticut
06901
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code:     (203) 504-1020

_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Shares, par value $0.01 per share	N/A	NONE
Preference Shares, par value $0.01 per share	N/A	NONE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☑    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐    No  ☑

The aggregate market value of the Registrant’s Common Shares based upon the closing price on the New York Stock Exchange on August 31, 2022 (the last business day of registrant’s most recently completed second fiscal quarter), beneficially owned by non-affiliates of the Registrant was $0 because the Registrant’s Common Shares were not publicly traded as of that date. For purposes of the foregoing calculation, which is required by Form 10-K, the Registrant has included in the shares owned by affiliates those shares owned by directors and executive officers and shareholders owning 10% or more of the outstanding common shares of the Registrant, and such inclusion shall not be construed as an admission that any such person is an affiliate for any purpose.

As of October 7, 2022, there were 14,048 outstanding shares of the registrant’s common shares, par value $0.01 per share.

Aircastle Limited and Subsidiaries

Form 10-Q

Table of Contents

		Page No.
	PART I. – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets as of August 31, 2022 and February 28, 2022	3
	Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended August 31, 2022 and 2021	4
	Consolidated Statements of Cash Flows for the six months ended August 31, 2022 and 2021	5
	Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended August 31, 2022 and 2021	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	38
	PART II. – OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	40
SIGNATURE		42

2

PART I. — FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

Aircastle Limited and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)

	August 31, 2022		February 28, 2022
	(Unaudited)
ASSETS
Cash and cash equivalents	$	246,713	$	167,891
Restricted cash and cash equivalents	650		2,791
Accounts receivable	54,960		63,666
Flight equipment held for lease, net	6,355,679		6,313,950
Net investment in leases, net	137,619		150,325
Unconsolidated equity method investments	39,494		38,317
Other assets	327,141		356,326
Total assets	$	7,162,256	$	7,093,266
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Borrowings from secured financings, net	$	626,776	$	684,039
Borrowings from unsecured financings, net	3,915,114		3,835,841
Accounts payable, accrued expenses and other liabilities	195,004		177,424
Lease rentals received in advance	43,040		37,361
Security deposits	65,366		69,189
Maintenance payments	498,768		459,713
Total liabilities	5,344,068		5,263,567
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at August 31, 2022 and February 28, 2022	—		—
Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at August 31, 2022 and February 28, 2022	—		—
Additional paid-in capital	1,878,774		1,878,774
Accumulated deficit	(60,586)		(49,075)
Total shareholders’ equity	1,818,188		1,829,699
Total liabilities and shareholders’ equity	$	7,162,256	$	7,093,266

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

Aircastle Limited and Subsidiaries

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Dollars in thousands)

(Unaudited)

	Three Months Ended August 31,				Six Months Ended  August 31,
	2022		2021		2022		2021
Revenues:
Lease rental revenue	$	146,508	$	137,589	$	290,652	$	269,714
Direct financing and sales-type lease revenue	2,265		2,776		4,863		5,653
Amortization of lease premiums, discounts and incentives	(5,518)		(5,835)		(10,906)		(11,159)
Maintenance revenue	20,114		21,218		47,213		47,694
Total lease revenue	163,369		155,748		331,822		311,902
Gain on sale of flight equipment	10,049		1,502		13,736		10,524
Other revenue	161		402		3,585		1,036
Total revenues	173,579		157,652		349,143		323,462
Operating expenses:
Depreciation	82,106		83,391		163,424		165,782
Interest, net	50,587		55,413		100,881		113,450
Selling, general and administrative	17,393		15,990		37,309		31,573
Provision for credit losses	109		6		689		12
Impairment of flight equipment	33,671		21,232		38,099		41,815
Maintenance and other costs	5,212		8,087		13,277		15,615
Total operating expenses	189,078		184,119		353,679		368,247
Other income (expense):
Loss on extinguishment of debt	—		(14,132)		(463)		(14,156)
Other	2,072		57,609		2,072		57,619
Total other income	2,072		43,477		1,609		43,463
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	(13,427)		17,010		(2,927)		(1,322)
Income tax provision (benefit)	(4,068)		7,665		(739)		(627)
Earnings of unconsolidated equity method investments, net of tax	666		458		1,177		745
Net income (loss)	$	(8,693)	$	9,803	$	(1,011)	$	50
Preference share dividends	(10,500)		(5,658)		(10,500)		(5,658)
Net income (loss) available to common shareholders	$	(19,193)	$	4,145	$	(11,511)	$	(5,608)
Total comprehensive income (loss) available to common shareholders	$	(19,193)	$	4,145	$	(11,511)	$	(5,608)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

Aircastle Limited and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

	Six Months Ended August 31,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	(1,011)	$	50
Adjustments to reconcile net income (loss) to net cash and restricted cash provided by operating activities:
Depreciation	163,424		165,782
Amortization of deferred financing costs	7,095		8,384
Amortization of lease premiums, discounts and incentives	10,906		11,159
Deferred income taxes	6,588		4,240
Collections on net investment in leases	4,016		8,065
Security deposits and maintenance payments included in earnings	(2,133)		(30,420)
Gain on sale of flight equipment	(13,736)		(10,524)
Loss on extinguishment of debt	463		14,156
Impairment of flight equipment	38,099		41,815
Provision for credit losses	689		12
Other	(1,179)		(745)
Changes in certain assets and liabilities:
Accounts receivable	5,808		(5,479)
Other assets	(8,223)		(15,413)
Accounts payable, accrued expenses and other liabilities	(2,284)		(10,664)
Lease rentals received in advance	7,094		(704)
Net cash and restricted cash provided by operating activities	215,616		179,714
Cash flows from investing activities:
Acquisition and improvement of flight equipment	(372,474)		(370,187)
Proceeds from sale of flight equipment	171,065		77,900
Aircraft purchase deposits and progress payments, net of deposits returned and aircraft sales deposits	4,504		10,003
Other	1,500		(64)
Net cash and restricted cash used in investing activities	(195,405)		(282,348)
Cash flows from financing activities:
Net proceeds from preference share issuance	—		393,362
Proceeds from secured and unsecured debt financings	75,000		—
Repayments of secured and unsecured debt financings	(58,355)		(546,903)
Debt extinguishment costs	(291)		(13,372)
Deferred financing costs	(1,903)		(4,748)
Security deposits and maintenance payments received	63,758		44,111
Security deposits and maintenance payments returned	(11,239)		(10,219)
Dividends paid	(10,500)		—
Net cash and restricted cash provided by (used in) financing activities	56,470		(137,769)
Net increase in cash and restricted cash:	76,681		(240,403)
Cash and restricted cash at beginning of period	170,682		580,598
Cash and restricted cash at end of period	$	247,363	$	340,195

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

Aircastle Limited and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

(Dollars in thousands)

(Unaudited)

	Six Months Ended August 31,
	2022		2021
Reconciliation to Consolidated Balance Sheets:
Cash and cash equivalents	$	246,713	$	337,455
Restricted cash and cash equivalents	650		2,740
Unrestricted and restricted cash and cash equivalents	$	247,363	$	340,195
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized	$	93,007	$	107,102
Cash paid for income taxes	$	200	$	1,201
Supplemental disclosures of non-cash investing activities:
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets assumed in asset acquisitions	$	6,100	$	1,158
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets settled in sale of flight equipment	$	14,791	$	12,506
Transfers from flight equipment held for lease to Net investment in leases and Other assets	$	8,895	$	3,554

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

Aircastle Limited and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

(Dollars in thousands, except share amounts)

(Unaudited)

	Common Shares			Preference Shares			Additional Paid-In Capital		Accumulated Deficit		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount
Balance, February 28, 2022	14,048	$	—	400	$	—	$	1,878,774	$	(49,075)	$	1,829,699
Net income	—	—		—	—		—		7,682		7,682
Balance, May 31, 2022	14,048	$	—	400	$	—	$	1,878,774	$	(41,393)	$	1,837,381
Net loss	—	—		—	—		—		(8,693)		(8,693)
Preference share dividends	—	—		—	—		—		(10,500)		(10,500)
Balance, August 31, 2022	14,048	$	—	400	$	—	$	1,878,774	$	(60,586)	$	1,818,188
	Common Shares			Preference Shares			Additional Paid-In Capital		Retained Earnings		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount
Balance, February 28, 2021	14,048	$	—	—	$	—	$	1,485,777	$	245,293	$	1,731,070
Net loss	—	—		—	—		—		(9,753)		(9,753)
Balance, May 31, 2021	14,048	$	—	—	$	—	$	1,485,777	$	235,540	$	1,721,317
Net loss	—	—		—	—		—		9,803		9,803
Issuance of preference shares	—	—		400	—		393,362		—		393,362
Preference share dividends	—	—		—	—		—		(5,658)		(5,658)
Balance, August 31, 2021	14,048	$	—	400	$	—	$	1,879,139	$	239,685	$	2,118,824

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

Note 1. Summary of Significant Accounting Policies

Organization

Aircastle Limited (“Aircastle,” the “Company,” “we,” “us” or “our”) is a Bermuda exempted company that was incorporated on October 29, 2004 under the provisions of Section 14 of the Companies Act of 1981 of Bermuda. Aircastle’s business consists of acquiring, leasing, managing and selling commercial jet aircraft.

The Company is controlled by affiliates of Marubeni Corporation (“Marubeni”) and Mizuho Leasing Company, Limited (“Mizuho Leasing”). Aircastle is a holding company and conducts its business through subsidiaries that are wholly-owned, either directly or indirectly, by Aircastle.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements presented are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

The accompanying consolidated financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, in our opinion, reflect all adjustments, including normal recurring items, which are necessary to present fairly the results for interim periods. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the entire year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. However, we believe that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2022.

The consolidated financial statements include the accounts of Aircastle and all its subsidiaries, including any Variable Interest Entity (“VIE”) of which Aircastle is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

We manage and analyze our business and report on our results of operations based on one operating segment: leasing, financing, selling and managing commercial flight equipment. Our Chief Executive Officer is the chief operating decision maker.

The Company’s management has reviewed and evaluated all events or transactions for potential recognition and/or disclosure subsequent to the balance sheet date of August 31, 2022, through the date on which the consolidated financial statements included in this Form 10-Q were issued.

Risk and Uncertainties

In the normal course of business, Aircastle encounters several significant types of economic risk including credit, market, aviation industry and capital market risks. Credit risk is the risk of a lessee’s inability or unwillingness to make contractually required payments and to fulfill its other contractual obligations to Aircastle. Market risk reflects the change in the value of financings due to changes in interest rate spreads or other market factors, including the value of collateral underlying financings. Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of early lease terminations and depress lease rates and the value of the Company’s aircraft. Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While

8

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

Aircastle believes the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates.

Lease Revenue Recognition

We lease flight equipment under net operating leases with lease terms typically ranging from three to seven years. We generally do not offer renewal terms or purchase options in our leases, although certain of our operating leases allow the lessee the option to extend the lease for an additional term. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the initial lease, assuming no renewals.

In certain instances, we may provide lease concessions to customers, generally in the form of lease rental deferrals. While these deferral arrangements affect the timing of lease rental payments, the total amount of lease rental payments required over the lease term is generally the same as that which was required under the original lease agreement. We account for the deferrals as if no modifications to the lease agreements were made and record the deferred rentals as a receivable within other assets.

Should we determine that the collectability of rental payments is no longer probable (including any deferral thereof), we will recognize lease rental revenue using a cash basis of accounting rather than an accrual method. In the period we conclude that collection of lease payments is no longer probable, we recognize any difference between revenue amounts recognized to date under the accrual method and payments that have been collected from the lessee, including security deposit amounts held, as a current period adjustment to lease rental revenue.

Impairment of Flight Equipment

We perform an annual recoverability assessment of all aircraft in our fleet, on an aircraft-by-aircraft basis. A recoverability assessment is also performed whenever events or changes in circumstances, or indicators, suggest 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 change in an aircraft type’s storage levels, the introduction of newer technology aircraft or engines, an aircraft type is no longer in production or a significant airworthiness directive is issued. When we perform a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the aircraft exceed its net book value. The undiscounted cash flows consist of cash flows from currently contracted lease rental and maintenance payments, future projected lease rates and maintenance payments, transition costs, estimated down time, and estimated residual or scrap values for an aircraft. In the event that an aircraft does not meet the recoverability test, the aircraft will be adjusted to fair value, resulting in an impairment charge. See Note 2 in the Notes to Unaudited Consolidated Financial Statements.

Management develops the assumptions used in the recoverability analysis based on current and future expectations of the global demand for a particular aircraft type and historical experience in the aircraft leasing market and aviation industry, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and will focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform Topic 848 (“ASC 848”), in response to the market transition from the London interbank

9

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

offered rates (“LIBOR”) and other interbank offered rates (“IBORs”) to alternative reference rates. U.S. GAAP requires entities to evaluate whether a contract modification, such as the replacement or change of a reference rate, results in the establishment of a new contract or continuation of an existing contract. ASC 848 allows an entity to elect not to apply certain modification accounting requirements to contracts affected by reference rate reform. The standard provides this temporary election through December 31, 2022, and cannot be applied to contract modifications that occur after December 31, 2022. Reference rate reform will primarily impact our lease and debt arrangements for which floating-rate lease rentals and interest expense are based on LIBOR. As of August 31, 2022, less than 1% of our fleet have floating-rate lease rentals and for the three and six months ended August 31, 2022, 8.0% and 6.5%, respectively, of our interest expense was derived from floating-rate debt which is referenced to LIBOR. We have not adopted ASC 848 and are evaluating the election available to us under the standard.

Note 2. Fair Value Measurements

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs.

The following tables set forth our financial assets as of August 31, 2022 and February 28, 2022 that we measured at fair value on a recurring basis by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

			Fair Value Measurements at August 31, 2022 Using Fair Value Hierarchy
	Fair Value as of August 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	246,713	$	246,713	$	—	$	—	Market
Restricted cash and cash equivalents	650		650		—		—		Market
Total	$	247,363	$	247,363	$	—	$	—

			Fair Value Measurements at February 28, 2022 Using Fair Value Hierarchy
	Fair Value as of February 28, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	167,891	$	167,891	$	—	$	—	Market
Restricted cash and cash equivalents	2,791		2,791		—		—		Market
Total	$	170,682	$	170,682	$	—	$	—

Our cash and cash equivalents and our restricted cash and cash equivalents consist largely of money market securities that are highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.

For the three and six months ended August 31, 2022, we had no transfers into or out of Level 3.

We measure the fair value of certain assets and liabilities on a non-recurring basis when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate the carrying amounts of these assets may not be recoverable. Assets subject to these measurements include our aircraft and investment in unconsolidated joint

10

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

venture. We record aircraft at fair value when we determine the carrying value may not be recoverable. Fair value measurements for aircraft in impairment tests are based on the average of the market approach that uses Level 2 inputs, which include third party appraisal data and an income approach that uses Level 3 inputs, which include the Company’s assumptions and appraisal data as to future cash proceeds from leasing and selling aircraft discounted using the Company’s weighted average cost of capital.

We account for our investment in unconsolidated joint ventures under the equity method of accounting. Our investment is recorded at cost and is adjusted by undistributed earnings and losses and the distributions of dividends and capital. This investment is reviewed for impairment whenever events or changes in circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary.

Aircraft Valuation

Impairment of Flight Equipment

Excluding asset write-offs related to Russia, during the three and six months ended August 31, 2022, the Company recorded impairment charges totaling $6.2 million related to the scheduled lease expiration of one narrow-body aircraft and other flight equipment. The Company recognized $6.1 million of maintenance revenue for this one aircraft during the three and six months ended August 31, 2022.

The Company wrote off the remaining book value of eight narrow-body and one freighter aircraft in Russia which have not been returned to us. As a result, the Company recorded impairment charges totaling $27.5 million and $31.9 million during the three and six months ended August 31, 2022, respectively – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. During the six months ended August 31, 2022, the Company recognized $9.5 million of maintenance and other revenue for these nine aircraft related to payments received on maintenance and general security letters of credit. No revenue was recognized for these nine aircraft during the three months ended August 31, 2022.

During the three months ended August 31, 2021, the Company recorded impairment charges totaling $21.2 million, of which $18.0 million were transactional impairments primarily related to two narrow-body aircraft resulting from early lease terminations. The Company recognized $16.1 million of maintenance revenue for these two aircraft.

During the six months ended August 31, 2021, the Company recorded impairment charges totaling $41.8 million, of which $38.6 million were transactional impairments, primarily related to four narrow-body aircraft resulting from three early lease terminations and one scheduled lease expiration. The Company recognized $37.1 million of maintenance revenue for these four aircraft.

Annual Recoverability Assessment

We plan to perform our annual recoverability assessment of all our aircraft during the third quarter of 2022.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and will focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

The recoverability assessment is a comparison of the carrying value of each aircraft to its estimated undiscounted future cash flows. We develop the assumptions used in the recoverability assessment, including those relating to current and future demand for each aircraft type, based on management’s experience in the aircraft leasing industry, as well as information received from third-party sources. Estimates of the undiscounted cash flows for each aircraft type are impacted by changes in contracted and future expected lease rates, residual values, expected scrap values, economic conditions and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

11

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

If our estimates or assumptions change, including those related to our customers that have entered judicial insolvency proceedings, we may revise our cash flow assumptions and record future impairment charges. While we believe that the estimates and related assumptions used in our recoverability assessments are appropriate, actual results could differ from those estimates.

Financial Instruments

Our financial instruments, other than cash, consist principally of cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and amounts borrowed under financings. The fair value of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable approximates the carrying value of these financial instruments because of their short-term nature.

The fair value of our senior notes is estimated using quoted market prices. The fair values of all our other financings are estimated using a discounted cash flow analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of our financial instruments at August 31, 2022 and February 28, 2022 were as follows:

	August 31, 2022				February 28, 2022
	Carrying  Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	95,000	$	95,000	$	20,000	$	20,000
Unsecured Term Loan	155,000		152,968		155,000		152,195
Export Credit Agency (“ECA”) Financings	—		—		21,576		21,931
Bank Financings	629,479		613,383		666,258		675,667
Senior Notes	3,700,000		3,481,227		3,700,000		3,776,997

All our financial instruments are classified as Level 2 except for our senior notes, which are classified as Level 1.

Note 3. Flight Equipment Held for Lease, Net

The following table summarizes the activities for the Company’s flight equipment held for lease for the six months ended August 31, 2022:

	Amount
Balance at February 28, 2022	$	6,313,950
Additions	361,928
Depreciation	(162,752)
Disposals and transfers to net investment in leases and held for sale	(122,366)
Impairments	(35,081)
Balance at August 31, 2022	$	6,355,679
Accumulated depreciation as of August 31, 2022	$	2,459,049

Write-off of Russian Aircraft

As of August 31, 2022, nine of our aircraft that were previously leased to Russian airlines remain in Russia. Most of the operators of these aircraft have continued to fly the aircraft notwithstanding the sanctions imposed on Russia and leasing terminations. While we will continue to pursue repossession, it is unlikely we will regain possession of any of these nine aircraft. As a result, the Company wrote off the remaining book value of these nine aircraft, resulting in impairment charges totaling $4.4 million and $27.5 million during the three months ended May 31, 2022 and August 31,

12

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

2022, respectively. These nine aircraft have been removed from the Company’s owned fleet count. The Company is vigorously pursuing insurance claims to recover its losses relating to these aircraft, however, collection, timing and amounts of any insurance recoveries is uncertain.

We also had one freighter aircraft outside of Russia that we successfully repossessed during the three months ended August 31, 2022. Additionally, in response to a new wave of sanctions against Russia in the United Kingdom (“U.K.”), the Company terminated the lease of one freighter aircraft with a U.K.-based airline and successfully repossessed that aircraft during the three months ended August 31, 2022. We recognized $11.9 million of maintenance revenue as a result of this lease termination. Subsequent to August 31, 2022, these two freighter aircraft and one wide-body aircraft previously on lease to a Russian airline were sold for gains of approximately $53.0 million.

During the six months ended August 31, 2022, the Company recognized $25.4 million of maintenance and other revenue related to payments received on maintenance and general security letters of credit for our former Russian lessees. We are pursuing collection on remaining letters of credit totaling $24.1 million.

Note 4. Lease Rental Revenues

Minimum future lease rentals contracted to be received under our existing operating leases of flight equipment at August 31, 2022 were as follows:

Year Ending February 28/29,	Amount(1)
2023 (Remainder of fiscal year)	$	291,415
2024	546,501
2025	446,371
2026	331,792
2027	276,959
Thereafter	784,086
Total	$	2,677,124

_______________

(1)Reflects impact of lessee lease rental deferrals.

At August 31, 2022 and February 28, 2022, the amounts of lease incentive liabilities recorded in maintenance payments on our consolidated balance sheets were $20.1 million and $16.5 million, respectively.

Note 5. Net Investment in Leases, Net

At August 31, 2022 and February 28, 2022, our net investment in leases consisted of nine and eleven aircraft, respectively. The components of our net investment in leases at August 31, 2022 and February 28, 2022, were as follows:

	August 31, 2022		February 28, 2022
Lease receivable	$	46,444	$	52,021
Unguaranteed residual value of flight equipment	93,620		100,068
Net investment leases	140,064		152,089
Allowance for credit losses	(2,445)		(1,764)
Net investment in leases, net	$	137,619	$	150,325

13

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

The activity in the allowance for credit losses related to our net investment in leases for the six months ended August 31, 2022 was as follows:

	Amount
Balance at February 28, 2022	$	1,764
Provision for credit losses	689
Write-offs	(8)
Balance at August 31, 2022	$	2,445

At August 31, 2022, future lease payments on net investment in leases are as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	3,983
2024	8,973
2025	9,509
2026	8,353
2027	8,292
Thereafter	16,103
Total lease payments to be received	55,213
Present value of lease payments - lease receivable	(46,444)
Difference between undiscounted lease payments and lease receivable	$	8,769

Note 6. Concentration of Risk

The classification of regions in the tables below is based on our customers’ principal place of business.

