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What changed in FTAI Aviation Ltd.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FTAI Aviation Ltd.'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.

+193 added−190 removedSource: 10-K (2024-02-26) vs 10-K (2023-02-27)

Top changes in FTAI Aviation Ltd.'s 2023 10-K

193 paragraphs added · 190 removed · 157 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe table below provides additional information on the assets in our Aviation Leasing segment: Aviation Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2022 13 95 108 Purchases 1 38 39 Sales (3) (5) (8) Transfers (3) (30) (33) Assets at December 31, 2022 8 98 106 Engines Assets at January 1, 2022 68 139 207 Purchases 2 62 64 Sales (36) (35) (71) Transfers 6 18 24 Assets at December 31, 2022 40 184 224 Aerospace Products The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through exclusivity arrangements, aircraft engines and aftermarket components primarily for the CFM56-7B and CFM56-5B commercial aircraft engines.
Biggest changeThe table below provides additional information on the assets in our Aviation Leasing segment: Aviation Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2023 8 98 106 Purchases — 40 40 Sales (2) (11) (13) Transfers (1) (36) (37) Assets at December 31, 2023 5 91 96 Engines Assets at January 1, 2023 40 184 224 Purchases 7 94 101 Sales (17) (24) (41) Transfers 2 (19) (17) Assets at December 31, 2023 32 235 267 Aerospace Products The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through our maintenance facility and exclusivity arrangements, aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines.
As an example, we often partner with Maintenance, Repair and Overhaul (“MRO”) facilities in the aviation sector to lease engines and support airlines’ fleet management needs. 8 While we expect to hold our assets for extended periods of time, we and our Manager continually review our assets to assess whether we should sell or otherwise monetize them.
As an example, we often partner with Maintenance, Repair and Overhaul (“MRO”) facilities in the aviation sector to lease engines and support airlines’ fleet management needs. While we expect to hold our assets for extended periods of time, we and our Manager continually review our assets to assess 8 whether we should sell or otherwise monetize them.
Certain of our current sustainability solutions and investments are highlighted below, and we expect to continue to explore additional sustainability-related opportunities. 9 Aerospace As previously announced, in December 2021 we entered into an agreement with AAR CORP. (NYSE: AIR) to create Serviceable Engine Products, an exclusive seven-year CFM56 used serviceable material (“USM”) partnership.
Certain of our current sustainability solutions and investments are highlighted below, and we expect to continue to explore additional sustainability-related opportunities. Aerospace 9 As previously announced, in December 2021 we entered into an agreement with AAR CORP. (NYSE: AIR) to create Serviceable Engine Products, an exclusive seven-year CFM56 used serviceable material (“USM”) partnership.
These relationships include senior executives at lessors and operators, end users of aviation and offshore energy assets, as well as banks, lenders and other asset owners. Asset Acquisition Process Our strategy is to acquire assets that are essential to the transportation of goods and people globally. We acquire assets that are 6 used by major operators of transportation networks.
These relationships include senior executives at lessors and operators, end users of aviation and offshore energy assets, as well as banks, lenders and other asset owners. Asset Acquisition Process Our strategy is to acquire assets that are essential to the transportation of goods and people globally. We acquire assets that are used by major operators of transportation networks.
Our Manager has significant prior experience in all of our target sectors, as well as a network of industry relationships, that we believe positions us well to make successful acquisitions and to actively manage and improve operations and cash flows of our existing and newly-acquired assets.
Our Manager has significant prior experience in all of our target sectors, as well as a network of industry relationships, that we believe positions us well to make successful acquisitions and to actively manage and 6 improve operations and cash flows of our existing and newly-acquired assets.
Please refer to Note 13 of our consolidated financial statements included in Item 8 in this Annual Report on Form 10-K for further details regarding our Management Agreement and Services and Profit Sharing Agreement. 7 Our Portfolio We own and acquire high quality aviation and offshore energy equipment that is essential for the transportation of goods and people globally.
Please refer to Note 12 of our consolidated financial statements included in Item 8 in this Annual Report on Form 10-K for further details regarding our Management Agreement and Services and Profit Sharing Agreement. 7 Our Portfolio We own and acquire high quality aviation and offshore energy equipment that is essential for the transportation of goods and people globally.
Our Aerospace Products business develops and manufactures through a joint venture, and repairs and sells, through exclusivity arrangements, aftermarket components for aircraft engines.
Our Aerospace Products business develops and manufactures through a joint venture, and repairs and sells, through our maintenance facility and exclusivity arrangements, aftermarket components for aircraft engines.
Our aviation equipment was approximately 71% utilized during the three months ended December 31, 2022, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes.
Our aviation equipment was approximately 77% utilized during the three months ended December 31, 2023, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes.
As of December 31, 2022, 79 of our commercial aircraft and 127 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease.
As of December 31, 2023, 76 of our commercial aircraft and 175 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease.
As of and for the year ended December 31, 2022, no customer accounted for more than 10% of our revenue and two of our customers accounted for 20% and 12% of total accounts receivable, net. We derive a significant percentage of our revenue within specific sectors from a limited number of customers.
As of and for the year ended December 31, 2023, no customer accounted for more than 10% of our revenue or total accounts receivable, net. We derive a significant percentage of our revenue within specific sectors from a limited number of customers.
Our aircraft currently have a weighted average remaining lease term of 42 months, and our engines currently on-lease have an average remaining lease term of 11 months.
Our aircraft currently have a weighted average remaining lease term of 47 months, and our engines currently on-lease have an average remaining lease term of 16 months.
Human Capital Management Our Manager provides a management team and other professionals who are responsible for implementing our business strategy and performing certain services for us, subject to oversight by our board of directors. As of December 31, 2022, we also have approximately 40 employees at certain subsidiaries across our business segments.
Human Capital Management Our Manager provides a management team and other professionals who are responsible for implementing our business strategy and performing certain services for us, subject to oversight by our board of directors. As of December 31, 2023, we also have app roximately 170 employees at certain subsidiarie s across our business segments.
We are externally managed by FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”), which has a dedicated team of experienced professionals focused on the acquisition of transportation and infrastructure assets since 2002. On December 27, 2017, SoftBank Group Corp. (“SoftBank”) acquired Fortress (the “SoftBank Merger”).
We are externally managed by FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC, which has a dedicated team of experienced professionals focused on the acquisition of transportation and infrastructure assets since 2002.
As of December 31, 2022, we had total consolidated assets o f $2.4 billion and total equity of $19.4 million. As of December 31, 2022, our operations consisted of Aviation Leasing and Aerospace Products. Our Aviation Leasing business acquires assets that are designed to carry cargo or people.
As of December 31, 2023, we had total co nsolidated assets of $3.0 billion and total equity of $175.9 million. As of December 31, 2023, our operations consisted of Aviation Leasing and Aerospace Products. Our Aviation Leasing b usiness acquires assets that are designed to carry cargo or people.
Aviation Leasing As of December 31, 2022, in our Aviation Leasing segment, we own and manage 330 aviation assets, consisting of 106 commercial aircraft and 224 engine s, including four aircraft and one engine that were still located in Ukraine and eight aircraft and seventeen engines that were still located in Russia.
Aviation Leasing As of December 31, 2023, in our Aviation Leasing segment, we own and man age 363 aviation assets, consisting of 96 commercial aircraft and 267 engines, including eight aircraft and seventeen engines that were still located in Russia.
In connection with the SoftBank Merger, Fortress operates within SoftBank as an independent business headquartered in New York. We own and acquire high quality aviation equipment that is essential for the transportation of goods and people globally. Additionally, we own and lease offshore energy equipment.
After the closing of the transaction, Fortress will continue to operate as an independent investment manager under the Fortress brand, with autonomy over investment processes and decision making, personnel and operations. We own and acquire high quality aviation equipment that is essential for the transportation of goods and people globally. Additionally, we own and lease offshore energy equipment.
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On May 22, 2023, Fortress and Mubadala Investment Company, through its wholly owned asset management subsidiary Mubadala Capital (“Mubadala”), announced that they have entered into definitive agreements pursuant to which, among other things, certain members of Fortress management and affiliates of Mubadala will acquire 100% of the equity of Fortress that is currently indirectly held by SoftBank Group Corp. (“SoftBank”).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we believe that we are adequately insured against these types of events, no assurance can be given that the occurrence of any such event will not materially adversely affect us. 21 Risks Related to Our Manager We are dependent on our Manager and other key personnel at Fortress and may not find suitable replacements if our Manager terminates the Management Agreement or if other key personnel depart.
Biggest changeRisks Related to Our Manager We are dependent on our Manager and other key personnel at Fortress and may not find suitable replacements if our Manager terminates the Management Agreement or if other key personnel depart. Our officers and other individuals who perform services for us are employees of our Manager or other Fortress entities.
In addition, our ability to renew existing charter or leases or obtain new charters or leases will also depend on prevailing market conditions, and upon expiration of the contracts governing the leasing or charter of the applicable assets, we may be exposed to increased volatility in terms of rates and contract provisions.
In addition, our ability to renew existing charters or leases or obtain new charters or leases will also depend on prevailing market conditions, and upon expiration of the contracts governing the leasing or charter of the applicable assets, we may be exposed to increased volatility in terms of rates and contract provisions.
Projects in the aerospace products and services sector are exposed to unplanned interruptions caused by breakdown or failure of equipment, aging infrastructure, employee error or contractor or subcontractor failure, limitations that may be imposed by equipment conditions or environmental, safety or other regulatory requirements, fuel supply or fuel transportation reductions or interruptions, labor disputes, difficulties with the implementation or operation of information systems, power outages, pipeline or electricity line ruptures, catastrophic events, such as hurricanes, cyclones, earthquakes, landslides, floods, explosions, fires, or other disasters.
Projects in the aerospace products and services sector are exposed to unplanned interruptions caused by breakdown or failure of equipment, aging infrastructure, employee error or contractor or subcontractor failure, limitations that may be imposed by equipment conditions or environmental, safety or other regulatory requirements, fuel supply or fuel transportation reductions or interruptions, labor or legal disputes, difficulties with the implementation or operation of information systems, power outages, pipeline or electricity line ruptures, catastrophic events, such as hurricanes, cyclones, earthquakes, landslides, floods, explosions, fires, or other disasters.
In those circumstances, 20 although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met.
In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met.
In addition, changes to environmental standards or regulations in the industries in which we operate could limit the economic life of the assets we acquire or reduce their value, and also require us to make significant additional investments in order to maintain compliance, which would negatively impact our cash flows and results of operations.
In addition, changes to environmental standards or regulations in the industries in which we operate could limit the 19 economic life of the assets we acquire or reduce their value, and also require us to make significant additional investments in order to maintain compliance, which would negatively impact our cash flows and results of operations.
Our Manager’s due diligence of potential asset acquisitions or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations. 23 Our Manager intends to conduct due diligence with respect to each asset acquisition opportunity or other transaction it pursues.
Our Manager’s due diligence of potential asset acquisitions or other transactions may not identify all pertinent risks, which could materially affect our business, financial condition, liquidity and results of operations. Our Manager intends to conduct due diligence with respect to each asset acquisition opportunity or other transaction it pursues.
