Net Investment in Leases, Net

3 Months Ended

May 31, 2023

At May 31, 2023 and February 28, 2023, our net investment in leases consisted of 14 and 4 aircraft, respectively. The components of our net investment in leases at May 31, 2023 and February 28, 2023, were as follows:


	May 31, 2023		February 28, 2023
Lease receivable	$	143,191	$	31,674
Unguaranteed residual value of flight equipment	131,665		37,287
Net investment leases	274,856		68,961
Allowance for credit losses	(8,226)		(1,267)
Net investment in leases, net	$	266,630	$	67,694

During the three months ended May 31, 2023, 10 aircraft were reclassified from operating leases to sales-type leases. Collectability of the lease payments for these 10 aircraft, which was not deemed probable at the effective date of

the lease modification, became probable during the three months ended May 31, 2023. Accordingly, we derecognized the carrying amounts of the underlying aircraft and lease payments recorded by us as deposit liabilities and recognized net investments in leases. A selling profit totaling $32.7 million for these 10 aircraft was recognized as a component of Gain on sale of flight equipment for the three months ended May 31, 2023. We also recognized a provision for credit losses totaling $7.0 million for these 10 aircraft during the three months ended May 31, 2023.

The activity in the allowance for credit losses related to our net investment in leases for the three months ended May 31, 2023 was as follows:


	Amount
Balance at February 28, 2023	$	1,267
Provision for credit losses	6,959


Balance at May 31, 2023	$	8,226

At May 31, 2023, future lease payments to be received under our net investment in leases were as follows:


Year Ending February 28/29,	Amount
2024 (Remainder of fiscal year)	$	17,735
2025	25,284
2026	24,984
2027	25,121
2028	24,911
Thereafter	74,317
Total lease payments to be received	192,352
Present value of lease payments - lease receivable	(143,191)
Difference between undiscounted lease payments and lease receivable	$	49,161