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What changed in AIR LEASE CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of AIR LEASE CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+456 added−436 removedSource: 10-K (2024-02-15) vs 10-K (2023-02-16)

Top changes in AIR LEASE CORP's 2023 10-K

456 paragraphs added · 436 removed · 330 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+34 added−19 removed55 unchanged
Biggest changeThe following table sets forth the dollar amount and percentage of our Rental of flight equipment revenues attributable to the respective geographical regions based on each airline’s principal place of business: Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Region Amount of Rental Revenue % of Total Amount of Rental Revenue % of Total Amount of Rental Revenue % of Total (in thousands, except percentages) Asia (excluding China) $ 625,355 28.2 % $ 558,020 27.9 % $ 573,722 29.5 % Europe 611,091 27.6 % 564,479 28.2 % 525,543 27.0 % China 359,976 16.3 % 352,375 17.6 % 341,121 17.5 % The Middle East and Africa 251,243 11.3 % 210,977 10.5 % 220,017 11.3 % U.S. and Canada 143,266 6.5 % 130,717 6.5 % 106,694 5.5 % Central America, South America and Mexico 141,638 6.4 % 104,315 5.2 % 88,113 4.5 % Pacific, Australia, and New Zealand 81,939 3.7 % 82,454 4.1 % 91,410 4.7 % Total $ 2,214,508 100.0 % $ 2,003,337 100.0 % $ 1,946,620 100.0 % The following table sets forth the regional concentration based on each airline's principal place of business of our flight equipment subject to operating lease based on net book value as of December 31, 2022 and 2021: Year Ended December 31, 2022 Year Ended December 31, 2021 Region Net Book Value % of Total Net Book Value % of Total (in thousands, except percentages) Europe $ 7,985,317 32.5 % $ 7,439,993 32.5 % Asia (excluding China) 7,144,188 29.1 % 5,952,981 26.0 % China 2,792,022 11.4 % 2,934,224 12.8 % The Middle East and Africa 2,253,342 9.3 % 2,447,919 10.7 % Central America, South America, and Mexico 1,924,216 7.8 % 1,566,133 6.8 % U.S. and Canada 1,557,260 6.3 % 1,638,450 7.2 % Pacific, Australia, and New Zealand 882,040 3.6 % 919,304 4.0 % Total $ 24,538,385 100.0 % $ 22,899,004 100.0 % 5 Table of Contents At December 31, 2022 and 2021, we owned and managed leased aircraft to customers in the following regions based on each airline’s principal place of business: Year Ended December 31, 2022 Year Ended December 31, 2021 Region Number of Customers (1) % of Total Number of Customers (1) % of Total Europe 49 41.9 % 50 42.5 % Asia (excluding China) 23 19.7 % 22 18.6 % The Middle East and Africa 14 12.0 % 14 11.9 % U.S. and Canada 13 11.1 % 13 11.0 % China 8 6.8 % 9 7.6 % Central America, South America and Mexico 7 6.0 % 7 5.9 % Pacific, Australia, and New Zealand 3 2.5 % 3 2.5 % Total 117 100.0 % 118 100.0 % (1) A customer is an airline with its own operating certificate.
Biggest changeThe following table sets forth the dollar amount and percentage of our Rental of flight equipment revenues attributable to the respective geographical regions based on each airline’s principal place of business: Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 Region Amount of Rental Revenue % of Total Amount of Rental Revenue % of Total Amount of Rental Revenue % of Total (in thousands, except percentages) Asia Pacific $ 1,156,837 46.7 % $ 1,067,270 48.2 % $ 992,849 49.6 % Europe 769,407 31.1 % 611,091 27.6 % 564,479 28.2 % The Middle East and Africa 262,554 10.6 % 251,243 11.3 % 210,977 10.5 % Central America, South America and Mexico 156,275 6.3 % 141,638 6.4 % 104,315 5.2 % U.S. and Canada 132,534 5.3 % 143,266 6.5 % 130,717 6.5 % Total $ 2,477,607 100.0 % $ 2,214,508 100.0 % $ 2,003,337 100.0 % The following table sets forth the regional concentration based on each airline’s principal place of business of our flight equipment subject to operating lease based on net book value as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Region Net Book Value % of Total Net Book Value % of Total (in thousands, except percentages) Asia Pacific $ 10,456,435 39.8 % $ 10,818,250 44.1 % Europe 9,881,024 37.7 % 7,985,317 32.5 % Central America, South America, and Mexico 2,361,089 9.0 % 1,924,216 7.8 % The Middle East and Africa 2,062,420 7.9 % 2,253,342 9.3 % U.S. and Canada 1,470,240 5.6 % 1,557,260 6.3 % Total (1) $ 26,231,208 100.0 % $ 24,538,385 100.0 % (1) As of December 31, 2022, we had four aircraft classified as held for sale with a carrying value of $153.5 million included in the table above.
We are principally engaged in purchasing the most modern, fuel-efficient new technology commercial jet aircraft directly from aircraft manufacturers, such as The Boeing Company (“Boeing”) and Airbus S.A.S.(“Airbus”), and leasing those aircraft to airlines throughout the world with the intention to generate attractive returns on equity.
We are principally engaged in purchasing the most modern, fuel-efficient new technology commercial jet aircraft directly from aircraft manufacturers, such as Airbus S.A.S.(“Airbus”) and The Boeing Company (“Boeing”), and leasing those aircraft to airlines throughout the world with the intention to generate attractive returns on equity.
Oftentimes, we are able to achieve lower pricing through direct bulk purchase contracts with the component manufacturers than would be achievable if we relied on the airframe manufacturers to source the components for the aircraft themselves. Airframe manufacturers such as Boeing and Airbus install these buyer furnished equipment in our aircraft during the final assembly process at their facilities.
Oftentimes, we are able to achieve lower pricing through direct bulk purchase contracts with the component manufacturers than would be achievable if we relied on the airframe manufacturers to source the components for the aircraft themselves. Airframe manufacturers such as Airbus and Boeing install these buyer furnished equipment in our aircraft during the final assembly process at their facilities.
Fleet flexibility is key to the airlines’ ability to effectively operate and compete in their respective markets. Operating leases offer airlines significant fleet flexibility by allowing them to adapt and manage their fleets through varying market conditions without bearing the full financial risk associated with these capital intensive assets which have an expected useful life of 25 years.
Fleet flexibility is key to the airlines’ ability to effectively operate and compete in their respective markets. Operating leases offer airlines significant fleet flexibility by allowing them to adapt and manage their fleets through varying market conditions without bearing the full financial risk associated with these capital-intensive assets that have an expected useful life of 25 years.
In addition, our leases are all structured as triple net leases, whereby the lessee is responsible for all operating costs, including taxes, insurance and maintenance and also contain provisions which require payment whether or not the aircraft is operated, irrespective of the circumstances. Substantially all of our leases require payments to be made in U.S. dollars.
In addition, our leases are all structured as triple net leases, whereby the lessee is responsible for all operating costs, including taxes, insurance and maintenance and also contain provisions that require payment whether or not the aircraft is operated, irrespective of the circumstances. Substantially all of our leases require payments to be made in U.S. dollars.
Airlines in some of these markets have fewer financing alternatives, enabling us to command higher lease rates compared to those in more mature markets. We mitigate the risks of owning and leasing aircraft through careful management and diversification of our leases and lessees by geography, lease term, and aircraft age and type.
Airlines in some of these less saturated markets have fewer financing alternatives, enabling us to command higher lease rates compared to those in more mature markets. We mitigate the risks of owning and leasing aircraft through careful management and diversification of our leases and lessees by geography, lease term, and aircraft age and type.
Furthermore, the insurance is primary and not contributory, and we require that all insurance carriers be required to waive rights of subrogation against us. The stipulated loss value schedule under aircraft hull insurance policies is on an agreed-value basis acceptable to us and usually exceeds the book value of the aircraft.
Furthermore, the insurance is primary and not contributory, and we require that all insurance carriers be required to waive rights of subrogation against us. The stipulated loss value schedule under aircraft hull insurance policies is on an agreed-value basis acceptable to us and typically exceeds the book value of the aircraft.
Other benefits for which our employees in the United States, and to the extent practicable outside of the United States, are eligible for include but are 11 Table of Contents not limited to: cash bonus programs, our long-term incentive plan, employee-funded 401(k) programs with company matching, education reimbursement, company-paid medical, dental and vision insurance, company-paid life insurance, reimbursement accounts and remote healthcare services among other health and wellness offerings.
Other benefits for which our employees in the United States, and to the extent practicable outside of the United States, are eligible for include but are not limited to: cash bonus programs, our long-term incentive plan, employee-funded 401(k) programs with company matching, education reimbursement, company-paid medical, dental and vision insurance, company-paid life insurance, reimbursement accounts and remote healthcare services among other health and wellness offerings.
Competition in the purchase and sale of used aircraft is based principally on the availability of used aircraft, price, the terms of the lease to which an aircraft is subject, and the creditworthiness of the lessee, if any. 9 Table of Contents Government Regulation The air transportation industry is highly regulated.
Competition in the purchase and sale of used aircraft is based principally on the availability of used aircraft, price, the terms of the lease to which an aircraft is subject, and the creditworthiness of the lessee, if any. 10 Table of Contents Government Regulation The air transportation industry is highly regulated.
This enables us to identify lessees that may be experiencing operating and financial difficulties. This identification assists us in assessing the lessee’s ability to fulfill its obligations under the lease. This monitoring also identifies candidates, where appropriate, to 7 Table of Contents restructure the lease prior to the lessee’s insolvency or the initiation of bankruptcy or similar proceedings.
This enables us to identify lessees that may be experiencing operating and financial difficulties. This identification assists us in assessing the lessee’s ability to fulfill its obligations under the lease. This monitoring also identifies candidates, where appropriate, to restructure the lease prior to the lessee’s insolvency or the initiation of bankruptcy or similar proceedings.
We operate our business on a global basis, providing aircraft to airline customers in every major geographical region, including markets such as Asia, Europe, the Middle East and Africa, U.S. and Canada, Central America, South America and Mexico, and the Pacific, Australia and New Zealand.
We operate our business on a global basis, providing aircraft to airline customers in every major geographical region, including markets such as Asia Pacific, Europe, the Middle East and Africa, Central America, South America and Mexico, and the U.S. and Canada.
Ethical and inclusive behavior is strongly promoted by the management team and these values are reflected in our long-term strategy and our way of doing business. Employees, Compensation and Benefits Pay equity is central to our mission to attract and retain the best talent.
Ethical and inclusive behavior is strongly promoted by the management team and these values are reflected in our long-term strategy and our way of doing business. 12 Table of Contents Employees, Compensation and Benefits Pay equity is central to our mission to attract and retain the best talent.
For example, following the Russia-Ukraine conflict, Russia, Ukraine and Belarus are now generally excluded from coverage in our contingent liability, contingent hull and contingent hull war insurance consistent with insurance market terms available at the time these policies were last renewed. Competition The leasing, remarketing, and sale of aircraft is highly competitive.
For example, Russia, Ukraine, Belarus and the Republic of Sudan are now generally excluded from coverage in our contingent liability, contingent hull and contingent hull war insurance consistent with insurance market terms available at the time these policies were last renewed. Competition The leasing, remarketing, and sale of aircraft is highly competitive.
This allows us to better serve our airline customers and expand our existing airline customer base by providing additional leasing opportunities beyond our own aircraft portfolio, new order pipeline, and customer or regional concentration limits. As of December 31, 2022, we had a managed fleet of 85 aircraft.
This allows us to better serve our airline customers and expand our existing airline customer base by providing additional leasing opportunities beyond our own aircraft portfolio, new order pipeline, and customer or regional concentration limits. As of December 31, 2023, we had a managed fleet of 78 aircraft.
As of December 31, 2022, we had 151 full-time employees. None of our employees are represented by a union or collective bargaining agreements. Access to Our Information We file annual, quarterly, current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”).
As of December 31, 2023, we had 163 full-time employees. None of our employees are represented by a union or collective bargaining agreements. Access to Our Information We file annual, quarterly, current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”).
Information about our Executive Officers Set forth below is certain information concerning each of our executive officers as of February 16, 2023, including his/her age and current position with the Company. All of our executive officers have been employed by us during the past five years. Name Age Company Position Steven F.
Information about our Executive Officers Set forth below is certain information concerning each of our executive officers as of February 15, 2024, including his/her age and current position with us. All of our executive officers have been employed by us during the past five years. Name Age Company Position Steven F.
Our debt financing strategy is focused on raising unsecured debt in the global 3 Table of Contents bank and debt capital markets, with limited utilization of government guaranteed export credit or other forms of secured financing.
Our debt financing strategy is focused on raising unsecured debt in the global bank and debt capital markets, with limited utilization of government guaranteed export credit or other forms of secured financing.
We aim to maintain investment-grade credit metrics and focus our debt financing strategy on funding our business primarily on an unsecured basis with mostly fixed-rate debt from public bond offerings. Unsecured financing provides us with operational flexibility when selling or transitioning aircraft from one airline to another.
We aim to maintain investment-grade credit metrics and focus our debt financing strategy on funding our business primarily on an unsecured basis with mostly fixed-rate debt issued in the public bond market. Unsecured financing provides us with operational flexibility when selling or transitioning aircraft from one airline to another.
The most recently published electricity emission factor from the Sustainable Energy Authority of Ireland was applied to Dublin and the Carbon Footprint Country specific Electricity Grid Greenhouse Gas Emission Factors, dated March 2022, was applied to Hong Kong.
The most recently published electricity emission factor from the Sustainable Energy Authority of Ireland was applied to Dublin and the Hong Kong Electric 2022 Sustainability report, dated March 2023, was applied to Hong Kong. Carbon Footprint Country specific Electricity Grid Greenhouse Gas Emission Factors, dated March 2022, was applied to Hong Kong.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for a discussion of adjusted net income before income taxes and adjusted diluted earnings per share before income taxes as non-GAAP measures and a reconciliation of these measures to net income attributable to common stockholders.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for a discussion of adjusted net income before income taxes and adjusted diluted earnings per share before income taxes as non-GAAP measures and a reconciliation of these measures to net income attributable to common stockholders. 4 Table of Contents traffic volume into 2024.
The international aviation insurance market has exclusions for physical damage to aircraft hulls caused by dirty bombs, bio-hazardous materials, and electromagnetic pulsing. Exclusions for the same type of perils could be introduced into liability policies in the future.
The international aviation insurance market has exclusions for physical damage to aircraft hulls caused by weapons of mass destruction, including nuclear events, dirty bombs, bio-hazardous materials, and electromagnetic pulsing. Exclusions for the same type of perils could be introduced into liability policies in the future as well.
We believe that a diverse and inclusive culture helps maintain our position as a preeminent aircraft leasing company. As of December 31, 2022, more than 30% of our employees are multicultural and over 50% are female. Our values and priorities are further specified in our code of conduct and our ethics-related compliance policies, procedures, trainings, and programs.
We believe that a diverse and inclusive culture helps maintain our position as a preeminent aircraft leasing company. As of December 31, 2023, 39% of our employees are multicultural and 52% are female. Our values and priorities are further specified in our code of conduct and our ethics-related compliance policies, procedures, trainings, and programs.
We expect that these markets will also present significant replacement opportunities in upcoming years as many airlines look to replace aging aircraft with new, modern technology, fuel efficient jet aircraft. An important focus of our strategy is meeting the needs of this replacement market.
Many of these less saturated markets are experiencing increased demand for passenger airline travel. We expect that these less saturated markets will also present significant replacement opportunities in upcoming years as many airlines look to replace aging aircraft with new, modern technology, fuel efficient jet aircraft. An important focus of our strategy is meeting the needs of this replacement market.
For the years ended December 31, 2022, 2021, and 2020, China was the only individual country that represented at least 10% of our rental revenue based on each airline's principal place of business; however, no individual airline contributed more than 10% to our rental revenue.
China was the only individual country that represented at least 10% of our rental revenue based on each airline’s principal place of business in each of 2021, 2022 and 2023; however, no individual airline contributed more than 10% to our rental revenue.
Khatibi 62 Executive Vice President Kishore Korde 49 Executive Vice President, Marketing Grant A. Levy 60 Executive Vice President, Marketing and Commercial Affairs John D. Poerschke 61 Executive Vice President of Aircraft Procurement and Specifications 12 Table of Contents
Khatibi 63 Executive Vice President Kishore Korde 50 Executive Vice President, Marketing Grant A. Levy 61 Executive Vice President, Marketing and Commercial Affairs John D. Poerschke 62 Executive Vice President of Aircraft Procurement and Specifications 13 Table of Contents
We may also, from time to time, work with our airline customers to assist them in obtaining financing for aircraft. 6 Table of Contents We work to mitigate the risks associated with owning and leasing aircraft and cyclical variations in the airline industry through careful management of our fleet, including managing customer concentrations by geography and region, entering into long-term leases, staggering lease maturities, balancing aircraft type exposures, and maintaining a young fleet age.
We work to mitigate the risks associated with owning and leasing aircraft and cyclical variations in the airline industry through careful management of our fleet, including managing customer concentrations by geography and region, entering into long-term 7 Table of Contents leases, staggering lease maturities, balancing aircraft type exposures, and maintaining a young fleet age.
Udvar-Házy 76 Executive Chairman of the Board of Directors John L. Plueger 68 Chief Executive Officer, President and Director Carol H. Forsyte 60 Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer Gregory B. Willis 44 Executive Vice President and Chief Financial Officer Alex A.
Udvar-Házy 77 Executive Chairman of the Board of Directors John L. Plueger 69 Chief Executive Officer, President and Director Carol H. Forsyte 61 Executive Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer Gregory B. Willis 45 Executive Vice President and Chief Financial Officer Alex A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information on our financial results for the year ended December 31, 2022.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information on our financial results for the year ended December 31, 2023.
We ended 2022 with $31.4 billion in committed minimum future rental payments, consisting of $15.6 billion in contracted minimum rental payments on the aircraft in our existing fleet and $15.8 billion in minimum future rental payments related to aircraft which will deliver between 2023 through 2028.
We ended 2023 with $31.0 billion in committed minimum future rental payments, consisting of $16.4 billion in contracted minimum rental payments on the aircraft in our existing fleet and $14.6 billion in minimum future rental payments related to aircraft which will deliver between 2024 through 2027.
Our customer base is highly diversified, with our average customer representing approximately 1.0% of our fleet net book value as of December 31, 2022. We also have a global customer base with the average country representing approximately 1.8% of our fleet net book value as of December 31, 2022.
Our customer base is highly diversified, with an average customer concentration of approximately 1.0% of our fleet net book value as of December 31, 2023. We also have a globally diversified customer base with an average country concentration of approximately 1.8% of our fleet net book value as of December 31, 2023.
References throughout this Annual Report on Form 10-K to “our fleet” refer to the aircraft included in flight equipment subject to operating leases and do not include aircraft in our managed fleet or aircraft classified as net investments in sales-type leases unless the context indicates otherwise. Geographic Diversification Over 95% of our aircraft are operated internationally.
We had a managed fleet of 78 aircraft as of December 31, 2023 compared to 85 as of December 31, 2022. 3 References throughout this Annual Report on Form 10-K to “our fleet” refer to the aircraft included in flight equipment subject to operating leases and do not include aircraft in our managed fleet, our flight equipment held for sale or aircraft classified as net investments in sales-type leases unless the context indicates otherwise. 5 Table of Contents Geographic Diversification Over 95% of our aircraft are operated internationally.
Financing Strategy We finance the purchase of aircraft and our business with available cash balances, internally generated funds, including through aircraft sales and trading activity and an array of financing products.
Financing Strategy We finance the purchase of aircraft and our business with available cash balances and internally generated funds, including through cash flows from our operating leases, aircraft sales and trading activity, and debt financings.