If we were not eligible for the exemption under Section 883 of the Code, we expect that our U.S. source rental income would generally be subject to U.S. federal taxation, on a gross income basis, 24 at a rate of not in excess of 4% as provided in Section 887 of the Code.
If we were not eligible for the exemption under Section 883 of the Code, we expect that our U.S. source rental income would generally be subject to U.S. federal taxation, on a gross income basis, at a rate of not in excess of 4% as provided in Section 887 of the Code.
There are conflicts of interest inherent in our relationship with our Manager insofar as our Manager and its affiliates invest in aviation assets and whose investment objectives overlap with our asset acquisition objectives. Certain opportunities appropriate for us may also be appropriate for one or more of these other investment vehicles.
There are conflicts of interest inherent in our relationship with our Manager insofar as our Manager and its affiliates invest in aviation assets and whose investment objectives overlap with our asset acquisition objectives. Certain opportunities appropriate 21 for us may also be appropriate for one or more of these other investment vehicles.
In such case, such U.S. source rental income would be subject to U.S. federal income taxation at the maximum corporate rate as well as state and local taxation. In addition, the Company or such subsidiary would be subject to the U.S. federal branch profits tax on its effectively connected earnings and profits at a rate of 30%.
In such case, such U.S. source rental income would be subject to U.S. federal income taxation at the maximum corporate rate as well as state and local taxation. In addition, the Company or such subsidiary would be subject to the U.S. federal branch profits tax on its effectively 24 connected earnings and profits at a rate of 30%.
The imposition of such taxes could adversely affect our business and would result in decreased cash available for distribution to our shareholders. We or our subsidiaries may become subject to unanticipated tax liabilities that may have a material adverse effect on our results of operations.
The imposition of such taxes could adversely affect our business and would result in decreased cash available for distribution to our shareholders. We or our subsidiaries may become subject to increased and/or unanticipated tax liabilities that may have a material adverse effect on our results of operations.
SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury 19 securities in the repurchase agreement market. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates.
SOFR is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities in the repurchase agreement market. At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates.
Accordingly, our ability to successfully execute our business strategy and maintain our operations depends on the availability and cost of debt and equity capital. Additionally, our ability to borrow against our assets is dependent, in part, on the appraised value of such 18 assets.
Accordingly, our ability to successfully execute our business strategy and maintain our operations depends on the availability and cost of debt and equity capital. Additionally, our ability to borrow against our assets is dependent, in part, on the appraised value of such assets.
In the event that any of our directors and officers who is also a director, officer or employee of Fortress or its affiliates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of FTAI and such person acts in good faith, then to the fullest extent permitted by law such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us if Fortress or its affiliates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us.
In the event that any of our directors and officers who is also a director, officer or employee of Fortress or its affiliates acquires knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as a director or officer of FTAI Aviation Ltd. and such person acts in good faith, then to the fullest extent permitted by law such person is deemed to have fully satisfied such person’s fiduciary duties owed to us and is not liable to us if Fortress or its affiliates pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us.
Our board of directors adopted a policy regarding the approval of any “related person transactions” pursuant 22 to which certain of the material transactions described above may require disclosure to, and approval by, the independent members of our board of directors.
Our board of directors adopted a policy regarding the approval of any “related person transactions” pursuant to which certain of the material transactions described above may require disclosure to, and approval by, the independent members of our board of directors.
The indentures governing our Senior Notes and the Revolving Credit Facility restrict among other things, our and certain of our subsidiaries’ ability to: • merge, consolidate or transfer all, or substantially all, of our assets; • incur additional debt or issue preferred shares; • make certain investments or acquisitions; • create liens on our or our subsidiaries’ assets; • sell assets; • make distributions on or repurchase our shares; • enter into transactions with affiliates; and • create dividend restrictions and other payment restrictions that affect our subsidiaries.
The indentures governing our Senior Notes and the Revolving Credit Facility restrict among other things, our a nd certain of our subsidiaries’ ability to: • merge, consolidate or transfer all, or substantially all, of our assets; • incur additional debt or issue preferred shares; • make certain investments or acquisitions; • create liens on our or our subsidiaries’ assets; • sell assets; • make distributions on or repurchase our shares; • enter into transactions with affiliates; and • create dividend restrictions and other payment restrictions that affect our subsidiaries.
Some of our subsidiaries are subject to income, withholding or other taxes in certain non-U.S. jurisdictions by reason of their jurisdiction of incorporation, activities and operations, where their assets are used or where the lessees of their assets (or others in possession of their assets) are located, and it is also possible that taxing authorities in any such jurisdictions could assert that we or our subsidiaries are subject to greater taxation than we currently anticipate.
Some of our subsidiaries are subject to income, withholding or other taxes in certain non-U.S. jurisdictions by reason of their jurisdiction of incorporation, activities and operations, where their assets are used or where the lessees of their assets (or others in possession of their assets) are located, and it is also possible that taxing authorities in any such jurisdictions could assert that we or our subsidiaries are subject to greater taxation than we currently face or otherwise anticipate.
Your percentage ownership in FTAI may be diluted in the future because of equity awards granted and may be granted to our Manager pursuant to the Management Agreement and the Incentive Plan. Since 2015, we granted our Manager an option to acqui re 3,903,010 ordinary shares in connection with equity offerings.
Your percentage ownership in FTAI Aviation Ltd. may be diluted in the future because of equity awards granted and may be granted to our Manager pursuant to the Management Agreement and the Incentive Plan. Since 2015, we granted our Manager an option to acqui re 3,903,010 ordinary shares in connection with equity offerings.
For example, we do not currently have long-term charters for our constructions support vessel and our ROV support vessel. Likewise, our customers may reduce their activity levels or seek to terminate or renegotiate their charters or leases with us.
For example, we do not currently have long-term charters for our construction support vessel and our ROV support vessel. Likewise, our customers may reduce their activity levels or seek to terminate or renegotiate their charters or leases with us.
Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our shares include: • a shift in our investor base; • our quarterly or annual earnings, or those of other comparable companies; • actual or anticipated fluctuations in our operating results; • changes in accounting standards, policies, guidance, interpretations or principles; • announcements by us or our competitors of significant investments, acquisitions or dispositions; • the failure of securities analysts to cover our ordinary shares; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and share price performance of other comparable companies; • prevailing interest rates or rates of return being paid by other comparable companies and the market for securities similar to our preferred shares; • additional issuances of preferred shares; • whether we declare distributions on our preferred shares; • overall market fluctuations; • general economic conditions; and • developments in the markets and market sectors in which we participate. 25 Stock markets in the United States have experienced extreme price and volume fluctuations.
Some of the factors that could negatively affect our share price or result in fluctuations in the price or trading volume of our shares include: • a shift in our investor base; • our quarterly or annual earnings, or those of other comparable companies; • actual or anticipated fluctuations in our operating results; • changes in accounting standards, policies, guidance, interpretations or principles; • announcements by us or our competitors of significant investments, acquisitions or dispositions; • the failure of securities analysts to cover our ordinary shares; • changes in earnings estimates by securities analysts or our ability to meet those estimates; • the operating and share price performance of other comparable companies; • prevailing interest rates or rates of return being paid by other comparable companies and the market for securities similar to our preferred shares; • additional issuances of preferred shares; • whether we declare distributions on our preferred shares; • overall market fluctuations; • general economic conditions; and • developments in the markets and market sectors in which we participate.
Various countries in which we operate are experiencing and may continue to experience military action and civil and political unrest. We have assets in the emerging market economies of Eastern Europe, including some assets in Russia and Ukraine. In late February 2022, Russian military forces launched significant military action against Ukraine. Sustained conflict and disruption in the region is likely.
Various countries in which we operate are experiencing and may continue to experience military action and civil and political unrest. We have assets in the emerging market economies of Eastern Europe, including some assets in Russia. In late February 2022, Russian military forces launched significant military action against Ukraine.
As a result of these developments, the tax laws of certain countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could increase our liabilities for taxes, interest and penalties, and therefore could harm our business, cash flows, results of operations and financial position.
As a result of these developments, the tax laws of certain countries in which we and our affiliates do business are expected to change (and could change on a retroactive basis) and certain of such changes are expected to increase our liabilities for taxes (and possibly interest and penalties) and therefore could harm our business, cash flows, results of operations and financial position.
The agreements governing our indebtedness, including, but not limited to, the indentures governing our Senior Notes and the second amended and restated revolving credit facility entered into on September 20, 2022, as amended by Amendment No. 1, dated as of November 22, 2022 (the “Revolving Credit Facility”), contain covenants that place restrictions on us and our subsidiaries.
The agreements governing our indebtedness, including, but not limited to, the indentures governing our senior unsecured notes due 2025, 2027, 2028 and 2030 (“Senior Notes”) and the second amended and restated revolving credit facility entered into on September 20, 2022, as amended by Amendment No. 1, dated as of November 22, 2022 (the “Revolving Credit Facility”), contain covenants that place restrictions on us and our subsidiaries.
One of the factors that investors may consider in deciding whether to buy or sell our shares is our distribution rate as a percentage of our share price relative to market interest rates.
An increase in market interest rates may have an adverse effect on the market price of our shares. 25 One of the factors that investors may consider in deciding whether to buy or sell our shares is our distribution rate as a percentage of our share price relative to market interest rates.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company. The Financial Action Task Force has increased monitoring of the Cayman Islands.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
We have initially reserved 30,000,000 ordinary shares for issuance under the Incentive Plan. As of December 31, 2022, rights relating to 1,720,316 of our ordinary shares were outstanding under the Incentive Plan.
We have initially reserved 30,000,000 ordinary shares for issuance under the Incentive Plan. As of December 31, 2023, rights relating to 616,177 of our ordinary shares were outstanding under the Incentive Plan.
Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries and our ability to receive distributions from our subsidiaries may be limited by the financing agreements to which they are subject.
Because we are a holding company and have no direct operations, we will only be able to pay dividends from our available cash on hand and any funds we receive from our subsidiaries.
Market fluctuations, as well as general political and economic conditions, such as acts of terrorism, prolonged economic uncertainty, a recession or interest rate or currency rate fluctuations, could adversely affect the market price of our ordinary and preferred shares. An increase in market interest rates may have an adverse effect on the market price of our shares.
Stock markets in the United States have experienced extreme price and volume fluctuations. Market fluctuations, as well as general political and economic conditions, such as acts of terrorism, prolonged economic uncertainty, a recession or interest rate or currency rate fluctuations, could adversely affect the market price of our ordinary and preferred shares.
Our officers and other individuals who perform services for us are employees of our Manager or other Fortress entities. We are completely reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies, to conduct our business.
We are completely reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies, to conduct our business.
Risks Related to Taxation We expect the Company to be a passive foreign investment company (“PFIC”) and it could be a controlled foreign corporation (“CFC”) for U.S. federal income tax purposes, which may result in adverse tax considerations for U.S. shareholders.