The geographic concentration of the net book value of our fleet (flight equipment held for lease and net investment in direct financing and sales-type leases, or “Net Book Value”) as of August 31, 2022 and February 28, 2022 was as follows:

	August 31, 2022				February 28, 2022
Region	Number of Aircraft		Net Book Value %		Number of Aircraft		Net Book Value %
Asia and Pacific	65		29	%	71		32	%
Europe	90		29	%	98		30	%
Middle East and Africa	10		4	%	10		4	%
North America	37		19	%	36		17	%
South America	26		13	%	25		13	%
Off-lease	15	(1)	6	%	11	(2)	4	%
Total	243		100	%	251		100	%

_______________

(1)Of the fifteen off-lease aircraft at August 31, 2022, we have two narrow-body aircraft and six wide-body aircraft which we are currently marketing for lease or sale.

(2)Of the eleven off-lease aircraft at February 28, 2022, we have three wide-body aircraft which we are currently marketing for lease or sale.

14

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

The following table sets forth individual countries representing at least 10% of our Net Book Value as of August 31, 2022 and February 28, 2022:

	August 31, 2022				February 28, 2022
Country	Net Book Value		Net Book Value %	Number of Lessees	Net Book Value		Net Book Value %	Number of Lessees
India	$	656,090	10%	3	$	670,523	10%	3

The geographic concentration of our lease rental revenue earned from flight equipment held for lease was as follows:

	Three Months Ended August 31,				Six Months Ended August 31,
Region	2022		2021		2022		2021
Asia and Pacific	35	%	32	%	34	%	33	%
Europe	29	%	36	%	29	%	35	%
Middle East and Africa	5	%	5	%	5	%	5	%
North America	18	%	15	%	17	%	15	%
South America	13	%	12	%	15	%	12	%
Total	100	%	100	%	100	%	100	%

The following table shows the number of lessees with lease rental revenue of at least 5% of total lease rental revenue and their combined total percentage of lease rental revenue for the periods indicated:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue
Largest lessees by lease rental revenue	4	28%	4	30%	3	23%	5	34%

For the three months ended August 31, 2022, total revenue attributable to the U.K, the United States, and India was 11%, 11%, and 10%, respectively. Total revenue attributable to the U.K. included $11.9 million of maintenance revenue resulting from the lease termination of one freighter aircraft – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. For the three months ended August 31, 2021, total revenue attributable to India was 13% and less than 10% for the U.K. and the United States.

For the six months ended August 31, 2022 and 2021, total revenue attributable to India was 11% and 13%, respectively.

Judicial Insolvency Proceedings or Similar Protection

As of October 7, 2022, three of our customers, to which we lease sixteen aircraft, are subject to judicial insolvency proceedings or similar protection. We have signed restructured lease agreements for fifteen of these aircraft, subject only to the lessees emerging from their respective judicial insolvency processes, and a restructured lease commitment for one of these aircraft.

15

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

Note 7. Unconsolidated Equity Method Investments

We have a joint venture with Mizuho Leasing which has nine aircraft with a net book value of $292.0 million at August 31, 2022.

	Amount
Investment in joint venture at February 28, 2022	$	38,317
Earnings from joint venture, net of tax	1,177
Investment in joint venture at August 31, 2022	$	39,494

On June 30, 2022, the Company received full repayment of the unsecured loan facility it provided to the joint venture in the amount of $1.5 million.

Note 8. Borrowings from Secured and Unsecured Debt Financings

The outstanding amounts of our secured and unsecured debt financings were as follows:

	At August 31, 2022					At February 28, 2022
Debt Obligation	Outstanding Borrowings		Number of Aircraft	Interest Rate	Final Stated Maturity	Outstanding Borrowings
Secured Debt Financings:
ECA Financings(1)	$	—	—	—%	N/A	$	21,576
Bank Financings(2)	629,479		31	3.13% to 4.55%	06/17/23 to 03/06/25	666,258
Less: Debt issuance costs and discounts	(2,703)		—			(3,795)
Total secured debt financings, net of debt issuance costs and discounts	626,776		31			684,039
Unsecured Debt Financings:
Senior 5.00% Notes due 2023	500,000			5.00%	04/01/23	500,000
Senior 4.40% Notes due 2023	650,000			4.40%	09/25/23	650,000
Senior Notes due 2024	500,000			4.125%	05/01/24	500,000
Senior Notes due 2025	650,000			5.25%	08/11/25	650,000
Senior Notes due 2026	650,000			4.25%	06/15/26	650,000
Senior Notes due 2028	750,000			2.85%	01/26/28	750,000
Unsecured Term Loans	155,000			3.38%	02/27/24	155,000
Revolving Credit Facilities	95,000			3.24% to 4.24%	02/28/23 to 05/24/25	20,000
Less: Debt issuance costs and discounts	(34,886)					(39,159)
Total unsecured debt financings, net of debt issuance costs and discounts	3,915,114					3,835,841
Total secured and unsecured debt financings, net of debt issuance costs and discounts	$	4,541,890				$	4,519,880

(1)In May 2022, the Company repaid the principal and accrued interest outstanding under our remaining ECA Financing and incurred early extinguishment costs of $0.5 million.

(2)The borrowings under these financings at August 31, 2022 have a weighted-average fixed rate of interest of 3.81%.

16

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

Unsecured Debt Financings:

Revolving Credit Facilities

On May 24, 2022, we entered into an amendment for one of our unsecured revolving credit facilities that expanded the size and extended the term of the facility. As a result, the existing $230.0 million commitment was expanded to $280.0 million, with $35.0 million and $245.0 million of the commitment allocated to Tranche B and Tranche C, respectively. Tranche B will mature on February 28, 2023 and Tranche C will mature on May 23, 2025. Tranche A matured on its stated maturity date of December 27, 2021.

On June 27, 2022, a $100.0 million commitment under one of our unsecured revolving credit facilities, with a total commitment of $1.0 billion, matured on its stated maturity date. On September 8, 2022, we entered into an amendment that expanded the size of the facility from $900.0 million to $1.0 billion and replaced LIBOR with Term Secured Overnight Financing Rate (“SOFR”) as the benchmark interest rate. The facility bears interest at Adjusted Term SOFR (as defined in the amendment to the credit agreement) plus a margin of 1.625% per year and matures on April 26, 2025.

On July 30, 2022, a $50.0 million commitment under our revolving credit facility with Mizuho Bank Ltd., a related party, matured on its stated maturity date.

As of August 31, 2022, we had $95.0 million outstanding under our revolving credit facilities and had $1.2 billion available for borrowing.

As of August 31, 2022, we were in compliance with all applicable covenants in our financings.

Note 9. Shareholders' Equity

On March 15, 2022, the Company paid a quarterly dividend in the amount of $10.5 million for its Preference Shares, which was approved by the Company’s Board of Directors on January 6, 2022, and accrued as of February 28, 2022.

On September 15, 2022, the Company paid a quarterly dividend in the amount of $10.5 million for its Preference Shares, which was approved by the Company’s Board of Directors on July 6, 2022, and accrued as of August 31, 2022.

Note 10. Related Party Transactions

The Company incurred fees from Marubeni as part of its intra-company service agreement totaling $1.2 million and $0.9 million during the three months ended August 31, 2022 and 2021, respectively, and $2.6 million and $1.9 million during the six months ended August 31, 2022 and 2021, respectively, whereby Marubeni provides certain management and administrative services to the Company. In addition, the Company purchased parts under a parts management services and supply agreement with an affiliate of Marubeni totaling $2.3 million and $1.4 million during the three months ended August 31, 2022 and 2021, respectively, and $4.0 million and $2.0 million during the six months ended August 31, 2022 and 2021, respectively.

Note 11. Income Taxes

Income taxes have been provided for based upon the tax laws and rates in countries in which our operations are conducted and income is earned. The Company received assurance from the Bermuda Minister of Finance that it would be exempted from local income, withholding and capital gains taxes until March 2035. Consequently, the provision for income taxes relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily the United States and Ireland.

17

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

The sources of income (loss) from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the three and six months ended August 31, 2022 and 2021 were as follows:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
U.S. operations	$	4,790	$	4,479	$	10,126	$	8,190
Non-U.S. operations	(18,217)		12,531		(13,053)		(9,512)
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	$	(13,427)	$	17,010	$	(2,927)	$	(1,322)

Our aircraft-owning subsidiaries generally earn income from sources outside the U.S. and typically are not subject to U.S. federal, state or local income taxes. The aircraft owning subsidiaries resident in the U.S. and Ireland are subject to tax in those respective jurisdictions.

We have a U.S.-based subsidiary which provides management services to our subsidiaries and is subject to U.S. federal, state and local income taxes. We also have Ireland and Singapore based subsidiaries which provide management services to our non-U.S. subsidiaries and are subject to tax in those respective jurisdictions.

The Company’s effective tax rates (“ETRs”) for the three months ended August 31, 2022 and 2021 were 30.3% and 45.1% , and for the six months ended August 31, 2022 and 2021 were 25.2% and 47.4%, respectively. The movement in the ETR is primarily caused by changes in the mix of the Company’s pre-tax earnings/(losses) in its taxable and non-tax jurisdictions. The six months ended August 31, 2022 included net non-cash impairment charges, which were recorded in a low tax jurisdiction. Further, the three and six months ended August 31, 2021 included income from the sale of unsecured claims filed by the Company against LATAM Airlines Group S.A. and certain of its subsidiaries (“LATAM”) in respect of LATAM’s Chapter 11 filing (the “LATAM Bankruptcy”), which was recorded in a low tax jurisdiction.

Note 12. Interest, Net

The following table shows the components of interest, net:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
Interest on borrowings and other liabilities	$	48,392	$	51,807	$	95,633	$	106,135
Amortization of deferred financing fees and debt discount	3,498		4,193		7,095		8,384
Interest expense	51,890		56,000		102,728		114,519
Less: Interest income	(748)		(382)		(1,007)		(712)
Less: Capitalized interest	(555)		(205)		(840)		(357)
Interest, net	$	50,587	$	55,413	$	100,881	$	113,450

18

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

Note 13. Commitments and Contingencies

Rent expense for the corporate offices and sales and marketing offices was $0.4 million and $0.4 million, and $0.9 million and $0.8 million, for the three and six months ended August 31, 2022 and 2021, respectively.

As of August 31, 2022, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in Stamford, Connecticut; Dublin, Ireland; and Singapore for future minimum lease payments as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	899
2024	1,747
2025	1,778
2026	1,630
2027	1,571
Thereafter	2,412
Total	$	10,037

At August 31, 2022, we had commitments to acquire 21 aircraft for $748.1 million.

At August 31, 2022, commitments, including $54.4 million of remaining progress payments, contractual price escalations and other adjustments for these aircraft, net of amounts already paid, are as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	375,356
2024	178,315
2025	194,469
2026	—
2027	—
Thereafter	—
Total	$	748,140

Note 14. Other Assets

The following table describes the principal components of other assets on our consolidated balance sheets as of August 31, 2022 and February 28, 2022:

	August 31, 2022		February 28, 2022
Deferred income tax asset	$	465	$	570
Lease incentives and lease premiums, net of amortization of $82,250 and $81,553, respectively	55,152		53,513
Flight equipment held for sale	32,852		77,636
Aircraft purchase deposits and Embraer E-2 progress payments	67,533		56,157
Right-of-use asset(1)	5,519		7,176
Deferred rent receivable	47,634		55,478
Other assets	117,986		105,796
Total other assets	$	327,141	$	356,326

______________

(1)Net of lease incentives and tenant allowances.

19

Aircastle Limited and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

August 31, 2022

Note 15. Accounts Payable, Accrued Expenses and Other Liabilities

The following table describes the principal components of accounts payable, accrued expenses and other liabilities recorded our consolidated balance sheets as of August 31, 2022 and February 28, 2022:

	August 31, 2022		February 28, 2022
Accounts payable, accrued expenses and other liabilities	$	70,436	$	58,882
Deferred income tax liability	72,606		66,123
Accrued interest payable	43,755		42,013
Lease liability	7,935		9,846
Lease discounts, net of amortization of $45,481 and $45,546, respectively	272		560
Total accounts payable, accrued expenses and other liabilities	$	195,004	$	177,424

Note 16. Subsequent Event

On September 8, 2022, we expanded the size of one of our unsecured revolving credit facilities by $100.0 million to $1.0 billion – see Note 8 in the Notes to Unaudited Consolidated Financial Statements.

In September 2022, we sold two freighter aircraft and one wide-body aircraft for gains of approximately $53.0 million – see Note 3 in the Notes to Unaudited Consolidated Financial Statements.

20

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks, uncertainties and assumptions. You should read the following discussion in conjunction with our historical consolidated financial statements and the notes thereto appearing elsewhere in this report. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those described under “Risk Factors” and included in our Annual Report on Form 10-K for the year ended February 28, 2022. Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and, unless otherwise indicated, the other financial information contained in this report has also been prepared in accordance with U.S. GAAP. Unless otherwise indicated, all references to “dollars” and “$” in this report are to, and all monetary amounts in this report are presented in, U.S. dollars.

All statements included or incorporated by reference in this Quarterly Report on Form 10-Q (this “report”), other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA and Adjusted EBITDA and the global aviation industry and aircraft leasing sector. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “may,” “will,” “would,” “could,” “should,” “seeks,” “estimates” and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this report. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle’s filings with the Securities and Exchange Commission (the “SEC”) and previously disclosed under “Risk Factors” in Part I - Item 1A of Aircastle’s Annual Report on Form 10-K for the year ended February 28, 2022. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this report. Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.

WEBSITE AND ACCESS TO THE COMPANY’S REPORTS

Statements and information concerning our status as a Passive Foreign Investment Company (“PFIC”) for U.S. taxpayers are available free of charge through our website at www.aircastle.com under “Investors — Tax Information (PFIC).”

The information on the Company’s Internet website is not part of, nor incorporated by reference, into this report, or any other report we file with, or furnish to, the SEC.

21

OVERVIEW

Aircastle acquires, leases, and sells commercial jet aircraft to airlines throughout the world. Our aircraft are managed by an experienced team based in the United States, Ireland and Singapore. Our aircraft are subject to net leases whereby the lessee is generally responsible for maintaining the aircraft and paying operational, maintenance and insurance costs. However, in many cases we are obligated to pay a specified portion of maintenance or modification costs. During the six months ended August 31, 2022, we purchased eight aircraft and sold nine aircraft and other flight equipment. As of August 31, 2022, we owned and managed on behalf of our joint ventures 252 aircraft leased to 74 lessees located in 45 countries. As of August 31, 2022, the Net Book Value of our fleet was $6.5 billion. The weighted average age of our fleet was 10.3 years and the weighted average remaining lease term was 5.0 years. As of August 31, 2022, we have commitments to acquire 21 aircraft for $748.1 million, which includes estimated amounts for pre-delivery deposits, contractual price escalations and other adjustments.

Our total revenues, net loss and Adjusted EBITDA were $173.6 million and $349.1 million, $8.7 million $1.0 million, and $159.1 million, and $312.0 million, respectively, for the three and six months ended August 31, 2022. Cash flow provided by operating activities was $215.6 million and $179.7 million for the six months ended August 31, 2022 and 2021, respectively. Our business and financial results, customers, and the aviation industry has and will continue to be impacted by the COVID-19 pandemic and the Russian invasion of Ukraine. We believe our platform and personnel position us to effectively manage through these crises and will enable us to take advantage of new investment opportunities when they arise.

While the industry continues to recover from the impact of COVID-19, according to the International Air Transit Association (“IATA”), as of August 31, 2022, air travel was still down to approximately 74% compared to normal levels. We continue to believe long-term demand for air travel will gradually return to historical trends over time.

Historically, growth in commercial air traffic has been correlated with world economic activity. Prior to the COVID-19 pandemic, commercial air traffic growth expanded at a rate of approximately 1 to 2 times that of global GDP growth. This expansion of air travel has driven growth in the world aircraft fleet; and there are approximately 25,000 commercial mainline passenger and freighter aircraft in the world fleet today. Aircraft leasing companies own approximately 50% of the world’s commercial jet aircraft. Under normal circumstances, we would expect the global fleet to continue expanding at a two to three percent average annual rate.

We believe that our long-standing business strategy of maintaining conservative leverage, limiting long-term financial commitments, and focusing our portfolio on more liquid narrow-body aircraft will enable us to manage through recent crises, such as the COVID-19 pandemic and the Russian invasion of Ukraine. Our portfolio of primarily mid-life, narrow-body aircraft should remain attractive relative to new technology aircraft due to their lower capital costs in an environment of tight airline margins.

We believe that we have sufficient liquidity to meet our contractual obligations over the next twelve months and as of October 1, 2022, total liquidity of $2.1 billion includes $1.4 billion of undrawn credit facilities, $0.3 billion of unrestricted cash and $0.4 billion of projected adjusted operating cash flows through October 1, 2023.

Update on Russian Invasion of Ukraine

As of August 31, 2022, nine of our aircraft that were previously leased to Russian airlines remain in Russia. Most of the operators of these aircraft have continued to fly the aircraft notwithstanding the sanctions imposed on Russia and leasing terminations. While will continue to pursue repossession, it is unlikely we will regain possession of any of these nine aircraft. As a result, the Company wrote off the remaining book value of these nine aircraft, resulting in impairment charges totaling $4.4 million and $27.5 million during the three months ended May 31, 2022 and August 31, 2022, respectively. These nine aircraft have been removed from the Company’s owned fleet count. The Company is vigorously pursuing insurance claims to recover its losses relating to these aircraft, however, collection, timing and amounts of any insurance recoveries is uncertain.

We also had one freighter aircraft outside of Russia that we successfully repossessed during the three months ended August 31, 2022. Additionally, in response to a new wave of sanctions in the U.K., the Company terminated the lease of one freighter aircraft with a U.K.-based airline and successfully repossessed that aircraft during the three months ended August 31, 2022. We recognized $11.9 million of maintenance revenue as a result of this lease termination. Subsequent

22

to August 31, 2022, these two freighter aircraft and a wide-body aircraft previously on lease to a Russian airline were sold for gains of approximately $53.0 million.

During the six months ended August 31, 2022, the Company recognized $25.4 million of maintenance and other revenue related to payments received on maintenance and general security letters of credit for our former Russian lessees. We are pursuing collection on remaining letters of credit totaling $24.1 million.

Fiscal Year 2022 Lease Expirations and Lease Placements

As of October 7, 2022, we had ten off-lease aircraft and five aircraft with leases expiring in fiscal year 2022, which combined account for less than 6% of our Net Book Value at August 31, 2022, still to be placed or sold.

Taking into account lease and sale commitments, we currently have the following number of aircraft with lease expirations scheduled in the fiscal years 2023-2026, representing the percentage of our Net Book Value at August 31, 2022, specified below:

•2023: 33 aircraft, representing 9%;

•2024: 41 aircraft, representing 15%;

•2025: 28 aircraft, representing 12%; and

•2026: 17 aircraft, representing 6%.

Acquisitions and Sales

During the six months ended August 31, 2022, we acquired eight aircraft for $320.0 million. As of August 31, 2022, we had commitments to acquire 21 aircraft for $748.1 million, with delivery through the fourth quarter of 2024, which includes estimated amounts for pre-delivery deposits, contractual price escalations and other adjustments. As of October 7, 2022, we have acquired two additional aircraft and have commitments to acquire nineteen aircraft for $674.2 million.

During the six months ended August 31, 2022, we sold nine aircraft and other flight equipment for net proceeds of $171.1 million and recognized a net gain on sale of $13.7 million. As of October 7, 2022, we have sold five additional aircraft.

Finance

We operate in a capital-intensive industry and have a demonstrated track record of raising substantial amounts of capital from debt and equity investors. Since our inception in late 2004, we have raised $2.1 billion in equity capital from private and public investors. We also raised $19.0 billion in debt capital from a variety of sources including export credit agency-backed debt, commercial bank debt, the aircraft securitization markets and the unsecured bond market. The diversity and global nature of our financing sources demonstrates our ability to adapt to changing market conditions and seize new growth opportunities.

We intend to fund new investments through cash on hand, funds generated from operations, maintenance payments received from lessees, secured and unsecured borrowings for aircraft, draws on our revolving credit facilities and proceeds from any future aircraft sales. We may repay all or a portion of such borrowings from time to time with the net proceeds from subsequent long-term debt financings, additional equity offerings or cash generated from operations and asset sales. Therefore, our ability to execute our business strategy, particularly the acquisition of additional commercial jet aircraft or other aviation assets, depends to a significant degree on our ability to obtain additional debt and equity capital on terms we deem attractive.

See “Liquidity and Capital Resources — Secured Debt Financings” and “Liquidity and Capital Resources — Unsecured Debt Financings” below.