Aircraft Acquisition Strategy We seek to acquire the most highly in demand and widely distributed, modern technology, fuel efficient and lowest emissions narrowbody and widebody commercial jet aircraft. Our strategy is to order new aircraft directly from the manufacturers. When placing new aircraft orders with the manufacturers, we strategically target the replacement of aging aircraft with modern technology aircraft.
Aircraft Acquisition Strategy We seek to acquire the most highly in demand and widely distributed, modern technology, fuel efficient and lowest emissions narrowbody and widebody commercial jet aircraft, with a primary focus on passenger aircraft. Our strategy is to order new aircraft directly from the manufacturers.
While we are one of the largest aircraft lessors operating on a global scale, the aircraft leasing industry is diversified with a large number of competitors. We face competition from aircraft manufacturers, banks, financial institutions, other leasing companies, aircraft brokers and airlines.
While we are one of the largest aircraft lessors operating on a global scale, the aircraft leasing industry is diversified with a large number of competitors. We face competition from aircraft manufacturers, banks, financial institutions, other leasing companies, and airlines. Some of our competitors may have greater operating and financial resources and access to lower capital costs than we have.
We also have the ability to seek debt financing secured by our assets, as well as financings supported through the Export-Import Bank of the United States and other export credit agencies for aircraft deliveries .
We also have the ability to seek debt financing secured by our assets, as well as financings supported through government-guaranteed export credit agencies for most of our future aircraft deliveries.
Industry Outlook Performance of the commercial airline industry is linked to global economic health and development. Passenger traffic has historically expanded at a faster rate than global gross domestic product (“GDP”) growth, in part due to the expansion of the middle class and the ease and affordability of air travel and we expect this trend to continue.
Passenger traffic volume has historically expanded at a faster rate than global gross domestic product (“GDP”) growth, in part due to the expansion of the global middle class and the ease and affordability of air travel, which we expect to continue.
As of December 31, 2022, we had commitments to purchase 398 aircraft from Boeing and Airbus for delivery through 2029, with an estimated aggregate commitment of $25.5 billion. We have placed approximately 90% of our committed orderbook on long-term leases for aircraft delivering through the end of 2024 and have placed 60% of our entire orderbook.
As of December 31, 2023, we had commitments to purchase 334 aircraft from Airbus and Boeing for delivery through 2028, with an estimated aggregate commitment of $21.7 billion. We have placed 100% of our committed orderbook on long-term leases for aircraft delivering through the end of 2025 and have placed approximately 65% of our entire orderbook.
Our management team identifies prospective airline customers based upon industry knowledge and long-standing relationships. Prior to leasing an aircraft, we evaluate the competitive positioning of the airline, the strength and quality of the management team, and the financial performance of the airline. Management obtains and reviews relevant business materials from all prospective customers before entering into a lease agreement.
Our management team identifies prospective airline customers based upon industry knowledge and long-standing relationships. Prior to leasing an aircraft, we evaluate the competitive positioning of the airline, the strength and quality of the management team, and the financial performance of the airline.
Scope 2 (Indirect - Location-Based) Electricity Chilled Water The appropriate eGRID region was identified from the US EPA's Emission Factors for Greenhouse Inventories, dated April 2022, (if a U.S. facility) or a publicly available regional factor (if international facility).
The appropriate Scope 2 eGRID region was identified from the US EPA’s Emission Factors for Greenhouse Gas Inventories, dated April 2023 (of a U.S. facility), or a public available regional factor (if an international facility).
Global air travel continues to recover following the impact of the COVID-19 pandemic. The International Air Transport Association (“IATA”) reported that passenger traffic was up 64% during 2022 relative to the prior year, due to a significant acceleration in international traffic and strong continued expansion of domestic traffic in most markets.
The International Air Transport Association (“IATA”) reported that passenger traffic was up 37% during 2023 relative to the prior year, primarily due to a significant acceleration in international traffic and strong continued expansion of domestic traffic in most markets.
We typically finance the purchase of aircraft and our business with available cash balances, internally generated funds from our aircraft leasing and sales activities, and debt financings.
We finance the purchase of aircraft and our business with available cash balances and internally generated funds, including through cash flows from our operating leases, aircraft sales and trading activity and debt financings.
In order to maximize residual values and minimize the risk of obsolescence, our strategy is to own an aircraft during the first third of its expected 25-year useful life.
In order to maximize residual values and minimize the risk of obsolescence, our strategy is to own an aircraft during the first third of its expected 25-year useful life. During the year ended December 31, 2023, we purchased 71 new aircraft from Airbus and Boeing, and sold 27 aircraft 1 .
We work closely with our airline customers throughout the world to help optimize their long-term aircraft fleet strategies.
We work closely with our airline customers throughout the world to help optimize their long-term aircraft fleet strategies. We may also, from time to time, work with our airline customers to assist them in obtaining financing for aircraft.
Lease agreements generally require hull and liability limits to be in U.S. dollars, which are shown on the certificate of insurance. Insurance premiums are to be paid by the lessee, with coverage acknowledged by the broker or carrier. The territorial coverage, in each case, should be suitable for the lessee’s area of operations and based on available insurance coverages.
Lease agreements generally require hull and liability limits to be in U.S. dollars, which are shown on the certificate of insurance. 9 Table of Contents In accordance with our lease agreements, insurance premiums are paid by the lessee, with coverage acknowledged by the broker or carrier.
Scope 1 and Scope 2 GHG emissions information has been prepared in accordance with the World Resources Institute (WRI)/World Business Council for Sustainable Development (WBCSD) Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard and WRI/WBCSD GHG Protocol Scope 2 Guidance, collectively referred to herein as the GHG Protocol (the “GHG Protocol”). 10 Table of Contents GHG Emissions Factors Emissions Scope Emissions Source Emissions Factor Employed Scope 1 (Direct) Natural Gas Diesel Backup Generators Aviation Fuel • Natural gas: US EPA's Emission Factors for Greenhouse Gas Inventories, dated April 2022, were applied.
Scope 1 and Scope 2 GHG emissions information has been prepared in accordance with the World Resources Institute (“WRI”)/World Business Council for Sustainable Development (“WBCSD”) GHG Protocol: A Corporate Accounting and Reporting Standard and WRI/WBCSD GHG Protocol Scope 2 Guidance, collectively referred to here as the GHG Protocol. 11 Table of Contents GHG Emissions Factors Emissions Scope Emissions Source Emissions Factor Employed Scope 1 (Direct) Natural Gas Diesel Backup Generators Corporate Jet Fuel Natural Gas: Emissions factors are applied to primary data obtained from utility bill (metered consumption).
We generally require a certificate of insurance from the lessee’s insurance broker prior to delivery of an aircraft. Generally, all 8 Table of Contents certificates of insurance contain a breach of warranty endorsement so that our interests are not prejudiced by any act or omission of the lessee.
Generally, all certificates of insurance contain a breach of warranty endorsement so that our interests are not prejudiced by any act or omission of the lessee.
Our adjusted net income before income taxes excludes the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items, such as the net impact of the write-off of our Russian fleet.
Airline forward ticket sales as reported by IATA remained strong in 2023, illustrating continued support for 2 Adjusted net income before income taxes excludes the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items, such as net write-offs and recoveries related to our former Russian fleet.
Insurance We require our lessees to carry those types of insurance that are customary in the air transportation industry, including comprehensive liability insurance, aircraft all-risk hull insurance, and war-risk insurance covering risks such as hijacking, terrorism but excluding coverage for weapons of mass destruction and nuclear events), confiscation, expropriation, seizure, and nationalization.
Insurance We require our lessees to obtain insurance coverage that is customary in the air transportation industry, including comprehensive liability insurance, aircraft all-risk hull insurance, and war-risk insurance covering risks such as hijacking, terrorism, confiscation, expropriation, seizure, and nationalization. We generally require a certificate of insurance from the lessee’s insurance broker prior to delivery of an aircraft.
Our managed fleet was comprised of 85 aircraft as of December 31, 2022 as compared to 92 aircraft as of December 31, 2021. We have a globally diversified customer base comprised of 117 airlines in 62 countries as of December 31, 2022. We continue to have a strong lease utilization rate of 99.6% for the year ended December 31, 2022.
We have a globally diversified customer base comprised of 119 airlines in 62 countries as of December 31, 2023. We continued to maintain a strong lease utilization rate of 99.9% for the year ended December 31, 2023.
Additionally, we look to supplement our order pipeline with opportunistic purchases of aircraft in the secondary market and participate in sale-leaseback transactions with airlines. In addition to our focus on commercial aircraft, we have expanded our focus to include the cargo market based on customer demand. Prior to ordering aircraft, we evaluate the market for specific types of aircraft.
When placing new aircraft orders with the manufacturers, we strategically target the replacement of aging aircraft with modern technology aircraft. Additionally, we look to supplement our order pipeline with opportunistic purchases of aircraft in the secondary market and participate in sale-leaseback transactions with airlines. Prior to ordering aircraft, we evaluate the market for specific types of aircraft.
As air travel continues to recover from the impact of the COVID-19 pandemic, we expect demand for our modern fuel-efficient aircraft will continue to increase. In markets such as the United States and Western Europe, our strategy is to focus on the replacement market as many airlines look to replace aging aircraft with new, modern technology, fuel efficient jet aircraft.
In markets such as the United States and Western Europe, our strategy is to focus on the replacement market as many airlines look to replace aging aircraft with new, modern technology, fuel efficient jet aircraft. In less saturated markets, including parts of Asia, in addition to the replacement market, we serve customers expanding their fleets.
During the year ended December 31, 2022, we recorded net loss attributable to shareholders of $138.7 million, or net loss of $1.24 per diluted share, as compared to net income attributable to shareholders of $408.2 million, or $3.57 per diluted share, for the year ended December 31, 2021.
Our net income attributable to common stockholders for the year ended December 31, 2023 was $572.9 million, or $5.14 per diluted share, as compared to a net loss attributable to common stockholders of $138.7 million, or $1.24 loss per diluted share, for the year ended December 31, 2022.
Once an insolvency or bankruptcy occurs, we typically have less control over, and would most likely incur greater costs in connection with, the restructuring of the lease or the repossession of the aircraft.
Once an insolvency or bankruptcy occurs, we typically have less control over, and would most likely incur greater costs in connection with, the restructuring of the lease or the repossession of the aircraft. 8 Table of Contents During the life of the lease, situations may emerge that place our customers under significant financial pressure, which may lead us to repossess our aircraft or restructure our leases with our airline customers.
There may be variations in methodology used by other companies in reporting emissions data, and consequently it is not always practical to directly compare emissions from different companies. In addition, future emissions results may vary as the methodology and performance measures applied by the aviation industry and by us continue to evolve.
In addition, future emissions results may vary as the methodology and performance measures applied by the aviation industry and by us continue to evolve.
Adjusted net income before income taxes per diluted share increased 14.4% to $5.89 per adjusted diluted share for the year ended December 31, 2022 compared to $5.15 per adjusted diluted share for the year ended December 31, 2021.
Adjusted net income before income taxes 2 during the year ended December 31, 2023 was $733.6 million or $6.58 per adjusted diluted share, as compared to $659.9 million, or $5.89 per adjusted diluted share, for the year ended December 31, 2022.
As of December 31, 2022, we owned 417 aircraft in our aircraft portfolio, comprised of 306 narrowbody aircraft and 111 widebody aircraft. As of December 31, 2022, the weighted average fleet age and weighted average remaining lease term of our fleet was 4.5 years and 7.1 years, respectively.
As of December 31, 2023, the weighted average fleet age and weighted average remaining lease term of our fleet was 4.6 years and 7.0 years, respectively.
We typically enter into a lease agreement 18 to 36 months in advance of the delivery of a new aircraft from our orderbook. Once the aircraft has been delivered and operated by the airline, we look to remarket the aircraft and sign a follow-on lease six to 12 months ahead of the scheduled expiry of the initial lease term.
Once the aircraft has been delivered and operated by the airline, we look to remarket the aircraft and sign a follow-on lease six to 12 months ahead of the scheduled expiry of the initial lease term. Our leases are typically structured as operating leases with fixed rates and terms and typically require cash security deposits and maintenance reserve payments.
GHG Emissions by Type Carbon Dioxide Methane Nitrous Oxide Total Scope 1 Direct 4,394 3 42 4,439 Scope 2 Indirect - Location-Based 220 — 1 221 All GHG emissions figures are in metric tonnes of carbon dioxide equivalents (CO2e). In accordance with the GHG Protocol, we have included in our reporting carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O).
GHG Emissions by Type Carbon Dioxide Methane Nitrous Oxide Total Scope 1 Direct 4,919 3 45 4,967 Scope 2 Indirect - Location-Based 262 — 1 263 All GHG emissions figures are in metric tonnes of carbon dioxide equivalents (CO 2 e).
The net book value of our fleet grew by 7.2% to $24.5 billion as of December 31, 2022 compared to $22.9 billion as of December 31, 2021. The weighted average age of our fleet was 4.5 years and the weighted average lease term remaining was 7.1 years as of December 31, 2022.
The weighted average age of our fleet was 4.6 years and the weighted average lease term remaining was 7.0 years as of December 31, 2023. Our managed fleet was comprised of 78 aircraft as of December 31, 2023 compared to 85 aircraft as of December 31, 2022.
The increase in total revenues was primarily driven by the continued growth in our fleet and significantly lower COVID-19 related lease restructuring and cash basis losses.
The increase in total revenues was primarily driven by the continued growth in our fleet, an increase in sales activity and higher end of lease revenue.
As of December 31, 2022, our composite cost of funds raised through debt financings was 3.07%. Our total revenues for the year ended December 31, 2022 increased by 11.0% to $2.3 billion as compared to 2021.
As of December 31, 2023, we had total debt outstanding of $19.4 billion, of which 84.7% was at a fixed rate and 98.4% of which was unsecured, and in the aggregate, our composite cost of funds was 3.77%. Our total revenues for the year ended December 31, 2023 increased by 15.9% to $2.7 billion as compared to 2022.
Under certain circumstances, the customer may be required to obtain guarantees or other financial support from a sovereign entity or a financial institution. We work closely with our existing customers and potential lessees to develop customized lease structures that address their specific needs.
Our management team obtains and reviews relevant business materials from all prospective customers before entering into a lease agreement. Under certain circumstances, the customer may be required to obtain guarantees or other financial support from a sovereign entity or a financial institution.
Below is a summary of the GHG emissions factors used and the GHG emissions by type for the fiscal year ended December 31, 2021.
Below is a summary of the Greenhouse Gas (“GHG”) emissions factors used and the GHG emissions by type for the year ended December 31, 2022. We present gross Scope 1 and 2 emissions below. Scope 1 represents direct GHG emissions that occur from sources that are owned or controlled by us.
Elevated fuel costs and other expenses inherent in operating older aircraft, along with environmental sustainability initiatives are also driving increased demand for new aircraft. 4 Table of Contents Operations to Date Current Fleet The net book value of our fleet increased by 7.2% to $24.5 billion as of December 31, 2022 compared to $22.9 billion as of December 31, 2021.
Operations to Date Current Fleet The net book value of our fleet 3 increased by 6.9% to $26.2 billion as of December 31, 2023 compared to $24.5 billion as of December 31, 2022. As of December 31, 2023, we owned 463 aircraft in our aircraft portfolio, comprised of 345 narrowbody aircraft and 118 widebody aircraft.
For all natural gas emission sources at international locations, the UK Government GHG Conversion Factors for Company Reporting, dated January 2022, were applied. • Diesel for backup generators: CGHGP Emission Factors from Cross Sector Tools, dated May 2017, were applied. • Aviation fuel: Aviation fuel emission factors within the UK Government GHG Conversion Factors for Company Reporting dated January 2022 were applied.
For all natural gas emission sources in the United States, the consumption data was converted from cubic meters to standard cubic feet and the US EPA’s Emission Factors for Greenhouse Gas Inventories, dated April 2023, were applied. For all natural gas emissions sources at international locations, the UK Government GHG Conversion Factors for Company Reporting, dated September 2022, were applied.
Hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6), and nitrogen trifluoride (NF3) emissions have been omitted as they are not material sources of greenhouse gases for us. The emissions figures provided above are based on the reporting tools and information reasonably available to us during the fiscal year ended December 31, 2021.
In accordance with the GHG Protocol, we have included in our reporting carbon dioxide (CO 2 ), methane (CH 4 ), and nitrous oxide (N 2 O). Hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF 6 ), and nitrogen trifluoride (NF 3 ) emissions have been omitted as they are not material sources of greenhouse gases for us.
Removed
In less saturated markets, including parts of Asia, in addition to the replacement market, we serve customers expanding their fleets. Many of these markets are experiencing increased demand for passenger airline travel and have lower market saturation than more mature markets such as the United States and Western Europe.
Added
We ended the year with a total of 463 aircraft in our owned fleet. The net book value of our fleet grew by 6.9% to $26.2 billion as of December 31, 2023 compared to $24.5 billion as of December 31, 2022.
Removed
During the year ended December 31, 2022, we purchased 60 new aircraft from Boeing and Airbus, purchased one aircraft from the secondary market, sold six aircraft and wrote-off our interests in 21 aircraft in our owned fleet that were detained in Russia. However, in October 2022, we recovered one of these aircraft. See “Impact of Russia-Ukraine conflict” in “Item 7.
Added
During 2023, we raised approximately $3.6 billion in committed debt financings, with floating interest rates ranging from SOFR plus 0.42% and SOFR plus 1.50% and fixed interest rates ranging from 5.30% to 5.94%, net of the effects of cross-currency hedging arrangements.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for further discussion. We ended the year with a total of 417 aircraft in our owned fleet.
Added
We ended 2023 with an aggregate borrowing capacity under our 1 Aircraft sales include two sales-type lease transactions and nine sales-type lease transactions during the year ended December 31, 2023 and 2022, respectively. 3 Table of Contents revolving credit facility of $6.3 billion and total liquidity of $6.8 billion.
Removed
In 2022, we issued approximately $2.2 billion in aggregate principal amount of senior unsecured notes with maturities ranging from 2027 to 2032 with a weighted average interest rate of 3.59%. We ended 2022 with total debt outstanding of $18.8 billion, of which 91.3% was at a fixed rate and 99.3% of which was unsecured.
Added
During the year ended December 31, 2023, we recognized $156.3 million in gains from the sale of 27 aircraft and also recognized $124.4 million in end of lease revenue from the return of 22 aircraft. During the year ended December 31, 2022, we recognized $48.0 million in gains from the sale of 15 aircraft 1 .
Removed
Despite the growth of our fleet, the decrease was due to the net impact of the write-off of our Russian fleet, which totaled approximately $771.5 million for the year ended December 31, 2022. See “Item 7.
Added
In addition, in 2022, we recorded $76.6 million in income related to security deposit forfeitures and maintenance reserve revenue from the return of 12 aircraft as well as the termination of our leasing activities in Russia.
Removed
Adjusted net income before income taxes for the year ended December 31, 2022 increased 11.9% to $659.9 million compared to $589.7 million for the year ended December 31, 2021.
Added
The increase compared to the prior year was primarily due to the increase in revenues as discussed above partially offset by higher interest expense, which resulted from an increase in our composite cost of funds.
Removed
Our adjusted net income before income taxes and adjusted diluted earnings per share before income taxes increased for the year ended December 31, 2022 as compared to 2021, primarily due to the continued growth of our fleet and the increase in revenues.
Added
In addition, in 2023, we recognized a net benefit of approximately $67.0 million from the settlement of insurance claims under JSC Siberia Airline’s (“S7”, a Russian airline) insurance policies related to four aircraft previously included in our owned fleet and our equity interest in certain aircraft from our managed fleet that were previously on lease to S7, whereas in 2022, we recognized a net write-off of $771.5 million related to our Russian fleet.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeShifts in foreign exchange rates can be significant, are difficult to predict, and can occur quickly as evidenced by the significant appreciation of the U.S. dollar in 2022. Should our lessees be unable to honor the terms of their leases due to the appreciation of the U.S. dollar, we may experience lost revenues and reduced net income.