Accordingly, transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors. 23 Risks Related to Taxation We expect the Company to be a passive foreign investment company (“PFIC”) and it could be a controlled foreign corporation (“CFC”) for U.S. federal income tax purposes, which may result in adverse tax considerations for U.S. shareholders.
Accordingly, we may, without a shareholder vote, change our target sectors and acquire a variety of assets that differ from, and are possibly riskier than, our current asset portfolio.
Our Manager makes decisions about our investments in accordance with broad investment guidelines adopted by our board of directors. Accordingly, we may, without a shareholder vote, change our target sectors and acquire a variety of assets that differ from, and are possibly riskier than, our current asset portfolio.
As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers.
As a result, it may be difficult for investors to effect service of process within the United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or officers. 20 Our corporate affairs are governed by our Articles, the Companies Act (As Revised) of the Cayman Islands (the ‘‘Cayman Companies Act’’) and the common law of the Cayman Islands.
Our leases and charters typically require payments in U.S. dollars, but many of our customers operate in other currencies; if foreign currencies devalue against the U.S. dollar, our lessees or charterers may be unable to meet their payment obligations to us in a timely manner. Our current leases and charters typically require that payments be made in U.S. dollars.
Although we believe that we are adequately insured against these types of events, no assurance can be given that the occurrence of any such event will not materially adversely affect us. 18 Our leases and charters typically require payments in U.S. dollars, but many of our customers operate in other currencies; if foreign currencies devalue against the U.S. dollar, our lessees or charterers may be unable to meet their payment obligations to us in a timely manner.
In addition, our Manager may assign our Management Agreement to an entity whose business and operations are managed or supervised by Mr. Wesley R.
In addition, our Manager may assign our Management Agreement to an entity whose business and operations are managed or supervised by Mr. Wesley R. Edens, who is a principal and a member of the board of directors of Fortress, an affiliate of our Manager, and a member of the management committee of Fortress since co-founding Fortress in May 1998.
If the currency that our lessees or charterers typically use in operating their businesses devalues against the U.S. dollar, our lessees or charterers could encounter difficulties in making payments to us in U.S. dollars. Furthermore, many foreign countries have currency and exchange laws regulating international payments that may impede or prevent payments from being paid to us in U.S. dollars.
Our current leases and charters typically require that payments be made in U.S. dollars. If the currency that our lessees or charterers typically use in operating their businesses devalues against the U.S. dollar, our lessees or charterers could encounter difficulties in making payments to us in U.S. dollars.
Our directors have approved a broad asset acquisition strategy for our Manager and will not approve each acquisition we make at the direction of our Manager. In addition, we may change our strategy without a shareholder vote, which may result in our acquiring assets that are different, riskier or less profitable than our current assets.
In addition, we may change our strategy without a shareholder vote, which may result in our acquiring assets that are different, riskier or less profitable than our current assets. 22 Our Manager is authorized to follow a broad asset acquisition strategy. We may pursue other types of acquisitions as market conditions evolve.
Federal Reserve concurrently issued a statement advising banks to stop new LIBOR issuances by the end of 2021. The IBA ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021 and intends to cease publishing the remaining USD LIBOR settings after June 30, 2023.
Federal Reserve concurrently issued a statement advising banks to stop new LIBOR issuances by the end of 2021.
In addition, our existing indebtedness does, and our future indebtedness may, limit our ability to pay dividends on our ordinary and preferred shares.
Our indirect intermediate holding company subsidiary FTAI LLC is currently, and may in the future be, subject to certain covenants included in its financing agreements that limit its ability to make distributions to us. In addition, our existing indebtedness does, and our future indebtedness may, limit our ability to pay dividends on our ordinary and preferred shares.
Future leases or charters may provide for payments to be made in euros or other foreign currencies.
Furthermore, many foreign countries have currency and exchange laws regulating international payments that may impede or prevent payments from being paid to us in U.S. dollars. Future leases or charters may provide for payments to be made in euros or other foreign currencies.
Removed
Our corporate affairs are governed by our Articles, the Companies Act (As Revised) of the Cayman Islands (the ‘‘Cayman Companies Act’’) and the common law of the Cayman Islands.
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The conflict remains ongoing and sustained conflict and disruption in the region is likely.
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In February 2021, the Cayman Islands was added to the Financial Action Task Force (‘‘FATF’’) list of jurisdictions whose anti-money laundering/counter-terrorist and proliferation financing practices are under increased monitoring, commonly referred to as the ‘‘FATF grey list.’’ The FATF was established in July 1989 by a Group of Seven (G-7) Summit and is a task force composed of member governments who agree to fund the FATF on temporary basis with specific goals and projects– it is an international policy-making body that sets international anti-money laundering standards and counter-terrorist financing measures.
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The IBA ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021, and the remaining USD LIBOR settings after June 30, 2023, other than certain USD LIBOR settings that are expected to continue to be published under a synthetic methodology until September 2024.
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The FATF monitors countries to ensure they implement the FATF Standards fully and effectively and holds countries to account that do not comply. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring during that timeframe.
Added
On May 22, 2023, Fortress and Mubadala announced that they have entered into definitive agreements pursuant to which, among other things, certain members of Fortress management and affiliates of Mubadala will acquire 100% of the equity of Fortress that is currently indirectly held by SoftBank.
Removed
Following its October 2022 plenary, it has been confirmed that the Cayman Islands has fully satisfied 62 out of 63 FATF recommendations and must now only demonstrate that it is prosecuting all types of money laundering cases in line with the jurisdiction’s risk profile.
Added
While Fortress’s senior investment professionals are expected to remain at Fortress, including those individuals who perform services for us, there can be no assurance that the transaction will not have an adverse impact on us or our relationship with our Manager. There are conflicts of interest in our relationship with our Manager.
Removed
The Cayman Islands' progress towards satisfying this final recommended action will be assessed at the next FATF Plenary meeting in February 2023. Despite the progress the Cayman Islands has made on satisfying the final outstanding recommendation, it is still unclear how long this designation will remain in place and what ramifications, if any, the designation will have for the Company.
Added
Our directors have approved a broad asset acquisition strategy for our Manager and will not approve each acquisition we make at the direction of our Manager.
Removed
The Cayman Islands are included in the EU AML High-Risk Third Countries List. On March 13, 2022, the European Commission (‘‘EC’’) updated its list of ’high-risk third countries’ (‘‘EU AML List’’) identified as having strategic deficiencies in their anti-money laundering/counter-terrorist financing regimes to add nine countries, including the Cayman Islands.
Added
Numerous countries, including European Union member states, have enacted or are expected to enact minimum tax legislation to be effective as early as January 1, 2024, with additional elements of the minimum tax expected to be effective on or after January 1, 2025.
Removed
The EC has noted it is committed to there being a greater alignment between the EU AML List and the FATF listing process. The addition of the Cayman Islands to the EU AML List is a direct result of the inclusion of the Cayman Islands on the FATF grey list in February 2021.
Added
Additionally, On December 27, 2023, Bermuda enacted a corporate tax regime with a 15% rate (the “Bermuda CIT”) and with requirements similar to those of the OECD’s minimum tax proposal.
Removed
It is unclear how long this designation will remain in place and what ramifications, if any, the designation will have for the Company. Our assets are exposed to unplanned interruptions caused by events outside of our control which may disrupt our business and cause damage or losses that may not be adequately covered by insurance.
Added
The Bermuda CIT will be effective for tax years beginning on or after January 1, 2025 (see footnote 11 to our consolidated financial statements entitled “Income Taxes” included elsewhere in this Annual Report).
Removed
Edens, who is a principal, Co-Chief Executive Officer and a member of the board of directors of Fortress, an affiliate of our Manager, and a member of the management committee of Fortress since co-founding Fortress in May 1998.
Removed
In connection with the SoftBank Merger, Fortress operates within SoftBank as an independent business headquartered in New York. There are conflicts of interest in our relationship with our Manager.
Removed
Our Manager is authorized to follow a broad asset acquisition strategy. We may pursue other types of acquisitions as market conditions evolve. Our Manager makes decisions about our investments in accordance with broad investment guidelines adopted by our board of directors.
Removed
Accordingly, transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors.
Removed
Legislatures in multiple countries outside of the EU have also drafted legislation consistent with the OECD’s minimum tax proposal.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that our office facilities and properties are suitable and adequate for our business as it is contemplated to be conducted.
Biggest changeAdditionally, our aviation leasing business and offshore energy business lease office space in New York, Florida, Wales and Singapore, respectively, and we own and/or lease maintenance facilities in Florida and Canada for our aerospace products business. We believe that our office facilities and properties are suitable and adequate for our business as it is contemplated to be conducted.
Item 2. Properties An affiliate of our Manager leases principal executive offices at 1345 Avenue of the Americas, New York, NY 10105. We also lease office space from an affiliate of our Manager in Ireland and Dubai. Additionally, our aviation leasing business and offshore energy business lease office space in New York, Florida, Wales and Singapore, respectively.
Item 2. Properties An affiliate of our Manager leases principal executive offices at 1345 Avenue of the Americas, New York, NY 10105. We also lease office space from an affiliate of our Manager in Ireland and Dubai.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeEquity Compensation Plan Information Plan category Number of securities to be issued upon exercise of outstanding options, warrants, and rights Weighted-average exercise price of outstanding options, warrants, and rights Number of securities remaining available for future issuance under equity compensation plans (1) Equity compensation plans approved by security holders 1,735,316 $ 22.67 29,817,943 Equity compensation plans not approved by security holders — — — Total 1,735,316 29,817,943 ______________________________________________________________________________________ (1) Excludes 25,000 stock options and 157,057 ordinary shares issued to directors as compensation. 29 Performance Graph The following graph compares the cumulative total return for our ordinary shares (share price change plus reinvested dividends) with the comparable return of three indices: S&P Mid Cap 400, Russell 2000, and Dow Jones US Transportation Services.
Biggest changeAs of December 31, 2023, the Incentive Plan provides for the issuance of up to 29.8 million shares. 29 Performance Graph The following graph compares the cumulative total return for our ordinary shares (share price change plus reinvested dividends) with the comparable return of three indices: S&P Mid Cap 400, Russell 2000, and Dow Jones US Transportation Services.
Nonqualified Stock Option and Incentive Award Plan In 2015, in connection with the IPO, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) referred to then as the Fortress Transportation and Infrastructure Investors LLC Nonqualified Stock Option and Incentive Award Plan, which provides for the ability to award equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors.
Nonqualified Stock Option and Incentive Award Plan In 2015, in connection with our IPO, we established a Nonqualified Stock Option and Incentive Award Plan (“Incentive Plan”) referred to then as the Fortress Transportation and Infrastructure Investors LLC Nonqualified Stock Option and Incentive Award Plan, which provides for the ability to award equity compensation awards in the form of stock options, stock appreciation rights, restricted stock, and performance awards to eligible employees, consultants, directors, and other individuals who provide services to us, each as determined by the Compensation Committee of the Board of Directors.
COMPARISON OF CUMULATIVE TOTAL RETURN* Among FTAI Aviation Ltd., the S&P Midcap 400 Index, the Russell 2000 Index and the Dow Jones US Transportation Services Index *$100 each invested on December 31, 2017 in stock and index, including reinvestment of dividends. Fiscal year ending December 31.