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AIRCASTLE AIRCRAFT INFORMATION

The following table sets forth certain information with respect to the aircraft owned by us as of August 31, 2022 and 2021 (dollars in millions):

Owned Aircraft	As of August 31, 2022			As of August 31, 2021
Net Book Value of Flight Equipment	$	6,493		$	6,761
Net Book Value of Unencumbered Flight Equipment	$	5,447		$	5,593
Number of Aircraft(1)	243			255
Number of Unencumbered Aircraft(1)	212			223
Number of Lessees	74			76
Number of Countries	45			42
Weighted Average Age (Years)(2)	10.3			10.6
Weighted Average Remaining Lease Term (Years)(2)	5.0			4.6
Weighted Average Fleet Utilization during the three months ended August 31, 2022 and 2021(3)	94.9		%	94.1		%
Weighted Average Fleet Utilization during the six months ended August 31, 2022 and 2021(3)	94.8		%	93.6		%
Portfolio Yield for the three months ended August 31, 2022 and 2021(4)	9.2		%	8.7		%
Portfolio Yield for the six months ended August 31, 2022 and 2021(4)	9.2		%	8.5		%
Managed Aircraft on behalf of Joint Venture
Net Book Value of Flight Equipment	$	292		$	305
Number of Aircraft	9			9

(1)Excludes nine aircraft that remain in Russia with zero net book value – see Note 3 in the Notes to Unaudited Consolidated Financial Statements

(2)Weighted by net book value.

(3)Aircraft on-lease days as a percent of total days in period weighted by net book value.

(4)Lease rental revenue, interest income and cash collections on our net investment in leases for the period as a percent of the average Net Book Value for the period; quarterly information is annualized.

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PORTFOLIO DIVERSIFICATION

	Owned Aircraft as of August 31, 2022				Owned Aircraft as of August 31, 2021
	Number of Aircraft		% of Net Book Value		Number of Aircraft		% of Net Book Value
Aircraft Type
Passenger:
Narrow-body - new technology(1)	31		21	%	19		13	%
Narrow-body - current technology	186		61	%	210		66	%
Wide-body - current technology	21		15	%	22		17	%
Total Passenger	238		97	%	251		96	%
Freighter - current technology	5		3	%	4		4	%
Total	243		100	%	255		100	%
Manufacturer
Airbus	159		66	%	171		65	%
Boeing	72		29	%	77		33	%
Embraer	12		5	%	7		2	%
Total	243		100	%	255		100	%
Regional Diversification
Asia and Pacific	65		29	%	74		33	%
Europe	90		29	%	96		29	%
Middle East and Africa	10		4	%	10		4	%
North America	37		19	%	33		15	%
South America	26		13	%	25		13	%
Off-lease	15	(2)	6	%	17	(3)	6	%
Total	243		100	%	255		100	%

(1)    Includes Airbus A320-200neo and A321-200neo, Boeing 737-MAX8 and Embraer E2 aircraft.

(2)    Of the fifteen off-lease aircraft at August 31, 2022, we have two narrow-body aircraft and six wide-body aircraft which we are currently marketing for lease or sale.

(3)    Of the seventeen off-lease aircraft at August 31, 2021, we have two wide-body aircraft which we are currently marketing for lease or sale.

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The top ten customers for aircraft we owned at August 31, 2022 are as follows:

Customer	Country	Percent of Net Book Value	Number of Aircraft
IndiGo	India	7.5%	11
LATAM(1)	Chile	7.3%	13
American Airlines	United States	3.9%	9
KLM	Netherlands	3.5%	7
Air Canada	Canada	3.5%	5
Viva Aerobus	Mexico	3.5%	6
Iberia	Spain	3.4%	14
Frontier Airlines	United States	3.0%	4
Aerolineas Argentinas	Argentina	2.8%	5
easyJet	United Kingdom	2.7%	11
Total top ten customers		41.1%	85
All other customers		58.9%	158
Total all customers		100.0%	243

(1)     LATAM filed for Chapter 11 in May 2020. We have signed restructured leases for all thirteen of the LATAM aircraft, subject only to LATAM emerging from the Chapter 11 process.

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RESULTS OF OPERATIONS

Comparison of the three months ended August 31, 2022 to the three months ended August 31, 2021:

	Three Months Ended August 31,
	2022		2021
	(Dollars in thousands)
Revenues:
Lease rental revenue	$	146,508	$	137,589
Direct financing and sales-type lease revenue	2,265		2,776
Amortization of lease premiums, discounts and incentives	(5,518)		(5,835)
Maintenance revenue	20,114		21,218
Total lease revenue	163,369		155,748
Gain on sale of flight equipment	10,049		1,502
Other revenue	161		402
Total revenues	173,579		157,652
Operating expenses:
Depreciation	82,106		83,391
Interest, net	50,587		55,413
Selling, general and administrative	17,393		15,990
Provision for credit losses	109		6
Impairment of flight equipment	33,671		21,232
Maintenance and other costs	5,212		8,087
Total operating expenses	189,078		184,119
Other income (expense):
Loss on extinguishment of debt	—		(14,132)
Other	2,072		57,609
Total other income	2,072		43,477
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	(13,427)		17,010
Income tax provision (benefit)	(4,068)		7,665
Earnings of unconsolidated equity method investments, net of tax	666		458
Net income (loss)	$	(8,693)	$	9,803

Revenues

Total revenues increased $15.9 million for the three months ended August 31, 2022 as compared to the three months ended August 31, 2021.

Lease rental revenue increased $8.9 million as a result of:

•a $15.8 million increase in revenue as the three months ended August 31, 2022 included a lower amount of customers for which lease rental revenue was recognized using a cash basis of accounting rather than an accrual method as compared to the three months ended August 31, 2021 – see Note 1 in the Notes to Unaudited Consolidated Financial Statements for our lease revenue recognition policy; and

•a $15.6 million increase related to 24 aircraft purchased since June 1, 2021.

These increases were partially offset by:

•a $15.2 million decrease due to lease terminations, of which $12.4 million relates to aircraft for which the leases were terminated as a result of sanctions against Russia;

•a $5.4 million decrease related to the sale of thirteen aircraft since June 1, 2021; and

•a $1.9 million decrease due to lease extensions, amendments, transitions and other changes.

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Direct financing and sales-type lease revenue decreased $0.5 million, primarily related to the sales of five aircraft since June 1, 2021, partially offset by the reclassification of two aircraft to sales-type leases.

Amortization of lease premiums, discounts and lease incentives:

	Three Months Ended August 31,
	2022		2021
	(Dollars in thousands)
Amortization of lease premiums	$	(2,723)	$	(3,597)
Amortization of lease discounts	126		227
Amortization of lease incentives	(2,921)		(2,465)
Amortization of lease premiums, discounts and incentives	$	(5,518)	$	(5,835)

Maintenance revenue. For the three months ended August 31, 2022, we recorded $20.1 million of maintenance revenue, comprised primarily of $7.5 million related to the scheduled lease expirations of two narrow-body aircraft and $11.9 million related to the early lease termination of one freighter aircraft as a result of a new wave of sanctions against Russia in the U.K. – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. For the three months ended August 31, 2021, we recorded $21.2 million of maintenance revenue, comprised primarily of $17.0 million related to the early lease terminations of three narrow-body aircraft.

Gain on sale of flight equipment. During the three months ended August 31, 2022 we sold five aircraft for a gain of $10.0 million as compared to the sale of one aircraft during the three months ended August 31, 2021 for a gain of $1.5 million.

Operating expenses

Total operating expenses increased $5.0 million for the three months ended August 31, 2022 as compared to the three months ended August 31, 2021.

Depreciation expense decreased $1.3 million primarily attributable to $10.3 million resulting from fourteen aircraft sold since June 1, 2021 and lower depreciation related to aircraft subject to impairments, including aircraft that were previously leased to Russian airlines. This was partially offset by an increase of $7.3 million related to 24 aircraft acquired since June 1, 2021.

Interest, net consisted of the following:

	Three Months Ended August 31,
	2022		2021
	(Dollars in thousands)
Interest on borrowings and other liabilities	$	48,392	$	51,807
Amortization of deferred financing fees and debt discount	3,498		4,193
Interest expense	51,890		56,000
Less: Interest income	(748)		(382)
Less: Capitalized interest	(555)		(205)
Interest, net	$	50,587	$	55,413

Interest, net decreased $4.8 million, primarily due to $408.3 million in lower weighted average debt outstanding.

Selling, general and administrative expenses increased $1.4 million, primarily due to due to an increase in Russia-related legal costs and travel expenses due to increased business travel.

Impairment of aircraft. During the three months ended August 31, 2022, the Company wrote off the remaining book value of one freighter aircraft in Russia, which has not been returned to us, in the amount of $27.5 million. While we maintain title to the aircraft and will continue to pursue repossession, we determined that it is unlikely we will regain possession of this aircraft – see Note 3 in the Notes to Unaudited Consolidated Financial Statements.

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The Company also recorded impairment charges totaling $6.2 million related to the scheduled lease expiration of one narrow-body aircraft and other flight equipment during the three months ended August 31, 2022. The Company recognized $6.1 million of maintenance revenue for this one aircraft.

During the three months ended August 31, 2021, the Company recorded impairment charges totaling $21.2 million, of which $18.0 million were transactional impairments primarily related to two narrow-body aircraft resulting from early lease terminations. The Company recognized $16.1 million of maintenance revenue for these two aircraft.

Maintenance and other costs were $5.2 million and $8.1 million for the three months ended August 31, 2022 and 2021, respectively, which related to aircraft that have transitioned or will transition to new lessees as a result of lease terminations or scheduled lease expirations. The Company incurred higher maintenance costs during the three months ended August 31, 2021 and continues to incur higher costs compared to historical levels, resulting from extended transition periods driven by supply chain issues and manpower shortages.

Other income (expense)

Total other income decreased $41.4 million for the three months ended August 31, 2022 as compared to the three months ended August 31, 2021. During the three months ended August 31, 2021, the Company recognized $55.2 million of proceeds from the sales of unsecured claims related to the LATAM Bankruptcy into other income. This was partially offset by a $14.1 million loss on extinguishment of debt related to the early redemption in full of $500.0 million outstanding aggregate principal amount of our 5.5% Senior Notes due 2022.

Income tax provision (benefit)

Our income tax benefit for the three months ended August 31, 2022 was a $4.1 million benefit as compared to a provision of $7.7 million for the three months ended August 31, 2021. The decrease in our income tax provision of $11.7 million was primarily attributable to changes in the mix of pre-tax book income/(loss) in Bermuda, Ireland and the United States. The three months ended August 31, 2022 included certain net non-cash impairment charges, which were recorded in a low tax jurisdiction. Further, the three months ended August 31, 2021 included income from the sale of unsecured claims related to the LATAM Bankruptcy, which was recorded in a low tax jurisdiction.

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RESULTS OF OPERATIONS

Comparison of the six months ended August 31, 2022 to the six months ended August 31, 2021:

	Six Months Ended August 31,
	2022		2021
	(Dollars in thousands)
Revenues:
Lease rental revenue	$	290,652	$	269,714
Direct financing and sales-type lease revenue	4,863		5,653
Amortization of lease premiums, discounts and incentives	(10,906)		(11,159)
Maintenance revenue	47,213		47,694
Total lease revenue	331,822		311,902
Gain on sale of flight equipment	13,736		10,524
Other revenue	3,585		1,036
Total revenues	349,143		323,462
Operating expenses:
Depreciation	163,424		165,782
Interest, net	100,881		113,450
Selling, general and administrative	37,309		31,573
Provision for credit losses	689		12
Impairment of flight equipment	38,099		41,815
Maintenance and other costs	13,277		15,615
Total operating expenses	353,679		368,247
Other income (expense):
Loss on extinguishment of debt	(463)		(14,156)
Other	2,072		57,619
Total other income	1,609		43,463
Loss from continuing operations before income taxes and earnings of unconsolidated equity method investments	(2,927)		(1,322)
Income tax benefit	(739)		(627)
Earnings of unconsolidated equity method investments, net of tax	1,177		745
Net income (loss)	$	(1,011)	$	50

Revenues

Total revenues increased $25.7 million for the six months ended August 31, 2022 as compared to the six months ended August 31, 2021.

Lease rental revenue increased $20.9 million as a result of:

•a $30.5 million increase related to 26 aircraft purchased since March 1, 2021;

•a $22.4 million increase in revenue as the six months ended August 31, 2022 included a lower amount of customers for which lease rental revenue was recognized using a cash basis of accounting rather than an accrual method as compared to the six months ended August 31, 2021 – see Note 1 in the Notes to Unaudited Consolidated Financial Statements for our lease revenue recognition policy; and

•a $6.5 million increase due to lease extensions, amendments, transitions and other changes.

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These increases were partially offset by:

•a $28.2 million decrease due to lease terminations, of which $21.3 million relates to aircraft for which the leases were terminated as a result of sanctions against Russia; and

•a $10.3 million decrease related to the sale of sixteen aircraft since March 1, 2021.

Direct financing and sales-type lease revenue decreased $0.8 million, primarily related to the sales of five aircraft since March 1, 2021, partially offset by the reclassification of two aircraft to sales-type leases.

Amortization of lease premiums, discounts and lease incentives:

	Six Months Ended August 31,
	2022		2021
	(Dollars in thousands)
Amortization of lease premiums	$	(5,278)	$	(6,500)
Amortization of lease discounts	255		457
Amortization of lease incentives	(5,883)		(5,116)
Amortization of lease premiums, discounts and incentives	$	(10,906)	$	(11,159)

Maintenance revenue. For the six months ended August 31, 2022, we recorded $47.2 million of maintenance revenue, of which $23.9 million related to payments received on maintenance letters of credit for our former Russian lessees and $11.9 million related to the early termination of one freighter aircraft as a result of a new wave of sanctions against Russia in the U.K. – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. In addition, we recorded maintenance revenue of $9.6 million related to the scheduled lease expirations of three narrow-body aircraft.

For the six months ended August 31, 2021, we recorded $47.7 million of maintenance revenue, comprised primarily of $41.9 million related to the scheduled lease expirations of four narrow-body aircraft and the early lease terminations of three narrow-body and one wide-body aircraft. In addition, we recorded $5.4 million of maintenance revenue related to one narrow-body and one wide-body aircraft for which the customers were previously subject to judicial insolvency proceedings or similar protection.

Gain on sale of flight equipment. During the six months ended August 31, 2022, we sold nine aircraft for a gain of $13.7 million as compared to the sale of four aircraft during the six months ended August 31, 2021 for a gain of $10.5 million.

Other revenue increased $2.5 million to $3.6 million for the six months ended August 31, 2022 attributable to $1.5 million of payments received on general security letters of credit for our former Russian lessees and $1.8 million of security deposits retained by us in connection with an aircraft lease amendment.

Operating expenses

Total operating expenses decreased $14.6 million for the six months ended August 31, 2022 as compared to the six months ended August 31, 2021.

Depreciation expense decreased $2.4 million primarily attributable to $19.9 million resulting from seventeen aircraft sold since March 1, 2021 and lower depreciation related to aircraft subject to impairments, including aircraft that were previously leased to Russian airlines. This was partially offset by an increase of $14.1 million related to 26 aircraft acquired since March 1, 2021.

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Interest, net consisted of the following:

	Six Months Ended August 31,
	2022		2021
	(Dollars in thousands)
Interest on borrowings and other liabilities	$	95,633	$	106,135
Amortization of deferred financing fees and debt discount	7,095		8,384
Interest expense	102,728		114,519
Less: Interest income	(1,007)		(712)
Less: Capitalized interest	(840)		(357)
Interest, net	$	100,881	$	113,450

Interest, net decreased $12.6 million, primarily due to $518.9 million in lower weighted average debt outstanding.

Selling, general and administrative expenses increased $5.7 million, primarily due to an increase in personnel costs, as well as Russia-related legal costs and travel expenses due to increased business travel.

Impairment of aircraft. During the six months ended August 31, 2022, the Company wrote off the remaining book value of eight narrow-body and one freighter aircraft in Russia, which have not been returned to us, totaling $31.9 million. While we maintain title to the aircraft and will continue to pursue repossession, we determined that it is unlikely we will regain possession of these nine aircraft – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. The Company recognized $9.5 million of maintenance and other revenue for these nine aircraft related to payments received on maintenance and general security letters of credit.

The Company also recorded impairment charges totaling $6.2 million related to the scheduled lease expiration of one narrow-body aircraft and other flight equipment during the six months ended August 31, 2022. The Company recognized $6.1 million of maintenance revenue for this one aircraft.

During the six months ended August 31, 2021, the Company recorded impairment charges totaling $41.8 million, of which $38.6 million were transactional impairments, primarily related to four narrow-body aircraft resulting from three early lease terminations and one scheduled lease expiration. The Company recognized $37.1 million of maintenance revenue for these four aircraft.

Maintenance and other costs were $13.3 million and $15.6 million for the six months ended August 31, 2022 and 2021, respectively, which related to aircraft that have transitioned or will transition to new lessees as a result of lease terminations or scheduled lease expirations. The Company incurred higher maintenance costs during the six months ended August 31, 2021 and continues to incur higher costs compared to historical levels, resulting from extended transition periods driven by supply chain issues and manpower shortages.

Other income (expense)

Total other income decreased by $41.9 million for the six months ended August 31, 2022 as compared to the six months ended August 31, 2021. During the six months ended August 31, 2021, the Company recognized $55.2 million of proceeds from the sales of unsecured claims related to the LATAM Bankruptcy into other income. This was partially offset by a $14.1 million loss on extinguishment of debt related to the early redemption in full of $500.0 million outstanding aggregate principal amount of our 5.5% Senior Notes due 2022.

Income tax benefit

Our income tax benefit for the six months ended August 31, 2022 and 2021 was $0.7 million and $0.6 million, respectively. The six months ended August 31, 2022 included net non-cash impairment charges, which were recorded in a low tax jurisdiction. Further, the six months ended August 31, 2021 included income from the sale of unsecured claims related to the LATAM Bankruptcy, which was recorded in a low tax jurisdiction.

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Aircraft Valuation

Annual Recoverability Assessment

We plan to perform our annual recoverability assessment of all our aircraft during the third quarter of 2022.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and will focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

The recoverability assessment is a comparison of the carrying value of each aircraft to its estimated undiscounted future cash flows. We develop the assumptions used in the recoverability assessment, including those relating to current and future demand for each aircraft type, based on management’s experience in the aircraft leasing industry, as well as information received from third-party sources. Estimates of the undiscounted cash flows for each aircraft type are impacted by changes in contracted and future expected lease rates, residual values, expected scrap values, economic conditions and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

If our estimates or assumptions change, including those related to our customers that have entered judicial insolvency proceedings, we may revise our cash flow assumptions and record future impairment charges. While we believe that the estimates and related assumptions used in our recoverability assessments are appropriate, actual results could differ from those estimates.

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RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

See Note 1 – “Summary of Significant Accounting Policies – Organization and Basis of Presentation” in the Notes to Unaudited Consolidated Financial Statements above.

RECENT UNADOPTED ACCOUNTING PRONOUNCEMENTS

See Note 1 – “Summary of Significant Accounting Policies – Recent Accounting Pronouncements” in the Notes to Unaudited Consolidated Financial Statements above.

LIQUIDITY AND CAPITAL RESOURCES

Our business is very capital intensive, requiring significant investments in order to expand our fleet and to maintain and improve our existing portfolio. Our operations have historically generated a significant amount of cash, primarily from lease rentals and maintenance collections. We have also met our liquidity and capital resource needs by utilizing several sources over time, including:

•various forms of borrowing secured by our aircraft, including bank term facilities, limited recourse securitization financings, and ECA-backed financings for new aircraft acquisitions;

•unsecured indebtedness, including our current unsecured revolving credit facilities, term loan and senior notes;

•asset sales; and

•sales of common and preference shares.

Going forward, we expect to continue to seek liquidity from these sources and other sources, subject to pricing and conditions we consider satisfactory.

During the six months ended August 31, 2022, we met our liquidity and capital resource needs with $215.6 million of cash flows from operations and $171.1 million of cash from the sale of aircraft and other flight equipment.

As of August 31, 2022, the weighted-average maturity of our secured and unsecured debt financings was 2.6 years and we were in compliance with all applicable covenants.

While the industry continues to recover from the impact of COVID-19, according to IATA, as of August 31, 2022, air travel was still down to approximately 74% compared to normal levels. If air traffic remains depressed over an extended period and if our customers are unable to obtain sufficient funds from private, government or other sources, we may need to provide lease concessions to certain customers in the form of deferrals or broader lease restructurings. We may ultimately be unable to collect some or all amounts that we have deferred or may defer in future periods. As of August 31, 2022, we hold $65.4 million in security deposits, $498.8 million in maintenance payments and $109.9 million in letters of credit from our lessees, of which $24.1 million relates to our former Russian lessees and for which we are pursuing collection.

We believe we have sufficient liquidity to meet our contractual obligations over the next twelve months and as of October 1, 2022, total liquidity of $2.1 billion includes $1.4 billion of undrawn credit facilities, $0.3 billion of unrestricted cash and $0.4 billion of projected adjusted operating cash flows through October 1, 2023. In addition, we believe payments received from lessees and other funds generated from operations, unsecured bond offerings, borrowings secured by our aircraft, borrowings under our revolving credit facilities and other borrowings and proceeds from future aircraft sales will be sufficient to satisfy our liquidity and capital resource needs over the next twelve months. Our liquidity and capital resource needs include payments due under our aircraft purchase obligations, required principal and interest payments under our long-term debt facilities, expected capital expenditures, lessee maintenance payment reimbursements and lease incentive payments.