Biggest changeShould our lessees be unable to honor the terms of their leases due to the appreciation of the U.S. dollar, we may experience lost revenues and reduced net income. Regulatory, tax and legal risks relating to our business Income and other taxes could negatively affect our business and operating results due to our multi-jurisdictional operations.
Depending on market conditions at the time and our access to capital, we may also have to rely more heavily on additional equity issuances or on less efficient forms of debt financing that may require a larger portion of our cash flow from operations to service, thereby reducing funds available for our operations, future business opportunities and other purposes.
Depending on market conditions at the time and our access to capital, we may also have to rely more heavily on less efficient forms of debt financing or additional equity issuances that may require a larger portion of our cash flow from operations to service, thereby reducing funds available for our operations, future business opportunities and other purposes.
To the extent such changes are within the United States, we may be disproportionately impacted as compared to our competitor aircraft lessors. For example, certain provisions of the Tax Cuts and Jobs Act that phased into effect in 2022 may limit our ability to deduct interest expense from taxable income in future financial statements.
To the extent such changes are within the United States, we may be disproportionately impacted as compared to our competitor aircraft lessors. For example, certain provisions of the Tax Cuts and Jobs Act that phased into effect in 2022 limit our ability to deduct interest expense from taxable income in future financial statements.
Sale of these shares could impair our ability to raise capital through the sale of equity or equity related securities.
The sale of these shares could impair our ability to raise capital through the sale of equity or equity related securities.
We may obtain financing or further increase our capital resources by issuing additional shares of Class A common stock, or more series of our preferred stock, or offering debt or additional equity securities, including commercial paper, medium-term notes, senior or subordinated notes, or new convertible or preferred securities.
We may obtain financing or further increase our capital resources by issuing additional shares of Class A common stock, or additional series of preferred stock, or offering debt or additional equity securities, including commercial paper, medium-term notes, senior or subordinated notes, or new convertible or preferred securities.
Risks relating to our capital requirements and debt financings Our substantial indebtedness will require significant capital to refinance our outstanding indebtedness and to acquire aircraft; our inability to make our debt payments and obtain incremental capital may have a material adverse effect on our business. We and our subsidiaries have a significant amount of indebtedness.
Risks relating to our capital requirements and debt financings We will require significant capital to refinance our outstanding indebtedness and to acquire aircraft; our inability to make our debt payments and obtain incremental capital may have a material adverse effect on our business. We and our subsidiaries have a significant amount of indebtedness.
General risk factors relating to investment in our stock Provisions in Delaware law and our restated certificate of incorporation and amended and restated bylaws may inhibit a takeover of us, which could entrench management or cause the price of our Class A common stock to decline.
Risk factors relating to investment in our Class A common stock Provisions in Delaware law and our restated certificate of incorporation and amended and restated bylaws may inhibit a takeover of us, which could entrench management or cause the price of our Class A common stock to decline.
We have in place training programs for our employees with respect to FCPA, OFAC, UKBA, export controls and similar laws and regulations, but we cannot assure that our employees, consultants, sales agents, or associates will not engage in unlawful conduct for which we may be held responsible or that our business partners will not engage in conduct that could affect their ability to perform their contractual obligations and result in our being held liable for such conduct.
We have training programs in place for our employees with respect to FCPA, OFAC, UKBA, export controls and similar laws and regulations, but we cannot assure that our employees, consultants, sales agents, or associates will not engage in unlawful conduct for which we may be held responsible or that our business partners, including our lessees will not engage in conduct that could affect their ability to perform their contractual obligations and result in our being held liable for such conduct.
Oversupply may produce sharp and prolonged decreases in market lease rates and residual values and may affect our ability to remarket or sell at a profit, or at all, some of the aircraft in our fleet which would impact our earnings and cash flows. 22 Table of Contents Export restrictions and tariffs may impact where we can place and deliver our aircraft and negatively impact our ability to execute on our long-term strategy.
Oversupply may produce sharp and prolonged decreases in market lease rates and residual values and may affect our ability to remarket or sell at a profit, or at all, some of the aircraft in our fleet which would impact our earnings and cash flows. 23 Table of Contents Export restrictions and tariffs may impact where we can place and deliver our aircraft and negatively impact our ability to execute on our long-term strategy.
The demand for our aircraft is also affected by other factors outside of our control, including: air passenger demand; air cargo demand; air travel restrictions; airline financial health; changes in fuel costs, interest rates, foreign currency, inflation and general economic conditions; technical problems associated with a particular aircraft model; airport and air traffic control infrastructure constraints; and the availability and cost of financing.
The demand for our aircraft is also affected by other factors outside of our control, including: air passenger demand; air cargo demand; air travel restrictions; airline financial health; changes in fuel costs, interest rates, foreign currency, inflation and general economic conditions; technical problems associated with a particular aircraft or engine model; airport and air traffic control infrastructure constraints; and the availability and cost of financing.
Our management team evaluates on a quarterly basis the need to perform an impairment test whenever facts or circumstances indicate a potential impairment has occurred. An assessment is performed whenever events or changes in circumstances indicate that the carrying amount of an aircraft may not be recoverable from their expected future undiscounted net cash flow.
Our management team evaluates on a quarterly basis the need to perform an impairment test whenever facts or circumstances indicate a potential impairment has occurred. An assessment is performed whenever events or changes in circumstances indicate that the carrying amount of an aircraft may not be recoverable from its expected future undiscounted net cash flow.
Due to the competitive nature of the aviation industry, operators may be unable to pass on increases in fuel prices to 23 Table of Contents their customers by increasing fares in a manner that fully offsets increased fuel costs. In addition, they may not be able to manage this risk by appropriately hedging their exposure to fuel price fluctuations.
Due to the competitive nature of the aviation industry, operators may be unable to pass on increases in fuel prices to their customers by increasing fares in a manner that fully offsets increased fuel costs. In addition, they may not be able to manage this risk by appropriately hedging their 24 Table of Contents exposure to fuel price fluctuations.
If we are unable to generate sufficient returns on our aircraft due to any of the above factors within or outside of our control, it may have an adverse impact on our net income. Failure to close our aircraft acquisition commitments would negatively affect our ability to further grow our fleet and net income.
If we are unable to generate sufficient returns on our aircraft due to any of the above factors within or outside of our control, it may have an adverse impact on our net income. Failure to satisfy our aircraft acquisition commitments would negatively affect our ability to further grow our fleet and net income.
Some of our lessees have defaulted on their lease obligations or filed for bankruptcy or otherwise sought protection from creditors (collectively referred to as “bankruptcy”). One of our lessees is subject to bankruptcy proceedings as of February 15, 2023 and lessee bankruptcies may increase in the future.
Some of our lessees have defaulted on their lease obligations or filed for bankruptcy or otherwise sought protection from creditors (collectively referred to as “bankruptcy”). One of our lessees is subject to bankruptcy proceedings as of February 15, 2024 and lessee bankruptcies may increase in the future.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Damage or interruption to such IT systems may require significant investment to fix or replace, and we may suffer operational interruptions.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to applicable laws or regulations prohibiting such payments. Damage or interruption to such IT systems may require significant investment to fix or replace, and we may suffer operational interruptions.
Risks related to concentrated exposure can include economic recessions, financial, public health and political emergencies, burdensome local regulations, trade disputes, and in extreme cases, increased risks of requisition of our aircraft and risks of wide-ranging sanctions prohibiting us from leasing flight equipment in certain jurisdictions.
Risks related to concentrated exposure can include economic recessions, financial, public health and political emergencies, burdensome local regulations, trade disputes, and increased risks of requisition of our aircraft and risks of wide-ranging sanctions prohibiting us from leasing flight equipment in certain jurisdictions.
For a description of our impairment policy, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Flight equipment.” If we were to record an impairment charge on aircraft, or if we were to dispose of aircraft for a price that is less than its depreciated book value on our balance sheet, it would reduce our total assets and shareholders’ equity.
For a description of our impairment policy, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates—Flight equipment.” If we were to record an impairment charge on aircraft, or if we were to dispose of aircraft for a price that is less than its depreciated book value on our balance sheet, it would reduce our total assets and shareholders’ equity and increase our debt to equity ratio.
Privacy-related claims or lawsuits initiated by governmental bodies, customers or other third parties, irrespective of the merits, could be time consuming, result in costly enforcement actions (including regulatory proceedings, investigations, fines, penalties, audits, and inspections), litigation (including class action claims), penalties and fines, require us to change our business practices or cause business interruptions and may lead to administrative, civil, or criminal liability.
Privacy-related claims or lawsuits initiated by governmental bodies, customers or other third parties, irrespective of the merits, could be time consuming, result in costly enforcement actions (including regulatory proceedings, investigations, fines, penalties, audits, and inspections), litigation (including class action claims) or mass arbitration demands, penalties and fines, require us to change our business practices or cause business interruptions and may lead to administrative, civil, or criminal liability.
Further, compliance with current or future regulations, fees, taxes and reporting imposed to address environmental concerns could cause our lessees to incur higher costs and to generate lower revenues, which could adversely affect their ability to make lease payments to us. The airline industry has come under scrutiny by the press, public and investors regarding environmental impacts of air travel.
Further, compliance with current or future regulations, fees, taxes and reporting imposed to address environmental concerns could cause our lessees to incur higher costs and to generate lower revenues, which could adversely affect their ability to make lease payments to us. 25 Table of Contents The airline industry has come under scrutiny by the press, public and investors regarding environmental impacts of air travel.
For example, the CCPA, which applies to business representative and other types of personal data, provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
For example, the CCPA, which applies to business representative and other types of personal data of California residents, provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
For the year ended December 31, 2022, more than 95% of our revenues were derived from customers who have their principal place of business outside the U.S. and most leases designated payment currency is U.S. dollars.
For the year ended December 31, 2023, more than 95% of our revenues were derived from customers who have their principal place of business outside the U.S. and most leases designated payment currency is U.S. dollars.
Climate and environmental objectives may impact the types of aircraft we target for investment and the demand for certain aircraft and engine types, and could result in a significant increase in our costs and expenses and adversely affect future revenue, cash flows and financial performance.
Climate and environmental regulations may impact the types of aircraft we target for investment and the demand for certain aircraft and engine types, and could result in a significant increase in our costs and expenses and adversely affect future revenue, cash flows and financial performance.
Our outstanding preferred stock have preferences with respect to liquidating distributions and dividend payments which limits our ability to pay dividends to our Class A common stockholders, subject to certain conditions. Any new series of preferred stock could have similar or different preferences.
Our outstanding preferred stock have preferences with respect to liquidating distributions and dividend payments which limit our ability to pay dividends to our Class A common stockholders, subject to certain conditions. Any new series of preferred stock could have similar or different preferences.
Our access to financing sources depends upon a number of factors over which we have limited control, including general market conditions and interest rate fluctuations; periods of unexpected market disruption and volatility; the market's view of the quality of our assets, perception of our growth potential and assessment of our credit risk; the relative attractiveness of alternative investments; and the trading prices of our debt securities and preferred and common equity securities.
Our access to financing sources depends upon a number of factors over which we have limited control, including general market conditions and interest rate fluctuations; periods of unexpected market disruption and volatility; the market’s view of the quality of our business and assets, perception of our growth potential and assessment of our credit risk; the relative attractiveness of alternative investments; and the trading prices of our debt and equity securities.
For example, the effects of COVID-19 pandemic related travel restrictions, as well as, groundings and aircraft production delays, have each impacted, and may continue to impact lease rates or our ability to lease certain aircraft in our fleet or orderbook.
For example, the effects of pandemic related travel restrictions, as well as, groundings and aircraft production delays, have each impacted and may continue to impact lease rates or our ability to lease certain aircraft in our fleet or orderbook.
In addition, geopolitical events such as changes in national policy or the imposition of sanctions, including new sanctions, trade barriers or tariffs, as well as events leading to political or economic instability such as war, prolonged armed conflict and acts of terrorism; epidemics, pandemics and natural disasters; availability of financing, including availability of governmental support; airline financial health may also have an impact.
In recent years, geopolitical events such as changes in national policy or the imposition of sanctions, including new sanctions, trade barriers or tariffs, as well as events leading to political or economic instability such as war, prolonged armed conflict and acts of terrorism; epidemics, pandemics and natural disasters; availability of financing, including availability of governmental support; airline financial health may also have an impact.
Violation of laws or regulations may result in increased liabilities including penalties and fines as well as reputational harm. A lessee’s failure to obtain required licenses, consents and approvals could negatively affect our ability to remarket or sell aircraft. Airlines are subject to extensive regulation in the jurisdictions in which they are registered and operate.
Violation of laws or regulations may result in increased liabilities including penalties and fines as well as reputational harm. A lessee’s failure to obtain required licenses, consents and approvals could negatively affect our ability to remarket or sell aircraft. 26 Table of Contents Airlines are subject to extensive regulation in the jurisdictions in which they are registered and operate.
Udvar-Házy or Mr. Plueger may terminate their employment at any time. If we were to lose the services of any of the members of our senior management team, it may negatively impact our business.
Udvar-Házy and Mr. Plueger may terminate their employment at any time. If we were to lose the services of any of the members of our senior management team, it may negatively impact our business.
In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, 20 Table of Contents and diversion of funds.
In particular, severe ransomware 21 Table of Contents attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, and diversion of funds.
As the result of the existence of these financial and non-financial covenants and our need to comply with them, the flexibility we have to operate our business may be limited. Operational risks relating to our business We may be unable to generate sufficient returns on our aircraft investments which may have an adverse impact on our net income.
As the result of the existence of these financial and non-financial covenants and our need to comply with them, the flexibility we have to operate our business may be limited. 15 Table of Contents Operational risks relating to our business We may be unable to generate sufficient returns on our aircraft investments which may have an adverse impact on our net income.
Such systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, ransomware attacks, social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), fire and natural disasters.
Such systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, ransomware attacks, social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), fire and natural disasters, and other similar threats.
The occurrence of any such event, or multiple such events, could cause our lessees to experience decreased passenger demand, to incur higher costs and to generate lower revenues, which could adversely affect their ability to make lease payments to us or to obtain the types and amounts of insurance we require.
The occurrence of any of the events described above, or multiple such events, could cause our lessees to experience decreased passenger demand, to incur higher costs, or to generate lower revenues, which could adversely affect their ability to make lease payments to us or to obtain the types and amounts of insurance we require.
This exclusive forum provision is intended to apply to claims arising under Delaware state law and would not apply to claims brought pursuant to the Exchange Act of 1934 or Securities Act of 1933, each as amended, or any other claim for which the federal courts have exclusive jurisdiction.
This exclusive forum provision is intended to apply to claims arising under Delaware state law and would not apply to claims brought pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) or Securities Act of 1933 (the “Securities Act”), each as amended, or any other claim for which the federal courts have exclusive jurisdiction.
An adverse political or economic event in or related to China, or deterioration of government relations between the U.S. and China, could affect the ability of our lessees in China to meet their obligations to us, or expose us to various associated legal or political risks, which could have an adverse effect on our financial condition.
An adverse economic, legal or political event in or related to these regions, or deterioration of government relations between the U.S. and these regions, could affect the ability of these lessees to meet their obligations to us, or expose us to various associated legal or political risks, which could have an adverse effect on our financial condition.
Many of our lessees are exposed to currency risk due to the fact that they earn revenues in their local currencies while a significant portion of their liabilities and expenses are denominated in U.S. dollars, including their lease payments to us, as well as fuel, debt service, and other expenses.
Many of our lessees are exposed to currency risk due to the fact that they earn revenues in their local currencies while a significant portion of their liabilities and expenses are denominated in U.S. dollars, including their lease payments to us, as well as fuel expenses.
It may also be necessary to pay off 18 Table of Contents liens including fleet liens, taxes and other governmental charges on the aircraft to obtain clear possession and to remarket the aircraft effectively, including, in some cases, liens that the lessee might have incurred in connection with the operation of its other aircraft.
It may also be necessary to pay off liens including fleet liens, taxes and other governmental charges on the aircraft to obtain clear possession and to remarket the aircraft effectively, including, in some cases, liens that the lessee might have incurred in connection with the operation of its other aircraft.
We could also incur other costs in connection with the physical possession of the aircraft. When a lessee fails to fulfill their obligations under the lease or enters into bankruptcy proceedings, the lessee may not make lease payments or may return aircraft to us before the lease expires.
We could also incur other costs in connection with the physical possession of the aircraft. 19 Table of Contents When a lessee fails to fulfill their obligations under the lease or enters into bankruptcy proceedings, the lessee may not make lease payments or may return aircraft to us before the lease expires.
As demand for particular aircraft declines, lease rates for that type of aircraft are likely to correspondingly decline, the residual values of that type of aircraft could be negatively impacted, and we may be unable to lease or sell such aircraft on favorable terms, if 16 Table of Contents at all.
As demand for particular aircraft declines, lease rates for that type of aircraft are likely to correspondingly decline, the residual values of that type of aircraft could be negatively impacted, and we may be unable to lease or sell such aircraft on favorable terms, if at all.
The Court of 26 Table of Contents Chancery of the State of Delaware may also reach different judgments or results than would other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders.
The Court of Chancery of the State of Delaware may also reach different judgments or results than other courts, including courts where a stockholder would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders.
Historically, fuel prices have fluctuated widely depending primarily on international market conditions, geopolitical and environmental events, and currency exchange rates. The cost of fuel represents a major expense to airlines that is not within their control, and significant increases in fuel costs or hedges that inaccurately assess the direction of fuel costs can adversely affect their operating results.
Historically, fuel prices have fluctuated widely depending primarily on international market conditions, geopolitical and environmental events, and currency exchange rates. The cost of fuel represents a major expense to airlines that is not within their control. Significant increases in fuel costs or ineffective hedges can adversely affect their operating results.
Shares of our Class A common stock underlying any outstanding restricted stock units are reserved for issuance under the Air Lease Corporation 2014 Equity Incentive Plan and have been registered on Form S-8 under the Securities Act, and will become eligible for sale in the public markets upon vesting, subject to Rule 144 limitations applicable to affiliates or the registration of the resale with the SEC.
Shares of our Class A common stock underlying any outstanding restricted stock unit awards are reserved for issuance under the Air Lease Corporation 2014 Equity Incentive Plan or Air Lease Corporation 2023 Equity Incentive Plan, as applicable, and have been registered on Form S-8 under the Securities Act, and will become eligible for sale in the public markets upon vesting, subject to Rule 144 limitations applicable to affiliates or the registration of the resale with the SEC.
The exclusive forum provision in our amended and restated bylaws will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
The exclusive 27 Table of Contents forum provision in our amended and restated bylaws will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
Applicable data privacy and security obligations may also require us to notify relevant stakeholders of cyberattacks. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.
Applicable data privacy and security obligations may also require us to notify relevant stakeholders of cyberattacks or make disclosures to applicable regulatory bodies. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.
In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these companies and their boards of directors accountable.
In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve sustainability disclosures or performance and may also make voting decisions, or take other actions, to hold these companies and their boards of directors accountable.
Our primary competitors are other aircraft leasing companies. The barriers to entry in the aircraft acquisition and leasing market are comparatively low, and new entrants with private equity, hedge fund, or other funding sources appear from time to time.
Our primary competitors are other aircraft leasing companies. The barriers to entry in the aircraft sale and leaseback market are comparatively low, and new entrants with private equity, hedge fund, or other funding sources appear from time to time.
Actual or anticipated changes or downgrades in our 14 Table of Contents credit ratings, including any announcement that our ratings are under review for a downgrade, could increase our borrowing costs and limit our access to the capital markets, which may adversely impact our net income and/or our ability to compete in the marketplace.
Actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade, could increase our borrowing costs and limit our access to the capital markets, which may adversely impact our net income and/or our ability to compete in the marketplace.
In addition, increased focus on the environmental impact of air travel has led to the emergence of numerous sustainability initiatives, including the development of sustainable aviation fuel, and electric and hydrogen 24 Table of Contents powered aircraft.
In addition, increased focus on the environmental impact of air travel has led to the emergence of numerous sustainability initiatives, including the development of sustainable aviation fuel, and electric and hydrogen powered aircraft.
Our inability to compete successfully with our competitors may impact our ability to execute our long-term strategy. 19 Table of Contents Our lessees may fail to adequately insure our aircraft or fulfill their indemnity obligations, or we may not be able to adequately insure our aircraft, which may result in increased costs and liabilities.
Our inability to compete successfully with our competitors may impact our ability to execute our long-term strategy. Our lessees may fail to adequately insure our aircraft or fulfill their indemnity obligations, or we may not be able to adequately insure our aircraft, which may result in increased costs and liabilities.
While we believe our insurance is adequate both as to coverages and amounts based on industry standards in the current market, we cannot assure you that we are adequately insured against all risks and in all territories in which our aircraft operate.
While we believe 20 Table of Contents our insurance is adequate both as to coverages and amounts based on industry standards in the current market, we cannot assure you that we are adequately insured against all risks and in all territories in which our aircraft operate.
If we were to be removed as the manager 21 Table of Contents from a managed fleet portfolio, our reputation may be harmed and we would lose the benefit of future management fees.
If we were to be removed as the manager from a managed fleet portfolio, our reputation may be harmed and we would lose the benefit of future management fees.
In addition, a significant number of shares of our Class A common stock may be sold in the public market by any selling stockholders listed in a prospectus we may file with the SEC and such sales, or the perception they may occur, could adversely affect prices for our Class A common stock.
In addition, a significant number of shares of our Class A common stock may be sold in the public market by any selling stockholders listed in a prospectus we may file with the SEC and such sales, or the perception they may occur, could adversely affect prices for our Class A common stock. 28 Table of Contents ITEM 1B.
For example, following the Russia-Ukraine conflict, Russia, Ukraine and Belarus are now generally excluded from coverage in our contingent liability, contingent hull and contingent hull war insurance consistent with insurance market terms available at the time these policies were last renewed.
For example, Russia, Ukraine, Belarus and the Republic of Sudan are now generally excluded from coverage in our contingent liability, contingent hull and contingent hull war insurance consistent with insurance market terms available at the time these policies were last renewed.
Parts of our business depend on the secure operation of our and our third-party providers’ IT systems to manage, process, store, and transmit aircraft leasing information. We have, from time to time, experienced threats to our data and systems, including malware and computer virus attacks.
Parts of our business depend on the secure operation of our and our third-party providers’ IT systems to manage, process, store, and transmit sensitive information, including our proprietary information and that of our customers, suppliers and employees and aircraft leasing information. We have, from time to time, experienced threats to our data and systems, including malware and computer virus attacks.
Certain organizations that provide corporate governance and other corporate risk information to investors have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics.
Certain financial organizations and organizations that provide corporate governance and other corporate risk information to investors have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon sustainability metrics.
The aircraft leasing industry is highly competitive. Some of our competitors have greater resources, lower capital costs or provide financial or maintenance services, or other inducements to potential lessees or buyers that we cannot, which could make them able to compete more effectively in certain markets we operate in.
The aircraft leasing industry is highly competitive. Some of our competitors have greater resources, lower capital costs, the ability to provide financial or maintenance services, or other inducements to potential lessees or buyers that we do not have, which could help them compete more effectively in certain markets we operate in.
If manufacturers fail to meet their contractual obligations to us, we may experience: • missed or late aircraft deliveries and potential inability to meet our contractual delivery obligations owed to our lessees, resulting in potential lost or delayed revenues, and strained customer relationships; • an inability to acquire aircraft and engines resulting in lower growth or contraction of our aircraft fleet; • reduced demand for a particular manufacturer’s product, which may lead to reduced market lease rates and lower aircraft residual values and may affect our ability to remarket or sell at a profit, or at all, some of the aircraft in our fleet; and • technical or other difficulties with aircraft or engines after delivery that subject aircraft to operating restrictions or groundings, resulting in a decline in residual value and lease rates of such aircraft and impair our ability to lease or dispose of such aircraft on favorable terms or at all.
If manufacturers fail to meet their contractual obligations to us, we may experience: • missed or late aircraft deliveries and potential inability to meet our contractual delivery obligations owed to our lessees, resulting in potential lost or delayed revenues, and strained customer relationships; • an inability to acquire aircraft and engines resulting in lower growth or contraction of our aircraft fleet; • reduced demand for a particular manufacturer’s product, which may lead to reduced market lease rates and lower aircraft residual values and may affect our ability to remarket or sell at a profit, or at all, some of the aircraft in our fleet; and • technical or other difficulties with aircraft or engines after delivery that subject aircraft to operating restrictions, groundings or increased maintenance requirements, resulting in a decline in residual value and lease rates of such aircraft and impair our ability to lease or dispose of such aircraft or engines on favorable terms or at all. 16 Table of Contents There have been well-publicized delivery delays by airframe and engine manufacturers.
Growing our fleet will require us to obtain substantial capital through additional financing, which may not be available to us on favorable terms or at all. As of December 31, 2022, we had 398 new aircraft on order with an estimated aggregate purchase price of approximately $25.5 billion.
Growing our fleet will require us to obtain substantial capital through additional financing, which may not be available to us on favorable terms or at all. As of December 31, 2023, we had 334 new aircraft on order with an estimated aggregate purchase price of approximately $21.7 billion.
Should changes in fuel costs negatively affect our lessees or demand for our aircraft, our ability to execute our long-term strategy may be impacted. The appreciation of the U.S. dollar could negatively impact our lessees’ ability to honor the terms of their leases, which are generally denominated in U.S. dollars, and may result in lost revenues and reduced net income.
Should changes in fuel costs negatively affect our lessees or demand for our aircraft, we may experience lost revenues and reduced net income. The appreciation of the U.S. dollar could negatively impact our lessees’ ability to honor the terms of their leases, which are generally denominated in U.S. dollars, and may result in lost revenues and reduced net income.
Our business model and results are driven by our ability to acquire strategically attractive commercial passenger aircraft, profitably lease and re-lease them, and finally sell such aircraft in order to generate sufficient revenues to finance our growth and operations, pay our debt service obligations, and meet our other corporate and contractual obligations.
Our financial performance is driven by our ability to acquire strategically attractive commercial passenger aircraft, profitably lease and re-lease them, and finally sell such aircraft in order to generate sufficient revenues to finance our growth and operations, pay our debt service obligations, and meet our other corporate and contractual obligations.
Some of our customers are impacted by closures of Russian and Ukrainian airspace, increases in fuel and energy prices, and disruptions of the global supply chain. Airspace closures have resulted in certain of our airline customers re-routing flights to avoid such airspace which has resulted in increased flight times and fuel costs.
Some of our customers are impacted by closures of Russian and Ukrainian airspace, instability in fuel and energy prices, and disruptions of the global supply chain. Ongoing airspace closures require certain of our airline customers to re-route flights to avoid such airspace which has resulted in increased flight times and fuel costs.
Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision.
Some financial institutions and investment funds focus on positive sustainability business practices and sustainability scores when making investments and may consider a company’s sustainability scores as a reputational or other factor in making an investment decision.
Failure to complete our planned aircraft sales could affect our net income and may lead us to use alternative sources of liquidity. Proceeds from the sale of aircraft in our owned portfolio help to supplement our liquidity position and contribute to our net income. We currently expect to sell approximately $1.0 billion to $2.0 billion in aircraft in 2023.
Failure to complete our planned aircraft sales could affect our net income and may lead us to use alternative sources of liquidity. Proceeds from the sale of aircraft in our owned portfolio help to supplement our liquidity position and contribute to our net income. We currently expect to sell approximately $1.5 billion in aircraft for the full year 2024.
These alternative measures may not be successful and may not permit us to make required repayments on our debt or meet our aircraft purchase commitments as they come due and other cash needs. The issuance of additional equity may be dilutive to existing shareholders or otherwise may be on terms not favorable to us or existing shareholders.
These alternative measures may not be successful and may not permit us to make required repayments on our debt or meet our cash requirements, including aircraft purchase commitments. The issuance of additional equity may be dilutive to existing shareholders or otherwise may be on terms not favorable to us or existing shareholders.
Our leases are generally for multiple years with fixed lease rates over the life of the lease and, therefore, lags will exist because our lease rates with respect to a particular aircraft cannot generally be increased until the expiration of the lease.
Our leases are generally entered into 18-36 months in advance of aircraft delivery and are for multiple years with fixed lease rates over the life of the lease. Therefore, lags will exist because our lease rates with respect to a particular aircraft cannot generally be increased until the expiration of the lease.
Laws, regulations and other obligations (including applicable guidance, industry standards, external and internal privacy and security policies and contractual requirements) relating to personal data constantly evolve, as federal, state and foreign governments continue to adopt new measures addressing data privacy and processing (including collection, storage, transfer, disposal, disclosure, security and use) of personal data, and the interpretation and application of many existing privacy and data protection laws and regulations in the U.S., Europe (including the E.U.’s General Data Protection Regulation and the California Consumer Privacy Act, as amended (“CCPA”)) and elsewhere impose stringent obligations.
Laws, regulations and other obligations (including applicable guidance, industry standards, external and internal privacy and security policies and contractual requirements) relating to personal data constantly evolve, as federal, state and foreign governments continue to adopt new measures addressing data privacy and processing (including collection, storage, transfer, disposal, disclosure, security and use) of personal data, and the interpretation and application of many existing privacy and data protection laws and regulations in the U.S.
Therefore, if fuel prices materially increase or show significant volatility, our lessees are likely to incur higher costs or generate lower revenues, which may affect their ability to meet their obligations to us. A sustained period of lower fuel costs may also adversely affect regional economies that depend on oil revenue, including those in which certain of our lessees operate.
Therefore, if fuel prices materially increase or show significant volatility, our lessees are likely to incur higher costs or generate lower revenues, which may affect their ability to meet their obligations to us. A sustained period of lower fuel costs may also adversely affect regional economies in which certain of our lessees operate or demand for fuel-efficient aircraft.
As of December 31, 2022, we had entered into binding purchase commitments to acquire a total of 398 new aircraft for delivery through 2029.
As of December 31, 2023, we had entered into binding purchase commitments to acquire a total of 334 new aircraft for delivery through 2028.
As of December 31, 2022, our total consolidated indebtedness, net of discounts and issuance costs, was approximately $18.6 billion and our interest payments were approximately $533.9 million for the year ended December 31, 2022. We expect these amounts to grow as we acquire more aircraft.
As of December 31, 2023, our total consolidated indebtedness, net of discounts and issuance costs, was approximately $19.2 billion and our interest payments were approximately $693.8 million for the year ended December 31, 2023. We expect these amounts to grow as we acquire more aircraft.
Such interests involve significant risks that may not be present with other methods of ownership, including that: • we may not realize a satisfactory return on our investment; • the investment may divert management’s attention from our core business; • our investment partners could have investment goals that are not consistent with our investment objectives, including the timing, terms and strategies for any investments; • our investment partners may fail to fund their share of required capital contributions or fulfill their other obligations; and • our investment partners may have competing interests in our markets that could create conflict of interest issues, particularly if aircraft owned by the applicable investment entity are being marketed for lease or sale at a time when we also have comparable aircraft available for lease or sale.
Such interests involve significant risks that may not be present with other methods of ownership, including that: • we may not realize a satisfactory return on our investment; • the investment may divert management’s attention from our core business; • our investment partners could have investment goals that are not consistent with our investment objectives, including the timing, terms and strategies for any investments; • our investment partners may fail to fund their share of required capital contributions or fulfill their other obligations; and • our investment partners may have competing interests in our markets that could create conflict of interest issues, particularly if aircraft owned by the applicable investment entity are being marketed for lease or sale at a time when we also have comparable aircraft available for lease or sale. 22 Table of Contents The agreements governing these entities typically provide the non-managing investment partner certain veto rights over various significant actions and the right to remove us as the manager under certain circumstances.
The ability of our lessees to make lease payments to us in U.S. dollars may be adversely impacted in the event of an appreciating U.S. dollar. This is particularly true for non-U.S. airlines whose operations are primarily domestic.
The ability of our lessees to make lease payments to us in U.S. dollars may be adversely impacted in the event of an appreciating U.S. dollar. This is particularly true for non-U.S. airlines whose operations are primarily domestic. Shifts in foreign exchange rates can be significant, are difficult to predict, and can occur quickly.
Further, the issuance of additional shares of our outstanding preferred stock or any other preferred stock approved by our board of directors pursuant to our charter may result in such preferred stockholders having rights, preferences or privileges senior to existing Class A common stockholders, who would not have the ability to approve such issuance.
Further, the issuance of additional shares of preferred stock may result in such preferred stockholders having rights, preferences or privileges senior to existing Class A common stockholders, who would not have the ability to approve such issuance.
For instance, our unsecured revolving credit facility requires us to comply with certain financial maintenance covenants (measured at the end of each fiscal quarter) including minimum consolidated shareholders’ equity, minimum consolidated unencumbered assets, and an interest coverage test.
Most of our credit facilities require us to comply with certain financial maintenance covenants (measured at the end of each quarter) including minimum consolidated shareholders’ equity, minimum consolidated unencumbered assets, and an interest coverage test.
Various countries, including the United States and the European Union, have announced sustainability initiatives to reduce carbon emissions, explore sustainable aviation fuels and establish sustainability measures and targets.
Various countries, including the United States and the European Union, have announced sustainability initiatives to reduce carbon emissions, explore sustainable aviation fuels, require tracking and disclosure of emissions metrics, or the establishment of sustainability measures and targets.
As a result, we expect some of our leases will require licenses, consents or approvals, including consents from governmental or regulatory authorities for certain payments under our leases and for the import, export or deregistration of aircraft.
As a result, we expect some of our leases will require licenses, consents or approvals, including consents from governmental or regulatory authorities for certain payments under our leases and for the import, export or deregistration of aircraft. Subsequent changes in applicable law or administrative practice may require additional licenses and consents or result in revocation of prior licenses and consents.
Further, in August 2022, United States Congress passed the Inflation Reduction Act of 2022. The key tax provisions applicable to us are a 15% corporate minimum tax on adjusted book income and a 1% excise tax on stock repurchases effective January 1, 2023.
Also, in August 2022, United States Congress passed the Inflation Reduction Act of 2022. The key tax provisions applicable to us are a 15% corporate minimum tax on adjusted book income.
Doing business in countries around the world, including in emerging markets, has and may continue to expose our business to heightened risks and negatively impact our earnings and cash flows. Changes in fuel costs could negatively affect our lessees and by extension the demand for our aircraft which may impact our ability to execute on our long-term strategy.
Doing business in countries around the world, including in emerging markets, has and may continue to expose our business to heightened risks and negatively impact our earnings and cash flows. Changes in fuel costs could negatively affect our lessees’ ability to honor the terms of their leases and by extension the demand for our aircraft.
Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home and while traveling.
Remote work by our employees also increases risks to our IT systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home and while traveling.
Any conflicts of interest that arise between us and the clients which utilize our fleet management services may result in legal challenges or reputational harm to our business.
Nevertheless, despite these contractual waivers, competing with our fleet management clients in practice may result in strained relationships with them. Any conflicts of interest that arise between us and the clients which utilize our fleet management services may result in legal challenges or reputational harm to our business.
ITEM 1A. RISK FACTORS The following important risk factors, and those risk factors described elsewhere in this report or in our other filings with the Securities and Exchange Commission, could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere.
ITEM 1A. RISK FACTORS The following important risk factors, and those risk factors described elsewhere in this report or in our other filings with the SEC, could cause our actual results to differ materially from those stated in forward-looking statements contained in this document and elsewhere. These risks are not presented in order of importance or probability of occurrence.
A majority of our lessees received lease deferrals or other accommodations during the COVID-19 pandemic and we may agree to deferrals, restructurings and terminations in the ordinary course of our business in the future.
In addition, lease default levels will likely increase over time if economic conditions deteriorate. A majority of our lessees received lease deferrals or other accommodations during the COVID-19 pandemic, and we may agree to deferrals, restructurings and terminations in the ordinary course of our business in the future.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table shows the scheduled lease terminations (for the minimum non-cancellable period which does not include contracted unexercised lease extension options) of our owned fleet, excluding one aircraft that is currently not subject to a lease agreement, as of December 31, 2022, updated through February 16, 2023: Aircraft Type 2023 2024 2025 2026 2027 Thereafter Total Airbus A220-300 — — — — — 4 4 Airbus A319-100 — — 1 — — — 1 Airbus A320-200 1 5 8 1 2 11 28 Airbus A320-200neo — — — — 4 19 23 Airbus A321-200 4 — 1 9 2 7 23 Airbus A321-200neo — 4 — 2 5 67 78 Airbus A330-200 3 3 1 — — 6 13 Airbus A330-300 — — 3 1 — 1 5 Airbus A330-900neo 1 — — — — 15 16 Airbus A350-900 — — — 1 1 11 13 Airbus A350-1000 — — — — — 6 6 Boeing 737-700 — 2 — — 2 — 4 Boeing 737-800 11 7 20 16 10 18 82 Boeing 737-8 MAX — 1 12 — 1 32 46 Boeing 737-9 MAX — — — — — 15 15 Boeing 777-200ER — — 1 — — — 1 Boeing 777-300ER — — 2 9 4 9 24 Boeing 787-9 — — — 1 2 24 27 Boeing 787-10 — — — — — 6 6 Embraer E190 — 1 — — — — 1 Total 20 23 49 40 33 251 416 28 Table of Contents Commitments As of December 31, 2022, we had committed to purchase the following new aircraft at an estimated aggregate purchase price (including adjustment for anticipated inflation) of approximately $25.5 billion for delivery as shown below.
Biggest changeThe following table shows the scheduled lease terminations (for the minimum non-cancellable period which does not include contracted unexercised lease extension options) of our owned fleet as of December 31, 2023: Aircraft Type 2024 2025 2026 2027 2028 Thereafter Total Airbus A220-100 — — — — — 2 2 Airbus A220-300 — — — — — 13 13 Airbus A319-100 — 1 — — — — 1 Airbus A320-200 2 8 3 2 2 11 28 Airbus A320-200neo — — — 4 4 17 25 Airbus A321-200 — 5 9 2 6 1 23 Airbus A321-200neo — — 2 7 8 78 95 Airbus A330-200 2 1 2 — 2 6 13 Airbus A330-300 — 3 1 — — 1 5 Airbus A330-900neo — — 1 — — 22 23 Airbus A350-900 — — 1 1 1 11 14 Airbus A350-1000 — — — — — 7 7 Boeing 737-700 1 2 — — — — 3 Boeing 737-800 3 20 21 13 4 12 73 Boeing 737-8 MAX — 13 — 1 1 37 52 Boeing 737-9 MAX — — — — — 29 29 Boeing 777-200ER — 1 — — — — 1 Boeing 777-300ER — 2 9 4 6 3 24 Boeing 787-9 — — 1 2 3 19 25 Boeing 787-10 — — — — — 6 6 Embraer E190 — 1 — — — — 1 Total 8 57 50 36 37 275 463 30 Table of Contents Commitments As of December 31, 2023, we had committed to purchase the following new aircraft at an estimated aggregate purchase price (including adjustments for anticipated inflation) of approximately $21.7 billion for delivery as shown below.