COMPARISON OF CUMULATIVE TOTAL RETURN* Among FTAI Aviation Ltd., the S&P Midcap 400 Index, the Russell 2000 Index and the Dow Jones US Transportation Services Index *$100 each invested on December 31, 2018 in stock and index, including reinvestment of dividends. Fiscal year ending December 31.
The graph assumes an investment of $100 in our ordinary shares and in each of the indices on December 31, 2017, and that all dividends were reinvested. The past performance of our shares is not an indication of future performance.
The graph assumes an investment of $100 in our ordinary shares and in each of the indices on December 31, 2018, and that all dividends were reinvested. The past performance of our shares is not an indication of future performance.
On February 23, 2023, our Board of Directors declared a cash dividend on our ordinary shares of $0.30 per share for the quarter ended December 31, 2022, payable on March 22, 2023 to the holders of record on March 10, 2023.
On February 22, 2024, our Board of Directors declared a cash dividend on our ordinary shares of $0.30 per share for the quarter ended December 31, 2023, payable on March 20, 2024 to the holders of record on March 8, 2024.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our ordinary shares were previously listed on the NYSE from May 15, 2015, the date of the IPO.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our ordinary shares are listed on The Nasdaq Global Select Market under the ticker symbol “FTAI”. As of February 22, 2024, there were approximately 14 record holders of our ordinary shares.
Removed
Our ordinary shares were transferred from the NYSE to The Nasdaq Global Select Market on April 26, 2022, continuing to be listed under the ticker symbol “FTAI”. As of February 22, 2023, there were approximately 17 record holders of our ordinary shares. This figure does not reflect the beneficial ownership of shares held in nominee name.
Added
This figure does not reflect the beneficial ownership of shares held in nominee name.
Removed
As of December 31, 2022, the Incentive Plan provides for the issuance of up to 29.8 million shares. The following table summarizes the total number of outstanding securities in the Incentive Plan and the number of securities remaining for future issuance, as well as the weighted average strike price of all outstanding securities as of December 31, 2022.
Added
(in whole dollars) December 31, Index 2018 2019 2020 2021 2022 2023 FTAI Aviation Ltd. $ 100.00 $ 149.92 $ 204.40 $ 266.34 $ 198.57 $ 559.43 S&P Midcap 400 100.00 126.20 143.44 178.95 155.58 181.15 Russell 2000 100.00 125.52 150.58 172.90 137.56 160.85 Dow Jones US Transportation Services 100.00 135.60 162.47 243.23 148.16 194.36 30 Item 6. [Reserved]
Removed
(in whole dollars) December 31, Index 2017 2018 2019 2020 2021 2022 FTAI Aviation Ltd. $ 100.00 $ 78.85 $ 118.21 $ 161.17 $ 210.02 $ 156.58 S&P Midcap 400 100.00 88.92 112.21 127.54 159.12 138.34 Russell 2000 100.00 88.99 111.70 134.00 153.85 122.41 Dow Jones US Transportation Services 100.00 60.49 82.03 98.28 147.14 89.63 30 Item 6. [Reserved]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeConsolidated Financial Statements of F TAI Aviation Ltd. : 51 Report of Independent Registered Public Accounting Firm 52 Consolidated Balance Sheets as of December 31, 202 2 and 202 1 54 Consolidated Statements of Operations for the years ended December 31, 202 2 , 202 1 and 20 20 55 Consolidated Statements of Comprehensive Loss for the years ended December 31, 202 2 , 202 1 and 20 20 56 Consolidated Statement of Changes in Equity for the years ended December 31, 202 2 , 202 1 and 20 20 57 Consolidated Statements of Cash Flows for the years ended December 31, 202 2 , 202 1 and 20 20 58 Notes to Consolidated Financial Statements 60 Note 1: Organization 60 Note 2: Summary of Significant Accounting Policies 60 Note 3: Discontinued Operations 64 Note 4 : Leasing Equipment, net 69 Note 5 : Property, Plant and Equipment, net 70 Note 6 : Investments 71 Note 7 : Intangible Assets and Liabilities, net 72 Note 8 : Debt, net 73 Note 9 : Fair Value Measurements 74 Note 1 0 : Revenues 74 Note 11: Equity-Based Compensation 80 Note 1 2 : Income Taxes 77 Note 1 3 : Management Agreement and Affiliate Transactions 79 Note 1 4 : Segment Information 80 Note 1 5 : Earnings per Share and Equity 88 Note 1 6 : Commitments and Contingencies 89 Note 1 7 : Subsequent Events 89
Biggest changeConsolidated Financial Statements of FTAI Aviation Ltd.: 50 Report of Independent Registered Public Accounting Firm 51 Consolidated Balance Sheets as of December 31, 2023 and 2022 53 Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021 54 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023, 2022 and 2021 55 Consolidated Statement of Changes in Equity for the years ended December 31, 2023, 2022 and 2021 56 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 57 Notes to Consolidated Financial Statements 59 Note 1: Organization 59 Note 2: Summary of Significant Accounting Policies 59 Note 3: Discontinued Operations 64 Note 4: Acquisition of QuickTurn 67 Note 5: Leasing Equipment, net 69 Note 6: Investments 69 Note 7: Intangible Assets and Liabilities, net 71 Note 8: Debt, net 72 Note 9: Fair Value Measurements 73 Note 10: Equity-Based Compensation 80 Note 11: Income Taxes 76 Note 12: Management Agreement and Affiliate Transactions 78 Note 1 3 : Segment Information 80 Note 1 4 : Earnings per Share and Equity 87 Note 1 5 : Commitments and Contingencies 88 Note 1 6 : Subsequent Events 88

Item 7. Management's Discussion & Analysis

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

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Biggest changeWe also hold a 25% interest in the Advanced Engine Repair JV which focuses on developing new cost savings programs for engine repairs. 40 The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Aerospace products revenue $ 153,550 $ 23,301 $ — $ 130,249 $ 23,301 Expenses Cost of sales 88,895 14,308 — 74,587 14,308 Operating expenses 11,967 5,429 — 6,538 5,429 Acquisition and transaction expenses 243 — — 243 — Depreciation and amortization 258 66 — 192 66 Total expenses 101,363 19,803 — 81,560 19,803 Other income (expense) Equity in losses of unconsolidated entities (1,109) (1,403) — 294 (1,403) Gain on sale of assets, net 18,562 19,917 — (1,355) 19,917 Total other income 17,453 18,514 — (1,061) 18,514 Income before income taxes 69,640 22,012 — 47,628 22,012 Provision for income taxes 2,961 1,135 — 1,826 1,135 Net income 66,679 20,877 — 45,802 20,877 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — Net income attributable to shareholders $ 66,679 $ 20,877 $ — $ 45,802 $ 20,877 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Net income attributable to shareholders $ 66,679 $ 20,877 $ — $ 45,802 $ 20,877 Add: Provision for income taxes 2,961 1,135 — 1,826 1,135 Add: Equity-based compensation expense — — — — — Add: Acquisition and transaction expenses 243 — — 243 — Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges — — — — — Add: Incentive allocations — — — — — Add: Depreciation and amortization expense 258 66 — 192 66 Add: Interest expense and dividends on preferred shares — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) (885) (1,203) — 318 (1,203) Less: Equity in losses of unconsolidated entities 1,109 1,403 — (294) 1,403 Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ 70,365 $ 22,278 $ — $ 48,087 $ 22,278 __________________________________________________ (1) Includes the following items for the years ended December 31, 2022, 2021 and 2020: (i) net loss of $(1,109), $(1,403) and $0 and (ii) depreciation and amortization of $224, $200 and $0, respectively. 41 Comparison of the years ended December 31, 2022 and 2021 Revenues Total Aerospace Products revenue increased $130.2 million primarily driven by an increase in sales relating to the CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory as operations continued to ramp-up in 2022.
Biggest changeThe following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Aerospace products revenue $ 454,970 $ 178,515 $ 23,301 $ 276,455 $ 155,214 Expenses Cost of sales 280,280 109,481 14,308 170,799 95,173 Operating expenses 20,459 11,967 5,429 8,492 6,538 Acquisition and transaction expenses 1,722 243 — 1,479 243 Depreciation and amortization 661 258 66 403 192 Total expenses 303,122 121,949 19,803 181,173 102,146 Other income (expense) Equity in losses of unconsolidated entities (1,458) (1,109) (1,403) (349) 294 Gain on sale of assets, net — 18,163 20,384 (18,163) (2,221) Other income 5,347 — — 5,347 — Total other income 3,889 17,054 18,981 (13,165) (1,927) Income before income taxes 155,737 73,620 22,479 82,117 51,141 (Benefit from) provision for income taxes (24,440) 2,961 1,135 (27,401) 1,826 Net income 180,177 70,659 21,344 109,518 49,315 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — Net income attributable to shareholders $ 180,177 $ 70,659 $ 21,344 $ 109,518 $ 49,315 41 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Net income attributable to shareholders $ 180,177 $ 70,659 $ 21,344 $ 109,518 $ 49,315 Add: (Benefit from) provision for income taxes (24,440) 2,961 1,135 (27,401) 1,826 Add: Equity-based compensation expense 225 — — 225 — Add: Acquisition and transaction expenses 1,722 243 — 1,479 243 Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges — — — — — Add: Incentive allocations — — — — — Add: Depreciation and amortization expense 661 258 66 403 192 Add: Interest expense and dividends on preferred shares — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1) 206 (885) (1,203) 1,091 318 Less: Equity in losses of unconsolidated entities 1,458 1,109 1,403 349 (294) Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ 160,009 $ 74,345 $ 22,745 $ 85,664 $ 51,600 __________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (i) net loss of $ 1,458 , $1,109 and $1,403 (ii) depreciation and amortization of $1,236 , $224 and $200 and (iii) acquisition and transaction expense of $428, $0, $0, respectively.
Operating expenses increased $72.6 million primarily due to: • an increase of $48.5 million in the Aviation Leasing segment primarily as a result of an increase in provision for credit losses as a result of the sanctions imposed on Russian airlines, and increases in insurance expense, shipping and storage fees, professional fees, and repairs and maintenance expenses. • an increase of $17.6 million in the Offshore Energy business which reflects increases in offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in 2022 compared to 2021, as well as crane repairs on one of our vessels. • an increase of $6.5 million in the Aerospace Products segment primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products.
Operating expenses increased $72.6 million primarily due to: • an increase of $48.5 million in the Aviation Leasing segment primarily as a result of an increase in provision for credit losses as a result of the sanctions imposed on Russian airlines in 2022, and increases in insurance expense, shipping and storage fees, professional fees, and repairs and maintenance expenses. • an increase of $17.6 million in the Offshore Energy business which reflects increases in offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in 2022 compared to 2021, as well as crane repairs on one of our vessels. • an increase of $6.5 million in the Aerospace Products segment primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products.