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Cash Flows

	Six Months Ended August 31,
	2022		2021
	(Dollars in thousands)
Net cash flow provided by operating activities	$	215,616	$	179,714
Net cash flow used in investing activities	(195,405)		(282,348)
Net cash flow provided by (used in) financing activities	56,470		(137,769)

Operating Activities:

Cash flow provided by operating activities was $215.6 million and $179.7 million for the six months ended August 31, 2022 and 2021, respectively. The increase of $35.9 million was primarily attributable to:

•$25.4 million of payments received on maintenance and general security letters of credit for our former Russian lessees;

•a $22.4 million increase in lease rental revenue as the six months ended August 31, 2022 included a lower number of customers for which lease rental revenue was recognized using a cash basis of accounting rather than an accrual method; and

•an $18.5 million increase in cash related to accounts receivable and other assets, primarily due to an increase in customer collections, including the repayment of lease deferrals, as global air traffic recovers from the COVID-19 pandemic.

These inflows were offset by a decrease in cash of $21.1 million resulting from the termination of our Russian leases.

Investing Activities:

Cash flow used in investing activities was $195.4 million and $282.3 million for the six months ended August 31, 2022 and 2021, respectively. The decrease of $86.9 million was primarily attributable to a $93.2 million increase in proceeds from the sale of flight equipment.

Financing Activities:

Cash flow provided by financing activities was $56.5 million for the six months ended August 31, 2022 as compared to cash flow used in financing activities of $137.8 million for the six months ended August 31, 2021. The net cash increase of $194.2 million was primarily attributable to a $563.5 million decrease in repayments of secured and unsecured debt financings, net of proceeds. In addition, security deposits and maintenance payments received, net of payments returned, increased $18.6 million for the six months ended August 31, 2022 as compared to the six months ended August 31, 2021.

These inflows were partially offset by a $393.4 million decrease in net proceeds from the issuance of preference shares.

Debt Obligations

For complete information on our debt obligations, refer to Note 8 – “Secured and Unsecured Debt Financings” in the Notes to Unaudited Consolidated Financial Statements.

Contractual Obligations

Our contractual obligations consist of principal and interest payments on debt financings, aircraft acquisitions and rent payments related to our office leases. Total contractual obligations decreased to $5.8 billion at August 31, 2022 from $6.0 billion at February 28, 2022, due to lower outstanding debt and the related interest thereon resulting from principal repayments, partially offset by higher aircraft purchase commitments.

35

Capital Expenditures

From time to time, we make capital expenditures to maintain or improve our aircraft. These expenditures include the cost of major overhauls necessary to place an aircraft in service and modifications made at the request of lessees. For the six months ended August 31, 2022 and 2021, we incurred a total of $49.4 million and $17.6 million, respectively, of capital expenditures (including lease incentives) related to the improvement of aircraft.

As of August 31, 2022, the weighted average age by net book value of our aircraft was approximately 10.3 years. In general, the costs of operating an aircraft, including maintenance expenditures, increase with the age of the aircraft. Our lease agreements call for the lessee to be primarily responsible for maintaining the aircraft. Maintenance reserves are generally paid by the lessee to provide for future maintenance events. Provided a lessee performs scheduled maintenance of the aircraft, we are required to reimburse the lessee for scheduled maintenance payments. In certain cases, we are also required to make lessor contributions, in excess of amounts a lessee may have paid, towards the costs of maintenance events performed by or on behalf of the lessee. We may incur additional maintenance and modification costs in the future in the event we are required to remarket an aircraft, such as in the event of a lessee default or a lessee fails to meet its maintenance obligations under the lease agreement.

Actual maintenance payments to us by lessees in the future may be less than projected as a result of several factors, such as in the event of a lessee default. Maintenance reserves may not cover the entire amount of actual maintenance expenses incurred and, where these expenses are not otherwise covered by the lessees, there can be no assurance that our operational cash flow and maintenance reserves will be sufficient to fund maintenance requirements, particularly as our aircraft age. See Item 1A. “Risk Factors – Risks Related to Our Business – Risks related to our leases – If lessees are unable to fund their maintenance obligations on our aircraft, we may incur increased costs at the conclusion of the applicable lease” in our Annual Report on Form 10-K for the year ended February 28, 2022.

Off-Balance Sheet Arrangements

We entered into a joint venture arrangement in order to help expand our base of new business opportunities. This joint venture does not qualify for consolidated accounting treatment. The assets and liabilities of this entity are not included in our consolidated balance sheets and we record our net investment under the equity method of accounting. See Note 7 in the Notes to Unaudited Consolidated Financial Statements.

We hold a 25% equity interest in our joint venture with Mizuho Leasing and as of August 31, 2022, the net book value of its nine aircraft was $292.0 million.

Foreign Currency Risk and Foreign Operations

At August 31, 2022, all our leases are payable to us in U.S. dollars. However, we incur Euro and Singapore dollar-denominated expenses in connection with our subsidiaries in Ireland and Singapore. For the six months ended August 31, 2022, expenses, such as payroll and office costs, denominated in currencies other than the U.S. dollar aggregated approximately $9.6 million in U.S. dollar equivalents and represented 25.8% of total selling, general and administrative expenses. Our international operations are a significant component of our business strategy and permit us to more effectively source new aircraft, service the aircraft we own and maintain contact with our lessees. Therefore, our international operations and our exposure to foreign currency risk will likely increase over time. Although we have not yet entered into foreign currency hedges because our exposure to date has not been significant, if our foreign currency exposure increases, we may enter into hedging transactions in the future to mitigate this risk. For the six months ended August 31, 2022 and 2021, we incurred insignificant net gains and losses on foreign currency transactions.

Inflation

Inflation affects our lease rentals, asset values and costs, including operating expenses and maintenance and other costs. We do not believe that our financial results have been, or will be, adversely affected by inflation in a material way.

36

Management’s Use of EBITDA and Adjusted EBITDA

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-U.S. GAAP measure is helpful in identifying trends in our performance.

This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals, as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.

EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management and the Board of Directors to review the consolidated financial performance of our business.

We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants.

The table below shows the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the three and six months ended August 31, 2022 and 2021:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
Net income (loss)	$	(8,693)	$	9,803	$	(1,011)	$	50
Depreciation	82,106		83,391		163,424		165,782
Amortization of lease premiums, discounts and incentives	5,518		5,835		10,906		11,159
Interest, net	50,587		55,413		100,881		113,450
Income tax provision (benefit)	(4,068)		7,665		(739)		(627)
EBITDA	125,450		162,107		273,461		289,814
Adjustments:
Impairment of flight equipment	33,671		21,232		38,099		41,815
Loss on extinguishment of debt	—		14,132		463		14,156
Adjusted EBITDA	$	159,121	$	197,471	$	312,023	$	345,785

Limitations of EBITDA and Adjusted EBITDA

An investor or potential investor may find EBITDA and Adjusted EBITDA important measures in evaluating our performance, results of operations and financial position. We use these non-U.S. GAAP measures to supplement our U.S. GAAP results in order to provide a more complete understanding of the factors and trends affecting our business.

EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be viewed in isolation or as substitutes for U.S. GAAP measures of earnings (loss). Material limitations in making the adjustments to our earnings (loss) to calculate EBITDA and Adjusted EBITDA, and using these non-U.S. GAAP measures as compared to U.S. GAAP net income (loss), income (loss) from continuing operations and cash flows provided by or used in operations, include:

•depreciation and amortization, though not directly affecting our current cash position, represent the wear and tear and/or reduction in value of our aircraft, which affects the aircraft’s availability for use and may be indicative of future needs for capital expenditures;

•the cash portion of income tax (benefit) provision generally represents charges (gains), which may significantly affect our financial results; and

37

•adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes which may not be comparable to similarly titled measures used by other companies.

EBITDA and Adjusted EBITDA are not alternatives to net income (loss), income (loss) from operations or cash flows provided by or used in operations as calculated and presented in accordance with U.S. GAAP. You should not rely on these non-U.S. GAAP measures as a substitute for any such U.S. GAAP financial measure. We strongly urge you to review the reconciliations to U.S. GAAP net income (loss), along with our consolidated financial statements included elsewhere in this report. We also strongly urge you to not rely on any single financial measure to evaluate our business. In addition, because EBITDA and Adjusted EBITDA are not measures of financial performance under U.S. GAAP and are susceptible to varying calculations, EBITDA and Adjusted EBITDA as presented in this report, may differ from and may not be comparable to similarly titled measures used by other companies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET 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. These risks are highly sensitive to many factors, including U.S. monetary and tax policies, U.S. and international 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 exposures relate to our floating rate debt obligations. Rent payments under our aircraft lease agreements typically do not vary during the term of the lease according to changes in interest rates. However, our borrowing agreements generally require payments based on a variable interest rate index, such as LIBOR or an alternative reference rate. 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 securities. If LIBOR is no longer available or in certain other circumstances as described in the borrowing agreements, the applicable borrowing agreements provide a mechanism for determining an alternative rate of interest. There is no assurance that any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, LIBOR.

Sensitivity Analysis

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. It also does not include a variety of other potential factors that could affect our business as a result of changes in interest rates.

As of August 31, 2022, a hypothetical 100-basis point increase/decrease in interest rates on our variable rate borrowings would result in an interest expense increase/decrease of $3.6 million and $3.6 million, respectively, over the next twelve months.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures” is defined in Exchange Act Rules 13a-15(e) and 15d-15(e). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as appropriate, to allow timely decisions regarding required disclosure. An evaluation was performed under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures as of August 31, 2022. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of August 31, 2022.

38

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f), that occurred during the quarter ended August 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. — OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

The Company is not a party to any material legal or adverse regulatory proceedings.

ITEM 1A. RISK FACTORS

There have been no material changes to the disclosure related to the risk factors described in our Annual Report on Form 10-K for the year ended February 28, 2022, as filed with the SEC.

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

Environmental, Social and Governance (“ESG”)

Information on our ESG initiatives can be found on our website at www.aircastle.com under “About – ESG.” The information on the Company’s website regarding our ESG initiatives is not part of, nor incorporated by reference, into this report, or any other report we file with, or furnish to, the SEC.

39

ITEM 6.    EXHIBITS

Exhibit No.	Description of Exhibit
3.1	Amended and Restated Memorandum of Association (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2020).
3.2	Amended and Restated Bye-laws (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 27, 2020).
3.3	Certificate of Designations, dated June 8, 2021 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 8, 2021).
4.1	Specimen Share Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (Amendment No. 2) (No. 333-134669) filed on July 25, 2006).
4.2	Indenture, dated as of December 5, 2013, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 6, 2013).
4.3	Fourth Supplemental Indenture, dated as of March 24, 2016, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 24, 2016).
4.4	Fifth Supplemental Indenture, dated as of March 20, 2017, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 20, 2017).
4.5	Sixth Supplemental Indenture, dated as of September 25, 2018, between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on September 25, 2018).
4.6	Seventh Supplemental Indenture, dated as of June 13, 2019, between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 13, 2019).
4.7	Indenture, dated as of August 11, 2020, by and between Aircastle Limited and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 11, 2020).
4.8	Indenture, dated as of January 26, 2021, by and between Aircastle and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 26, 2021).
4.9	Deposit Agreement, dated June 8, 2021, among Aircastle Limited, Computer share Inc. and Computershare Trust Company, N.A., acting jointly as depositary, and the holders from time to time of depositary receipts issued thereunder (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 8, 2021).
10.1	Amendment No. 17 to Purchase Agreement COM0270-15, dated as of August 24, 2022 (Amendment No. 17), by and between Aircastle Holding Corporation and Embraer S.A. * ** ØØ
31.1	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. *
31.2	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002. *
32.1	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. *
32.2	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. *
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended August 31, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of August 31, 2022 and February 28, 2022; (ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the three and six months ended August 31, 2022 and 2021; (iii) Consolidated Statements of Cash Flows for the six months ended August 31, 2022 and 2021; (iv) Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended August 31, 2022 and 2021; and (v) Notes to Unaudited Consolidated Financial Statements.*

40

Exhibit No.	Description of Exhibit
104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

* Filed herewith.

** Certain attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

ØØ Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

41

SIGNATURE

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.

Dated: October 12, 2022

AIRCASTLE LIMITED
(Registrant)
By:	/s/ Dane Silverman
	Dane Silverman
	Chief Accounting Officer and Authorized Officer

42

EX-10.1

Exhibit 10.1

Executed Version

Certain identified information marked with “[***]” has been omitted from this document because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.

AMENDMENT No. 17 TO PURCHASE AGREEMENT COM0270-15

This Amendment No. 17 (COM0270-22), dated as of August 24, 2022 (“Amendment No. 17”), is among Embraer S.A., as successor of Yaborã Industria Aeronautica S.A., ("Embraer S.A." or "Seller"), a corporation existing under the laws of Brazil, with its principal place of business at Avenida Brigadeiro Faria Lima, 2170, Putim, in the city of São José dos Campos, State of São Paulo, Brazil, and Aircastle Holding Corporation Limited (“Buyer”) collectively referred to herein as the “Parties”, and constitutes an amendment and modification to Purchase Agreement COM0270-15, dated June 12th, 2015, as amended from time to time (the "Purchase Agreement").

All capitalized terms not otherwise defined herein shall have the same meaning when used herein as provided in the Purchase Agreement and in case of any conflict between this Amendment No. 17 and the Purchase Agreement, this Amendment No. 17 shall control.

WHEREAS, [***].

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by the Parties, Seller and Buyer hereby agree as follows:

1. [***].

2. [***].

3. ATTACHMENT CHANGE

As a result of the changes referred to in Article 1 above, the Attachment “A3” and Attachment “A4” to the Purchase Agreement is hereby deleted and replaced in their entirety by the Attachment “A3” and Attachment “A4” attached to this Amendment No. 17, which shall be deemed to be Attachment “A3” and Attachment “A4” for all purposes under the Purchase Agreement.

4. REINSTATEMENT OF PURCHASE AGREEMENT

All other provisions and conditions of the referenced Purchase Agreement, as well as its related Attachments, which are not specifically modified by this Amendment No. 17 shall remain in full force and effect without any change.

5. COUNTERPARTS

This Amendment No. 17 may be signed by the parties hereto in any number of separate counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument and all of which when taken together shall constitute one and the same instrument.

This Amendment No. 17 may be signed by facsimile with originals duly signed to follow by an internationally recognized courier.

[INTENTIONALLY LEFT BLANK – SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, Seller and Buyer, by their duly authorized officers, have entered into and executed this Amendment No. 17 to be effective as of the date first written above.

EMBRAER S.A.	AIRCASTLE HOLDING CORPORATION LIMITED
By /s/ Marcelo Santiago Name: Marcelo Santiago Title: Vice President Contracts &               Asset Management	By /s/ Stephen Quinn Name: Stephen Quinn Title: Director
By /s/ Marc Thomas Ahlgrimm Name: Marc Thomas Ahlgrimm Title: Director, Contracts               Administration
Place: São José dos Campos, SP,              Brazil	Place: Stamford, CT, USA

ATTACHMENT A3

E195-E2 AIRCRAFT CONFIGURATION

ATTACHMENT A4

E192-E2 AIRCRAFT CONFIGURATION

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Inglese, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Aircastle Limited;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 12, 2022

/s/ Michael Inglese

Michael Inglese

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Roy Chandran, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Aircastle Limited;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: October 12, 2022

/s/ Roy Chandran

Roy Chandran

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Aircastle Limited (the “Company”) for the three months ended August 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Inglese, as Chief Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by section 906 has been provided to Aircastle Limited and will be retained by Aircastle Limited and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Michael Inglese
Name:	Michael Inglese
Title:	Chief Executive Officer
Date:	October 12, 2022

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Aircastle Limited (the “Company”) for the three months ended August 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Roy Chandran, as Acting Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by section 906 has been provided to Aircastle Limited and will be retained by Aircastle Limited and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Roy Chandran
Name:	Roy Chandran
Title:	Chief Financial Officer
Date:	October 12, 2022

XML

Cover Page - shares	6 Months Ended
	Aug. 31, 2022	Oct. 07, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Aug. 31, 2022
Document Transition Report	false
Entity File Number	001-32959
Entity Registrant Name	AIRCASTLE LIMITED
Entity Incorporation, State or Country Code	D0
Entity Tax Identification Number	98-0444035
Entity Address, Address Line One	c/o Aircastle Advisor LLC
Entity Address, Address Line Two	201 Tresser Boulevard, Suite 400
Entity Address, City or Town	Stamford
Entity Address, State or Province	CT
City Area Code	203
Local Phone Number	504-1020
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		14,048
Entity Central Index Key	0001362988
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--02-28
Entity Address, Postal Zip Code	06901
Common Shares
Document Information [Line Items]
Title of 12(b) Security	Common Shares, par value $0.01 per share
Security Exchange Name	NONE
No Trading Symbol Flag	true
Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	Preference Shares, par value $0.01 per share
Security Exchange Name	NONE
No Trading Symbol Flag	true

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Aug. 31, 2022	Feb. 28, 2022
ASSETS
Cash and cash equivalents	$ 246,713	$ 167,891
Restricted cash and cash equivalents	650	2,791
Accounts receivable	54,960	63,666
Flight equipment held for lease, net	6,355,679	6,313,950
Net investment in leases, net	137,619	150,325
Unconsolidated equity method investments	39,494	38,317
Other assets	327,141	356,326
Total assets	7,162,256	7,093,266
LIABILITIES
Borrowings from secured financings, net	626,776	684,039
Borrowings from unsecured financings, net	3,915,114	3,835,841
Accounts payable, accrued expenses and other liabilities	195,004	177,424
Lease rentals received in advance	43,040	37,361
Security deposits	65,366	69,189
Maintenance payments	498,768	459,713
Total liabilities	5,344,068	5,263,567
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at August 31, 2022 and February 28, 2022	0	0
Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at August 31, 2022 and February 28, 2022	0	0
Additional paid-in capital	1,878,774	1,878,774
Accumulated deficit	(60,586)	(49,075)
Total shareholders’ equity	1,818,188	1,829,699
Total liabilities and shareholders’ equity	$ 7,162,256	$ 7,093,266

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Consolidated Balance Sheets (Parenthetical) - USD ($)	Aug. 31, 2022	Feb. 28, 2022
Statement of Financial Position [Abstract]
Preference shares, par value	$ 0.01	$ 0.01
Preference shares, shares authorized	50,000,000	50,000,000
Preferred Stock, Shares Issued	400	400
Preferred Stock, Shares Outstanding	400	400
Preferred Stock, Liquidation Preference, Value	$ 400,000	$ 400,000
Common shares, par value	$ 0.01	$ 0.01
Common shares, shares authorized	250,000,000	250,000,000
Common shares, shares issued	14,048	14,048
Common shares, shares outstanding	14,048	14,048

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Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2022	Aug. 31, 2021	Aug. 31, 2022	Aug. 31, 2021
Revenues:
Lease rental revenue	$ 146,508	$ 137,589	$ 290,652	$ 269,714
Direct financing and sales-type lease revenue	2,265	2,776	4,863	5,653
Amortization of lease premiums, discounts and incentives	(5,518)	(5,835)	(10,906)	(11,159)
Maintenance revenue	20,114	21,218	47,213	47,694
Total lease revenue	163,369	155,748	331,822	311,902
Gain on sale of flight equipment	10,049	1,502	13,736	10,524
Other revenue	161	402	3,585	1,036
Total revenues	173,579	157,652	349,143	323,462
Operating expenses:
Depreciation	82,106	83,391	163,424	165,782
Interest, net	50,587	55,413	100,881	113,450
Selling, general and administrative	17,393	15,990	37,309	31,573
Provision for credit losses	109	6	689	12
Impairment of flight equipment	33,671	21,232	38,099	41,815
Maintenance and other costs	5,212	8,087	13,277	15,615
Total operating expenses	189,078	184,119	353,679	368,247
Other income (expense):
Loss on extinguishment of debt	0	(14,132)	(463)	(14,156)
Other	2,072	57,609	2,072	57,619
Total other income	2,072	43,477	1,609	43,463
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	(13,427)	17,010	(2,927)	(1,322)
Income tax provision (benefit)	(4,068)	7,665	(739)	(627)
Earnings of unconsolidated equity method investments, net of tax	666	458	1,177	745
Net income (loss)	(8,693)	9,803	(1,011)	50
Preference share dividends	(10,500)	(5,658)	(10,500)	(5,658)
Earnings available to common shareholders – Basic	(19,193)	4,145	(11,511)	(5,608)
Total comprehensive income (loss) available to common shareholders	$ (19,193)	$ 4,145	$ (11,511)	$ (5,608)