The table is subject to change based on Airbus and Boeing delivery delays. As noted below, we expect delivery delays for some aircraft in our orderbook. We remain in discussions with Boeing and Airbus to determine the extent and duration of delivery delays; however, we are not yet able to determine the full impact of these delays. See “Item 7.
The table is subject to change based on Airbus and Boeing delivery delays. As noted below, we expect delivery delays for some aircraft in our orderbook. We remain in discussions with Airbus and Boeing to determine the extent and duration of delivery delays; however, we are not yet able to determine the full impact of these delays. See “Item 7.
While our management’s historical experience is that non-binding letters of intent for aircraft leases generally lead to binding contracts, we cannot be certain that we will ultimately execute binding agreements for all 29 Table of Contents or any of the letters of intent.
While our management’s historical experience is that non-binding letters of intent for aircraft leases generally lead to binding contracts, we cannot be certain that we will ultimately execute binding agreements for all or any of the letters of intent.
New Aircraft Placements The following table, which is subject to change based on Airbus and Boeing delivery delays, shows the number of new aircraft scheduled to be delivered as of December 31, 2022, along with the lease placements of such aircraft as of February 16, 2023. We expect delivery delays for all aircraft deliveries in our orderbook.
New Aircraft Placements The following table, which is subject to change based on Airbus and Boeing delivery delays, shows the number of new aircraft scheduled to be delivered as of December 31, 2023, along with the lease placements of such aircraft as of February 15, 2024.
While we actively seek lease placements for all aircraft in our orderbook, in making our lease placement decisions, we also take into consideration the anticipated growth in the aircraft leasing market and anticipated improvements in lease rates, which could lead us to determine that entering into particular lease arrangements at a later date would be more beneficial to us.
While we actively seek lease placements for all aircraft in our orderbook, in making our lease placement decisions, we also take into consideration the anticipated growth in the aircraft leasing market and anticipated improvements in lease rates, which could lead us to determine that entering into particular lease arrangements at a later date would be more beneficial to us. 31 Table of Contents Facilities We lease our principal executive office at 2000 Avenue of the Stars, Suite 1000N, Los Angeles, California 90067, USA.
Facilities We lease our principal executive office at 2000 Avenue of the Stars, Suite 1000N, Los Angeles, California 90067, USA. We also lease offices in Hong Kong and Dallas, Texas and own our office in Dublin, Ireland. We believe our current facilities are adequate for our current needs and for the foreseeable future.
We also lease offices in Hong Kong and Dallas, Texas and own our office in Dublin, Ireland. We believe our current facilities are adequate for our current needs and for the foreseeable future.
Estimated Delivery Years Aircraft Type 2023 2024 2025 2026 2027 Thereafter Total Airbus A220-100/300 14 26 20 12 — — 72 Airbus A320/321neo (1) 28 22 18 35 35 40 178 Airbus A330-900neo 7 6 — — — — 13 Airbus A350-900/1000 4 3 — — — — 7 Airbus A350F — — — 2 2 3 7 Boeing 737-7/8/9 MAX 30 37 19 16 — — 102 Boeing 787-9/10 5 4 10 — — — 19 Total (2) 88 98 67 65 37 43 398 (1) Our Airbus A320/321neo aircraft orders include 22 long-range variants and 49 extra long-range variants.
Estimated Delivery Years Aircraft Type 2024 2025 2026 2027 2028 Thereafter Total Airbus A220-100/300 19 10 18 14 — — 61 Airbus A320/321neo (1) 21 13 40 40 38 — 152 Airbus A330-900neo 6 1 — — — — 7 Airbus A350-900/1000 4 — — — — — 4 Airbus A350F — — — 4 3 — 7 Boeing 737-7/8/9 MAX 31 32 16 — 2 — 81 Boeing 787-9/10 11 10 1 — — — 22 Total (2) 92 66 75 58 43 — 334 (1) Our Airbus A320/321neo aircraft orders include 11 long-range variants and 49 extra long-range variants.
ITEM 2. PROPERTIES Flight Equipment As of December 31, 2022, we owned 417 aircraft in our owned aircraft portfolio, comprised of 306 narrowbody aircraft and 111 widebody aircraft, with a weighted average age of 4.5 years.
ITEM 2. PROPERTIES Flight Equipment As of December 31, 2023, we owned 463 aircraft, comprised of 345 narrowbody aircraft and 118 widebody aircraft. Our fleet has a weighted average age of 4.6 years.
We remain in discussions with Boeing and Airbus to determine the extent and duration of delivery delays, but we are not yet able to determine the full impact of these delays. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Our Fleet — Aircraft Delivery Delays” for more information.
Our aircraft delivery schedule could continue to be subject to material changes, and delivery delays are expected to extend beyond 2024. We remain in discussions with Airbus and Boeing to determine the extent and duration of delivery delays, but we are not yet able to determine the full impact of these delays. See “Item 7.
Delivery Year Total number of lease placements Number of aircraft in our orderbook % Leased 2023 88 88 100.0 % 2024 79 98 80.6 % 2025 36 67 53.7 % 2026 21 65 32.3 % 2027 14 37 37.8 % Thereafter 1 43 2.3 % Total 239 398 Our lease commitments for all of the 88 aircraft to be delivered in 2023 are comprised of 86 binding leases and two non-binding letters of intent.
Delivery Year Total number of lease placements Number of aircraft in our orderbook % Leased 2024 92 92 100.0 % 2025 66 66 100.0 % 2026 42 75 56.0 % 2027 17 58 29.3 % 2028 — 43 — % Thereafter — — — % Total 217 334 Our lease commitments for all of the lease placements noted in the table above, except five aircraft delivering in 2026, are binding leases.
Removed
Boeing and Airbus have expressed their desire to increase production rates on several aircraft types; however, they have yet to meaningfully increase production. At their current production pace, we do not currently see this improving the delivery delay situation through at least 2023.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Our Fleet — Aircraft Delivery Delays” for more information.
Removed
Our lease commitments for 79 of the 98 aircraft to be delivered in 2024 are comprised of 67 binding leases and 12 non-binding letters of intent.
Removed
Our lease commitments consist of binding leases for 36 of the 67 aircraft to be delivered in 2025, 21 of the 65 aircraft to be delivered in 2026, and 14 of the 37 aircraft to be delivered in 2027. We also have one aircraft to be delivered in 2028 that is subject to a non-binding letter of intent.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOur industry is also subject to scrutiny by government regulators, which could result in enforcement proceedings or litigation related to regulatory compliance matters. We are not presently a party to any enforcement proceedings or litigation related to regulatory compliance matters.
Biggest changeIn addition, from time to time, we may be involved in litigation and claims incidental to the conduct of our business in the ordinary course. Our industry is also subject to scrutiny by government regulators, which could result in enforcement proceedings or litigation related to regulatory compliance matters.
LEGAL PROCEEDINGS In June 2022, we and certain of our subsidiaries (collectively, the “Plaintiffs”) submitted insurance claims to the insurers on our aviation insurance policies (collectively, the “Insurers”) to recover losses relating to aircraft detained in Russia for which we recorded a net write-off of our interests in our owned and managed aircraft totaling approximately $771.5 million for the year ended December 31, 2022.
LEGAL PROCEEDINGS In June 2022, we and certain of our subsidiaries (collectively, the “Plaintiffs”) submitted insurance claims to the insurers on our aviation insurance policies (collectively, the “Plaintiffs’ Insurers”) to recover losses relating to aircraft detained in Russia for which we recorded a net write-off of our interests in our owned and managed aircraft totaling approximately $771.5 million for the year ended December 31, 2022.
We do not believe this matter will have a material adverse effect on our results of operations, financial condition or cash flow, as we have already recorded a write-off of our entire interest in our owned and managed aircraft detained in Russia and any recovery in this lawsuit would be recorded as a gain in our financial statements.
We do not believe these matters will have a material adverse effect on our results of operations, financial condition or cash flow, as we recorded a write-off of our entire interest in our owned and managed aircraft detained in Russia during 2022 and any recovery in these lawsuits would be recorded as a gain in our financial statements.
On December 20, 2022, the Plaintiffs filed suit in the Los Angeles County Superior Court of the State of California seeking recovery of actual damages (subject to proof at trial) and declaratory relief against the Insurers for breach of contract and breach of the covenant of good faith and fair dealing in connection with the Plaintiff’s previously submitted insurance claims.
On December 20, 2022, the Plaintiffs filed suit in the Los Angeles County Superior Court of the State of California seeking recovery of actual damages (subject to proof at trial) and declaratory relief against the Plaintiffs’ Insurers for breach of contract and breach of the covenant of good faith and fair dealing in connection with the Plaintiffs’ previously submitted insurance claims for which a trial date has been set for April 17, 2025.
We maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards.
We are not presently a party to any enforcement proceedings or litigation related to regulatory compliance matters. We maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards.
Removed
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of Russia-Ukraine Conflict” for more information on aircraft that remain detained in Russia. In addition, from time to time, we may be involved in litigation and claims incidental to the conduct of our business in the ordinary course.
Added
On December 21, 2023, certain Plaintiffs received cash insurance settlement proceeds of approximately US$64.9 million in settlement of their insurance claims under S7’s insurance policies in respect of four aircraft in our owned fleet on lease to S7 at the time of Russia’s invasion of Ukraine.
Added
The receipt of these insurance settlement proceeds serves to mitigate, in part, such Plaintiffs’ losses under their aviation insurance policies.
Added
On January 19, 2024, certain of the Plaintiffs filed suit in the High Court of Justice, Business & Property Courts of England & Wales, Commercial Court against the Russian airlines’ aviation insurers and reinsurance insurers (collectively, the “Airlines’ Insurers”) seeking recovery under the Russian airlines’ insurance policies for aircraft that remain in Russia.
Added
The lawsuit against the Airlines’ Insurers is in the early stages and no trial date has been set.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed3 unchanged
Biggest changeDividends The following table sets forth the dividends declared on the Company’s outstanding Class A common stock for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 Dividends declared per share $ 0.755 $ 0.665 $ 0.61 The Board of Directors approved quarterly cash dividends on the Company’s outstanding common stock in 2022 and expects to continue approving a comparable quarterly cash dividend on the Company’s outstanding common stock for the foreseeable future.
Biggest changeDividends The following table sets forth the dividends declared on the Company’s outstanding Class A common stock for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 Dividends declared per share $ 0.81 $ 0.755 $ 0.665 The board of directors approved quarterly cash dividends on the Company’s outstanding Class A common stock in 2023 and expects to continue approving a comparable quarterly cash dividend on the Company’s outstanding Class A common stock for the foreseeable future.
This custom benchmarking group reflects companies with similar characteristics to the Company’s business, including exposure to real assets, dependence on a highly skilled management team, credit exposure/underwriting expertise, and significant capital investments. The Company’s 2022 custom benchmark group was updated to remove certain size outliers based on market capitalization and to maintain a balanced industry representation.
This custom benchmarking group reflects companies with similar characteristics to the Company’s business, including exposure to real assets, dependence on a highly skilled management team, credit exposure/underwriting expertise, and significant capital investments. The Company’s 2023 custom benchmark group was updated to remove certain size outliers based on market capitalization and to maintain a balanced industry representation.
The customized benchmarking group investments are weighted by market capitalization as of December 31, 2017, and adjusted monthly. The Company believes that the S&P Midcap 400 Index, as measured by market capitalization, is currently still the most similar index benchmark to the Company.
The customized benchmarking group investments are weighted by market capitalization as of December 31, 2018, and adjusted monthly. The Company believes that the S&P Midcap 400 Index, as measured by market capitalization, is currently still the most similar index benchmark to the Company.
An investment of $100, with reinvestment of all dividends, is assumed to have been made in our Class A common stock, the 2021 custom benchmarking group, the 2022 custom benchmarking group and the S&P Midcap 400 Index on December 31, 2017, and the relative performance of each is tracked through December 31, 2022.
An investment of $100, with reinvestment of all dividends, is assumed to have been made in our Class A common stock, the 2022 custom benchmarking group, the 2023 custom benchmarking group and the S&P Midcap 400 Index on December 31, 2018, and the relative performance of each is tracked through December 31, 2023.
The stock price performance shown in the graph is not necessarily indicative of future stock price performance. 31 Table of Contents Comparison of 5 Year Cumulative Total Return Assumes Initial Investment of $100 December 31, 2022 The foregoing Performance Graph does not constitute soliciting material and shall not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Securities Act of 1933, as amended, or the Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates such report by reference therein.
The stock price performance shown in the graph is not necessarily indicative of future stock price performance. 33 Table of Contents Comparison of 5 Year Cumulative Total Return Assumes Initial Investment of $100 December 31, 2023 The foregoing Performance Graph does not constitute soliciting material and shall not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Securities Act, or the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.
The dividend will be paid on April 12, 2023 to holders of record of Class A common stock as of March 16, 2023. Performance Graph The graph below compares the 5-year cumulative return of the Company’s Class A common stock, the S&P Midcap 400 Index, the Company’s 2021 custom benchmark group and the Company’s 2022 custom benchmark group.
The dividend will be paid on April 10, 2024 to holders of record of Class A common stock as of March 15, 2024. Performance Graph The graph below compares the 5-year cumulative return of the Company’s Class A common stock, the S&P Midcap 400 Index, the Company’s 2022 custom benchmark group and the Company’s 2023 custom benchmark group.
However, the Company’s cash dividend policy can be changed at any time at the discretion of the Company’s Board of Directors. On February 14, 2023, the Company’s Board of Directors approved a quarterly cash dividend of $0.20 per share on the Company’s outstanding Class A common stock.
However, the Company’s cash dividend policy can be changed at any time at the discretion of the Company’s board of directors. On February 13, 2024, the Company’s board of directors approved a quarterly cash dividend of $0.21 per share on the Company’s outstanding Class A common stock.
As of December 31, 2022, there were 110,892,097 shares of Class A common stock outstanding. As of February 15, 2023, shares of the Company’s Class A common stock outstanding were held by approximately 62 holders of record.
As of December 31, 2023, there were 111,027,252 shares of Class A common stock outstanding. As of February 7, 2024, shares of the Company’s Class A common stock outstanding were held by approximately 64 holders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

117 edited+66 added−56 removed44 unchanged
Biggest changeThe following table sets forth the net book value and percentage of the net book value of our flight equipment subject to operating leases in the indicated regions based on each airline's principal place of business as of December 31, 2022 and 2021: December 31, 2022 December 31, 2021 Region Net Book Value % of Total Net Book Value % of Total (in thousands, except percentages) Europe $ 7,985,317 32.5 % $ 7,439,993 32.5 % Asia (excluding China) 7,144,188 29.1 % 5,952,981 26.0 % China 2,792,022 11.4 % 2,934,224 12.8 % The Middle East and Africa 2,253,342 9.3 % 2,447,919 10.7 % Central America, South America, and Mexico 1,924,216 7.8 % 1,566,133 6.8 % U.S. and Canada 1,557,260 6.3 % 1,638,450 7.2 % Pacific, Australia, and New Zealand 882,040 3.6 % 919,304 4.0 % Total $ 24,538,385 100.0 % $ 22,899,004 100.0 % 35 Table of Contents The following table sets forth the number of aircraft in our owned fleet by aircraft type as of December 31, 2022 and 2021: Year Ended December 31, 2022 Year Ended December 31, 2021 Aircraft type Number of Aircraft % of Total Number of Aircraft % of Total Airbus A220-300 4 1.0 % — — % Airbus A319-100 1 0.2 % 1 0.3 % Airbus A320-200 28 6.7 % 31 8.1 % Airbus A320-200neo 23 5.5 % 23 6.0 % Airbus A321-200 23 5.5 % 26 6.8 % Airbus A321-200neo 78 18.7 % 69 18.1 % Airbus A330-200 13 3.1 % 13 3.4 % Airbus A330-300 5 1.2 % 8 2.1 % Airbus A330-900neo 16 3.8 % 9 2.4 % Airbus A350-900 13 3.1 % 12 3.1 % Airbus A350-1000 6 1.4 % 5 1.3 % Boeing 737-700 4 1.0 % 4 1.0 % Boeing 737-800 82 19.7 % 88 23.0 % Boeing 737-8 MAX 47 11.3 % 28 7.3 % Boeing 737-9 MAX 15 3.7 % 7 1.8 % Boeing 777-200ER 1 0.2 % 1 0.3 % Boeing 777-300ER 24 5.8 % 24 6.3 % Boeing 787-9 27 6.5 % 26 6.8 % Boeing 787-10 6 1.4 % 6 1.6 % Embraer E190 1 0.2 % 1 0.3 % Total (1) 417 100.0 % 382 100.0 % (1) As of December 31, 2022, we had four aircraft classified as flight equipment held for sale.
Biggest changeThe following table sets forth our top five lessees by net book value as of December 31, 2023: December 31, 2023 Lessee % of Total EVA Air 4.9 % Virgin Atlantic 4.8 % Air France-KLM Group 4.3 % ITA 4.2 % Vietnam Airlines 4.1 % 37 Table of Contents The following table sets forth the number of aircraft in our owned fleet by aircraft type as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Aircraft type Number of Aircraft % of Total Number of Aircraft % of Total Airbus A220-100 2 0.4 % — — % Airbus A220-300 13 2.8 % 4 1.0 % Airbus A319-100 1 0.2 % 1 0.2 % Airbus A320-200 28 6.0 % 28 6.7 % Airbus A320-200neo 25 5.4 % 23 5.5 % Airbus A321-200 23 5.0 % 23 5.5 % Airbus A321-200neo 95 20.6 % 78 18.7 % Airbus A330-200 (1) 13 2.8 % 13 3.1 % Airbus A330-300 5 1.1 % 5 1.2 % Airbus A330-900neo 23 5.0 % 16 3.8 % Airbus A350-900 14 3.0 % 13 3.1 % Airbus A350-1000 7 1.5 % 6 1.4 % Boeing 737-700 3 0.6 % 4 1.0 % Boeing 737-800 73 15.8 % 82 19.7 % Boeing 737-8 MAX 52 11.2 % 47 11.3 % Boeing 737-9 MAX 29 6.3 % 15 3.7 % Boeing 777-200ER 1 0.2 % 1 0.2 % Boeing 777-300ER 24 5.2 % 24 5.8 % Boeing 787-9 25 5.4 % 27 6.5 % Boeing 787-10 6 1.3 % 6 1.4 % Embraer E190 1 0.2 % 1 0.2 % Total (2) 463 100.0 % 417 100.0 % (1) As of December 31, 2023, aircraft count includes two Airbus A330-200 aircraft classified as freighters.
We are principally engaged in purchasing the most modern, fuel-efficient new technology commercial jet aircraft directly from aircraft manufacturers, such as Boeing and Airbus, and leasing those aircraft to airlines throughout the world with the intention to generate attractive returns on equity.
We are principally engaged in purchasing the most modern, fuel-efficient new technology commercial jet aircraft directly from aircraft manufacturers, such as Airbus and Boeing, and leasing those aircraft to airlines throughout the world with the intention to generate attractive returns on equity.
(2) The table above reflects Airbus and Boeing aircraft delivery delays based on contractual documentation. Aircraft Delivery Delays Pursuant to our purchase agreements with Boeing and Airbus, we agree to contractual delivery dates for each aircraft ordered.
(2) The table above reflects Airbus and Boeing aircraft delivery delays based on contractual documentation. Aircraft Delivery Delays Pursuant to our purchase agreements with Airbus and Boeing, we agree to contractual delivery dates for each aircraft ordered.
Our purchase agreements with Boeing and Airbus generally provide each of us and the manufacturers with cancellation rights for delivery delays starting at one year after the original contractual delivery date, regardless of cause.
Our purchase agreements with Airbus and Boeing generally provide each of us and the manufacturers with cancellation rights for delivery delays starting at one year after the original contractual delivery date, regardless of cause.