Expenses Total expenses increased $29.9 million primarily due to higher interest expense, operating expenses, management fees and incentive allocation to affiliate partially offset by lower acquisition and transaction expenses. • Interest expense increased $14.2 million, which reflects an increase in the average outstanding debt of approximately $354.7 million due to increases in (i) the Senior Notes due 2028 of $459.7 million, (ii) the 2021 Bridge Loans issued in December 2021 and February 2022 of $169.9 million and (iii) the Revolving Credit Facility of $49.7 million, partially offset by a decrease in (iv) the Bridge Loans of $108.3 million, (v) the Senior Notes due 2022 of $133.1 million, which was redeemed in full in May 2021, and (vi) the Senior Notes due 2025 of $83.2 million, which were partially redeemed in August 2022. • Operating expenses increased $17.6 million which reflects increases in offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in 2022 compared to 2021, as well as crane repairs on one of our vessels. • Management fees and incentive allocation to affiliate increased $2.9 million primarily due to an increase in incentive fee due to the Manager. • Acquisition and transaction expenses decreased $5.9 million primarily due a decrease in professional fees related to the Transtar acquisition in 2021.
Expenses Total expenses increased $29.9 million primarily due to higher interest expense, operating expenses, management fees and incentive allocation to affiliate partially offset by lower acquisition and transaction expenses. • Interest expense increased $14.2 million , which reflects an increase in the average outstanding debt of approximately $354.7 million due to increases in (i) the Senior Notes due 2028 of $459.7 million, (ii) the 2021 Bridge Loans issued in December 2021 and February 2022 of $169.9 million and (iii) the Revolving Credit Facility of $49.7 million, partially offset by a decrease in (iv) the Bridge Loans of $108.3 million, (v) the Senior Notes due 2022 of $133.1 million, which was redeemed in full in May 2021, and (vi) the Senior Notes due 2025 of $83.2 million, which were partially redeemed in August 2022. • Operating expenses increased $17.6 million which reflects increases in offshore crew expenses, project costs and other operating expenses as our vessels were on-hire longer in 2022 compared to 2021, as well as crane repairs on one of our vessels. • Management fees and incentive allocation to affiliate increased $2.9 million primarily due to an increase in incentive fee due to the Manager. • Acquisition and transaction expenses decreased $5.9 million primarily due to a decrease in professional fees related to the Transtar acquisition in 2021.
Net loss from discontinued operations Net loss from discontinued operations increased $13.6 million primarily due to: • An increase in net loss of $34.7 million in the Ports and Terminals business in 2022 of which $32.6 million relates to our equity pick-up in net losses for the Long Ridge investment. • An increase in acquisition and transaction expense of $11.9 million during 2022 related to the spin-off of the infrastructure business; 35 • Offset by a decrease in net loss of $22.6 million in the Jefferson business in 2022 which is primarily driven by seven months of activity during 2022 compared to a full year of activity in 2021; and • An increase in net income of $8.4 million on the Transtar business, which was acquired on July 28, 2021.
Net loss from discontinued operations Net loss from discontinued operations increased $13.6 million primarily due to: • An increase in net loss of $34.7 million in the Ports and Terminals business in 2022 of which $32.6 million relates to our equity pick-up in net losses for the Long Ridge investment. • An increase in acquisition and transaction expense of $11.9 million during 2022 related to the spin-off of the infrastructure business; • Offset by a decrease in net loss of $22.6 million in the Jefferson business in 2022 which is primarily driven by seven months of activity during 2022 compared to a full year of activity in 2021; and • An increase in net income of $8.4 million on the Transtar business, which was acquired on July 28, 2021.
See Note 4 to the consolidated financial statements for additional information. • Operating expenses increased $48.5 million primarily as a result of an increase in provision for credit losses as a result of the sanctions imposed on Russian airlines, and increases in insurance expense, shipping and storage fees, professional fees, and repairs and maintenance expenses. • Depreciation and amortization expense increased $4.6 million driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.
See Note 5 to the consolidated financial statements for additional information. • Operating expenses increased $48.5 million primarily as a result of an increase in provision for credit losses as a result of the sanctions imposed on Russian airlines in 2022, and increases in insurance expense, shipping and storage fees, professional fees, and repairs and maintenance expenses. • Depreciation and amortization expense increased $4.6 million driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.
Following the Merger, the Company entered into a Services and Profit Sharing Agreement (the “Services and Profit Sharing Agreement”), with a subsidiary of the Company and Fortress Worldwide Transportation and Infrastructure Master GP LLC (“Master GP”), pursuant to which Master GP is entitled to incentive payments on substantially similar terms as the previous arrangements.
Following the Merger, the Company entered into a Services and Profit Sharing Agreement (the “Services and Profit Sharing Agreement”), with a subsidiary of the Company and 31 Fortress Worldwide Transportation and Infrastructure Master GP LLC (“Master GP”), pursuant to which Master GP is entitled to incentive payments on substantially similar terms as the previous arrangements.
The Company and 31 certain of its subsidiaries executed a new management agreement with the Manager. The new management agreement has an initial term of six years. The Manager is entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Manager, which were assigned to FTAI Infrastructure.
The Company and certain of its subsidiaries executed a new management agreement with the Manager. The new management agreement has an initial term of six years. The Manager is entitled to a management fee and reimbursement of certain expenses on substantially similar terms as the previous arrangements with the Manager, which were assigned to FTAI Infrastructure.
Actual results 47 could differ from those estimates. Note 2 to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Operating Leases — We lease equipment pursuant to operating leases.
Actual results could differ from those estimates. Note 2 to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Operating Leases — We lease equipment pursuant to operating leases.
A discussion of our cash flows for 2021 compared to 2020 is included in our Annual Report on Form 10-K for the year ended December 31, 2021, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview We own, lease and sell aviation equipment.
A discussion of our cash flows for 2022 compared to 2021 is included in our Annual Report on Form 10-K for the year ended December 31, 2022, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. Overview We own, lease and sell aviation equipment.
See Note 8 to the consolidated financial statements for additional information about our debt obligations. Lease Obligations — As of December 31, 2022, we had outstanding operating and finance lease obligations of $2.9 million, of which, $0.8 million is due in the next twelve months.
See Note 8 to the consolidated financial statements for additional information about our debt obligations. Lease Obligations — As of December 31, 2023, we had outstanding operating and finance lease obligations of $2.0 million, of which, $0.9 million is due in the next twelve months.
See above discussion regarding presentation of asset sales. • Maintenance revenue increased $20.0 million primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft in the prior year and lower maintenance billings related to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines during the first quarter of 2022. • Other revenue increased $5.9 million primarily due to an increase in end-of lease redelivery compensation. • Lease income decreased $3.4 million primarily due to the early termination of aircraft and engine leases as a result of the sanctions imposed on Russian airlines during the first quarter of 2022.
See above discussion regarding presentation of asset sales. • Maintenance revenue increased $20.0 million primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft in the prior year and lower maintenance billings from the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines during the first quarter of 2022. • Other revenue increased $5.9 million primarily due to an increase in end-of-lease redelivery compensation. • Lease income decreased $4.7 million primarily due to the early termination of aircraft and engine leases as a result of the sanctions imposed on Russian airlines during the first quarter of 2022.
We also develop and manufacture through a joint venture, and repair and sell, through exclusivity arrangements, aftermarket components for aircraft engines. Additionally, we own and lease offshore energy equipment. We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation.
We also develop and manufacture through a joint venture, and repair and sell, through our maintenance facility and exclusivity arrangements, aftermarket components for aircraft engines. Additionally, we own and lease offshore energy equipment. We target assets that, on a combined basis, generate strong cash flows with potential for earnings growth and asset appreciation.
Geographic Information Please refer to Note 14 of our consolidated financial statements included in Item 8 in this Annual Report on Form 10-K for a report, by geographic area for each segment, of revenues from our external customers, for the years ended December 31, 2022, 2021 and 2020, as well as a report of our total property, plant and equipment as of December 31, 2022 and 2021.
Geographic Information Please refer to Note 13 of our consolidated financial statements included in Item 8 in this Annual Report on Form 10-K for a report, by geographic area for each segment, of revenues from our external customers, for the years ended December 31, 2023, 2022 and 2021, as well as a report of our total property, plant and equipment as of December 31, 2023 and 2022.
Comparison of the years ended December 31, 2022 and 2021 Revenues Total revenues increased $229.8 million driven by an increase in asset sales revenue, maintenance revenue and other revenue, partially offset by a decrease in lease income. • Asset sales revenue increas ed $208.5 million primarily due to an increase in the sale of commercial aircraft and engines during 2022.
Comparison of the years ended December 31, 2022 and 2021 Revenues Total revenues increased $204.8 million driven by an increase in asset sales revenue, maintenance revenue and other revenue, partially offset by a decrease in lease income. • Asset sales revenue increas ed $183.5 million primarily due to an increase in the sale of commercial aircraft and engines during 2022.
Our principal uses of liquidity have been and continue to be (i) acquisitions of aircraft and engines, (ii) dividends to our ordinary and preferred shareholders, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments. • Cash used for the purpose of making investments was $831.5 million, $1.5 billion and $597.5 million during the years ended December 31, 2022, 2021, and 2020, respectively. • Distributions to shareholders, including cash dividends, were $155.6 million, $142.8 million and $131.4 million during the years ended December 31, 2022, 2021 and 2020, respectively. • Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities.
Our principal uses of liquidity have been and continue to be (i) acquisitions of aircraft and engines, (ii) dividends to our ordinary and preferred shareholders, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments. • Cash used for the purpose of making investments was $861.5 million, $831.5 million and $1.5 billion during the years ended December 31, 2023, 2022, and 2021, respectively. • Distributions to shareholders, including cash dividends, were $151.6 million, $155.6 million and $142.8 million during the years ended December 31, 2023, 2022 and 2021, respectively. • Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities.
Maintenance revenue increased $20.0 million primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft in the prior year and lower maintenance billings related to the early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines during the first quarter of 2022. 34 Other revenue increased $8.6 million primarily due primarily due to an increase in end-of lease redelivery compensation.
Maintenance revenue increased $20.0 million primarily due to an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation, partially offset by a decrease in the recognition of maintenance deposits due to the early redelivery of aircraft in the prior year and lower maintenance billings from early termination of aircraft leases with Russian airlines as a result of the sanctions imposed on Russian airlines during the first quarter of 2022.
Please see Note 13 to our consolidated financial statements included elsewhere in this filing for more information.
Please see Note 12 to our consolidated financial statements included elsewhere in this filing for more information.
Our aviation equipment was approximately 71% utilized during the three months ended December 31, 2022, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes.
Our aviation equipment was approximately 77% utilized during the three months ended December 31, 2023, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes.
Expenses Total expenses increased $81.6 million primarily due to an increase in costs of sales and operating expenses. • Cost of sales increased $74.6 million primarily as a result of an increase in Aerospace Product sales and the gross presentation described above. • Operating expenses increased $6.5 million primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products.
Expenses Total expenses increased $102.1 million primarily due to an increase in costs of sales and operating expenses. • Cost of sales increased $95.2 million primarily as a result of an increase in Aerospace Product sales and the gross presentation described above. • Operating expenses increased $6.5 million primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products.