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2022	Aug. 31, 2021	Aug. 31, 2022	Aug. 31, 2021
Cash flows from operating activities:
Net income (loss)	$ (8,693)	$ 9,803	$ (1,011)	$ 50
Adjustments to reconcile net income (loss) to net cash and restricted cash provided by operating activities:
Depreciation	82,106	83,391	163,424	165,782
Amortization of deferred financing costs			7,095	8,384
Amortization of lease premiums, discounts and incentives	5,518	5,835	10,906	11,159
Deferred income taxes			6,588	4,240
Collections on net investment in leases			4,016	8,065
Security deposits and maintenance payments included in earnings			(2,133)	(30,420)
Gain on sale of flight equipment	(10,049)	(1,502)	(13,736)	(10,524)
Loss on extinguishment of debt	0	14,132	463	14,156
Impairment of flight equipment	33,671	21,232	38,099	41,815
Provision for credit losses	109	6	689	12
Other			(1,179)	(745)
Changes in certain assets and liabilities:
Accounts receivable			5,808	(5,479)
Other assets			(8,223)	(15,413)
Accounts payable, accrued expenses and other liabilities			(2,284)	(10,664)
Lease rentals received in advance			7,094	(704)
Net cash and restricted cash provided by operating activities			215,616	179,714
Cash flows from investing activities:
Acquisition and improvement of flight equipment			(372,474)	(370,187)
Proceeds from sale of flight equipment			171,065	77,900
Aircraft purchase deposits and progress payments, net of deposits returned and aircraft sales deposits			4,504	10,003
Payments for (Proceeds from) Other Investing Activities			1,500	(64)
Net cash and restricted cash used in investing activities			(195,405)	(282,348)
Cash flows from financing activities:
Proceeds from Issuance of Preferred Stock and Preference Stock			0	393,362
Proceeds from secured and unsecured debt financings			75,000	0
Repayments of secured and unsecured debt financings			(58,355)	(546,903)
Debt extinguishment costs			(291)	(13,372)
Deferred financing costs			(1,903)	(4,748)
Security deposits and maintenance payments received			63,758	44,111
Security deposits and maintenance payments returned			(11,239)	(10,219)
Dividends paid			(10,500)	0
Net cash and restricted cash provided by (used in) financing activities			56,470	(137,769)
Net increase in cash and restricted cash:			76,681	(240,403)
Cash and restricted cash at beginning of period			170,682	580,598
Cash and restricted cash at end of period	247,363	340,195	247,363	340,195
Cash and cash equivalents	246,713	337,455	246,713	337,455
Restricted cash and cash equivalents	650	2,740	650	2,740
Unrestricted and restricted cash and cash equivalents	$ 247,363	$ 340,195	247,363	340,195
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized			93,007	107,102
Cash paid for income taxes			200	1,201
Supplemental disclosures of non-cash investing activities:
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets assumed in asset acquisitions			6,100	1,158
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets settled in sale of flight equipment			14,791	12,506
Transfers from flight equipment held for lease to Net investment in leases and Other assets			$ 8,895	$ 3,554

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Consolidated Statements of Shareholder's Equity Statement - USD ($) $ in Thousands	Total	Common Shares	Preferred Stock	Additional Paid-In Capital	Accumulated Deficit
Preferred Stock, Shares Outstanding			0
Balance, shares at Feb. 28, 2021		14,048
Balance at Feb. 28, 2021	$ 1,731,070	$ 0	$ 0	$ 1,485,777	$ 245,293
Net income (loss)	(9,753)
Balance, shares at May. 31, 2021		14,048
Balance at May. 31, 2021	1,721,317	$ 0	0	1,485,777	235,540
Balance, shares at Feb. 28, 2021		14,048
Balance at Feb. 28, 2021	1,731,070	$ 0	0	1,485,777	245,293
Net income (loss)	50
Balance, shares at Aug. 31, 2021		14,048
Balance at Aug. 31, 2021	2,118,824	$ 0	$ 0	1,879,139	239,685
Preferred Stock, Shares Outstanding			0
Balance, shares at May. 31, 2021		14,048
Balance at May. 31, 2021	1,721,317	$ 0	$ 0	1,485,777	235,540
Net income (loss)	9,803
Stock Issued During Period, Value, New Issues	393,362			393,362
Stock Issued During Period, Shares, New Issues			400
Balance, shares at Aug. 31, 2021		14,048
Balance at Aug. 31, 2021	2,118,824	$ 0	$ 0	1,879,139	239,685
Dividends, Preferred Stock	$ (5,658)				(5,658)
Preferred Stock, Shares Outstanding			400
Preferred Stock, Shares Outstanding	400		400
Balance, shares at Feb. 28, 2022	14,048	14,048
Balance at Feb. 28, 2022	$ 1,829,699	$ 0	$ 0	1,878,774	(49,075)
Net income (loss)	7,682
Balance, shares at May. 31, 2022		14,048
Balance at May. 31, 2022	1,837,381	$ 0	0	1,878,774	(41,393)
Dividends, Preferred Stock	$ (10,500)
Balance, shares at Feb. 28, 2022	14,048	14,048
Balance at Feb. 28, 2022	$ 1,829,699	$ 0	0	1,878,774	(49,075)
Net income (loss)	$ (1,011)
Balance, shares at Aug. 31, 2022	14,048	14,048
Balance at Aug. 31, 2022	$ 1,818,188	$ 0	$ 0	1,878,774	(60,586)
Preferred Stock, Shares Outstanding			400
Balance, shares at May. 31, 2022		14,048
Balance at May. 31, 2022	1,837,381	$ 0	$ 0	1,878,774	(41,393)
Net income (loss)	$ (8,693)
Balance, shares at Aug. 31, 2022	14,048	14,048
Balance at Aug. 31, 2022	$ 1,818,188	$ 0	$ 0	$ 1,878,774	(60,586)
Dividends, Preferred Stock	$ (10,500)				$ (10,500)
Preferred Stock, Shares Outstanding	400		400

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Summary of Significant Accounting Policies

6 Months Ended

Aug. 31, 2022

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Organization

Aircastle Limited (“Aircastle,” the “Company,” “we,” “us” or “our”) is a Bermuda exempted company that was incorporated on October 29, 2004 under the provisions of Section 14 of the Companies Act of 1981 of Bermuda. Aircastle’s business consists of acquiring, leasing, managing and selling commercial jet aircraft.

The Company is controlled by affiliates of Marubeni Corporation (“Marubeni”) and Mizuho Leasing Company, Limited (“Mizuho Leasing”). Aircastle is a holding company and conducts its business through subsidiaries that are wholly-owned, either directly or indirectly, by Aircastle.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements presented are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

The accompanying consolidated financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, in our opinion, reflect all adjustments, including normal recurring items, which are necessary to present fairly the results for interim periods. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the entire year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. However, we believe that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2022.

The consolidated financial statements include the accounts of Aircastle and all its subsidiaries, including any Variable Interest Entity (“VIE”) of which Aircastle is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

We manage and analyze our business and report on our results of operations based on one operating segment: leasing, financing, selling and managing commercial flight equipment. Our Chief Executive Officer is the chief operating decision maker.

The Company’s management has reviewed and evaluated all events or transactions for potential recognition and/or disclosure subsequent to the balance sheet date of August 31, 2022, through the date on which the consolidated financial statements included in this Form 10-Q were issued.

Risk and Uncertainties

In the normal course of business, Aircastle encounters several significant types of economic risk including credit, market, aviation industry and capital market risks. Credit risk is the risk of a lessee’s inability or unwillingness to make contractually required payments and to fulfill its other contractual obligations to Aircastle. Market risk reflects the change in the value of financings due to changes in interest rate spreads or other market factors, including the value of collateral underlying financings. Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of early lease terminations and depress lease rates and the value of the Company’s aircraft. Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While

Aircastle believes the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates.

Lease Revenue Recognition

We lease flight equipment under net operating leases with lease terms typically ranging from three to seven years. We generally do not offer renewal terms or purchase options in our leases, although certain of our operating leases allow the lessee the option to extend the lease for an additional term. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the initial lease, assuming no renewals.

In certain instances, we may provide lease concessions to customers, generally in the form of lease rental deferrals. While these deferral arrangements affect the timing of lease rental payments, the total amount of lease rental payments required over the lease term is generally the same as that which was required under the original lease agreement. We account for the deferrals as if no modifications to the lease agreements were made and record the deferred rentals as a receivable within other assets.

Should we determine that the collectability of rental payments is no longer probable (including any deferral thereof), we will recognize lease rental revenue using a cash basis of accounting rather than an accrual method. In the period we conclude that collection of lease payments is no longer probable, we recognize any difference between revenue amounts recognized to date under the accrual method and payments that have been collected from the lessee, including security deposit amounts held, as a current period adjustment to lease rental revenue.

Impairment of Flight Equipment

We perform an annual recoverability assessment of all aircraft in our fleet, on an aircraft-by-aircraft basis. A recoverability assessment is also performed whenever events or changes in circumstances, or indicators, suggest 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 change in an aircraft type’s storage levels, the introduction of newer technology aircraft or engines, an aircraft type is no longer in production or a significant airworthiness directive is issued. When we perform a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the aircraft exceed its net book value. The undiscounted cash flows consist of cash flows from currently contracted lease rental and maintenance payments, future projected lease rates and maintenance payments, transition costs, estimated down time, and estimated residual or scrap values for an aircraft. In the event that an aircraft does not meet the recoverability test, the aircraft will be adjusted to fair value, resulting in an impairment charge. See Note 2 in the Notes to Unaudited Consolidated Financial Statements.

Management develops the assumptions used in the recoverability analysis based on current and future expectations of the global demand for a particular aircraft type and historical experience in the aircraft leasing market and aviation industry, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and will focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform Topic 848 (“ASC 848”), in response to the market transition from the London interbank

offered rates (“LIBOR”) and other interbank offered rates (“IBORs”) to alternative reference rates. U.S. GAAP requires entities to evaluate whether a contract modification, such as the replacement or change of a reference rate, results in the establishment of a new contract or continuation of an existing contract. ASC 848 allows an entity to elect not to apply certain modification accounting requirements to contracts affected by reference rate reform. The standard provides this temporary election through December 31, 2022, and cannot be applied to contract modifications that occur after December 31, 2022. Reference rate reform will primarily impact our lease and debt arrangements for which floating-rate lease rentals and interest expense are based on LIBOR. As of August 31, 2022, less than 1% of our fleet have floating-rate lease rentals and for the three and six months ended August 31, 2022, 8.0% and 6.5%, respectively, of our interest expense was derived from floating-rate debt which is referenced to LIBOR. We have not adopted ASC 848 and are evaluating the election available to us under the standard.

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Fair Value Measurements

6 Months Ended

Aug. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs.

The following tables set forth our financial assets as of August 31, 2022 and February 28, 2022 that we measured at fair value on a recurring basis by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

			Fair Value Measurements at August 31, 2022 Using Fair Value Hierarchy
	Fair Value as of August 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	246,713	$	246,713	$	—	$	—	Market
Restricted cash and cash equivalents	650		650		—		—		Market
Total	$	247,363	$	247,363	$	—	$	—

			Fair Value Measurements at February 28, 2022 Using Fair Value Hierarchy
	Fair Value as of February 28, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	167,891	$	167,891	$	—	$	—	Market
Restricted cash and cash equivalents	2,791		2,791		—		—		Market
Total	$	170,682	$	170,682	$	—	$	—

Our cash and cash equivalents and our restricted cash and cash equivalents consist largely of money market securities that are highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.

For the three and six months ended August 31, 2022, we had no transfers into or out of Level 3.

We measure the fair value of certain assets and liabilities on a non-recurring basis when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate the carrying amounts of these assets may not be recoverable. Assets subject to these measurements include our aircraft and investment in unconsolidated joint

venture. We record aircraft at fair value when we determine the carrying value may not be recoverable. Fair value measurements for aircraft in impairment tests are based on the average of the market approach that uses Level 2 inputs, which include third party appraisal data and an income approach that uses Level 3 inputs, which include the Company’s assumptions and appraisal data as to future cash proceeds from leasing and selling aircraft discounted using the Company’s weighted average cost of capital.

We account for our investment in unconsolidated joint ventures under the equity method of accounting. Our investment is recorded at cost and is adjusted by undistributed earnings and losses and the distributions of dividends and capital. This investment is reviewed for impairment whenever events or changes in circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary.

Aircraft Valuation

Impairment of Flight Equipment

Excluding asset write-offs related to Russia, during the three and six months ended August 31, 2022, the Company recorded impairment charges totaling $6.2 million related to the scheduled lease expiration of one narrow-body aircraft and other flight equipment. The Company recognized $6.1 million of maintenance revenue for this one aircraft during the three and six months ended August 31, 2022.

The Company wrote off the remaining book value of eight narrow-body and one freighter aircraft in Russia which have not been returned to us. As a result, the Company recorded impairment charges totaling $27.5 million and $31.9 million during the three and six months ended August 31, 2022, respectively – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. During the six months ended August 31, 2022, the Company recognized $9.5 million of maintenance and other revenue for these nine aircraft related to payments received on maintenance and general security letters of credit. No revenue was recognized for these nine aircraft during the three months ended August 31, 2022.

During the three months ended August 31, 2021, the Company recorded impairment charges totaling $21.2 million, of which $18.0 million were transactional impairments primarily related to two narrow-body aircraft resulting from early lease terminations. The Company recognized $16.1 million of maintenance revenue for these two aircraft.

During the six months ended August 31, 2021, the Company recorded impairment charges totaling $41.8 million, of which $38.6 million were transactional impairments, primarily related to four narrow-body aircraft resulting from three early lease terminations and one scheduled lease expiration. The Company recognized $37.1 million of maintenance revenue for these four aircraft.

Annual Recoverability Assessment

We plan to perform our annual recoverability assessment of all our aircraft during the third quarter of 2022.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and will focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

The recoverability assessment is a comparison of the carrying value of each aircraft to its estimated undiscounted future cash flows. We develop the assumptions used in the recoverability assessment, including those relating to current and future demand for each aircraft type, based on management’s experience in the aircraft leasing industry, as well as information received from third-party sources. Estimates of the undiscounted cash flows for each aircraft type are impacted by changes in contracted and future expected lease rates, residual values, expected scrap values, economic conditions and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

If our estimates or assumptions change, including those related to our customers that have entered judicial insolvency proceedings, we may revise our cash flow assumptions and record future impairment charges. While we believe that the estimates and related assumptions used in our recoverability assessments are appropriate, actual results could differ from those estimates.

Financial Instruments

Our financial instruments, other than cash, consist principally of cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and amounts borrowed under financings. The fair value of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable approximates the carrying value of these financial instruments because of their short-term nature.

The fair value of our senior notes is estimated using quoted market prices. The fair values of all our other financings are estimated using a discounted cash flow analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of our financial instruments at August 31, 2022 and February 28, 2022 were as follows:

	August 31, 2022				February 28, 2022
	Carrying  Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	95,000	$	95,000	$	20,000	$	20,000
Unsecured Term Loan	155,000		152,968		155,000		152,195
Export Credit Agency (“ECA”) Financings	—		—		21,576		21,931
Bank Financings	629,479		613,383		666,258		675,667
Senior Notes	3,700,000		3,481,227		3,700,000		3,776,997

All our financial instruments are classified as Level 2 except for our senior notes, which are classified as Level 1.

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Property, Plant, and Equipment

6 Months Ended

Aug. 31, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure

Note 3. Flight Equipment Held for Lease, Net

The following table summarizes the activities for the Company’s flight equipment held for lease for the six months ended August 31, 2022:

	Amount
Balance at February 28, 2022	$	6,313,950
Additions	361,928
Depreciation	(162,752)
Disposals and transfers to net investment in leases and held for sale	(122,366)
Impairments	(35,081)
Balance at August 31, 2022	$	6,355,679
Accumulated depreciation as of August 31, 2022	$	2,459,049

Write-off of Russian Aircraft

As of August 31, 2022, nine of our aircraft that were previously leased to Russian airlines remain in Russia. Most of the operators of these aircraft have continued to fly the aircraft notwithstanding the sanctions imposed on Russia and leasing terminations. While we will continue to pursue repossession, it is unlikely we will regain possession of any of these nine aircraft. As a result, the Company wrote off the remaining book value of these nine aircraft, resulting in impairment charges totaling $4.4 million and $27.5 million during the three months ended May 31, 2022 and August 31,

2022, respectively. These nine aircraft have been removed from the Company’s owned fleet count. The Company is vigorously pursuing insurance claims to recover its losses relating to these aircraft, however, collection, timing and amounts of any insurance recoveries is uncertain.

We also had one freighter aircraft outside of Russia that we successfully repossessed during the three months ended August 31, 2022. Additionally, in response to a new wave of sanctions against Russia in the United Kingdom (“U.K.”), the Company terminated the lease of one freighter aircraft with a U.K.-based airline and successfully repossessed that aircraft during the three months ended August 31, 2022. We recognized $11.9 million of maintenance revenue as a result of this lease termination. Subsequent to August 31, 2022, these two freighter aircraft and one wide-body aircraft previously on lease to a Russian airline were sold for gains of approximately $53.0 million.

During the six months ended August 31, 2022, the Company recognized $25.4 million of maintenance and other revenue related to payments received on maintenance and general security letters of credit for our former Russian lessees. We are pursuing collection on remaining letters of credit totaling $24.1 million.

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Lease Rental Revenues and Flight Equipment Held for Lease

6 Months Ended

Aug. 31, 2022

Leases [Abstract]

Lessor, Operating Leases [Text Block]

Note 4. Lease Rental Revenues

Minimum future lease rentals contracted to be received under our existing operating leases of flight equipment at August 31, 2022 were as follows:

Year Ending February 28/29,	Amount(1)
2023 (Remainder of fiscal year)	$	291,415
2024	546,501
2025	446,371
2026	331,792
2027	276,959
Thereafter	784,086
Total	$	2,677,124

_______________

(1)Reflects impact of lessee lease rental deferrals.

At August 31, 2022 and February 28, 2022, the amounts of lease incentive liabilities recorded in maintenance payments on our consolidated balance sheets were $20.1 million and $16.5 million, respectively.

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Net Investment in Leases, Net

6 Months Ended

Aug. 31, 2022

Leases [Abstract]

Net Investment in Leases, Net

Net Investment in Leases, Net

At August 31, 2022 and February 28, 2022, our net investment in leases consisted of nine and eleven aircraft, respectively. The components of our net investment in leases at August 31, 2022 and February 28, 2022, were as follows:

	August 31, 2022		February 28, 2022
Lease receivable	$	46,444	$	52,021
Unguaranteed residual value of flight equipment	93,620		100,068
Net investment leases	140,064		152,089
Allowance for credit losses	(2,445)		(1,764)
Net investment in leases, net	$	137,619	$	150,325

The activity in the allowance for credit losses related to our net investment in leases for the six months ended August 31, 2022 was as follows:

	Amount
Balance at February 28, 2022	$	1,764
Provision for credit losses	689
Write-offs	(8)
Balance at August 31, 2022	$	2,445

At August 31, 2022, future lease payments on net investment in leases are as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	3,983
2024	8,973
2025	9,509
2026	8,353
2027	8,292
Thereafter	16,103
Total lease payments to be received	55,213
Present value of lease payments - lease receivable	(46,444)
Difference between undiscounted lease payments and lease receivable	$	8,769

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Risks and Uncertainties

6 Months Ended

Aug. 31, 2022

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure

Note 6. Concentration of Risk

The classification of regions in the tables below is based on our customers’ principal place of business.

The geographic concentration of the net book value of our fleet (flight equipment held for lease and net investment in direct financing and sales-type leases, or “Net Book Value”) as of August 31, 2022 and February 28, 2022 was as follows:

	August 31, 2022				February 28, 2022
Region	Number of Aircraft		Net Book Value %		Number of Aircraft		Net Book Value %
Asia and Pacific	65		29	%	71		32	%
Europe	90		29	%	98		30	%
Middle East and Africa	10		4	%	10		4	%
North America	37		19	%	36		17	%
South America	26		13	%	25		13	%
Off-lease	15	(1)	6	%	11	(2)	4	%
Total	243		100	%	251		100	%

_______________

(1)Of the fifteen off-lease aircraft at August 31, 2022, we have two narrow-body aircraft and six wide-body aircraft which we are currently marketing for lease or sale.

(2)Of the eleven off-lease aircraft at February 28, 2022, we have three wide-body aircraft which we are currently marketing for lease or sale.

The following table sets forth individual countries representing at least 10% of our Net Book Value as of August 31, 2022 and February 28, 2022:

	August 31, 2022				February 28, 2022
Country	Net Book Value		Net Book Value %	Number of Lessees	Net Book Value		Net Book Value %	Number of Lessees
India	$	656,090	10%	3	$	670,523	10%	3

The geographic concentration of our lease rental revenue earned from flight equipment held for lease was as follows:

	Three Months Ended August 31,				Six Months Ended August 31,
Region	2022		2021		2022		2021
Asia and Pacific	35	%	32	%	34	%	33	%
Europe	29	%	36	%	29	%	35	%
Middle East and Africa	5	%	5	%	5	%	5	%
North America	18	%	15	%	17	%	15	%
South America	13	%	12	%	15	%	12	%
Total	100	%	100	%	100	%	100	%

The following table shows the number of lessees with lease rental revenue of at least 5% of total lease rental revenue and their combined total percentage of lease rental revenue for the periods indicated:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue
Largest lessees by lease rental revenue	4	28%	4	30%	3	23%	5	34%

For the three months ended August 31, 2022, total revenue attributable to the U.K, the United States, and India was 11%, 11%, and 10%, respectively. Total revenue attributable to the U.K. included $11.9 million of maintenance revenue resulting from the lease termination of one freighter aircraft – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. For the three months ended August 31, 2021, total revenue attributable to India was 13% and less than 10% for the U.K. and the United States.

For the six months ended August 31, 2022 and 2021, total revenue attributable to India was 11% and 13%, respectively.

Judicial Insolvency Proceedings or Similar Protection

As of October 7, 2022, three of our customers, to which we lease sixteen aircraft, are subject to judicial insolvency proceedings or similar protection. We have signed restructured lease agreements for fifteen of these aircraft, subject only to the lessees emerging from their respective judicial insolvency processes, and a restructured lease commitment for one of these aircraft.

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Unconsolidated Equity Method Investment (Notes)

6 Months Ended

Aug. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Unconsolidated Equity Method Investment

Unconsolidated Equity Method Investments

We have a joint venture with Mizuho Leasing which has nine aircraft with a net book value of $292.0 million at August 31, 2022.

	Amount
Investment in joint venture at February 28, 2022	$	38,317
Earnings from joint venture, net of tax	1,177
Investment in joint venture at August 31, 2022	$	39,494

On June 30, 2022, the Company received full repayment of the unsecured loan facility it provided to the joint venture in the amount of $1.5 million.