The actual delivery dates of the aircraft in our commitments table and expected time for payment of such aircraft may differ from our estimates and could be further impacted by the pace at which Boeing and Airbus can deliver aircraft, among other factors.
The actual delivery dates of the aircraft in our commitments table and the expected time for payment of such aircraft may differ from our estimates and could be further impacted by the pace at which Airbus and Boeing can deliver aircraft, among other factors.
The table is subject to change based on Airbus and Boeing delivery delays. As noted below, we expect delivery delays for all of the aircraft in our orderbook. We remain in discussions with Boeing and Airbus to determine the extent and duration of delivery delays; however, we are not yet able to determine the full impact of these delays.
The table is subject to change based on Airbus and Boeing delivery delays. As noted below, we expect delivery delays for all of the aircraft in our orderbook. We remain in discussions with Airbus and Boeing to determine the extent and duration of delivery delays; however, we are not currently able to determine the full impact of these delays.
Adjusted net income before income taxes, adjusted 46 Table of Contents pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations.
Adjusted 50 Table of Contents net income before income taxes, adjusted pre-tax margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations.
These rental payments are a primary driver of our short and long-term operating cash flow. As of December 31, 2022, our minimum future rentals on non-cancellable operating leases for the next 12 months was $2.2 billion. For further detail on our minimum future rentals for 2023 and thereafter, see “Notes to Consolidated Financial Statements” under “Item 8.
These rental payments are a primary driver of our short and long-term operating cash flow. As of December 31, 2023, our minimum future rentals on non-cancellable operating leases for the next 12 months was $2.4 billion. For further detail on our minimum future rentals for 2025 and thereafter, see “Notes to Consolidated Financial Statements” under “Item 8.
We have a balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, investing in modern, in-demand aircraft to profitably grow our core aircraft leasing business while maintaining strong fleet metrics and creating sustainable long-term shareholder value; second, maintaining our investment grade balance sheet utilizing unsecured debt as our primary form of financing; and finally, in lockstep with the aforementioned priorities, returning excess cash to shareholders through our dividend policy as well as regular evaluation of share repurchases, as appropriate.
Capital Allocation Strategy We have a balanced approach to capital allocation based on the following priorities, ranked in order of priority: first, investing in modern, in-demand aircraft to profitably grow our core aircraft leasing business while maintaining strong fleet metrics and creating sustainable long-term shareholder value; second, maintaining our investment grade balance sheet utilizing unsecured debt as our primary form of financing; and finally, in line with the aforementioned priorities, returning excess cash to shareholders through our dividend policy as well as regular evaluation of share repurchases, as appropriate.
Our airline customers are facing higher operating costs as a result of rising fuel costs, interest rates and inflation, ongoing labor shortages and disputes, as well as delays and cancellations caused by the global air traffic control system and airports, although the magnitude of underlying pre-pandemic demand returning to the market is offering a strong counterbalance to these increased costs.
Our airline customers are facing higher operating costs as a result of higher fuel costs, interest rates and inflation, foreign currency risk, ongoing labor shortages and disputes, as well as delays and cancellations caused by the global air traffic control system and airports, although the magnitude of underlying pre-pandemic demand returning to the market is offering a strong counterbalance to these increased costs.
As of December 31, 2022, we had a globally diversified customer base of 117 airlines in 62 different countries, with over 95% of our business revenues from airlines domiciled outside of the U.S., and we anticipate that most of our revenues in the future will be generated from foreign customers.
As of December 31, 2023, we had a globally diversified customer base of 119 airlines in 62 different countries, with over 95% of our business revenues from airlines domiciled outside of the U.S., and we anticipate that most of our revenues in the future will be generated from foreign customers.
The factors considered in estimating the undiscounted cash flows are affected by changes in future periods due to changes in contracted 52 Table of Contents lease rates, economic conditions, technology, and airline demand for a particular aircraft type.
The factors considered in estimating the undiscounted cash flows are affected by changes in future periods due to changes in contracted lease rates, economic conditions, technology, and airline demand for a particular aircraft type.
All of our fixed rate senior unsecured notes may be redeemed at our option in part or in full at any time and from time to time prior to maturity at the redemption prices specified in such senior unsecured notes.
All of our fixed rate senior unsecured notes may be redeemed at our option in part or in full at any time and from time to time prior to maturity at the redemption prices (including any “make-whole” premium) specified in such senior unsecured notes.
We have, however, from time to time established subsidiaries or trusts for the purpose of leasing aircraft or facilitating borrowing arrangements which are consolidated. We have non-controlling interests in two investment funds in which we own 9.5% of the equity of each fund.
We have, however, from time to time established subsidiaries or trusts for the purpose of leasing aircraft or facilitating borrowing arrangements which are included in our balance sheet. We have non-controlling interests in two investment funds in which we own 9.5% of the equity of each fund.
The decrease in stock-based compensation relates to reductions in the underlying vesting estimates of certain book value performance-based restricted stock units as the performance criteria are no longer considered probable of being achieved.
The decrease in stock-based compensation related to reductions in the underlying vesting estimates of certain book value performance-based restricted stock units as the performance criteria were no longer considered probable of being achieved.
Aircraft delivery delays as a product of manufacturer delays are expected to further reduce our aircraft investment and debt financing needs for the next six to twelve months and potentially beyond.
Ongoing aircraft delivery delays as a product of manufacturer delays are expected to further reduce our aircraft investment and debt financing needs for the next 12 months and potentially beyond.
These dates can change for a variety of reasons, however for the last several years, manufacturing delays have significantly impacted the planned purchases of our aircraft on order with Boeing and Airbus. We are currently experiencing delivery delays with both Boeing and Airbus aircraft.
These dates can change for a variety of reasons, however for the last several years, manufacturing delays have significantly impacted the planned purchases of our aircraft on order with both Airbus and Boeing.
Material Cash Sources and Requirements We believe that we have sufficient liquidity from available cash balances, cash generated from ongoing operations, available borrowings under our unsecured revolving credit facility and general ability to access the capital markets for opportunistic public bond offerings to satisfy the operating requirements of our business through at least the next 12 months.
Material Cash Sources and Requirements We believe that we have sufficient liquidity from available cash balances, cash generated from ongoing operations, available commitments under our unsecured revolving credit facility and general ability to access the capital and debt markets for opportunistic debt financings to satisfy the operating requirements of our business through at least the next 12 months.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in “Item 1A. Risk Factors” of this Annual Report on Form 10-K. Our material cash requirements are primarily for the purchase of aircraft and debt service payments, along with our general operating expenses.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in “Item 1A. Risk Factors” of this Annual Report on Form 10-K. Our material cash requirements are primarily comprised of aircraft purchases, debt service payments and general operating expenses.
As of December 31, 2022, we had total debt outstanding of $18.8 billion, of which 91.3% was at a fixed rate and 99.3% of which was unsecured. As of December 31, 2022, our composite cost of funds raised through debt financings was 3.07%.
As of December 31, 2022, we had total debt outstanding of $18.8 billion, of which 91.3% was at a fixed rate and 99.3% was unsecured, and in the aggregate, our composite cost of funds was 3.07%.
Treasury plus 3.149% Total 10,600,000 $ 850,000 The following table summarizes the quarterly cash dividends that we paid during the year ended December 31, 2022 on our outstanding Series A, Series B and Series C Preferred Stock (in thousands): Payment Dates Title of each class March 15, 2022 June 15, 2022 September 15, 2022 December 15, 2022 Series A Preferred Stock $3,844 $3,844 $3,843 $3,844 Series B Preferred Stock $3,487 $3,487 $3,488 $3,488 Series C Preferred Stock $3,094 $3,094 $3,094 $3,093 Off‑balance Sheet Arrangements We have not established any unconsolidated entities for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes.
The following table summarizes the quarterly cash dividends that we paid during the year ended December 31, 2023 on our outstanding Series A, Series B and Series C Preferred Stock (in thousands): Payment Dates Title of each class March 15, 2023 June 15, 2023 September 15, 2023 December 15, 2023 Series A Preferred Stock $3,844 $3,844 $3,844 $3,844 Series B Preferred Stock $3,487 $3,487 $3,487 $3,487 Series C Preferred Stock $3,094 $3,094 $3,094 $3,094 Off‑balance Sheet Arrangements We have not established any unconsolidated entities for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes.
During the year ended December 31, 2022, we recorded $48.0 million in gains from the sale of six aircraft and nine sales-type lease transactions and $17.9 million in forfeiture of security deposit income from the termination of our leasing activities in Russia in the current year period.
During the year ended December 31, 2022, we recorded $48.0 million in gains from the sale of 15 aircraft and $17.9 million in forfeiture of security deposit income from the termination of our leasing activities in Russia in the current year period.
During the year ended December 31, 2022, we recorded a net loss attributable to shareholders of $138.7 million, or net loss of $1.24 per diluted share, as compared to net income attributable to shareholders of $408.2 million, or $3.57 per diluted share, for the year ended December 31, 2021.
Net loss/income attributable to common stockholders For the year ended December 31, 2022, we reported net loss attributable to common stockholders of $138.7 million, or net loss of $1.24 per diluted share, compared to a net income attributable to common stockholders of $408.2 million, or $3.57 per diluted share, for the year ended December 31, 2021.
The Series C Preferred Stock ranks on a parity with the Series A and Series B Preferred Stock. 43 Table of Contents The following table summarizes our preferred stock issued and outstanding as of December 31, 2022 (in thousands, except for share amounts and percentages): Shares Issued and Outstanding as of December 31, 2022 Liquidation Preference as of December 31, 2022 Issue Date Dividend Rate in Effect at December 31, 2022 Next dividend rate reset date Dividend rate after reset date Series A 10,000,000 $ 250,000 March 5, 2019 6.150 % March 15, 2024 3M LIBOR plus 3.65% Series B 300,000 300,000 March 2, 2021 4.650 % June 15, 2026 5 Yr U.S.
Preferred equity The following table summarizes the Company’s preferred stock issued and outstanding as of December 31, 2023 and 2022(in thousands, except for share amounts and percentages): Shares Issued and Outstanding as of December 31, 2023 and 2022 Liquidation Preference as of December 31, 2023 and 2022 (2) Issue Date Dividend Rate in Effect at December 31, 2023 and 2022 (3) Next dividend rate reset date Dividend rate after reset date Series A 10,000,000 $ 250,000 March 5, 2019 6.150 % March 15, 2024 3M Term SOFR (1) plus 3.65% Series B 300,000 300,000 March 2, 2021 4.650 % June 15, 2026 5 Yr U.S.
If any event of default occurs, any amount then outstanding under the relevant indentures may immediately become due and payable. These events of default are subject to certain exceptions and qualifications set forth in the indentures.
The covenants contained in these indentures are subject to certain exceptions and qualifications set forth therein. In addition, the indentures also provide for customary events of default. If any event of default occurs, any amount then outstanding under the relevant indentures may immediately become due and payable.
Portfolio metrics of our fleet as of December 31, 2022 and 2021 are as follows: December 31, 2022 December 31, 2021 Net book value of flight equipment subject to operating lease $ 24.5 billion $ 22.9 billion Weighted-average fleet age (1) 4.5 years 4.4 years Weighted-average remaining lease term (1) 7.1 years 7.2 years Owned fleet 417 382 Managed fleet 85 92 Aircraft on order 398 431 Total 900 905 Current fleet contracted rentals $ 15.6 billion $ 14.8 billion Committed fleet rentals $ 15.8 billion $ 16.1 billion Total committed rentals $ 31.4 billion $ 30.9 billion (1) Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease.
Our portfolio metrics as of December 31, 2023 and 2022 are as follows: December 31, 2023 December 31, 2022 Net book value of flight equipment subject to operating lease $ 26.2 billion $ 24.5 billion Weighted-average fleet age (1) 4.6 years 4.5 years Weighted-average remaining lease term (1) 7.0 years 7.1 years Owned fleet (2) 463 417 Managed fleet 78 85 Aircraft on order 334 398 Total 875 900 Current fleet contracted rentals $ 16.4 billion $ 15.6 billion Committed fleet rentals $ 14.6 billion $ 15.8 billion Total committed rentals $ 31.0 billion $ 31.4 billion (1) Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease.
We do not currently anticipate the return of any other aircraft that are detained in Russia. Stock-based compensation We recorded stock-based compensation expense of $15.6 million for the year ended December 31, 2022 compared to stock-based compensation expense of $26.5 million for the year ended December 31, 2021.
We do not currently anticipate the return of any other aircraft that are detained in Russia. 5 Aircraft sales include one sales-type lease transaction during the year ended December 31, 2021. 55 Table of Contents Stock-based compensation We recorded stock-based compensation expense of $15.6 million for the year ended December 31, 2022 compared to stock-based compensation expense of $26.5 million for the year ended December 31, 2021.
As of December 31, 2022, we had $1.0 billion outstanding under our unsecured revolving credit facility. 39 Table of Contents • Senior unsecured bonds: We are a frequent issuer in the investment grade capital markets, opportunistically issuing unsecured bonds, primarily through our Medium-Term Note Program at attractive cost of funds.
As of December 31, 2023, we had $1.1 billion outstanding under our unsecured revolving credit facility. • Senior unsecured securities: We are a frequent issuer in the investment grade capital markets, opportunistically issuing unsecured notes, primarily through our Medium-Term Note Program at attractive cost of funds and other senior unsecured securities.
The following table shows the reconciliation of the numerator for adjusted pre-tax margin (in thousands, except percentages): Year Ended December 31, 2022 2021 2020 (unaudited) Reconciliation of the numerator for adjusted pre-tax margin (net (loss)/income attributable to common stockholders to adjusted net income before income taxes): Net (loss)/income attributable to common stockholders $ (138,724) $ 408,159 $ 500,889 Amortization of debt discounts and issuance costs 53,254 50,620 43,025 Write-off of Russian fleet, net of recoveries 771,476 — — Stock-based compensation expense 15,603 26,516 17,628 Income tax (benefit)/expense (41,741) 104,384 130,414 Adjusted net income before income taxes $ 659,868 $ 589,679 $ 691,956 Denominator for adjusted pre-tax margin: Total revenues 2,317,302 2,088,389 2,015,439 Adjusted pre-tax margin (a) 28.5 % 28.2 % 34.3 % (a) Adjusted pre-tax margin is adjusted net income before income taxes divided by total revenues 47 Table of Contents The following table shows the reconciliation of the numerator for adjusted diluted earnings per share before income taxes (in thousands, except share and per share amounts): Year Ended December 31, 2022 2021 2020 Reconciliation of the numerator for adjusted diluted earnings per share (net (loss)/income attributable to common stockholders to adjusted net income before income taxes): Net (loss)/income attributable to common stockholders $ (138,724) $ 408,159 $ 500,889 Amortization of debt discounts and issuance costs 53,254 50,620 43,025 Write-off of Russian fleet, net of recoveries 771,476 — — Stock-based compensation expense 15,603 26,516 17,628 Income tax (benefit)/expense (41,741) 104,384 130,414 Adjusted net income before income taxes $ 659,868 $ 589,679 $ 691,956 Denominator for adjusted diluted earnings per share: Weighted-average diluted common shares outstanding 111,626,508 114,446,093 114,014,021 Potentially dilutive securities, whose effect would have been anti-dilutive 361,186 — — Adjusted weighted-average diluted common shares outstanding 111,987,694 114,446,093 114,014,021 Adjusted diluted earnings per share before income taxes (b) $ 5.89 $ 5.15 $ 6.07 (b) Adjusted diluted earnings per share before income taxes is adjusted net income before income taxes divided by adjusted weighted-average diluted common shares outstanding 48 Table of Contents The following table shows the reconciliation of pre-tax return on common equity to adjusted pre-tax return on common equity (in thousands, except percentages): Year Ended December 31, 2022 2021 2020 (unaudited) Reconciliation of the numerator for adjusted pre-tax return on common equity (net (loss)/income attributable to common stockholders to adjusted net income before income taxes): Net (loss)/income attributable to common stockholders $ (138,724) $ 408,159 $ 500,889 Amortization of debt discounts and issuance costs 53,254 50,620 43,025 Write-off of Russian fleet, net of recoveries 771,476 — — Stock-based compensation expense 15,603 26,516 17,628 Income tax (benefit)/expense (41,741) 104,384 130,414 Adjusted net income before income taxes $ 659,868 $ 589,679 $ 691,956 Reconciliation of denominator for pre-tax return on common equity to adjusted pre-tax return on common equity: Common shareholders' equity as of beginning of the period $ 6,158,568 $ 5,822,341 $ 5,373,544 Common shareholders' equity as of end of the period $ 5,796,363 $ 6,158,568 $ 5,822,341 Average common shareholders' equity $ 5,977,466 $ 5,990,455 $ 5,597,943 Adjusted pre-tax return on common equity (c) 11.0 % 9.8 % 12.4 % (c) Adjusted pre-tax return on common equity is adjusted net income before income taxes divided by average common shareholders’ equity 2022 Compared to 2021 Rental revenue During the year ended December 31, 2022, we recorded $2.2 billion in rental revenue, which included overhaul revenue, net of amortization expense related to initial direct costs of $29.2 million, as compared to $2.0 billion in rental revenue, which included amortization expense related to initial direct costs, net of overhaul revenue of $2.3 million, for the year ended December 31, 2021.
The following table shows the reconciliation of the numerator for adjusted pre-tax margin (in thousands, except percentages): Year Ended December 31, 2023 2022 2021 (unaudited) Reconciliation of the numerator for adjusted pre-tax margin (net income/(loss) attributable to common stockholders to adjusted net income before income taxes): Net income/(loss) attributable to common stockholders $ 572,922 $ (138,724) $ 408,159 Amortization of debt discounts and issuance costs 54,053 53,254 50,620 Write-off of Russian fleet, net of (recoveries) (67,022) 771,476 — Stock-based compensation expense 34,615 15,603 26,516 Income tax expense/(benefit) 139,012 (41,741) 104,384 Adjusted net income before income taxes $ 733,580 $ 659,868 $ 589,679 Denominator for adjusted pre-tax margin: Total revenues 2,684,977 2,317,302 2,088,389 Adjusted pre-tax margin (a) 27.3 % 28.5 % 28.2 % (a) Adjusted pre-tax margin is adjusted net income before income taxes divided by total revenues 51 Table of Contents The following table shows the reconciliation of the numerator for adjusted diluted earnings per share before income taxes (in thousands, except share and per share amounts): Year Ended December 31, 2023 2022 2021 Reconciliation of the numerator for adjusted diluted earnings per share (net income/(loss) attributable to common stockholders to adjusted net income before income taxes): Net income/(loss) attributable to common stockholders $ 572,922 $ (138,724) $ 408,159 Amortization of debt discounts and issuance costs 54,053 53,254 50,620 Write-off of Russian fleet, net of (recoveries) (67,022) 771,476 — Stock-based compensation expense 34,615 15,603 26,516 Income tax expense/(benefit) 139,012 (41,741) 104,384 Adjusted net income before income taxes $ 733,580 $ 659,868 $ 589,679 Denominator for adjusted diluted earnings per share: Weighted-average diluted common shares outstanding 111,438,589 111,626,508 114,446,093 Potentially dilutive securities, whose effect would have been anti-dilutive — 361,186 — Adjusted weighted-average diluted common shares outstanding 111,438,589 111,987,694 114,446,093 Adjusted diluted earnings per share before income taxes (b) $ 6.58 $ 5.89 $ 5.15 (b) Adjusted diluted earnings per share before income taxes is adjusted net income before income taxes divided by adjusted weighted-average diluted common shares outstanding 52 Table of Contents The following table shows the reconciliation of pre-tax return on common equity to adjusted pre-tax return on common equity (in thousands, except percentages): Year Ended December 31, 2023 2022 2021 (unaudited) Reconciliation of the numerator for adjusted pre-tax return on common equity (net income/(loss) attributable to common stockholders to adjusted net income before income taxes): Net income/(loss) attributable to common stockholders $ 572,922 $ (138,724) $ 408,159 Amortization of debt discounts and issuance costs 54,053 53,254 50,620 Write-off of Russian fleet, net of (recoveries) (67,022) 771,476 — Stock-based compensation expense 34,615 15,603 26,516 Income tax expense/(benefit) 139,012 (41,741) 104,384 Adjusted net income before income taxes $ 733,580 $ 659,868 $ 589,679 Reconciliation of denominator for pre-tax return on common equity to adjusted pre-tax return on common equity: Common shareholders' equity as of beginning of the period $ 5,796,363 $ 6,158,568 $ 5,822,341 Common shareholders' equity as of end of the period $ 6,310,038 $ 5,796,363 $ 6,158,568 Average common shareholders' equity $ 6,053,201 $ 5,977,466 $ 5,990,455 Adjusted pre-tax return on common equity (c) 12.1 % 11.0 % 9.8 % (c) Adjusted pre-tax return on common equity is adjusted net income before income taxes divided by average common shareholders’ equity 2023 Compared to 2022 Rental of flight equipment revenue During the year ended December 31, 2023, we recorded $2.5 billion in rental revenue, which included overhaul revenue, net of amortization expense related to initial direct costs of $91.9 million, as compared to $2.2 billion in rental revenue, which included overhaul revenue, net of amortization expense related to initial direct costs of $29.2 million, for the year ended December 31, 2022.