As of December 31, 2022, 79 of our commercial aircraft and 133 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease.
As of December 31, 2023 , 76 of our commercial aircraft and 175 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease.
Aerospace Products revenue increased $130.2 million driven by an increase in sales relating to the CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory as operations continue to ramp-up in 2022. See above discussion regarding presentation of asset sales.
See above discussion regarding presentation of asset sales. Aerospace Products revenue increased $155.2 million driven by an increase in sales relating to the CFM56-7B, CFM56-5B and V2500 engines, engine modules, spare parts and used material inventory as operations ramped up in 2022. See above discussion regarding presentation of asset sales.
Aerospace Products Segment The Aerospace Products segment develops and manufactures through a joint venture, and repairs and sells, through exclusivity arrangements, aircraft engines and aftermarket components primarily for the CFM56-7B and CFM56-5B commercial aircraft engines.
Aerospace Products Segment The Aerospace Products segment develops and manufactures through a joint venture , repairs and sells, through our maintenance facility and exclusivity arrangements, aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines.
As a result of this update, the transaction price allocated to the sale of assets is included in Revenues in the Consolidated Statement of Operations for the third and fourth quarters of 2022 and are accounted for in accordance with ASC 606.
As a result of this update, the transaction price allocated to the sale of assets is included in Revenues in the Consolidated Statement of Operations beginning in the third quarter of 2022 and is accounted for in accordance with ASC 606.
We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Ukraine and Russia is approximately $274.0 million. We are pursuing all our claims under these policies.
We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Russia is approximately $210.7 million. We intend to pursue all our claims under these policies.
Revenue is recognized when a performance obligation is satisfied by transferring control over an asset to a customer. Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations. See Note 10 for additional information.
Revenue is recognized when a performance obligation is satisfied by transferring control over an asset to a customer. Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations.
See Note 4 to the consolidated financial statements for additional information.
See Note 11 to the consolidated financial statements for additional information.
Depreciation and amortization increased $6.5 million primarily driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.
Depreciation and amortization increased $17.0 million primarily driven by an increase i n the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.
Asset sales revenue increased $208.5 million primarily due to an increase in the sale of commercial aircraft and engines in our Aviation Leasing segment during 2022. See above discussion regarding presentation of asset sales.
Asset sales revenue increased $119.6 million primarily due to an increase in the sale of commercial aircraft and engines in our Aviation Leasing segment during 2023. See above discussion regarding presentation of asset sales.
We are externally managed by FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortr ess”), which has a dedicated team of experienced professionals focused on the acquisition of transportation assets since 2002. As of December 31, 2022, we had total consolidated assets of $2.4 billion and total equity of $19.4 million.
We are externally managed by FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortr ess”), which has a dedicated team of experienced professionals focused on the acquisition of transportation assets since 2002. As of December 31, 2023, we had total consolidated assets of $3.0 billion and total equity of $175.9 million.
In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when we are obligated and can reasonably estimate such payments. 48 Property, Plant and Equipment, Leasing Equipment and Depreciation —Property, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over estimated useful lives, to estimated residual values which are summarized as follows: Asset Range of Estimated Useful Lives Residual Value Estimates Aircraft 25 years from date of manufacture Generally not to exceed 15% of manufacturer’s list price when new Aircraft engines 2 - 6 years, based on maintenance adjusted service life Sum of engine core salvage value plus the estimated fair value of life limited parts Aviation tooling and equipment 3 - 6 years from date of purchase Scrap value at end of useful life Offshore energy vessels 25 years from date of manufacture 10% of new build cost Furniture and fixtures 3 - 6 years from date of purchase None Computer hardware and software 2 - 5 years from date of purchase None Construction in progress N/A N/A Impairment of Long-Lived Assets —We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable.
Property, Plant and Equipment, Leasing Equipment and Depreciation —Property, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over estimated useful lives, to estimated residual values which are summarized as follows: Asset Range of Estimated Useful Lives Residual Value Estimates Aircraft 25 years from date of manufacture Generally not to exceed 15% of manufacturer’s list price when new Aircraft engines 2 - 6 years, based on maintenance adjusted service life Sum of engine core salvage value plus the estimated fair value of life limited parts Aviation tooling and equipment 3 - 6 years from date of purchase Scrap value at end of useful life Offshore energy vessels 25 years from date of manufacture 10% of new build cost Buildings and improvements 40 to 50 years Scrap value at end of useful life Machinery and equipment 6 - 23 years Scrap value at end of useful life Furniture and fixtures 3 - 6 years from date of purchase None Computer hardware and software 2 - 5 years from date of purchase None Land N/A N/A Construction in progress N/A N/A Other 5 - 7 years N/A Impairment of Long-Lived Assets —We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable.
(2) Includes the following items for the years ended December 31, 2022, 2021 and 2020: (i) net income (loss) of $740, $— and $(1,932) and (ii) depreciation and amortization of $185, $0 and $0, respectively.
(2) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (i) net (loss) income of $(148), $740 and $0 and (ii) depreciation and amortization of $252, $185 and $0, respectively.
Our aircraft currently have a weighted average remaining lease term of 42 months, and our engines currently on-lease have an average remaining lease term of 11 months.
Our aircraft currently have a weighted average remaining lease term of 47 months, and our engines currently on-lease have an average remaining lease term of 16 months.
Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of December 31, 2022, we had outstanding principal and interest payment obligations of $2.2 billion and $620.8 million through the maturity date of the debt, respectively, of which only interest payments of $147.3 million are due in the next twelve months.
Contractual Obligations Our material cash requirements include the following contractual and other obligations: Debt Obligations — As of December 31, 2023, we had outstanding principal and interest payment obligations of $2.6 billion and $728.6 million through the maturity date of the debt, respectively, of which only interest payments of $177.4 million are due in the next twelve months.
We determined that it is unlikely that we will regain possession of the aircraft that had not been recovered from Ukraine and Russia during the first quarter of 2022.
We determined that it is unlikely that we will regain possession of the aircraft and engines that had not yet been recovered from Ukraine and Russia.
(2) Includes the following items for the years ended December 31, 2022, 2021 and 2020: (i) net loss of $(369), $(1,403) and $(1,932), and (ii) depreciation and amortization expense of $409, $200 and $0, respectively.
(2) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (i) net loss of $1,606, $369 and $1,403, (ii) depreciation and amortization expense of $1,488, $409 and $200 and (iii) acquisition and transaction expense of $428, $0 and $0, respectively.
The corresponding net book values of the assets sold are recorded in Cost of sales in the Consolidated Statement of Operations for the third and fourth quarters of 2022.
The corresponding net book values of the assets sold are recorded in Cost of sales in the Consolidated Statement of Operations beginning in the third quarter of 2022.
Generally, assets sold were under leasing arrangements with customers prior to sales and are included in Leasing equipment, net, on the Consolidated Balance Sheets. Comparison of the years ended December 31, 2022 and 2021 Total revenues increased $372.8 million, primarily due to an increase in Asset sales revenue, Aerospace Products revenue, maintenance revenue, other revenue and lease income.
Generally, assets sold were included in Leasing equipment, net, on the Consolidated Balance Sheets. Comparison of the years ended December 31, 2023 and 2022 Total revenues increased $462.5 million, primarily due to an increase in Aerospace Products revenue, Asset sales revenue, maintenance revenue and lease income.
Expenses Total expenses increased $340.2 million primarily driven by an increase in cost of sales, asset impairment, operating expenses and depreciation and amortization expense. 39 • Cost of sales increased $159.5 million primarily as a result of an increase in asset sales and the gross presentation of asset sales revenues and related costs of sales as described above. • Asset impairment increased $126.8 million primarily due to the write down of aircraft and engines located in Ukraine and Russia that may not be recoverable.
Expenses 40 Total expenses increased $319.7 million primarily driven by an increase in cost of sales, asset impairment, operating expenses and depreciation and amortization expense. • Cost of sales increased $138.9 million primarily as a result of an increase in asset sales and the gross presentation of asset sales revenues and related costs of sales as described above. • Asset impairment increased $126.8 million primarily due to the 2022 write down of aircraft and engines located in Russia and Ukraine that were deemed not recoverable.
Other Cash Requirements — In addition to our contractual obligations, we pay quarterly cash dividends on our ordinary shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During 2022, we declared cash dividends of $128.5 million and $27.2 million on our ordinary shares and preferred shares, respectively.
Other Cash Requirements — In addition to our contractual obligations, we pay quarterly cash dividends on our ordinary shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During 2023, we declared cash dividends of $119.8 million and $31.8 million o n our ordinary shares and preferred shares, respectively.
Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our aviation assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales. • Cash flows from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $29.4 million, $16.9 million and $110.3 million during the years ended December 31, 2022, 2021, and 2020, respectively. • During the year ended December 31, 2022, additional borrowings were obtained in connection with the (i) 2021 Bridge Loans of $239.5 million (ii) Revolving Credit Facility of $565.0 million and (iii) EB-5 Loan Agreement of $9.5 million .
Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities. 45 Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our aviation assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales. • Cash flows from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $163.0 million, $29.4 million and $16.9 million during the years ended December 31, 2023, 2022, and 2021, respectively. • During the year ended December 31, 2023, additional borrowings were obtained in connection with the (i) Revolving Credit Facility of $455.0 million and (ii) Senior Notes Due 2030 of $500.0 million.
Other expense Total other expense increased $16.7 million which primarily reflects $16.6 million increase in loss on extinguishment of debt primarily related to the pay-down of the 2021 Bridge Loans and the partial redemption of the Senior Notes due 2025.
Other income (expense) Total other expense increased $16.7 million which primarily reflects a $16.6 million increase in loss on extinguishment of debt primarily related to the 2022 pay-down of the 2021 Bridge Loans and the partial redemption of the Senior Notes due 2025. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $5.0 million primarily due to the changes noted above.
As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits, to write-off the carrying value of leasing equipment assets that we have not recovered from Ukraine and Russia for the year ended December 31, 2022 .
As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits for the year ended December 31, 2022, to write-off the entire carrying value of leasing equipment assets that we did not expect to recover from Ukraine and Russia. As of December 31, 2023, eight aircraft and seventeen engines were still located in Russia.
Historical Cash Flow The following table presents our historical cash flow from both continuing and discontinued operations: Year Ended December 31, (in thousands) 2022 2021 2020 Cash flow data: Net cash (used in) provided by operating activities $ (20,657) $ (22,044) $ 63,106 Net cash used in investing activities (411,253) (1,286,958) (509,123) Net cash provided by financing activities 44,914 1,587,645 364,918 Comparison of the years ended December 31, 2022 and 2021 Net cash used in operating activities decreased $1.4 million, which primarily reflects certain adjustments to reconcile net loss to cash used in operating activities including increases in (i) asset impairment of $126.8 million, (ii) provision for credit losses of $35.0 million, (iii) equity in losses of unconsolidated entities of $34.2 million and (iv) loss on extinguishment of debt of $16.6 million partially offset by (v) an increase in gain on sale of assets of $92.6 million, (vi) an increase in our net loss of $81.3 million, and (vii) a decrease in net working capital of $35.3 million.