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Borrowings from Secured and Unsecured Debt Financings

6 Months Ended

Aug. 31, 2022

Debt Disclosure [Abstract]

Borrowings from Secured and Unsecured Debt Financings

Borrowings from Secured and Unsecured Debt Financings

The outstanding amounts of our secured and unsecured debt financings were as follows:

	At August 31, 2022					At February 28, 2022
Debt Obligation	Outstanding Borrowings		Number of Aircraft	Interest Rate	Final Stated Maturity	Outstanding Borrowings
Secured Debt Financings:
ECA Financings(1)	$	—	—	—%	N/A	$	21,576
Bank Financings(2)	629,479		31	3.13% to 4.55%	06/17/23 to 03/06/25	666,258
Less: Debt issuance costs and discounts	(2,703)		—			(3,795)
Total secured debt financings, net of debt issuance costs and discounts	626,776		31			684,039
Unsecured Debt Financings:
Senior 5.00% Notes due 2023	500,000			5.00%	04/01/23	500,000
Senior 4.40% Notes due 2023	650,000			4.40%	09/25/23	650,000
Senior Notes due 2024	500,000			4.125%	05/01/24	500,000
Senior Notes due 2025	650,000			5.25%	08/11/25	650,000
Senior Notes due 2026	650,000			4.25%	06/15/26	650,000
Senior Notes due 2028	750,000			2.85%	01/26/28	750,000
Unsecured Term Loans	155,000			3.38%	02/27/24	155,000
Revolving Credit Facilities	95,000			3.24% to 4.24%	02/28/23 to 05/24/25	20,000
Less: Debt issuance costs and discounts	(34,886)					(39,159)
Total unsecured debt financings, net of debt issuance costs and discounts	3,915,114					3,835,841
Total secured and unsecured debt financings, net of debt issuance costs and discounts	$	4,541,890				$	4,519,880

(1)In May 2022, the Company repaid the principal and accrued interest outstanding under our remaining ECA Financing and incurred early extinguishment costs of $0.5 million.

(2)The borrowings under these financings at August 31, 2022 have a weighted-average fixed rate of interest of 3.81%.

Unsecured Debt Financings:

Revolving Credit Facilities

On May 24, 2022, we entered into an amendment for one of our unsecured revolving credit facilities that expanded the size and extended the term of the facility. As a result, the existing $230.0 million commitment was expanded to $280.0 million, with $35.0 million and $245.0 million of the commitment allocated to Tranche B and Tranche C, respectively. Tranche B will mature on February 28, 2023 and Tranche C will mature on May 23, 2025. Tranche A matured on its stated maturity date of December 27, 2021.

On June 27, 2022, a $100.0 million commitment under one of our unsecured revolving credit facilities, with a total commitment of $1.0 billion, matured on its stated maturity date. On September 8, 2022, we entered into an amendment that expanded the size of the facility from $900.0 million to $1.0 billion and replaced LIBOR with Term Secured Overnight Financing Rate (“SOFR”) as the benchmark interest rate. The facility bears interest at Adjusted Term SOFR (as defined in the amendment to the credit agreement) plus a margin of 1.625% per year and matures on April 26, 2025.

On July 30, 2022, a $50.0 million commitment under our revolving credit facility with Mizuho Bank Ltd., a related party, matured on its stated maturity date.

As of August 31, 2022, we had $95.0 million outstanding under our revolving credit facilities and had $1.2 billion available for borrowing.

As of August 31, 2022, we were in compliance with all applicable covenants in our financings.

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Shareholders’ Equity

6 Months Ended

Aug. 31, 2022

Equity [Abstract]

Shareholders’ Equity

Shareholders' Equity

On March 15, 2022, the Company paid a quarterly dividend in the amount of $10.5 million for its Preference Shares, which was approved by the Company’s Board of Directors on January 6, 2022, and accrued as of February 28, 2022.

On September 15, 2022, the Company paid a quarterly dividend in the amount of $10.5 million for its Preference Shares, which was approved by the Company’s Board of Directors on July 6, 2022, and accrued as of August 31, 2022.

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Related Party Disclosures	6 Months Ended
	Aug. 31, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsThe Company incurred fees from Marubeni as part of its intra-company service agreement totaling $1.2 million and $0.9 million during the three months ended August 31, 2022 and 2021, respectively, and $2.6 million and $1.9 million during the six months ended August 31, 2022 and 2021, respectively, whereby Marubeni provides certain management and administrative services to the Company. In addition, the Company purchased parts under a parts management services and supply agreement with an affiliate of Marubeni totaling $2.3 million and $1.4 million during the three months ended August 31, 2022 and 2021, respectively, and $4.0 million and $2.0 million during the six months ended August 31, 2022 and 2021, respectively

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Income Taxes

6 Months Ended

Aug. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesIncome taxes have been provided for based upon the tax laws and rates in countries in which our operations are conducted and income is earned. The Company received assurance from the Bermuda Minister of Finance that it would be exempted from local income, withholding and capital gains taxes until March 2035. Consequently, the provision for income taxes relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily the United States and Ireland.

The sources of income (loss) from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the three and six months ended August 31, 2022 and 2021 were as follows:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
U.S. operations	$	4,790	$	4,479	$	10,126	$	8,190
Non-U.S. operations	(18,217)		12,531		(13,053)		(9,512)
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	$	(13,427)	$	17,010	$	(2,927)	$	(1,322)

Our aircraft-owning subsidiaries generally earn income from sources outside the U.S. and typically are not subject to U.S. federal, state or local income taxes. The aircraft owning subsidiaries resident in the U.S. and Ireland are subject to tax in those respective jurisdictions.

We have a U.S.-based subsidiary which provides management services to our subsidiaries and is subject to U.S. federal, state and local income taxes. We also have Ireland and Singapore based subsidiaries which provide management services to our non-U.S. subsidiaries and are subject to tax in those respective jurisdictions.

The Company’s effective tax rates (“ETRs”) for the three months ended August 31, 2022 and 2021 were 30.3% and 45.1% , and for the six months ended August 31, 2022 and 2021 were 25.2% and 47.4%, respectively. The movement in the ETR is primarily caused by changes in the mix of the Company’s pre-tax earnings/(losses) in its taxable and non-tax jurisdictions. The six months ended August 31, 2022 included net non-cash impairment charges, which were recorded in a low tax jurisdiction. Further, the three and six months ended August 31, 2021 included income from the sale of unsecured claims filed by the Company against LATAM Airlines Group S.A. and certain of its subsidiaries (“LATAM”) in respect of LATAM’s Chapter 11 filing (the “LATAM Bankruptcy”), which was recorded in a low tax jurisdiction.

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Interest, Net

6 Months Ended

Aug. 31, 2022

Interest Income (Expense), Net [Abstract]

Interest Net

Interest, Net

The following table shows the components of interest, net:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
Interest on borrowings and other liabilities	$	48,392	$	51,807	$	95,633	$	106,135
Amortization of deferred financing fees and debt discount	3,498		4,193		7,095		8,384
Interest expense	51,890		56,000		102,728		114,519
Less: Interest income	(748)		(382)		(1,007)		(712)
Less: Capitalized interest	(555)		(205)		(840)		(357)
Interest, net	$	50,587	$	55,413	$	100,881	$	113,450

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Commitments and Contingencies

6 Months Ended

Aug. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Rent expense for the corporate offices and sales and marketing offices was $0.4 million and $0.4 million, and $0.9 million and $0.8 million, for the three and six months ended August 31, 2022 and 2021, respectively.

As of August 31, 2022, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in Stamford, Connecticut; Dublin, Ireland; and Singapore for future minimum lease payments as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	899
2024	1,747
2025	1,778
2026	1,630
2027	1,571
Thereafter	2,412
Total	$	10,037

At August 31, 2022, we had commitments to acquire 21 aircraft for $748.1 million.

At August 31, 2022, commitments, including $54.4 million of remaining progress payments, contractual price escalations and other adjustments for these aircraft, net of amounts already paid, are as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	375,356
2024	178,315
2025	194,469
2026	—
2027	—
Thereafter	—
Total	$	748,140

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Other Assets

6 Months Ended

Aug. 31, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

Other Assets

The following table describes the principal components of other assets on our consolidated balance sheets as of August 31, 2022 and February 28, 2022:

	August 31, 2022		February 28, 2022
Deferred income tax asset	$	465	$	570
Lease incentives and lease premiums, net of amortization of $82,250 and $81,553, respectively	55,152		53,513
Flight equipment held for sale	32,852		77,636
Aircraft purchase deposits and Embraer E-2 progress payments	67,533		56,157
Right-of-use asset(1)	5,519		7,176
Deferred rent receivable	47,634		55,478
Other assets	117,986		105,796
Total other assets	$	327,141	$	356,326

______________

(1)Net of lease incentives and tenant allowances.

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Accounts Payable, Accrued Expenses and Other Liabilities

6 Months Ended

Aug. 31, 2022

Payables and Accruals [Abstract]

Accounts Payable, Accrued Expenses and Other Liabilities

Accounts Payable, Accrued Expenses and Other Liabilities

The following table describes the principal components of accounts payable, accrued expenses and other liabilities recorded our consolidated balance sheets as of August 31, 2022 and February 28, 2022:

	August 31, 2022		February 28, 2022
Accounts payable, accrued expenses and other liabilities	$	70,436	$	58,882
Deferred income tax liability	72,606		66,123
Accrued interest payable	43,755		42,013
Lease liability	7,935		9,846
Lease discounts, net of amortization of $45,481 and $45,546, respectively	272		560
Total accounts payable, accrued expenses and other liabilities	$	195,004	$	177,424

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Subsequent Event

6 Months Ended

Aug. 31, 2022

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On September 8, 2022, we expanded the size of one of our unsecured revolving credit facilities by $100.0 million to $1.0 billion – see Note 8 in the Notes to Unaudited Consolidated Financial Statements.

In September 2022, we sold two freighter aircraft and one wide-body aircraft for gains of approximately $53.0 million – see Note 3 in the Notes to Unaudited Consolidated Financial Statements.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Aug. 31, 2022

Accounting Policies [Abstract]

Organization and Basis of Presentation

Organization

Aircastle Limited (“Aircastle,” the “Company,” “we,” “us” or “our”) is a Bermuda exempted company that was incorporated on October 29, 2004 under the provisions of Section 14 of the Companies Act of 1981 of Bermuda. Aircastle’s business consists of acquiring, leasing, managing and selling commercial jet aircraft.

The Company is controlled by affiliates of Marubeni Corporation (“Marubeni”) and Mizuho Leasing Company, Limited (“Mizuho Leasing”). Aircastle is a holding company and conducts its business through subsidiaries that are wholly-owned, either directly or indirectly, by Aircastle.

Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The consolidated financial statements presented are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

The accompanying consolidated financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, in our opinion, reflect all adjustments, including normal recurring items, which are necessary to present fairly the results for interim periods. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the entire year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. However, we believe that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended February 28, 2022.

The consolidated financial statements include the accounts of Aircastle and all its subsidiaries, including any Variable Interest Entity (“VIE”) of which Aircastle is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.

We manage and analyze our business and report on our results of operations based on one operating segment: leasing, financing, selling and managing commercial flight equipment. Our Chief Executive Officer is the chief operating decision maker.

The Company’s management has reviewed and evaluated all events or transactions for potential recognition and/or disclosure subsequent to the balance sheet date of August 31, 2022, through the date on which the consolidated financial statements included in this Form 10-Q were issued.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While

Aircastle believes the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates.

Revenue Recognition Leases, Operating [Policy Text Block]

Lease Revenue Recognition

We lease flight equipment under net operating leases with lease terms typically ranging from three to seven years. We generally do not offer renewal terms or purchase options in our leases, although certain of our operating leases allow the lessee the option to extend the lease for an additional term. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the initial lease, assuming no renewals.

In certain instances, we may provide lease concessions to customers, generally in the form of lease rental deferrals. While these deferral arrangements affect the timing of lease rental payments, the total amount of lease rental payments required over the lease term is generally the same as that which was required under the original lease agreement. We account for the deferrals as if no modifications to the lease agreements were made and record the deferred rentals as a receivable within other assets.

Should we determine that the collectability of rental payments is no longer probable (including any deferral thereof), we will recognize lease rental revenue using a cash basis of accounting rather than an accrual method. In the period we conclude that collection of lease payments is no longer probable, we recognize any difference between revenue amounts recognized to date under the accrual method and payments that have been collected from the lessee, including security deposit amounts held, as a current period adjustment to lease rental revenue.

New Accounting Pronouncements, Policy

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform Topic 848 (“ASC 848”), in response to the market transition from the London interbank

offered rates (“LIBOR”) and other interbank offered rates (“IBORs”) to alternative reference rates. U.S. GAAP requires entities to evaluate whether a contract modification, such as the replacement or change of a reference rate, results in the establishment of a new contract or continuation of an existing contract. ASC 848 allows an entity to elect not to apply certain modification accounting requirements to contracts affected by reference rate reform. The standard provides this temporary election through December 31, 2022, and cannot be applied to contract modifications that occur after December 31, 2022. Reference rate reform will primarily impact our lease and debt arrangements for which floating-rate lease rentals and interest expense are based on LIBOR. As of August 31, 2022, less than 1% of our fleet have floating-rate lease rentals and for the three and six months ended August 31, 2022, 8.0% and 6.5%, respectively, of our interest expense was derived from floating-rate debt which is referenced to LIBOR. We have not adopted ASC 848 and are evaluating the election available to us under the standard.

Concentration Risk, Credit Risk, Policy

Risk and Uncertainties

In the normal course of business, Aircastle encounters several significant types of economic risk including credit, market, aviation industry and capital market risks. Credit risk is the risk of a lessee’s inability or unwillingness to make contractually required payments and to fulfill its other contractual obligations to Aircastle. Market risk reflects the change in the value of financings due to changes in interest rate spreads or other market factors, including the value of collateral underlying financings. Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of early lease terminations and depress lease rates and the value of the Company’s aircraft. Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities.

Impairment or Disposal of Long-Lived Assets, Policy

Impairment of Flight Equipment

We perform an annual recoverability assessment of all aircraft in our fleet, on an aircraft-by-aircraft basis. A recoverability assessment is also performed whenever events or changes in circumstances, or indicators, suggest 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 change in an aircraft type’s storage levels, the introduction of newer technology aircraft or engines, an aircraft type is no longer in production or a significant airworthiness directive is issued. When we perform a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the aircraft exceed its net book value. The undiscounted cash flows consist of cash flows from currently contracted lease rental and maintenance payments, future projected lease rates and maintenance payments, transition costs, estimated down time, and estimated residual or scrap values for an aircraft. In the event that an aircraft does not meet the recoverability test, the aircraft will be adjusted to fair value, resulting in an impairment charge. See Note 2 in the Notes to Unaudited Consolidated Financial Statements.

Management develops the assumptions used in the recoverability analysis based on current and future expectations of the global demand for a particular aircraft type and historical experience in the aircraft leasing market and aviation industry, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and will focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

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Fair Value Measurements (Tables)

6 Months Ended

Aug. 31, 2022

Fair Value Disclosures [Abstract]

Fair value assets and liabilities measured on recurring basis

The following tables set forth our financial assets as of August 31, 2022 and February 28, 2022 that we measured at fair value on a recurring basis by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

			Fair Value Measurements at August 31, 2022 Using Fair Value Hierarchy
	Fair Value as of August 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	246,713	$	246,713	$	—	$	—	Market
Restricted cash and cash equivalents	650		650		—		—		Market
Total	$	247,363	$	247,363	$	—	$	—

			Fair Value Measurements at February 28, 2022 Using Fair Value Hierarchy
	Fair Value as of February 28, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	167,891	$	167,891	$	—	$	—	Market
Restricted cash and cash equivalents	2,791		2,791		—		—		Market
Total	$	170,682	$	170,682	$	—	$	—

Carrying amounts and fair values of financial instruments

The carrying amounts and fair values of our financial instruments at August 31, 2022 and February 28, 2022 were as follows:

	August 31, 2022				February 28, 2022
	Carrying  Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	95,000	$	95,000	$	20,000	$	20,000
Unsecured Term Loan	155,000		152,968		155,000		152,195
Export Credit Agency (“ECA”) Financings	—		—		21,576		21,931
Bank Financings	629,479		613,383		666,258		675,667
Senior Notes	3,700,000		3,481,227		3,700,000		3,776,997

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Property, Plant, and Equipment (Tables)

6 Months Ended

Aug. 31, 2022

Property, Plant and Equipment [Abstract]

Property, Plant, and Equipment, Lessor Asset under Operating Lease

The following table summarizes the activities for the Company’s flight equipment held for lease for the six months ended August 31, 2022:

	Amount
Balance at February 28, 2022	$	6,313,950
Additions	361,928
Depreciation	(162,752)
Disposals and transfers to net investment in leases and held for sale	(122,366)
Impairments	(35,081)
Balance at August 31, 2022	$	6,355,679
Accumulated depreciation as of August 31, 2022	$	2,459,049

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Lease Rental Revenues and Flight Equipment Held for Lease (Tables)

6 Months Ended

Aug. 31, 2022

Leases [Abstract]

Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity

Minimum future lease rentals contracted to be received under our existing operating leases of flight equipment at August 31, 2022 were as follows:

Year Ending February 28/29,	Amount(1)
2023 (Remainder of fiscal year)	$	291,415
2024	546,501
2025	446,371
2026	331,792
2027	276,959
Thereafter	784,086
Total	$	2,677,124

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(1)Reflects impact of lessee lease rental deferrals.

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Net Investment in Leases, Net (Tables)

6 Months Ended

Aug. 31, 2022

Leases [Abstract]

Schedule of Components of Net Investment in Leases

The components of our net investment in leases at August 31, 2022 and February 28, 2022, were as follows:

	August 31, 2022		February 28, 2022
Lease receivable	$	46,444	$	52,021
Unguaranteed residual value of flight equipment	93,620		100,068
Net investment leases	140,064		152,089
Allowance for credit losses	(2,445)		(1,764)
Net investment in leases, net	$	137,619	$	150,325

Sales-type and Direct Financing Leases, Lease Receivable, Maturity

The activity in the allowance for credit losses related to our net investment in leases for the six months ended August 31, 2022 was as follows:

	Amount
Balance at February 28, 2022	$	1,764
Provision for credit losses	689
Write-offs	(8)
Balance at August 31, 2022	$	2,445

At August 31, 2022, future lease payments on net investment in leases are as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	3,983
2024	8,973
2025	9,509
2026	8,353
2027	8,292
Thereafter	16,103
Total lease payments to be received	55,213
Present value of lease payments - lease receivable	(46,444)
Difference between undiscounted lease payments and lease receivable	$	8,769

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Risks and Uncertainties (Tables)

6 Months Ended

Aug. 31, 2022

Risks and Uncertainties [Abstract]

Long-lived Assets by Geographic Areas [Table Text Block]

The geographic concentration of the net book value of our fleet (flight equipment held for lease and net investment in direct financing and sales-type leases, or “Net Book Value”) as of August 31, 2022 and February 28, 2022 was as follows:

	August 31, 2022				February 28, 2022
Region	Number of Aircraft		Net Book Value %		Number of Aircraft		Net Book Value %
Asia and Pacific	65		29	%	71		32	%
Europe	90		29	%	98		30	%
Middle East and Africa	10		4	%	10		4	%
North America	37		19	%	36		17	%
South America	26		13	%	25		13	%
Off-lease	15	(1)	6	%	11	(2)	4	%
Total	243		100	%	251		100	%

_______________

(1)Of the fifteen off-lease aircraft at August 31, 2022, we have two narrow-body aircraft and six wide-body aircraft which we are currently marketing for lease or sale.

(2)Of the eleven off-lease aircraft at February 28, 2022, we have three wide-body aircraft which we are currently marketing for lease or sale.

Revenue from External Customers by Geographic Areas [Table Text Block]

The geographic concentration of our lease rental revenue earned from flight equipment held for lease was as follows:

	Three Months Ended August 31,				Six Months Ended August 31,
Region	2022		2021		2022		2021
Asia and Pacific	35	%	32	%	34	%	33	%
Europe	29	%	36	%	29	%	35	%
Middle East and Africa	5	%	5	%	5	%	5	%
North America	18	%	15	%	17	%	15	%
South America	13	%	12	%	15	%	12	%
Total	100	%	100	%	100	%	100	%

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

The following table shows the number of lessees with lease rental revenue of at least 5% of total lease rental revenue and their combined total percentage of lease rental revenue for the periods indicated:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue
Largest lessees by lease rental revenue	4	28%	4	30%	3	23%	5	34%

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block]

The following table sets forth individual countries representing at least 10% of our Net Book Value as of August 31, 2022 and February 28, 2022:

	August 31, 2022				February 28, 2022
Country	Net Book Value		Net Book Value %	Number of Lessees	Net Book Value		Net Book Value %	Number of Lessees
India	$	656,090	10%	3	$	670,523	10%	3

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Unconsolidated Equity Method Investment (Tables)

6 Months Ended

Aug. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

	Amount
Investment in joint venture at February 28, 2022	$	38,317
Earnings from joint venture, net of tax	1,177
Investment in joint venture at August 31, 2022	$	39,494

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Borrowings from Secured and Unsecured Debt Financings (Tables)

6 Months Ended

Aug. 31, 2022

Debt Disclosure [Abstract]

Outstanding amounts of secured and unsecured term debt financings

The outstanding amounts of our secured and unsecured debt financings were as follows:

	At August 31, 2022					At February 28, 2022
Debt Obligation	Outstanding Borrowings		Number of Aircraft	Interest Rate	Final Stated Maturity	Outstanding Borrowings
Secured Debt Financings:
ECA Financings(1)	$	—	—	—%	N/A	$	21,576
Bank Financings(2)	629,479		31	3.13% to 4.55%	06/17/23 to 03/06/25	666,258
Less: Debt issuance costs and discounts	(2,703)		—			(3,795)
Total secured debt financings, net of debt issuance costs and discounts	626,776		31			684,039
Unsecured Debt Financings:
Senior 5.00% Notes due 2023	500,000			5.00%	04/01/23	500,000
Senior 4.40% Notes due 2023	650,000			4.40%	09/25/23	650,000
Senior Notes due 2024	500,000			4.125%	05/01/24	500,000
Senior Notes due 2025	650,000			5.25%	08/11/25	650,000
Senior Notes due 2026	650,000			4.25%	06/15/26	650,000
Senior Notes due 2028	750,000			2.85%	01/26/28	750,000
Unsecured Term Loans	155,000			3.38%	02/27/24	155,000
Revolving Credit Facilities	95,000			3.24% to 4.24%	02/28/23 to 05/24/25	20,000
Less: Debt issuance costs and discounts	(34,886)					(39,159)
Total unsecured debt financings, net of debt issuance costs and discounts	3,915,114					3,835,841
Total secured and unsecured debt financings, net of debt issuance costs and discounts	$	4,541,890				$	4,519,880

(1)In May 2022, the Company repaid the principal and accrued interest outstanding under our remaining ECA Financing and incurred early extinguishment costs of $0.5 million.