Liquidity and Capital Resources Overview We ended 2022 with available liquidity of $6.9 billion which is comprised of unrestricted cash of $0.8 billion and undrawn balances under our unsecured revolving credit facility of $6.1 billion.
Liquidity and Capital Resources Overview We ended 2023 with available liquidity of $6.8 billion which was comprised of unrestricted cash of $0.5 billion and undrawn balances under our unsecured revolving credit facility of $6.3 billion.
Our material cash sources include: • Unrestricted cash: We ended 2022 with $766.4 million in unrestricted cash. • Lease cash flows: We ended 2022 with $31.4 billion in committed minimum future rental payments comprised of $15.6 billion in contracted minimum rental payments on the aircraft in our existing fleet and $15.8 billion in minimum future rental payments related to aircraft which will deliver between 2023 through 2028.
Our material cash sources include: • Unrestricted cash: We ended 2023 with $460.9 million in unrestricted cash. • Lease cash flows: We ended 2023 with $31.0 billion in committed minimum future rental payments comprised of $16.4 billion in contracted minimum rental payments on the aircraft in our existing fleet and $14.6 billion in minimum future rental payments related to aircraft which will deliver between 2024 through 2027.
The following table summarizes our current credit ratings: Rating Agency Long-term Debt Corporate Rating Outlook Date of Last Ratings Action Kroll Bond Ratings A- A- Stable March 25, 2022 Standard and Poor's BBB BBB Stable April 21, 2022 Fitch Ratings BBB BBB Stable December 19, 2022 While a ratings downgrade would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the interest rate applicable to certain of our financings. 45 Table of Contents Results of Operations Year Ended December 31, 2022 Year Ended December 31, 2021 Year Ended December 31, 2020 (in thousands, except share and per share amounts and percentages) Revenues Rental of flight equipment $ 2,214,508 $ 2,003,337 $ 1,946,620 Aircraft sales, trading, and other 102,794 85,052 68,819 Total revenues 2,317,302 2,088,389 2,015,439 Expenses Interest 492,924 462,396 431,733 Amortization of debt discounts and issuance costs 53,254 50,620 43,025 Interest expense 546,178 513,016 474,758 Depreciation of flight equipment 965,955 882,562 780,691 Write-off of Russian fleet, net of recoveries 771,476 — — Selling, general, and administrative 156,855 125,279 95,684 Stock-based compensation expense 15,603 26,516 17,628 Total expenses 2,456,067 1,547,373 1,368,761 (Loss)/income before taxes (138,765) 541,016 646,678 Income tax expense 41,741 (104,384) (130,414) Net (loss)/income $ (97,024) $ 436,632 $ 516,264 Preferred stock dividends (41,700) (28,473) (15,375) Net (loss)/income attributable to common stockholders $ (138,724) $ 408,159 $ 500,889 Earnings per share of common stock Basic $ (1.24) $ 3.58 $ 4.41 Diluted $ (1.24) $ 3.57 $ 4.39 Weighted-average shares of common stock outstanding Basic 111,626,508 114,050,578 113,684,782 Diluted 111,626,508 114,446,093 114,014,021 Other financial data Pre-tax margin (6.0) % 25.9 % 32.1 % Adjusted net income before income taxes (1) $ 659,868 $ 589,679 $ 691,956 Adjusted pre-tax margin (1) 28.5 % 28.2 % 34.3 % Adjusted diluted earnings per share before income taxes (1) $ 5.89 $ 5.15 $ 6.07 Pre-tax return on common equity (3.0) % 8.6 % 11.3 % Adjusted pre-tax return on common equity (1) 11.0 % 9.8 % 12.4 % (1) Adjusted net income before income taxes (defined as net income/(loss) attributable to common stockholders excluding the effects of certain non-cash items, one-time or non-recurring items, such as write-offs of our Russian fleet, that are not expected to continue in the future and certain other items), adjusted pre-tax margin (defined as adjusted net income before income taxes divided by total revenues), adjusted diluted earnings per share before income taxes (defined as adjusted net income before income taxes divided by the weighted average diluted common shares outstanding) and adjusted pre-tax return on common equity (defined as adjusted net income before income taxes divided by average common shareholders’ equity) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income/(loss) attributable to common stockholders, pre-tax margin, earnings/(loss) per share, diluted earnings/(loss) per share and pre-tax return on common equity, or any other performance measures derived in accordance with GAAP.
The following table summarizes our current credit ratings: Rating Agency Long-term Debt Corporate Rating Outlook Date of Last Ratings Action Kroll Bond Ratings A- A- Stable March 24, 2023 Standard and Poor’s BBB BBB Stable January 19, 2024 Fitch Ratings BBB BBB Stable December 19, 2023 While a ratings downgrade would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the interest rate applicable to certain of our financings. 49 Table of Contents Results of Operations Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021 (in thousands, except share and per share amounts and percentages) Revenues Rental of flight equipment $ 2,477,607 $ 2,214,508 $ 2,003,337 Aircraft sales, trading, and other 207,370 102,794 85,052 Total revenues 2,684,977 2,317,302 2,088,389 Expenses Interest 654,910 492,924 462,396 Amortization of debt discounts and issuance costs 54,053 53,254 50,620 Interest expense 708,963 546,178 513,016 Depreciation of flight equipment 1,068,772 965,955 882,562 Write-off of Russian fleet, net of (recoveries) (67,022) 771,476 — Selling, general, and administrative 186,015 156,855 125,279 Stock-based compensation expense 34,615 15,603 26,516 Total expenses 1,931,343 2,456,067 1,547,373 Income/(Loss) before taxes 753,634 (138,765) 541,016 Income tax (expense)/benefit (139,012) 41,741 (104,384) Net income/(loss) $ 614,622 $ (97,024) $ 436,632 Preferred stock dividends (41,700) (41,700) (28,473) Net income/(loss) attributable to common stockholders $ 572,922 $ (138,724) $ 408,159 Earnings/(loss) per share of common stock Basic $ 5.16 $ (1.24) $ 3.58 Diluted $ 5.14 $ (1.24) $ 3.57 Weighted-average shares of common stock outstanding Basic 111,005,088 111,626,508 114,050,578 Diluted 111,438,589 111,626,508 114,446,093 Other financial data Pre-tax margin 28.1 % (6.0) % 25.9 % Adjusted net income before income taxes (1) $ 733,580 $ 659,868 $ 589,679 Adjusted pre-tax margin (1) 27.3 % 28.5 % 28.2 % Adjusted diluted earnings per share before income taxes (1) $ 6.58 $ 5.89 $ 5.15 Pre-tax return on common equity 11.8 % (3.0) % 8.6 % Adjusted pre-tax return on common equity (1) 12.1 % 11.0 % 9.8 % (1) Adjusted net income before income taxes (defined as net income/(loss) attributable to common stockholders excluding the effects of certain non-cash items, one-time or non-recurring items, such as net write-offs and recoveries related to our former Russian fleet, that are not expected to continue in the future and certain other items), adjusted pre-tax margin (defined as adjusted net income before income taxes divided by total revenues), adjusted diluted earnings per share before income taxes (defined as adjusted net income before income taxes divided by the weighted average diluted common shares outstanding) and adjusted pre-tax return on common equity (defined as adjusted net income before income taxes divided by average common shareholders’ equity) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income/(loss) attributable to common stockholders, pre-tax margin, earnings/(loss) per share, diluted earnings/(loss) per share and pre-tax return on common equity, or any other performance measures derived in accordance with GAAP.
We ended the period with a total of 417 aircraft in our owned fleet. As of December 31, 2022, the weighted average fleet age and weighted average remaining lease term of our fleet were 4.5 years and 7.1 years, respectively. We also managed 85 aircraft as of December 31, 2022.
We ended the period with a total of 463 aircraft in our owned fleet. As of December 31, 2023, the weighted average fleet age and weighted average remaining lease term of our fleet were 4.6 years and 7.0 years, respectively. We also managed 78 aircraft as of December 31, 2023.
We expect to sell approximately $1.0 billion to $2.0 billion in aircraft for 2023 and have seen robust demand in the secondary market to support this aircraft sales program. • Other sources: In addition to the above, we generate liquidity through other sources of debt financing (including unsecured and secured bank term loans, export credit and private placements), issuances of preferred stock and cash received from security deposits and maintenance reserves from our lease agreements.
We expect to sell approximately $1.5 billion in aircraft for the full year 2024 and continue to see robust demand in the secondary market to support our aircraft sales program. • Other sources: In addition to the above, we generate liquidity through cash received from security deposits and maintenance reserves from our lease agreements, other sources of debt financings (including secured bank term loans, export credit and private placements), as well as issuances of preferred stock.
We have a globally diversified customer base comprised of 117 airlines in 62 countries as of December 31, 2022. We continue to have a strong lease utilization rate of 99.6% for the year ended December 31, 2022.
We have a globally diversified customer base comprised of 119 airlines in 62 countries as of December 31, 2023. We continued to maintain a strong lease utilization rate of 99.9% for the year ended December 31, 2023.
We ended the fourth quarter of 2022 with $31.4 billion in committed minimum future rental payments, consisting of $15.6 billion in contracted minimum rental payments on the aircraft in our existing fleet and $15.8 billion in minimum future rental payments related to aircraft which will deliver between 2023 through 2028.
We ended 2023 with $31.0 billion in committed minimum future rental payments, consisting of $16.4 billion in contracted minimum rental payments on the aircraft in our existing fleet and $14.6 billion in minimum future rental payments related to aircraft which will deliver between 2024 through 2027.
The weighted average age of our fleet was 4.5 years and the weighted average lease term remaining was 7.1 years as of December 31, 2022. Our managed fleet was comprised of 85 aircraft as of December 31, 2022 as compared to 92 aircraft as of December 31, 2021.
The weighted average age of our fleet 2 was 4.6 years and the weighted average lease term remaining was 7.0 years as of December 31, 2023. Our managed fleet was comprised of 78 aircraft as of December 31, 2023 compared to 85 aircraft as of December 31, 2022.
We expect that relatively low levels of widebody retirements in recent years could lead to an accelerated replacement cycle of older widebody aircraft in the near future. The increased demand for our aircraft, combined with rising interest rates and inflation, has been serving to increase lease rates.
We also expect that relatively low levels of widebody retirements in recent years could lead to an accelerated replacement cycle of older widebody aircraft in the near future. The increased demand for our aircraft, combined with elevated interest rates and inflation, helped to increase lease rates during the year ended December 31, 2023.
We may also redeem shares of the Series C Preferred Stock at our option under certain other limited conditions.
We may also redeem shares of the Series C Preferred Stock at our option under certain other limited conditions. The Series C Preferred Stock ranks on a parity with the Series A and Series B Preferred Stock.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. • Unsecured revolving credit facility : As of February 16, 2023, our $7.4 billion revolving credit facility is currently syndicated across 54 financial institutions from various regions of the world, diversifying our reliance on any individual lending institution. The final maturity for the facility is May 2026.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K. 42 Table of Contents • Unsecured revolving credit facility : As of February 15, 2024, our $7.4 billion revolving credit facility is syndicated across 51 financial institutions from various regions of the world, diversifying our reliance on any individual lending institution.
The increase for the year ended December 31, 2022 as compared to 2021, was primarily due to the continued growth of our fleet and the increase in revenues as discussed above. Adjusted net income before income taxes and adjusted diluted earnings per share before income taxes are measures of financial and operational performance that are not defined by U.S.
Our adjusted net income before income taxes and adjusted diluted earnings per share before income taxes increased for the year ended December 31, 2022 as compared to 2021, primarily due to the continued growth of our fleet and the increase in revenues as discussed above.
We may redeem shares of the Series B Preferred Stock at our option, in whole or in part, from time to time, on any dividend payment date on or after June 15, 2026, for cash at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
Treasury Rate as of the applicable reset dividend determination date plus a spread of 4.076% per reset period from June 15, 2026 and reset every five years and payable quarterly in arrears. 47 Table of Contents We may redeem shares of the Series B Preferred Stock at our option, in whole or in part, from time to time, on any dividend payment date on or after June 15, 2026, for cash at a redemption price equal to $1,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends.
Boeing and Airbus have expressed their desire to increase production rates on several aircraft types; however, they have yet to meaningfully increase production. At their current production pace, we do not currently see this improving the delivery delay situation through at least 2023.
Airbus and Boeing have expressed their desire to increase production rates on several aircraft types; however, they have yet to meaningfully increase production. At current production rates, we do not see delivery delays improving in the near term.
As of December 31, 2022, we had commitments to purchase 398 aircraft from Boeing and Airbus for delivery through 2029, with an estimated aggregate commitment of $25.5 billion. We have placed approximately 90% of our committed orderbook on long-term leases for aircraft delivering through the end of 2024, have placed 60% of our entire orderbook.
As of December 31, 2023, we had commitments to purchase 334 aircraft from Airbus and Boeing for delivery through 2028, with an estimated aggregate commitment of $21.7 billion. We have placed 100% of our committed orderbook on long-term leases for aircraft delivering through the end of 2025 and have placed approximately 65% of our entire orderbook.
Performance of the commercial airline industry is linked to global economic health and development. Passenger traffic has historically expanded at a faster rate than global GDP growth, in part due to the expansion of the middle class and the ease and affordability of air travel and we expect this trend to continue.
Passenger traffic volume has historically expanded at a faster rate than global GDP growth, in part due to the expansion of the global middle class and the ease and affordability of air travel, which we expect to continue.
As of February 16, 2023, 20 aircraft in our owned fleet and six aircraft in our managed fleet remain in Russia. While we or the respective managed platform maintain title to the 26 aircraft, we determined that it is unlikely we or they will regain possession of the aircraft that have not been returned and that were detained in Russia.
While we or the respective managed platform maintain title to the 26 aircraft, we determined that it is unlikely we or they would regain possession of the aircraft that had not been returned and that were detained in Russia.
Our adjusted net income before income taxes and adjusted diluted earnings per share before income taxes increased for the year ended December 31, 2022 as compared to 2021, primarily due to the continued growth of our fleet and the increase in revenues as discussed above. 2021 Compared to 2020 Rental revenue During the year ended December 31, 2021, we recorded $2.0 billion in rental revenue, which included amortization expense related to initial direct costs, net of overhaul revenue of $2.3 million, as compared to $1.95 billion, which included amortization expense related to initial direct costs, net of overhaul revenue of $31.9 million for the year ended December 31, 2020.
The increase in our adjusted net income before income taxes primarily relates to the increase in revenues as discussed above, partially offset by the higher interest expense. 2022 Compared to 2021 Rental revenue During the year ended December 31, 2022, we recorded $2.2 billion in rental revenue, which included overhaul revenue, net of amortization expense related to initial direct costs of $29.2 million, as compared to $2.0 billion in rental revenue, which included amortization expense related to initial direct costs, net of overhaul revenue of $2.3 million, for the year ended December 31, 2021.
As of December 31, 2022, the outstanding balance on all other debt financings was $708.3 million and we had pledged three aircraft as collateral with a net book value of $212.1 million.
As of December 31, 2022, we had an outstanding balance of $125.4 million in secured debt financings and pledged three aircraft as collateral with a net book value of $212.1 million.
Preferred equity On March 5, 2019, we issued 10,000,000 shares of 6.15% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series A (the “Series A Preferred Stock”), $0.01 par value, with an aggregate liquidation preference of $250.0 million ($25 per share). See “Item 8.
As of December 31, 2023 and 2022, we had 10,000,000 shares of 6.15% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series A (the “Series A Preferred Stock”), $0.01 par value, outstanding, with an aggregate liquidation preference of $250.0 million ($25 per share).
Public senior unsecured notes (including Medium-Term Note Program) As of December 31, 2022, we had $17.1 billion in aggregate principal amount of senior unsecured notes outstanding, all of which have been registered with the SEC and with remaining terms ranging from less than one month to 9.04 years and bearing interest at fixed rates ranging from 0.70% to 5.85%.
As of December 31, 2023, we had $15.7 billion in aggregate principal amount of senior unsecured notes outstanding, all of which have been issued in SEC-registered offerings and with remaining terms ranging from one month to 8.04 years and bearing interest at fixed rates ranging from 0.70% to 5.94%.
As a result, the timing of our purchase commitments shown in the table above may not reflect when the aircraft investments are eventually made.
As a result, the timing of our purchase commitments shown in the table above may not reflect when the aircraft investments are eventually made. For 2024, we currently expect to make between $4.5 billion and $5.5 billion in aircraft investments.
Our investment-grade corporate and long-term debt credit ratings help us to lower our cost of funds and broaden our access to attractively priced capital.
These investments are accounted for under the cost method of accounting. 48 Table of Contents Credit Ratings Our investment-grade corporate and long-term debt credit ratings help us to lower our cost of funds and broaden our access to attractively priced capital.
Our interest expense increased due to an increase in our average debt balance and an increase in our composite cost of funds as compared to the prior year.
Interest expense Interest expense totaled $546.2 million for the year ended December 31, 2022 compared to $513.0 million for the year ended December 31, 2021. Our interest expense increased due to an increase in our average debt balance and an increase in our composite cost of funds as compared to the prior year.
Global air travel continues to recover following the impact of the COVID-19 pandemic. The IATA reported that passenger traffic was up 64% during 2022 relative to the prior year, due to a significant acceleration in international traffic and strong continued expansion of domestic traffic in most markets.
The IATA reported that passenger traffic was up 37% during 2023 relative to the prior year, primarily due to a significant acceleration in international traffic and strong continued expansion of domestic traffic in most markets.
As of December 31, 2022, we had total revolving commitments of approximately $7.1 billion. Lenders held revolving commitments totaling approximately $6.7 billion that mature on May 5, 2026, commitments totaling $32.5 million that mature on May 5, 2025 and commitments totaling $375.0 million that mature on May 5, 2023.
Lenders held revolving commitments of approximately $7.1 billion that mature on May 5, 2027, commitments totaling $320.0 million that mature on May 5, 2026 and commitments totaling $32.5 million that mature on May 5, 2025.
The facility contains standard investment grade covenants and does not condition our ability to borrow on the lack of a material adverse effect on us or the general economy.
The final maturity for the facility is May 2027, although we expect to refinance this facility in advance of that date. The facility contains standard investment grade covenants and does not condition our ability to borrow on the lack of a material adverse effect on us or the general economy.