(2)The borrowings under these financings at August 31, 2022 have a weighted-average fixed rate of interest of 3.81%.

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Income Taxes (Tables)

6 Months Ended

Aug. 31, 2022

Income Tax Disclosure [Abstract]

Sources of income from continuing operations before income taxes

The sources of income (loss) from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the three and six months ended August 31, 2022 and 2021 were as follows:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
U.S. operations	$	4,790	$	4,479	$	10,126	$	8,190
Non-U.S. operations	(18,217)		12,531		(13,053)		(9,512)
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	$	(13,427)	$	17,010	$	(2,927)	$	(1,322)

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Interest, Net (Tables)

6 Months Ended

Aug. 31, 2022

Interest Income (Expense), Net [Abstract]

Components of Interest

The following table shows the components of interest, net:

	Three Months Ended August 31,				Six Months Ended August 31,
	2022		2021		2022		2021
Interest on borrowings and other liabilities	$	48,392	$	51,807	$	95,633	$	106,135
Amortization of deferred financing fees and debt discount	3,498		4,193		7,095		8,384
Interest expense	51,890		56,000		102,728		114,519
Less: Interest income	(748)		(382)		(1,007)		(712)
Less: Capitalized interest	(555)		(205)		(840)		(357)
Interest, net	$	50,587	$	55,413	$	100,881	$	113,450

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Commitments and Contingencies (Tables)

6 Months Ended

Aug. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of obligations under non-cancelable operating leases

As of August 31, 2022, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in Stamford, Connecticut; Dublin, Ireland; and Singapore for future minimum lease payments as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	899
2024	1,747
2025	1,778
2026	1,630
2027	1,571
Thereafter	2,412
Total	$	10,037

Long-term Purchase Commitment

commitments, including $54.4 million of remaining progress payments, contractual price escalations and other adjustments for these aircraft, net of amounts already paid, are as follows:

Year Ending February 28/29,	Amount
2023 (Remainder of fiscal year)	$	375,356
2024	178,315
2025	194,469
2026	—
2027	—
Thereafter	—
Total	$	748,140

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Other Assets (Tables)

6 Months Ended

Aug. 31, 2022

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Principal components of other assets

The following table describes the principal components of other assets on our consolidated balance sheets as of August 31, 2022 and February 28, 2022:

	August 31, 2022		February 28, 2022
Deferred income tax asset	$	465	$	570
Lease incentives and lease premiums, net of amortization of $82,250 and $81,553, respectively	55,152		53,513
Flight equipment held for sale	32,852		77,636
Aircraft purchase deposits and Embraer E-2 progress payments	67,533		56,157
Right-of-use asset(1)	5,519		7,176
Deferred rent receivable	47,634		55,478
Other assets	117,986		105,796
Total other assets	$	327,141	$	356,326

______________

(1)Net of lease incentives and tenant allowances.

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Accounts Payable, Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Aug. 31, 2022

Payables and Accruals [Abstract]

Principal components of accounts payable, accrued expenses and other liabilities recorded on our consolidated balance sheet

The following table describes the principal components of accounts payable, accrued expenses and other liabilities recorded our consolidated balance sheets as of August 31, 2022 and February 28, 2022:

	August 31, 2022		February 28, 2022
Accounts payable, accrued expenses and other liabilities	$	70,436	$	58,882
Deferred income tax liability	72,606		66,123
Accrued interest payable	43,755		42,013
Lease liability	7,935		9,846
Lease discounts, net of amortization of $45,481 and $45,546, respectively	272		560
Total accounts payable, accrued expenses and other liabilities	$	195,004	$	177,424

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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Aug. 31, 2022 USD ($)	Aug. 31, 2022 USD ($) segment
Accounting Policies [Line Items]
Number of Operating Segments | segment		1
Percentage of Fleet Having Floating-rate Lease Rentals	1.00%	1.00%
Percentage of Interest Expense Derived from Floating-rate Debt	8.00%	6.50%
Revolving Credit Facility | DBS (2018) Unsecured Revolving Credit Facility | Line of Credit
Accounting Policies [Line Items]
Line of Credit Facility, Current Borrowing Capacity	$ 280,000	$ 280,000
Tranche C ($245mm) - DBS Revolving Credit Facility | Revolving Credit Facility | DBS (2018) Unsecured Revolving Credit Facility | Line of Credit
Accounting Policies [Line Items]
Line of Credit Facility, Current Borrowing Capacity	$ 245,000	$ 245,000
Minimum | Property Subject to Operating Lease | Flight Equipment
Accounting Policies [Line Items]
Lessor, Operating Lease, Term of Contract	3 years	3 years
Maximum | Property Subject to Operating Lease | Flight Equipment
Accounting Policies [Line Items]
Lessor, Operating Lease, Term of Contract	7 years	7 years

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Fair Value Measurements - Assets Measured at Fair Value (Details) - Recurring - USD ($) $ in Thousands	Aug. 31, 2022	Feb. 28, 2022
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and cash equivalents	$ 246,713	$ 167,891
Restricted cash and cash equivalents	650	2,791
Total	247,363	170,682
Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	0	0
Restricted cash and cash equivalents	0	0
Total	0	0
Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents	0	0
Restricted cash and cash equivalents	0	0
Total	0	0
Estimate of Fair Value Measurement
Assets:
Cash and cash equivalents	246,713	167,891
Restricted cash and cash equivalents	650	2,791
Total	$ 247,363	$ 170,682

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Fair Value Measurements - Narrative (Details)
$ in Thousands

3 Months Ended

6 Months Ended

Aug. 31, 2022

USD ($)

May 31, 2022

USD ($)

Aug. 31, 2021

USD ($)

aircraft

Aug. 31, 2022

USD ($)

aircraft

Aug. 31, 2021

USD ($)

aircraft

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Transfers, Net

$ 0

Impairment of flight equipment

$ 33,671

$ 21,232

38,099

$ 41,815

Revenue from Contract with Customer, Excluding Assessed Tax

173,579

157,652

$ 349,143

323,462

Fair Value Disclosures [Text Block]

Fair Value Measurements

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs.

The following tables set forth our financial assets as of August 31, 2022 and February 28, 2022 that we measured at fair value on a recurring basis by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.

			Fair Value Measurements at August 31, 2022 Using Fair Value Hierarchy
	Fair Value as of August 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	246,713	$	246,713	$	—	$	—	Market
Restricted cash and cash equivalents	650		650		—		—		Market
Total	$	247,363	$	247,363	$	—	$	—

			Fair Value Measurements at February 28, 2022 Using Fair Value Hierarchy
	Fair Value as of February 28, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	167,891	$	167,891	$	—	$	—	Market
Restricted cash and cash equivalents	2,791		2,791		—		—		Market
Total	$	170,682	$	170,682	$	—	$	—

Our cash and cash equivalents and our restricted cash and cash equivalents consist largely of money market securities that are highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.

For the three and six months ended August 31, 2022, we had no transfers into or out of Level 3.

We measure the fair value of certain assets and liabilities on a non-recurring basis when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate the carrying amounts of these assets may not be recoverable. Assets subject to these measurements include our aircraft and investment in unconsolidated joint

venture. We record aircraft at fair value when we determine the carrying value may not be recoverable. Fair value measurements for aircraft in impairment tests are based on the average of the market approach that uses Level 2 inputs, which include third party appraisal data and an income approach that uses Level 3 inputs, which include the Company’s assumptions and appraisal data as to future cash proceeds from leasing and selling aircraft discounted using the Company’s weighted average cost of capital.

We account for our investment in unconsolidated joint ventures under the equity method of accounting. Our investment is recorded at cost and is adjusted by undistributed earnings and losses and the distributions of dividends and capital. This investment is reviewed for impairment whenever events or changes in circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary.

Aircraft Valuation

Impairment of Flight Equipment

Excluding asset write-offs related to Russia, during the three and six months ended August 31, 2022, the Company recorded impairment charges totaling $6.2 million related to the scheduled lease expiration of one narrow-body aircraft and other flight equipment. The Company recognized $6.1 million of maintenance revenue for this one aircraft during the three and six months ended August 31, 2022.

The Company wrote off the remaining book value of eight narrow-body and one freighter aircraft in Russia which have not been returned to us. As a result, the Company recorded impairment charges totaling $27.5 million and $31.9 million during the three and six months ended August 31, 2022, respectively – see Note 3 in the Notes to Unaudited Consolidated Financial Statements. During the six months ended August 31, 2022, the Company recognized $9.5 million of maintenance and other revenue for these nine aircraft related to payments received on maintenance and general security letters of credit. No revenue was recognized for these nine aircraft during the three months ended August 31, 2022.

During the three months ended August 31, 2021, the Company recorded impairment charges totaling $21.2 million, of which $18.0 million were transactional impairments primarily related to two narrow-body aircraft resulting from early lease terminations. The Company recognized $16.1 million of maintenance revenue for these two aircraft.

During the six months ended August 31, 2021, the Company recorded impairment charges totaling $41.8 million, of which $38.6 million were transactional impairments, primarily related to four narrow-body aircraft resulting from three early lease terminations and one scheduled lease expiration. The Company recognized $37.1 million of maintenance revenue for these four aircraft.

Annual Recoverability Assessment

We plan to perform our annual recoverability assessment of all our aircraft during the third quarter of 2022.

We continue to closely monitor the impact of recent crises, such as the Russian invasion of Ukraine and the COVID-19 pandemic, on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and will focus on aircraft with near-term lease expirations, customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, and certain other customers or aircraft variants that are more susceptible to the impact of the above crises and value deterioration.

The recoverability assessment is a comparison of the carrying value of each aircraft to its estimated undiscounted future cash flows. We develop the assumptions used in the recoverability assessment, including those relating to current and future demand for each aircraft type, based on management’s experience in the aircraft leasing industry, as well as information received from third-party sources. Estimates of the undiscounted cash flows for each aircraft type are impacted by changes in contracted and future expected lease rates, residual values, expected scrap values, economic conditions and other factors, such as the location of the aircraft and accessibility to records and technical documentation.

If our estimates or assumptions change, including those related to our customers that have entered judicial insolvency proceedings, we may revise our cash flow assumptions and record future impairment charges. While we believe that the estimates and related assumptions used in our recoverability assessments are appropriate, actual results could differ from those estimates.

Financial Instruments

Our financial instruments, other than cash, consist principally of cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable and amounts borrowed under financings. The fair value of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable approximates the carrying value of these financial instruments because of their short-term nature.

The fair value of our senior notes is estimated using quoted market prices. The fair values of all our other financings are estimated using a discounted cash flow analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of our financial instruments at August 31, 2022 and February 28, 2022 were as follows:

	August 31, 2022				February 28, 2022
	Carrying  Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	95,000	$	95,000	$	20,000	$	20,000
Unsecured Term Loan	155,000		152,968		155,000		152,195
Export Credit Agency (“ECA”) Financings	—		—		21,576		21,931
Bank Financings	629,479		613,383		666,258		675,667
Senior Notes	3,700,000		3,481,227		3,700,000		3,776,997

All our financial instruments are classified as Level 2 except for our senior notes, which are classified as Level 1.

Maintenance and Security Deposit [Member]

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Revenue from Contract with Customer, Excluding Assessed Tax

16,100

$ 6,100

37,100

Wide-body [Member] | Maintenance revenue | RUSSIAN FEDERATION

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Revenue from Contract with Customer, Excluding Assessed Tax

25,400

Russian Invasion of Ukraine

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Impairment of flight equipment

27,500

$ 4,400

31,900

Russian Invasion of Ukraine | Maintenance and Security Deposit [Member]

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Revenue from Contract with Customer, Excluding Assessed Tax

$ 0

$ 9,500

Transactional

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Impairment of flight equipment

$ 18,000

$ 38,600

Number of Aircraft Impaired as a Result of Early Lease Terminations | aircraft

3

Number of Aircraft Impaired as a Result of Scheduled Lease Expirations | aircraft

1

Transactional | Narrow-body [Member]

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Number of aircrafts impaired | aircraft

2

1

4

Impairments not Related to Russian Invasion of Ukraine

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Impairment of flight equipment

$ 6,200

Aircraft Remaining in Country of Base Operations | RUSSIAN FEDERATION

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Number of Aircraft on Lease with Russian Airlines | aircraft

9

Aircraft Remaining in Country of Base Operations | Russian Invasion of Ukraine | Narrow-body [Member] | RUSSIAN FEDERATION

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Number of Aircraft on Lease with Russian Airlines | aircraft

8

Aircraft Remaining in Country of Base Operations | Russian Invasion of Ukraine | Total wide-body and narrow-body [Member] | RUSSIAN FEDERATION

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Number of Aircraft on Lease with Russian Airlines | aircraft

9

Aircraft Remaining in Country of Base Operations | Russian Invasion of Ukraine | Freighter | RUSSIAN FEDERATION

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]

Number of Aircraft on Lease with Russian Airlines | aircraft

1

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Fair Value Measurements - Carrying Amounts and Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Aug. 31, 2022	Feb. 28, 2022
Unsecured Debt | Significant Other Observable Inputs (Level 2) | Reported Value Measurement | Revolving Credit Facility
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	$ 95,000	$ 20,000
Unsecured Debt | Significant Other Observable Inputs (Level 2) | Estimate of Fair Value Measurement | Revolving Credit Facility
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	95,000	20,000
Unsecured Debt | Quoted Prices in Active Markets for Identical Assets (Level 1) | Reported Value Measurement | DBJ Term Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	155,000	155,000
Unsecured Debt | Quoted Prices in Active Markets for Identical Assets (Level 1) | Reported Value Measurement | Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	3,700,000	3,700,000
Unsecured Debt | Quoted Prices in Active Markets for Identical Assets (Level 1) | Estimate of Fair Value Measurement | DBJ Term Loan
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	152,968	152,195
Unsecured Debt | Quoted Prices in Active Markets for Identical Assets (Level 1) | Estimate of Fair Value Measurement | Senior Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	3,481,227	3,776,997
Secured Debt | Significant Other Observable Inputs (Level 2) | Reported Value Measurement | ECA Term Financings
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	0	21,576
Secured Debt | Significant Other Observable Inputs (Level 2) | Reported Value Measurement | Bank Financings
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	629,479	666,258
Secured Debt | Significant Other Observable Inputs (Level 2) | Estimate of Fair Value Measurement | ECA Term Financings
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	0	21,931
Secured Debt | Significant Other Observable Inputs (Level 2) | Estimate of Fair Value Measurement | Bank Financings
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Debt Instrument, Fair Value Disclosure	$ 613,383	$ 675,667

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Property, Plant, and Equipment (Details) $ in Thousands		3 Months Ended			6 Months Ended		12 Months Ended
	Oct. 07, 2022 aircraft	Aug. 31, 2022 USD ($) aircraft	May 31, 2022 USD ($)	Aug. 31, 2021 USD ($)	Aug. 31, 2022 USD ($) aircraft	Aug. 31, 2021 USD ($)	Feb. 28, 2022 USD ($)
Property, Plant and Equipment [Abstract]
Property, Plant, and Equipment, Lessor Asset under Operating Lease, after Accumulated Depreciation		$ 6,355,679			$ 6,355,679		$ 6,313,950
Impairment of flight equipment		33,671		$ 21,232	38,099	$ 41,815
Depreciation		82,106		83,391	163,424	165,782
Transfers from flight equipment held for lease to Net investment in leases and Other assets					8,895	3,554
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Depreciation		$ 82,106		$ 83,391	$ 163,424	$ 165,782
Percentage of geographic concentration		100.00%		100.00%	100.00%	100.00%	100.00%
Property, Plant, and Equipment, Lessor Asset under Operating Lease, after Accumulated Depreciation		$ 6,355,679			$ 6,355,679		$ 6,313,950
Transfers from flight equipment held for lease to Net investment in leases and Other assets					8,895	$ 3,554
Impairment of flight equipment		33,671		$ 21,232	38,099	41,815
Revenue from Contract with Customer, Excluding Assessed Tax		173,579		$ 157,652	349,143	323,462
Proceeds from Sale of Flight Equipment					171,065	$ 77,900
Wide-body [Member] | Subsequent Event [Member]
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Property, Plant and Equipment, Number of Aircraft Sold | aircraft	1
Freighter | Subsequent Event [Member]
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Property, Plant and Equipment, Number of Aircraft Sold | aircraft	2
Russian Invasion of Ukraine
Property, Plant and Equipment [Abstract]
Impairment of flight equipment		27,500	$ 4,400		31,900
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Impairment of flight equipment		27,500	$ 4,400		31,900
RUSSIAN FEDERATION
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Letters of Credit Outstanding, Amount		$ 24,100			$ 24,100
Aircraft Remaining in Country of Base Operations | RUSSIAN FEDERATION
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Number of Aircraft on Lease with Russian Airlines | aircraft					9
Aircraft Remaining in Country of Base Operations | RUSSIAN FEDERATION | Russian Invasion of Ukraine | Narrow-body [Member]
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Number of Aircraft on Lease with Russian Airlines | aircraft					8
Aircraft Remaining in Country of Base Operations | RUSSIAN FEDERATION | Russian Invasion of Ukraine | Freighter
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Number of Aircraft on Lease with Russian Airlines | aircraft					1
Aircraft Outside Country of Base Operations | UNITED KINGDOM | Freighter
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Number of Aircraft Repossessed | aircraft		1
Flight Equipment
Property, Plant and Equipment [Abstract]
Property, Plant, and Equipment, Lessor Asset under Operating Lease, after Accumulated Depreciation		$ 6,355,679			$ 6,355,679		6,313,950
Property, Plant and Equipment, Additions					361,928
Property, Plant, and Equipment, Lessor Asset under Operating Lease, Accumulated Depreciation		2,459,049			2,459,049
Impairment of flight equipment					35,081
Depreciation					162,752
Transfers from flight equipment held for lease to Net investment in leases and Other assets					(122,366)
Property, Plant, and Equipment, Lessor Asset under Operating Lease [Line Items]
Property, Plant and Equipment, Additions					361,928
Depreciation					162,752
Property, Plant, and Equipment, Lessor Asset under Operating Lease, Accumulated Depreciation		2,459,049			2,459,049
Property, Plant, and Equipment, Lessor Asset under Operating Lease, after Accumulated Depreciation		$ 6,355,679			6,355,679		$ 6,313,950
Transfers from flight equipment held for lease to Net investment in leases and Other assets					(122,366)
Impairment of flight equipment					$ 35,081

XML

Lease Rental Revenues and Flight Equipment Held for Lease (Details) $ in Thousands	Aug. 31, 2022 USD ($)
Annual future minimum lease rentals receivable
2023 (Remainder of fiscal year)	$ 291,415
2024	546,501
2025	446,371
2026	331,792
2027	276,959
Thereafter	784,086
Total	$ 2,677,124

XML

Lease Rental Revenues and Flight Equipment Held for Lease (Details Textual) - USD ($) $ in Thousands	Aug. 31, 2022	Feb. 28, 2022
Maintenance Payments
Revenue, Major Customer [Line Items]
Lease incentive liabilities	$ 20,100	$ 16,500

XML

Net Investment in Leases, Net (Details Textual) - aircraft	Aug. 31, 2022	Feb. 28, 2022
Leases [Abstract]
Net Investment in Lease, Number of Leased Assets	9	11

XML

Net Investment in Leases, Net (Details 2) - USD ($) $ in Thousands	Aug. 31, 2022	Feb. 28, 2022
Capital Leases, Net Investment in Direct Financing Leases [Abstract]
Lease receivable	$ 46,444	$ 52,021
Unguaranteed residual value of flight equipment	93,620	100,068
Net investment leases	140,064	152,089
Allowance for credit losses	(2,445)	(1,764)
Net investment in leases, net	137,619	$ 150,325
Receivable in Remainder of Fiscal Year	3,983
Receivable in Year Two	8,973
Receivable in Year Three	9,509
Receivable in Year Four	8,353
Receivable in Year Five	8,292
Thereafter	16,103
Total	55,213
Present value of lease payments - lease receivable	(46,444)
Difference between undiscounted lease payments and lease receivable	$ 8,769

XML

Net Investment in Leases, Net - Credit Loss Rollforward (Details) $ in Thousands	6 Months Ended
	Aug. 31, 2022 USD ($)
Net Investment in Lease, Allowance for Credit Loss [Roll Forward]
Balance at February 28, 2022	$ 1,764
Provision for credit losses	689
Write-offs	(8)
Balance at August 31, 2022	$ 2,445

XML

Risks and Uncertainties (Details) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Oct. 07, 2022 aircraft Lessee	Aug. 31, 2022 USD ($) aircraft Lessee	Aug. 31, 2021 USD ($) Lessee	Aug. 31, 2022 USD ($) aircraft Lessee	Aug. 31, 2021 USD ($) Lessee	Feb. 28, 2022 USD ($) aircraft Lessee
Concentration Risk [Line Items]
Property Subject To Or Available for Operating Lease, Number of Units1		243		243		251
Percentage of geographic concentration		100.00%	100.00%	100.00%	100.00%	100.00%
Number of Offlease Aircraft Marketed for Lease or Sale						11
Number of Offlease Aircraft Marketed for Lease		15		15
Revenue from Contract with Customer, Excluding Assessed Tax | $		$ 173,579	$ 157,652	$ 349,143	$ 323,462
Asia Pacific [Member]
Concentration Risk [Line Items]
Property Subject To Or Available for Operating Lease, Number of Units1		65		65		71
Europe [Member]
Concentration Risk [Line Items]
Property Subject To Or Available for Operating Lease, Number of Units1		90		90		98
Middle East and Africa [Member]
Concentration Risk [Line Items]
Property Subject To Or Available for Operating Lease, Number of Units1		10		10		10
North America [Member]
Concentration Risk [Line Items]
Property Subject To Or Available for Operating Lease, Number of Units1		37		37		36
South America [Member]
Concentration Risk [Line Items]
Property Subject To Or Available for Operating Lease, Number of Units1		26		26		25
INDIA
Concentration Risk [Line Items]
Net Investment in Lease and Net Book Value of Equipment held for Lease | $		$ 656,090		$ 656,090		$ 670,523
property subject to or available for operating lease, net (percentage)				10.00%		10.00%
number of lessees | Lessee				3		3
Geographic Concentration Risk [Member] | Net Book Value | Off Lease
Concentration Risk [Line Items]
Percentage of geographic concentration				6.00%		4.00%
Geographic Concentration Risk [Member] | Net Book Value | Asia Pacific [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration				29.00%		32.00%
Geographic Concentration Risk [Member] | Net Book Value | Europe [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration				29.00%		30.00%
Geographic Concentration Risk [Member] | Net Book Value | Middle East and Africa [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration				4.00%		4.00%
Geographic Concentration Risk [Member] | Net Book Value | North America [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration				19.00%		17.00%
Geographic Concentration Risk [Member] | Net Book Value | South America [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration				13.00%		13.00%
Geographic Concentration Risk [Member] | Lease Rental Revenue | Asia Pacific [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration		35.00%	32.00%	34.00%	33.00%
Geographic Concentration Risk [Member] | Lease Rental Revenue | Europe [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration		29.00%	36.00%	29.00%	35.00%
Geographic Concentration Risk [Member] | Lease Rental Revenue | Middle East and Africa [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration		5.00%	5.00%	5.00%	5.00%
Geographic Concentration Risk [Member] | Lease Rental Revenue | North America [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration		18.00%	15.00%	17.00%	15.00%
Geographic Concentration Risk [Member] | Lease Rental Revenue | South America [Member]
Concentration Risk [Line Items]
Percentage of geographic concentration		13.00%	12.00%	15.00%	12.00%
Geographic Concentration Risk [Member] | Total Revenue [Member] | INDIA
Concentration Risk [Line Items]
Percentage of geographic concentration		10.00%	13.00%	11.00%	13.00%
Geographic Concentration Risk [Member] | Total Revenue [Member] | UNITED STATES
Concentration Risk [Line Items]
Percentage of geographic concentration		11.00%
Geographic Concentration Risk [Member] | Total Revenue [Member] | UNITED KINGDOM
Concentration Risk [Line Items]
Percentage of geographic concentration		11.00%
Subsequent Event [Member]
Concentration Risk [Line Items]
Number Of Customers Entering Bankruptcy | Lessee	3
Number of Aircrafts Leased to Bankrupt Customers	16
Major Customer Group One [Member]
Concentration Risk [Line Items]
Concentration Risk, Number of Customers in Major Customer Group | Lessee		4	4	3	5
Major Customer Group One [Member] | Geographic Concentration Risk | Lease Rental Revenue
Concentration Risk [Line Items]
Percentage of geographic concentration		28.00%	30.00%	23.00%	34.00%
Wide-body [Member] | RUSSIAN FEDERATION | Maintenance revenue
Concentration Risk [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax | $				$ 25,400
Wide-body [Member] | Subsequent Event [Member]
Concentration Risk [Line Items]
Number of Offlease Aircraft Marketed for Lease or Sale	6
Wide-body [Member] | Number of Off-lease Aircraft Marketed for Lease or Sale from Prior Year [Member] | Subsequent Event [Member]
Concentration Risk [Line Items]
Number of Offlease Aircraft Marketed for Lease or Sale	3
Narrow-body [Member] | Subsequent Event [Member]
Concentration Risk [Line Items]
Number of Offlease Aircraft Marketed for Lease or Sale	2
Total wide-body and narrow-body [Member] | Customers in Bankruptcy Proceedings [Member] | Subsequent Event [Member]
Concentration Risk [Line Items]
Number of Aircraft Leased to Bankrupt Customer with Signed Restructured Lease Agreements	15
Number of Aircraft Leased to Bankrupt Customer with Signed Restructured Lease Commitment	1
Freighter | UNITED KINGDOM | Maintenance revenue
Concentration Risk [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax | $		$ 11,900

XML

Unconsolidated Equity Method Investment (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2022 USD ($) aircraft	Aug. 31, 2021 USD ($)	Aug. 31, 2022 USD ($) aircraft	Aug. 31, 2021 USD ($)	Jun. 30, 2022 USD ($)	Feb. 28, 2022 USD ($)
Unconsolidated equity method investments	$ 39,494		$ 39,494			$ 38,317
Earnings of unconsolidated equity method investments, net of tax	666	$ 458	1,177	$ 745
Borrowings from unsecured financings, net	$ 3,915,114		$ 3,915,114			$ 3,835,841
Mizuho Leasing (2021) Unsecured Loan Facility (JV) | Unsecured Debt | Corporate Joint Venture
Borrowings from unsecured financings, net					$ 1,500
Equity Method Investee
Total number of aircraft owned by joint ventures | aircraft	9		9
Net Investment in Lease and Net Book Value of Equipment held for Lease	$ 292,000		$ 292,000

XML

Borrowings from Secured and Unsecured Debt Financings (Details)
$ in Thousands

6 Months Ended

Aug. 31, 2022

USD ($)

aircraft

Aug. 31, 2021

USD ($)

Feb. 28, 2022

USD ($)

Outstanding amounts of secured and unsecured term debt financings

Borrowings from secured financings

$ 626,776

$ 684,039

Number of Aircraft Financed | aircraft

31

Borrowings from unsecured financings, net

$ 3,915,114

3,835,841

Total secured and unsecured debt financings

4,541,890

4,519,880

Payment for Debt Extinguishment or Debt Prepayment Cost

$ 291

$ 13,372

Schedule of Debt [Table Text Block]

The outstanding amounts of our secured and unsecured debt financings were as follows:

	At August 31, 2022					At February 28, 2022
Debt Obligation	Outstanding Borrowings		Number of Aircraft	Interest Rate	Final Stated Maturity	Outstanding Borrowings
Secured Debt Financings:
ECA Financings(1)	$	—	—	—%	N/A	$	21,576
Bank Financings(2)	629,479		31	3.13% to 4.55%	06/17/23 to 03/06/25	666,258
Less: Debt issuance costs and discounts	(2,703)		—			(3,795)
Total secured debt financings, net of debt issuance costs and discounts	626,776		31			684,039
Unsecured Debt Financings:
Senior 5.00% Notes due 2023	500,000			5.00%	04/01/23	500,000
Senior 4.40% Notes due 2023	650,000			4.40%	09/25/23	650,000
Senior Notes due 2024	500,000			4.125%	05/01/24	500,000
Senior Notes due 2025	650,000			5.25%	08/11/25	650,000
Senior Notes due 2026	650,000			4.25%	06/15/26	650,000
Senior Notes due 2028	750,000			2.85%	01/26/28	750,000
Unsecured Term Loans	155,000			3.38%	02/27/24	155,000
Revolving Credit Facilities	95,000			3.24% to 4.24%	02/28/23 to 05/24/25	20,000
Less: Debt issuance costs and discounts	(34,886)					(39,159)
Total unsecured debt financings, net of debt issuance costs and discounts	3,915,114					3,835,841
Total secured and unsecured debt financings, net of debt issuance costs and discounts	$	4,541,890				$	4,519,880

(1)In May 2022, the Company repaid the principal and accrued interest outstanding under our remaining ECA Financing and incurred early extinguishment costs of $0.5 million.

(2)The borrowings under these financings at August 31, 2022 have a weighted-average fixed rate of interest of 3.81%.

Line of Credit | Revolving Credit Facility

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 95,000

20,000

ECA Term Financings | Notes Payable, Other Payables

Outstanding amounts of secured and unsecured term debt financings

Borrowings from secured financings

$ 0

21,576

Interest rate

0.00%

Payment for Debt Extinguishment or Debt Prepayment Cost

$ 500

ECA Term Financings | Secured Debt

Outstanding amounts of secured and unsecured term debt financings

Number of Aircraft Financed | aircraft

0

Bank Financings | Notes Payable, Other Payables

Outstanding amounts of secured and unsecured term debt financings

Debt, Weighted Average Interest Rate

3.81%

Bank Financings | Notes Payable to Banks

Outstanding amounts of secured and unsecured term debt financings

Borrowings from secured financings

$ 629,479

666,258

Bank Financings | Notes Payable to Banks | Minimum

Outstanding amounts of secured and unsecured term debt financings

Interest rate

3.13%

Bank Financings | Notes Payable to Banks | Maximum

Outstanding amounts of secured and unsecured term debt financings

Interest rate

4.55%

Bank Financings | Secured Debt

Outstanding amounts of secured and unsecured term debt financings

Number of Aircraft Financed | aircraft

31

Secured Debt

Outstanding amounts of secured and unsecured term debt financings

Debt Issuance Cost

$ (2,703)

(3,795)

Senior Notes Due 2023 | Senior Notes | 5.00

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 500,000

500,000

Interest rate

5.00%

Senior Notes Due 2023 | Senior Notes | 4.40%

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 650,000

650,000

Interest rate

4.40%

Senior Notes Due 2024 | Senior Notes

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 500,000

500,000

Senior Notes Due 2024 | Senior Notes | 4.125

Outstanding amounts of secured and unsecured term debt financings

Interest rate

4.125%

Senior Notes Due 2025 [Member] | Senior Notes

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 650,000

650,000

Senior Notes Due 2025 [Member] | Senior Notes | 5.25%

Outstanding amounts of secured and unsecured term debt financings

Interest rate

5.25%

Senior Notes Due 2026 [Member] | Senior Notes

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 650,000

650,000

Senior Notes Due 2026 [Member] | Senior Notes | 4.25%

Outstanding amounts of secured and unsecured term debt financings

Interest rate

4.25%

Senior Notes Due 2028 | Senior Notes

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 750,000

750,000

Senior Notes Due 2028 | Senior Notes | 2.85%

Outstanding amounts of secured and unsecured term debt financings

Interest rate

2.85%

Floating Rate Term Loan | Notes Payable to Banks

Outstanding amounts of secured and unsecured term debt financings

Interest rate

3.38%

Floating Rate Term Loan | Floating Rate Term Loan

Outstanding amounts of secured and unsecured term debt financings

Borrowings from unsecured financings, net

$ 155,000

155,000

Revolving Credit Facility | Line of Credit | Minimum

Outstanding amounts of secured and unsecured term debt financings

Interest rate

3.24%

Revolving Credit Facility | Line of Credit | Maximum

Outstanding amounts of secured and unsecured term debt financings

Interest rate

4.24%

Unsecured Debt

Outstanding amounts of secured and unsecured term debt financings

Debt Issuance Cost

$ (34,886)

$ (39,159)

XML

Borrowings from Secured and Unsecured Debt Financings (Details) $ in Thousands				6 Months Ended
	Sep. 08, 2022 USD ($) numberOfRevolvingCreditFacilities	Jul. 30, 2022 USD ($)	Jun. 27, 2022 USD ($)	Aug. 31, 2022 USD ($)	Aug. 31, 2021 USD ($)	Sep. 07, 2022 USD ($)	May 24, 2022 USD ($) numberOfRevolvingCreditFacilities	Feb. 28, 2022 USD ($)
Debt Instrument [Line Items]
Line of Credit Facility, Remaining Borrowing Capacity				$ 1,200,000
Payment for Debt Extinguishment or Debt Prepayment Cost				291	$ 13,372
Borrowings from unsecured financings, net				$ 3,915,114				$ 3,835,841
ECA Term Financings | Notes Payable, Other Payables
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage				0.00%
Payment for Debt Extinguishment or Debt Prepayment Cost				$ 500
Bank Financings | Notes Payable, Other Payables
Debt Instrument [Line Items]
Debt, Weighted Average Interest Rate				3.81%
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Borrowings from unsecured financings, net				$ 95,000				$ 20,000
Revolving Credit Facility | DBS (2018) Unsecured Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Line of Credit Facility Previous Borrowing Capacity							$ 230,000
Line of Credit Facility, Current Borrowing Capacity				280,000
Revolving Credit Facility | DBS (2018) Unsecured Revolving Credit Facility | Line of Credit | Tranche B (Revised) ($35mm) - DBS Revolving Credit Facility
Debt Instrument [Line Items]
Line of Credit Facility, Current Borrowing Capacity				35,000
Revolving Credit Facility | DBS (2018) Unsecured Revolving Credit Facility | Line of Credit | Tranche C ($245mm) - DBS Revolving Credit Facility
Debt Instrument [Line Items]
Line of Credit Facility, Current Borrowing Capacity				$ 245,000
Revolving Credit Facility | 2013 Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Line of Credit Facility Previous Borrowing Capacity			$ 1,000,000
Repayments of Lines of Credit			$ 100,000
Revolving Credit Facility | 2013 Revolving Credit Facility | Line of Credit | Subsequent Event [Member]
Debt Instrument [Line Items]
Line of Credit Facility Previous Borrowing Capacity						$ 900,000
Line of Credit Facility, Current Borrowing Capacity	$ 1,000,000
Revolving Credit Facility | 2013 Revolving Credit Facility | Line of Credit | Subsequent Event [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.625%
Revolving Credit Facility | 2013 Revolving Credit Facility | Revolving Credit Facility | Subsequent Event [Member]
Debt Instrument [Line Items]
Individual Debt Instrument at Time of Issuance Part of Overall Portfolio of Revolving Credit Facilities | numberOfRevolvingCreditFacilities	1
Revolving Credit Facility | Mizuho Bank Ltd. (2020) Unsecured Revolving Credit Facility [Member] | Line of Credit
Debt Instrument [Line Items]
Repayments of Lines of Credit		$ 50,000
Line of Credit | DBS (2018) Unsecured Revolving Credit Facility | Revolving Credit Facility
Debt Instrument [Line Items]
Individual Debt Instrument at Time of Issuance Part of Overall Portfolio of Revolving Credit Facilities | numberOfRevolvingCreditFacilities							1

XML

Shareholders’ Equity (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 31, 2022	May 31, 2022	Aug. 31, 2021
Equity [Abstract]
Dividends, Preferred Stock	$ 10,500	$ 10,500	$ 5,658

XML

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2022	Aug. 31, 2021	Aug. 31, 2022	Aug. 31, 2021
Marubeni Service Agreement
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Transaction	$ 1,200	$ 900	$ 2,600	$ 1,900
Marubeni Affiliate Parts Management Services and Supply Agreement
Related Party Transaction [Line Items]
Related Party Transaction, Amounts of Transaction	$ 2,300	$ 1,400	$ 4,000	$ 2,000

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2022	Aug. 31, 2021	Aug. 31, 2022	Aug. 31, 2021
Sources of income from continuing operations before income taxes
U.S. operations	$ 4,790	$ 4,479	$ 10,126	$ 8,190
Non-U.S. operations	(18,217)	12,531	(13,053)	(9,512)
Income from continuing operations before income taxes and earnings of unconsolidated equity method investments	$ (13,427)	$ 17,010	$ (2,927)	$ (1,322)

XML

Income Taxes Income Taxes (Textual) (Details)	3 Months Ended		6 Months Ended
	Aug. 31, 2022	Aug. 31, 2021	Aug. 31, 2022	Aug. 31, 2021
Income Tax Disclosure [Abstract]
Effective Income Tax Rate, Continuing Operations	30.30%	45.10%	25.20%	47.40%

XML

Interest, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2022	Aug. 31, 2021	Aug. 31, 2022	Aug. 31, 2021
Interest Income (Expense), Net [Abstract]
Interest on borrowings and other liabilities	$ 48,392	$ 51,807	$ 95,633	$ 106,135
Amortization of deferred financing costs	3,498	4,193	7,095	8,384
Interest expense	51,890	56,000	102,728	114,519
Less: Interest income	(748)	(382)	(1,007)	(712)
Less: Capitalized interest	(555)	(205)	(840)	(357)
Interest, net	$ 50,587	$ 55,413	$ 100,881	$ 113,450

XML

Commitments and Contingencies (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 31, 2022 USD ($) aircraft	Aug. 31, 2021 USD ($)	Aug. 31, 2022 USD ($) aircraft	Aug. 31, 2021 USD ($)
Types of Commercial Aircraft [Line Items]
Rent expense	$ 400	$ 400	$ 900	$ 800
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2023 (Remainder of fiscal year)	899		899
2024	1,747		1,747
2025	1,778		1,778
2026	1,630		1,630
2027	1,571		1,571
Thereafter	2,412		2,412
Total	$ 10,037		$ 10,037
Committed to acquire aircraft | aircraft	21		21
Purchase Obligation, Fiscal Year Maturity [Abstract]
2023 (Remainder of fiscal year)	$ 375,356		$ 375,356
2024	178,315		178,315
2025	194,469		194,469
2026	0		0
2027	0		0
Thereafter	0		0
Total	748,140		748,140
Pre-Delivery Payments
Purchase Obligation, Fiscal Year Maturity [Abstract]
Total	$ 54,400		$ 54,400

XML

Other Assets (Details) - USD ($) $ in Thousands	Aug. 31, 2022	Feb. 28, 2022
Principal components of other assets
Deferred income tax asset	$ 465	$ 570
Lease incentives and lease premiums, net of amortization of $82,250 and $81,553, respectively	55,152	53,513
Flight equipment held for sale	32,852	77,636
Aircraft purchase deposits and Embraer E-2 progress payments	67,533	56,157
Right-of-use asset	5,519	7,176
Deferred rent receivable	47,634	55,478
Other assets	117,986	105,796
Total other assets	327,141	356,326
Lease Incentives and Lease Premiums, Accumulated Amortization	$ 82,250	$ 81,553

XML

Accounts Payable, Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Aug. 31, 2022	Feb. 28, 2022
Payables and Accruals [Abstract]
Accounts payable, accrued expenses and other liabilities	$ 70,436	$ 58,882
Deferred income tax liability	72,606	66,123
Accrued interest payable	43,755	42,013
Lease liability	7,935	9,846
Lease discounts, net of amortization of $45,481 and $45,546, respectively	272	560
Total accounts payable, accrued expenses and other liabilities	195,004	177,424
Deferred Lease Income, Accumulated Amortization	$ 45,481	$ 45,546

XML

Subsequent Event - Narrative (Details) $ in Thousands			3 Months Ended		6 Months Ended
	Oct. 07, 2022 USD ($) aircraft	Sep. 08, 2022 USD ($) numberOfRevolvingCreditFacilities	Aug. 31, 2022 USD ($)	Aug. 31, 2021 USD ($)	Aug. 31, 2022 USD ($)	Aug. 31, 2021 USD ($)
Subsequent Event [Line Items]
Proceeds from Sale of Flight Equipment					$ 171,065	$ 77,900
Gain on sale of flight equipment			$ 10,049	$ 1,502	$ 13,736	$ 10,524
Subsequent Event [Member] | Revolving Credit Facility | 2013 Revolving Credit Facility | Revolving Credit Facility
Subsequent Event [Line Items]
Individual Debt Instrument at Time of Issuance Part of Overall Portfolio of Revolving Credit Facilities | numberOfRevolvingCreditFacilities		1
Subsequent Event [Member] | Revolving Credit Facility | 2013 Revolving Credit Facility | Line of Credit
Subsequent Event [Line Items]
Proceeds from Unsecured Lines of Credit		$ 100,000
Line of Credit Facility, Current Borrowing Capacity		$ 1,000,000
Subsequent Event [Member] | Freighter
Subsequent Event [Line Items]
Property, Plant and Equipment, Number of Aircraft Sold | aircraft	2
Subsequent Event [Member] | Freighter and Widebody Aircraft
Subsequent Event [Line Items]
Gain on sale of flight equipment	$ 53,000
Subsequent Event [Member] | Wide-body [Member]
Subsequent Event [Line Items]
Property, Plant and Equipment, Number of Aircraft Sold | aircraft	1