Our operating performance is driven by the growth of our fleet, the terms of our leases, the interest rates on our debt, and the aggregate amount of our indebtedness, supplemented by gains from aircraft sales and our management fees. 2022 Overview During the year ended December 31, 2022, we purchased 60 new aircraft from Boeing and Airbus, purchased one aircraft from the secondary market, sold six aircraft and wrote-off our interests in 21 aircraft in our owned fleet that were detained in Russia.
Our operating performance is driven by the growth of our fleet, the terms of our leases, the interest rates on our debt, and the aggregate amount of our indebtedness, supplemented by gains from aircraft sales and our management fees. 2023 Summary During the year ended December 31, 2023, we purchased 71 new aircraft from Airbus and Boeing and sold 27 aircraft 1 .
Recoverability of an aircraft’s carrying amount is measured by comparing the carrying amount of the aircraft to future undiscounted net cash flows expected to be generated by the aircraft. The undiscounted cash flows consist of cash flows from currently contracted leases, future projected lease rates, and estimated residual or scrap values for each aircraft.
The undiscounted cash flows consist of cash flows from currently contracted leases, future projected lease rates, and estimated residual or scrap values for each aircraft.
During the year ended December 31, 2021, we recorded a $34.0 million in revenue recognized from the sale to a third party of certain unsecured claims related to Aeromexico’s insolvency proceedings, and $24.0 million from the sale of three aircraft and one sales-type lease transaction. 49 Table of Contents Interest expense Interest expense totaled $546.2 million for the year ended December 31, 2022 compared to $513.0 million for the year ended December 31, 2021.
During the year ended December 31, 2021, we recorded $34.0 million in revenue recognized from the sale to a third party of certain unsecured claims related to Aeromexico’s insolvency proceedings, and $24.0 million from the sale of four aircraft 5 .
On March 2, 2021, we issued 300,000 shares of 4.65% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”), $0.01 par value, with an aggregate liquidation preference of $300.0 million ($1,000 per share). We will pay dividends on the Series B Preferred Stock only when, as and if declared by our board of directors.
As of December 31, 2023 and 2022, we had 300,000 shares of 4.65% Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”), $0.01 par value, outstanding, with an aggregate liquidation preference of $300.0 million ($1,000 per share).
In October 2021, we issued 300,000 shares of 4.125% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C (the “Series C Preferred Stock”), $0.01 par value, with an aggregate liquidation preference of $300.0 million ($1,000 per share). We will pay dividends on the Series C Preferred Stock only when, as and if declared by our board of directors.
As of December 31, 2023 and 2022, we had 300,000 shares of 4.125% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C (the “Series C Preferred Stock”), $0.01 par value, outstanding with an aggregate liquidation preference of $300.0 million ($1,000 per share).
Our senior unsecured notes also require us to offer to purchase all of the notes at a purchase price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest if a “change of control repurchase event” (as defined in the applicable indenture or supplemental indenture) occurs.
Our senior unsecured notes also require us to offer to purchase all of the notes at a purchase price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest if a “change of control repurchase event” (as defined in the applicable indenture or supplemental indenture) occurs. 45 Table of Contents The indentures that govern our senior unsecured notes requires us to comply with certain covenants, including restrictions on our ability to (i) incur liens on assets and (ii) merge, consolidate or transfer all or substantially all of our assets.
Changes in the tax rate were primarily driven by the write-off of our interests in aircraft that are detained in Russia.
Changes in the tax rate were primarily driven by the write-off of our interests in aircraft that are detained in Russia. Our effective tax rate would have been 19.5% if we excluded the impact of the write-off of our Russian fleet.
Borrowings under the Revolving Credit Facility are used to finance our working capital needs in the ordinary course of business and for other general corporate purposes.
Syndicated unsecured revolving credit facility As of December 31, 2023 and December 31, 2022, we had $1.1 billion and $1.0 billion, respectively, outstanding under our syndicated unsecured revolving credit facility (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility are used to finance our working capital needs in the ordinary course of business and for other general corporate purposes.
Estimated Delivery Years Aircraft Type 2023 2024 2025 2026 2027 Thereafter Total Airbus A220-100/300 14 26 20 12 — — 72 Airbus A320/321neo (1) 28 22 18 35 35 40 178 Airbus A330-900neo 7 6 — — — — 13 Airbus A350-900/1000 4 3 — — — — 7 Airbus A350F — — — 2 2 3 7 Boeing 737-7/8/9 MAX 30 37 19 16 — — 102 Boeing 787-9/10 5 4 10 — — — 19 Total (2) 88 98 67 65 37 43 398 (1) The Company's Airbus A320/321neo aircraft orders include 22 long-range variants and 49 extra long-range variants.
Estimated Delivery Years Aircraft Type 2024 2025 2026 2027 2028 Thereafter Total Airbus A220-100/300 19 10 18 14 — — 61 Airbus A320/321neo (1) 21 13 40 40 38 — 152 Airbus A330-900neo 6 1 — — — — 7 Airbus A350-900/1000 4 — — — — — 4 Airbus A350F — — — 4 3 — 7 Boeing 737-7/8/9 MAX 31 32 16 — 2 — 81 Boeing 787-9/10 11 10 1 — — — 22 Total (2) 92 66 75 58 43 — 334 (1) Our Airbus A320/321neo aircraft orders include 11 long-range variants and 49 extra long-range variants.
In addition, both Boeing and Airbus have had ongoing delivery delays and engine manufacturer delays have impacted and may continue to impact the ability of Boeing and Airbus to meet their contractual delivery obligations to us.
In addition, both Airbus and Boeing have ongoing delivery delays which have been further compounded by engine manufacturer delays, as well as shorter on-wing engine time of most new technology engines. These delays have impacted and may continue to impact the ability of Airbus and Boeing to meet their contractual delivery obligations to us.
As of the date of this filing, we had five aircraft placed with one airline which was subject to insolvency proceedings. 38 Table of Contents We believe the aircraft leasing industry has remained resilient over time across a variety of global economic conditions and remain optimistic about the long-term fundamentals of our business.
We believe the aircraft leasing industry has remained resilient over time across a variety of global economic conditions and remain optimistic about the long-term fundamentals of our business.
We expect our depreciation expense to increase as we continue to add aircraft to our fleet. Write-off of Russian fleet As further described above under “Impact of Russia-Ukraine Conflict” in March 2022 we terminated all of our leasing activities in Russia.
We expect our depreciation expense to increase as we continue to add aircraft to our fleet. Write-off of Russian fleet, net of recoveries In March 2022, we terminated all of our leasing activities in Russia. As of February 16, 2023, 20 aircraft in our owned fleet and six aircraft in our managed fleet remain in Russia.
If our airline customers are not able to effectively manage their operating costs and currency risk, it could impact our financial results and cash flows. Airline reorganizations, liquidations, or other forms of bankruptcies occurring in the industry may include some of our aircraft customers and result in the early return of aircraft or changes in our lease terms.
Airline reorganizations, liquidations, or other forms of bankruptcies occurring in the industry may include some of our aircraft customers and result in the early return of aircraft or changes in our lease terms.
Debt Our debt financing was comprised of the following as of December 31, 2022 and 2021: December 31, 2022 December 31, 2021 (U.S. dollars in thousands, except percentages) Unsecured Senior notes $ 17,095,116 $ 16,892,058 Revolving credit facility 1,020,000 — Term financings 582,950 167,000 Total unsecured debt financing 18,698,066 17,059,058 Secured Term financings 113,717 126,660 Export credit financing 11,646 18,301 Total secured debt financing 125,363 144,961 Total debt financing 18,823,429 17,204,019 Less: Debt discounts and issuance costs (182,366) (181,539) Debt financing, net of discounts and issuance costs $ 18,641,063 $ 17,022,480 Selected interest rates and ratios: Composite interest rate (1) 3.07 % 2.79% Composite interest rate on fixed rate debt (1) 2.98 % 2.90% Percentage of total debt at a fixed-rate 91.34 % 94.80% (1) This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs.
The decrease is primarily due to a $0.5 billion increase in debt repayments resulting from an increase in our aircraft sales activity discussed above. 44 Table of Contents Debt Our debt financing as of December 31, 2023 and 2022 is summarized below: December 31, 2023 December 31, 2022 (U.S. dollars in thousands, except percentages) Unsecured Senior unsecured securities $ 16,329,605 $ 17,095,116 Term financings 1,628,400 582,950 Revolving credit facility 1,100,000 1,020,000 Total unsecured debt financing 19,058,005 18,698,066 Secured Export credit financing 204,984 11,646 Term financings 100,471 113,717 Total secured debt financing 305,455 125,363 Total debt financing 19,363,460 18,823,429 Less: Debt discounts and issuance costs (180,803) (182,366) Debt financing, net of discounts and issuance costs $ 19,182,657 $ 18,641,063 Selected interest rates and ratios: Composite interest rate (1) 3.77 % 3.07% Composite interest rate on fixed-rate debt (1) 3.26 % 2.98% Percentage of total debt at a fixed-rate 84.71 % 91.34% (1) This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs.
Our cash flow provided by operating activities during the year ended December 31, 2022 increased primarily due to the continued growth of our fleet and an increase in our cash collections as compared to the year ended December 31, 2021.
The increase was primarily due to the continued growth of our fleet and an increase in customer cash collections as compared to the prior year. Our cash flow used in investing activities decreased by $0.6 billion to $2.8 billion for the year ended December 31, 2023.
As of December 31, 2021, we had $16.9 billion in aggregate principal amount of senior unsecured notes outstanding bearing interest at fixed rates ranging from 0.70% to 4.625%, with two notes bearing interest at a floating rate of three-month LIBOR plus 0.35% and a floating rate of LIBOR plus 1.125%.
As of December 31, 2022, we had $17.1 billion in aggregate principal amount of senior unsecured notes outstanding bearing interest at fixed rates ranging from 0.70% to 5.85%.
However, in October 2022, we recovered one of these aircraft. See “Impact of Russia-Ukraine Conflict” below for further discussion. We ended the period with a total of 417 aircraft in our owned fleet. The net book value of our fleet grew by 7.2% to $24.5 billion as of December 31, 2022 compared to $22.9 billion as of December 31, 2021.
We ended the year with a total of 463 aircraft in our owned fleet. The net book value of our fleet grew by 6.9% to $26.2 billion as of December 31, 2023 compared to $24.5 billion as of December 31, 2022.
On May 7, 2021, we renewed and refreshed our Medium-Term Note Program, under which we may issue, from time to time, up to $15.0 billion of debt securities designated as our Medium-Term Notes, Series A. All of our senior unsecured notes issued since 2019 have consisted of Medium-Term Notes, Series A, issued under our Medium-Term Note Program.
These events of default are subject to certain exceptions and qualifications set forth in the indentures. On May 7, 2021, we renewed and refreshed our Medium-Term Note Program, under which we may issue, from time to time, up to $15.0 billion (or their U.S. dollar equivalent) of debt securities designated as our Medium-Term Notes, Series A.
The following table, which is subject to change based on Airbus and Boeing delivery delays, shows the number of new aircraft scheduled to be delivered as of December 31, 2022, along with the lease placements of such aircraft as of February 16, 2023. As noted above, we expect delivery delays for all aircraft deliveries in our orderbook.
As a result of continued manufacturing delays described herein, our aircraft delivery schedule could continue to be subject to material changes and delivery delays are expected to extend beyond 2024. 39 Table of Contents The following table, which is subject to change based on Airbus and Boeing delivery delays, shows the number of new aircraft scheduled to be delivered as of December 31, 2023, along with the lease placements of such aircraft as of February 15, 2024.
Adjusted net income before income taxes per adjusted diluted share for the year ended December 31, 2022 increased 14.4% to $5.89 per diluted share compared to $5.15 per adjusted diluted share for the year ended December 31, 2021.
Adjusted net income before income taxes 3 during the year ended December 31, 2023 was $733.6 million or $6.58 per adjusted diluted share, as compared to $659.9 million, or $5.89 per adjusted diluted share, for the year ended December 31, 2022.
Treasury plus 4.076% Series C 300,000 300,000 October 13, 2021 4.125 % December 15, 2026 5 Yr U.S.
Treasury plus 4.076% Series C 300,000 300,000 October 13, 2021 4.125 % December 15, 2026 5 Yr U.S. Treasury plus 3.149% Total 10,600,000 $ 850,000 (1) 3M Term SOFR includes a credit spread adjustment of 0.10%.
Unsecured financing provides us with operational flexibility when selling or transitioning aircraft from one airline to another. We also have the ability to seek debt financing secured by our assets, as well as financings supported through the Export-Import Bank of the United States and other export credit agencies for future aircraft deliveries .
We also have the ability to seek debt financing secured by our assets, as well as financings supported through government-guaranteed export credit agencies for future aircraft deliveries.
Selling, general, and administrative expense as a percentage of total revenue increased to 6.0% for the year ended December 31, 2021 compared to 4.7% for the year ended December 31, 2020. The increase in selling, general and administrative expenses was primarily due to the increase in business activity and increased expenses related to transition of aircraft.
The increase in selling, general and administrative expenses was primarily due to the increase in insurance premiums, aircraft transition costs and general operating expenses. Selling, general and administrative expenses represented 6.9% and 6.8% as a percentage of total revenue for the years ended December 31, 2023 and 2022, respectively.
As a result, we recorded a write-off of our interests in our owned and managed aircraft that are detained in Russia, totaling approximately $802.4 million for the three months ended March 31, 2022. The 21 aircraft that remained in Russia were removed from our fleet as of March 31, 2022.
During the year ended December 31, 2022, we recorded a write-off of our interests in our owned and managed fleet that were detained in Russia, totaling approximately $771.5 million. As of February 15, 2024, 16 aircraft previously included in our owned fleet remain in Russia.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+1 added−2 removed5 unchanged
Biggest changeTo partially mitigate the risk of an increasing interest rate environment between the lease signing date and the delivery date of the aircraft, a majority of our forward lease contracts have manufacturer escalation protection and/or interest rate adjusters which would adjust the final lease rate upward or downward based on changes in the consumer price index or certain benchmark interest rates, respectively, at the time of delivery of the aircraft as compared to the lease signing date, subject to an outside limit on such adjustments.
Biggest changeTo partially mitigate the risk of an increasing interest rate environment between the lease signing date and the delivery date of the aircraft, a majority of our forward lease contracts have manufacturer escalation protection and/or interest rate adjusters which would adjust the final lease rate upward or downward based on changes in the consumer price index or certain benchmark interest rates, respectively, at the time of delivery of the aircraft as compared to the lease signing date, subject to an outside limit on such adjustments. 57 Table of Contents Foreign Exchange Rate Risk We attempt to minimize currency and exchange risks by entering into aircraft purchase agreements and a majority of lease agreements and debt agreements with U.S. dollars as the designated payment currency.
For the year ended December 31, 2022, more than 95% of our revenues were derived from customers who have their principal place of business outside 53 Table of Contents the U.S. and most leases designated payment currency is U.S. dollars.
For the year ended December 31, 2023, more than 95% of our revenues were derived from customers who have their principal place of business outside the U.S. and most leases designated payment currency is U.S. dollars.
If the composite interest rate on our outstanding floating rate debt was to increase by 1.0%, we would expect to incur additional annual interest expense on our existing indebtedness of approximately $16.3 million and $9.0 million as of December 31, 2022 and December 31, 2021, respectively, which would put downward pressure on our operating margins.
If the composite interest rate on our outstanding floating rate debt was to increase by 1.0%, we would expect to incur additional annual interest expense on our existing indebtedness of approximately $29.6 million and $16.3 million as of December 31, 2023 and December 31, 2022, respectively, each on an annualized basis, which would put downward pressure on our operating margins.
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional details on the fair value of the swap. 54 Table of Contents
Financial Statements and Supplementary Data” in this Annual Report on Form 10-K for additional details on the fair value of these swaps. 58 Table of Contents
Approximately 0.2% and 0.5% of our lease revenues were denominated in foreign currency as of December 31, 2022 and 2021, respectively. Approximately 1.6% and 1.8% of our debt obligations were denominated in foreign currency as of December 31, 2022 and December 31, 2021, respectively; however, the exposure of such debt has been effectively hedged as described below.
Approximately 3.5% and 1.6% of our debt obligations were denominated in foreign currency as of December 31, 2023 and December 31, 2022; however, the exposure of such debt has been effectively hedged as described below.
The ability of our lessees to make lease payments to us in U.S. dollars may be adversely impacted in the event the U.S. dollar continues to appreciate, as it did in 2022. In December 2019, we issued C$400.0 million in aggregate principal amount of 2.625% notes due 2024.
The ability of our lessees to make lease payments to us in U.S. dollars may be adversely impacted in the event of an appreciating U.S. dollar. In December 2019, we issued C$400.0 million in aggregate principal amount of 2.625% notes due 2024. In November 2023, we issued C$500.0 million in aggregate principal amount of 5.400% notes due 2028.
This is caused by us setting a fixed lease rate in advance of the delivery date of an aircraft. The delivery date is when a majority of the financing for an aircraft is arranged.
We also have interest rate risk on our forward lease placements. This is caused by us setting a fixed lease rate in advance of the delivery date of an aircraft. The delivery date is when a majority of the financing for an aircraft is arranged.
While our floating-rate debt balances have fluctuated in recent years, we have some exposure to changing interest rates as a result of our floating-rate debt, primarily from our revolving credit facility. As of December 31, 2022 and 2021, we had $1.6 billion and $0.9 billion, in floating-rate debt outstanding, respectively.
We have some exposure to changing interest rates as a result of our floating-rate debt, primarily from our Revolving Credit Facility and unsecured bilateral term loans. As of December 31, 2023 and 2022, we had $3.0 billion and $1.6 billion, in floating-rate debt outstanding, respectively.
We effectively hedged our foreign currency exposure on this transaction through a cross-currency swap that converts the borrowing rate to a fixed 2.535% U.S. dollar denominated rate. See Note 11 of “Notes to Consolidated Financial Statements” under “Item 8.
We effectively hedged our foreign currency exposure on these transactions through cross-currency swaps that convert the borrowing rate to fixed U.S. dollar denominated rates of 2.535% and 5.942%, respectively. See Note 11 of “Notes to Consolidated Financial Statements” under “Item 8.
Additionally, we have outstanding preferred stock with an aggregate stated amount of $850.0 million that currently pays dividends at a fixed rate, but will alternate to paying dividends based on a floating rate or be reset to a new fixed rate based on the then-applicable floating rate, after five years from initial issuance.
Additionally, we have outstanding preferred stock with an aggregate stated amount of $850.0 million, of which $250.0 million will begin paying dividends at a floating rate on March 15, 2024 and the remaining $600.0 million will reset dividends to a new fixed rate based on the then-applicable floating rate after five years from initial issuance and every five years thereafter.
If interest rates continue to increase, as they did throughout 2022, we would be obligated to make higher interest payments to our lenders, and eventually, higher dividend payments to the holders of our preferred stock.
If interest rates remain elevated, which we expect for the near term, we would be obligated to make higher interest payments to our lenders, and higher dividend payments to the holders of our preferred stock.
Removed
As noted above, we also have risk related to the impact of the transition from LIBOR. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt—Impact of LIBOR Transition.” We also have interest rate risk on our forward lease placements.
Added
Thus, most of our revenue and expenses are denominated in U.S. dollars. Approximately 0.3% and 0.2% of our lease revenues were denominated in foreign currency as of December 31, 2023 and 2022, respectively.
Removed
Foreign Exchange Rate Risk We attempt to minimize currency and exchange risks by entering into aircraft purchase agreements and a majority of lease agreements and debt agreements with U.S. dollars as the designated payment currency. Thus, most of our revenue and expenses are denominated in U.S. dollars.

Other AL 10-K year-over-year comparisons