Historical Cash Flow The following table presents our historical cash flow from both continuing and discontinued operations: Year Ended December 31, (in thousands) 2023 2022 2021 Cash flow data: Net cash used in operating activities $ 128,982 $ (20,657) $ (22,044) Net cash used in investing activities (373,349) (411,253) (1,286,958) Net cash provided by financing activities 282,208 44,914 1,587,645 Comparison of the years ended December 31, 2023 and 2022 Net cash used in operating activities decreased $149.6 million, which primarily reflects (i) a decrease in our Net loss of $455.8 million and (ii) Changes in working capital of $52.8 million, partially offset by certain adjustments to reconcile net income to cash used in operating activities including decreases in (i) Asset impairment of $135.1 million, (ii) Equity in losses of unconsolidated entities of $45.4 million, (iii) Provision for credit losses of $41.4 million, (iv) Depreciation and amortization of $23.4 million, (v) Loss on extinguishment of debt of $19.9 million, and (vi) an increase in gain on sale of assets of $19.1 million.
Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $48.1 million primarily due to the changes noted above. Comparison of the years ended December 31, 2021 and 2020 Revenues Total Aerospace Products revenue increased $23.3 million primarily driven by an increase in sales relating to engine modules, spare parts and used material inventory as operations began in 2021.
Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $85.7 million primarily due to the changes noted above. 42 Comparison of the years ended December 31, 2022 and 2021 Revenues Total Aerospace Products revenue increased $155.2 million primarily driven by an increase in sales relating to the CFM56-7B, CFM56-5B and V2500 engines, engine modules, spare parts and used material inventory as operations ramped up in 2022.
We made principal payments of $852.2 million related to the Senior Notes due 2022, Revolving Credit Facility, Series 2016 Bonds, Jefferson Revolver, Series 2012 Bonds and FTAI Pride Credit Agreement. • Proceeds from the sale of subsidiaries and assets were $414.2 million, $163.4 million and $72.2 million during the years ended December 31, 2022, 2021, and 2020, respectively. • Proceeds from the issuance of ordinary shares, net of issuance costs were $323.1 million during the year ended December 31, 2021.
We made principal payments of $1.6 billion related to the Bridge Loan Agreement, Revolving Credit Facility and Senior Notes due 2022. • Proceeds from the sale of assets were $477.9 million, $414.2 million and $163.4 million during the years ended December 31, 2023, 2022, and 2021, respectively. • Proceeds from the issuance of ordinary shares, net of issuance costs were $323.1 million during the year ended December 31, 2021.
Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $22.3 million primarily due to the changes noted above. 42 Corporate and Other The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Revenues Lease income $ 20,246 $ 10,131 $ 11,145 $ 10,115 $ (1,014) Other revenue 6,702 4,030 5,578 2,672 (1,548) Total revenues 26,948 14,161 16,723 12,787 (2,562) Expenses Operating expenses 39,065 21,429 19,454 17,636 1,975 General and administrative 14,164 13,448 14,106 716 (658) Acquisition and transaction expenses 11,041 16,929 3,181 (5,888) 13,748 Management fees and incentive allocation to affiliate 3,562 684 5,446 2,878 (4,762) Depreciation and amortization 8,401 7,996 7,382 405 614 Interest expense 169,194 155,017 87,442 14,177 67,575 Total expenses 245,427 215,503 137,011 29,924 78,492 Other (expense) income Loss on extinguishment of debt (19,859) (3,254) (6,943) (16,605) 3,689 Other (expense) income (39) 37 — (76) 37 Total other expense (19,898) (3,217) (6,943) (16,681) 3,726 Loss before income taxes (238,377) (204,559) (127,231) (33,818) (77,328) (Benefit from) provision for income taxes (163) (82) 469 (81) (551) Net loss (238,214) (204,477) (127,700) (33,737) (76,777) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — Less: Dividends on preferred shares 27,164 24,758 17,869 2,406 6,889 Net loss attributable to shareholders from continuing operations $ (265,378) $ (229,235) $ (145,569) $ (36,143) $ (83,666) 43 The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Net loss attributable to shareholders from continuing operations $ (265,378) $ (229,235) $ (145,569) $ (36,143) $ (83,666) Add: (Benefit from) provision for income taxes (163) (82) 469 (81) (551) Add: Equity-based compensation expense — — — — — Add: Acquisition and transaction expenses 11,041 16,929 3,181 (5,888) 13,748 Add: Losses on the modification or extinguishment of debt and capital lease obligations 19,859 3,254 6,943 16,605 (3,689) Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges — — — — — Add: Incentive allocations 3,489 — — 3,489 — Add: Depreciation and amortization expense 8,401 7,996 7,382 405 614 Add: Interest expense and dividends on preferred shares 196,358 179,775 105,311 16,583 74,464 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — Less: Equity in (earnings) losses of unconsolidated entities — — — — — Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ (26,393) $ (21,363) $ (22,283) $ (5,030) $ 920 Comparison of the years ended December 31, 2022 and 2021 Revenues Total revenues increased $12.8 million primarily due to an increase in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021.
Corporate and Other The following table presents our results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Revenues Lease income $ 28,232 $ 20,246 $ 10,131 $ 7,986 $ 10,115 Other revenue 6,083 6,702 4,030 (619) 2,672 Total revenues 34,315 26,948 14,161 7,367 12,787 Expenses Operating expenses 51,828 39,065 21,429 12,763 17,636 General and administrative 13,700 14,164 13,448 (464) 716 Acquisition and transaction expenses 6,322 11,041 16,929 (4,719) (5,888) Management fees and incentive allocation to affiliate 18,037 3,562 684 14,475 2,878 Depreciation and amortization 10,862 8,401 7,996 2,461 405 Interest expense 161,639 169,194 155,017 (7,555) 14,177 Total expenses 262,388 245,427 215,503 16,961 29,924 Other income (expense) Loss on extinguishment of debt — (19,859) (3,254) 19,859 (16,605) Other income (expense) 943 (39) 37 982 (76) Total other income (expense) 943 (19,898) (3,217) 20,841 (16,681) Loss before income taxes (227,130) (238,377) (204,559) 11,247 (33,818) Provision for (benefit from) income taxes 833 (163) (82) 996 (81) Net loss (227,963) (238,214) (204,477) 10,251 (33,737) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — Less: Dividends on preferred shares 31,795 27,164 24,758 4,631 2,406 Net loss attributable to shareholders from continuing operations $ (259,758) $ (265,378) $ (229,235) $ 5,620 $ (36,143) 43 The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Net loss attributable to shareholders from continuing operations $ (259,758) $ (265,378) $ (229,235) $ 5,620 $ (36,143) Add: Provision for (benefit from) income taxes 833 (163) (82) 996 (81) Add: Equity-based compensation expense 1,076 — — 1,076 — Add: Acquisition and transaction expenses 6,322 11,041 16,929 (4,719) (5,888) Add: Losses on the modification or extinguishment of debt and capital lease obligations — 19,859 3,254 (19,859) 16,605 Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges — — — — — Add: Incentive allocations 17,116 3,489 — 13,627 3,489 Add: Depreciation and amortization expense 10,862 8,401 7,996 2,461 405 Add: Interest expense and dividends on preferred shares 193,434 196,358 179,775 (2,924) 16,583 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities — — — — — Less: Equity in (earnings) losses of unconsolidated entities — — — — — Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ (30,115) $ (26,393) $ (21,363) $ (3,722) $ (5,030) Comparison of the years ended December 31, 2023 and 2022 Revenues Total revenues increased $7.4 million primarily due to an increase in the Offshore Energy business, as one of our vessels was on-hire longer in 2023 compared to 2022, and at higher rates.
Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, as well as information received from third party industry sources.
In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge. 48 Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, as well as information received from third party industry sources.
See above discussion regarding presentation of asset sales and impact on gain on sales of assets, net. Provision for income taxes The provision for income taxes increased $2.2 million primarily due to a higher provision in the Aerospace Products segment. Net loss from continuing operations Net loss from continuing operations increased $67.8 million primarily due to the changes noted above.
Provision for income taxes The provision for income taxes increased $2.2 million primarily due to a higher provision in the Aerospace Products segment. 36 Net loss from continuing operations Net loss from continuing operations increased $67.8 million primarily due to the changes noted above.
Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA. 32 The following table presents our consolidated results of operations: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Revenues Lease income $ 178,874 $ 172,117 $ 177,476 $ 6,757 $ (5,359) Maintenance revenue 148,846 128,819 101,462 20,027 27,357 Finance lease income 440 1,747 2,260 (1,307) (513) Asset sales revenue 208,500 — — 208,500 — Aerospace products revenue 153,550 23,301 — 130,249 23,301 Other revenue 18,201 9,599 16,736 8,602 (7,137) Total revenues 708,411 335,583 297,934 372,828 37,649 Expenses Cost of sales 248,385 14,308 — 234,077 14,308 Operating expenses 132,264 59,615 40,121 72,649 19,494 General and administrative 14,164 13,448 14,106 716 (658) Acquisition and transaction expenses 13,207 17,911 9,868 (4,704) 8,043 Management fees and incentive allocation to affiliate 3,562 684 5,446 2,878 (4,762) Depreciation and amortization 152,917 147,740 141,286 5,177 6,454 Asset impairment 137,219 10,463 33,978 126,756 (23,515) Interest expense 169,194 155,017 87,442 14,177 67,575 Total expenses 870,912 419,186 332,247 451,726 86,939 Other income (expense) Equity in losses of unconsolidated entities (369) (1,403) (1,932) 1,034 529 Gain (loss) on sale of assets, net 77,211 49,015 (300) 28,196 49,315 Loss on extinguishment of debt (19,859) (3,254) (6,943) (16,605) 3,689 Other income (expense) 207 (490) 94 697 (584) Total other income (expense) 57,190 43,868 (9,081) 13,322 52,949 Loss from continuing operations before income taxes (105,311) (39,735) (43,394) (65,576) 3,659 Provision for (benefit from) income taxes 5,300 3,126 (4,343) 2,174 7,469 Net loss from continuing operations (110,611) (42,861) (39,051) (67,750) (3,810) Net loss from discontinued operations, net of income taxes (101,416) (87,845) (64,641) (13,571) (23,204) Net loss (212,027) (130,706) (103,692) (81,321) (27,014) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries: Continuing operations — — — — — Discontinued operations (18,817) (26,472) (16,522) 7,655 (9,950) Less: Dividends on preferred shares 27,164 24,758 17,869 2,406 6,889 Net loss attributable to shareholders $ (220,374) $ (128,992) $ (105,039) $ (91,382) $ (23,953) 33 The following table sets forth a reconciliation of net loss attributable to shareholders from continuing operations to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Net loss attributable to shareholders from continuing operations $ (137,775) $ (67,619) $ (56,920) $ (70,156) $ (10,699) Add: Provision for (benefit from) income taxes 5,300 3,126 (4,343) 2,174 7,469 Add: Equity-based compensation expense — — — — — Add: Acquisition and transaction expenses 13,207 17,911 9,868 (4,704) 8,043 Add: Losses on the modification or extinguishment of debt and capital lease obligations 19,859 3,254 6,943 16,605 (3,689) Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges 137,219 10,463 33,978 126,756 (23,515) Add: Incentive allocations 3,489 — — 3,489 — Add: Depreciation & amortization expense (1) 190,031 175,718 171,632 14,313 4,086 Add: Interest expense and dividends on preferred shares 196,358 179,775 105,311 16,583 74,464 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 40 (1,203) (1,932) 1,243 729 Less: Equity in losses of unconsolidated entities 369 1,403 1,932 (1,034) (529) Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ 428,097 $ 322,828 $ 266,469 $ 105,269 $ 56,359 __________________________________________________ (1) Includes the following items for the years ended December 31, 2022, 2021 and 2020: (i) depreciation and amortization expense of $152,917, $147,740 and $141,286, (ii) lease intangible amortization of $13,913, $4,993 and $3,747 and (iii) amortization for lease incentives of $23,201, $22,985 and $26,599, respectively.
Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and capital lease obligations, changes in fair value of non-hedge derivative instruments, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities and the non-controlling share of Adjusted EBITDA. 32 The following table presents our consolidated results of operations: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Revenues Lease income $ 207,936 $ 179,314 $ 173,864 $ 28,622 $ 5,450 Maintenance revenue 191,347 148,846 128,819 42,501 20,027 Asset sales revenue 303,141 183,535 — 119,606 183,535 Aerospace products revenue 454,970 178,515 23,301 276,455 155,214 Other revenue 13,502 18,201 9,599 (4,699) 8,602 Total revenues 1,170,896 708,411 335,583 462,485 372,828 Expenses Cost of sales 502,132 248,385 14,308 253,747 234,077 Operating expenses 110,163 132,264 59,615 (22,101) 72,649 General and administrative 13,700 14,164 13,448 (464) 716 Acquisition and transaction expenses 15,194 13,207 17,911 1,987 (4,704) Management fees and incentive allocation to affiliate 18,037 3,562 684 14,475 2,878 Depreciation and amortization 169,877 152,917 147,740 16,960 5,177 Asset impairment 2,121 137,219 10,463 (135,098) 126,756 Interest expense 161,639 169,194 155,017 (7,555) 14,177 Total expenses 992,863 870,912 419,186 121,951 451,726 Other income (expense) Equity in losses of unconsolidated entities (1,606) (369) (1,403) (1,237) 1,034 Gain on sale of assets, net — 77,211 49,015 (77,211) 28,196 Loss on extinguishment of debt — (19,859) (3,254) 19,859 (16,605) Other income (expense) 7,590 207 (490) 7,383 697 Total other income 5,984 57,190 43,868 (51,206) 13,322 Income (loss) from continuing operations before income taxes 184,017 (105,311) (39,735) 289,328 (65,576) (Benefit from) provision for income taxes (59,800) 5,300 3,126 (65,100) 2,174 Net income (loss) from continuing operations 243,817 (110,611) (42,861) 354,428 (67,750) Net loss from discontinued operations, net of income taxes — (101,416) (87,845) 101,416 (13,571) Net income (loss) 243,817 (212,027) (130,706) 455,844 (81,321) Less: Net income (loss) attributable to non-controlling interest in consolidated subsidiaries: Continuing operations — — — — — Discontinued operations — (18,817) (26,472) 18,817 7,655 Less: Dividends on preferred shares 31,795 27,164 24,758 4,631 2,406 Net income (loss) attributable to shareholders $ 212,022 $ (220,374) $ (128,992) $ 432,396 $ (91,382) 33 The following table sets forth a reconciliation of net income (loss) attributable to shareholders from continuing operations to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Net income (loss) attributable to shareholders from continuing operations $ 212,022 $ (137,775) $ (67,619) $ 349,797 $ (70,156) Add: (Benefit from) provision for income taxes (59,800) 5,300 3,126 (65,100) 2,174 Add: Equity-based compensation expense 1,638 — — 1,638 — Add: Acquisition and transaction expenses 15,194 13,207 17,911 1,987 (4,704) Add: Losses on the modification or extinguishment of debt and capital lease obligations — 19,859 3,254 (19,859) 16,605 Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges 2,121 137,219 10,463 (135,098) 126,756 Add: Incentive allocations 17,116 3,489 — 13,627 3,489 Add: Depreciation & amortization expense (1) 213,641 190,031 175,718 23,610 14,313 Add: Interest expense and dividends on preferred shares 193,434 196,358 179,775 (2,924) 16,583 Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 310 40 (1,203) 270 1,243 Less: Equity in losses of unconsolidated entities 1,606 369 1,403 1,237 (1,034) Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ 597,282 $ 428,097 $ 322,828 $ 169,185 $ 105,269 __________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (i) depreciation and amortization expense of $169,877, $152,917 and $147,740, (ii) lease intangible amortization of $15,126, $13,913 and $4,993 and (iii) amortization for lease incentives of $28,638, $23,201 and $22,985, respectively.
The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to c ustomers.
Our two reportable segments are (i) Aviation Leasing and (ii) Aerospace Products. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to customers.
Basic lease revenues from our owned aircraft and engines leased to Russian airlines was approximately $39.8 million for the year ended December 31, 2021. This decrease is partially offset by an increase in the number of aircraft and engines placed on lease during the year.
Basic lease revenues from our owned aircraft and engines leased to Russian airlines was approximately $39.8 million for the year ended December 31, 2021.
Expenses Total expenses increased $86.9 million primarily due to highe r interest expense, operating expenses, cost of sales, acquisition and transaction expenses, and depreciation and amortization, partially offset by lower asset impairment charges and management fees and incentive allocation to affiliate.
Expenses Total expenses increased $122.0 million primarily due to higher (i) cost of sales, (ii) management fees and incentive allocation to affiliate and(iii) depreciation and amortization, partially offset by lower (iv) asset impairment, (v) operating expenses and (vi) interest expense.
Expenses Total expenses increased $19.8 million primarily due to an increase in costs of sales and operating expenses. • Cost of sales increased $14.3 million primarily as a result of an increase in Aerospace Product sales. • Operating expenses increased $5.4 million primarily due to an increase in commission expenses due to the increase in sales from the used serviceable material program as well as an increase in professional fees and other operating expenses due to the ramp-up of Aerospace Products.
Expenses Total expenses increased $181.2 million primarily due to an increase in costs of sales and operating expenses. • Cost of sales increased $170.8 million primarily as a result of an increase in Aerospace Product sales and the gross presentation described above. • Operating expenses increased $8.5 million primarily due to an increase in commission expenses due to the increase in sales from the used material program as well as an increase in shipping and storage fees as operations continued to ramp-up in 2023.
Aerospace Products revenue —Aerospace Products revenue primarily consists of the transaction price related to the sale of repaired CFM56-7B and CFM56-5B engines, engine modules, spare parts and used material inventory, and are accounted for within the scope of ASC 606. Revenue is recognized when a performance obligation is satisfied by transferring control over the related asset to a customer.
See Note 10 for additional information. 47 Aerospace Products revenue —Aerospace Products revenue primarily consists of the transaction price related to the sale of repaired CFM56-7B, CFM56-5B and V2500 engines, engine modules, spare parts and used material inventory, and are accounted for within the scope of ASC 606.
Cost of sales increased $234.1 million primarily as a result of an increase in asset sales and Aerospace Product sales and the gross presentation of asset sales revenue and Aerospace Product revenues as described above. Asset impairment increased $126.8 million primarily due to the write down of aircraft and engines located in Ukraine and Russia that may not be recoverable.
Cost of sales increased $234.1 million primarily as a result of an increase in asset sales and Aerospace Product sales and the gross presentation of asset sales revenue and Aerospace Product revenues as described above.
There were no issuances of ordinary shares in 2022 or 2020. • Proceeds from the issuance of preferred shares, net of underwriters discount and issuance costs, were $101.2 million and $19.7 million during the years ended December 31, 2021 and 2020, respectively.. 46 We are currently evaluating several potential transactions and related financings, which could occur within the next 12 months.
There were no issuances of ordinary shares in 2023 or 2022. • Proceeds from the issuance of preferred shares, net of underwriters discount and issuance costs, were $61.7 million and $101.2 million during the years ended December 31, 2023 and 2021, respectively. There were no issuances of preferred shares during the year ended December 31, 2022.
Other expense Total other expense decreased $3.7 million which primarily reflects a $3.7 million decrease in loss on extinguishment of debt. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $0.9 million primarily due to the changes noted above.
Other income (expense) Total other expense decreased $20.8 million which primarily reflects $19.9 million decrease in loss on extinguishment of debt primarily related to the 2022 pay-down of the 2021 Bridge Loans and the partial redemption of the Senior Notes due 2025. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $3.7 million primarily due to the changes noted above.
Net cash used in investing activities decreased $875.7 million primarily due to (i) a decrease in cash used in acquisitions of business, net of cash acquired, of $623.3 million, (ii) higher proceeds from the sale of leasing equipment of $250.0 million and (iii) a decrease in investment of unconsolidated entities of $47.3 million, partially offset by (iv) an increase in acquisition of leasing equipment of $65.7 million and (ii) an increase in acquisition of lease intangibles of $7.1 million.
Net cash used in investing activities decreased $37.9 million primarily due to (i) a decrease in Acquisition of property, plant and equipment of $138.0 million and (ii) higher Proceeds from the sale of leasing equipment of $68.9 million, partially offset by increases in (i) Acquisition of leasing equipment of $111.5 million, (ii) Acquisition of business, net of cash acquired, of $25.8 million, (iii) Purchase deposit for acquisitions of $17.3 million, and (iv) Investment of unconsolidated entities of $12.2 million.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, shared services costs, and management fees. Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases. Our Manager On December 27, 2017, SoftBank Group Corp.
Additionally, Corporate and Other also includes offshore energy related assets, which consist of vessels and equipment that support offshore oil and gas activities and production which are typically subject to operating leases.
Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $62.2 million primarily due to the changes noted above.
See Note 11 to the consolidated financial statements for additional information. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $87.2 million primarily due to the changes noted above.
Other income (expense) Total other income decreased $1.1 million which primarily reflects a decrease of $1.4 million in gain on sale of assets, net partially offset by a decrease of $0.3 million in our proportionate share of unconsolidated entities’ net loss. See above discussion regarding presentation of asset sales.
Other income (expense) Total other income decreased $13.2 million which primarily reflects a decrease of $18.2 million in Gain on sale of assets, net, partially offset by an increase of $5.3 million in gain on consolidation of investment in connection with the QuickTurn acquisition, and an increase of $0.3 million in our proportionate share of unconsolidated entities’ net loss.
Lease income decreased $5.4 million primarily due to an increase in the number of aircraft redelivered, partially offset by an increase in the number of aircraft and engines placed on lease towards the end of the year. Other revenue decreased $7.1 million primarily due to lower end-of-lease redelivery compensation and the settlement of an engine loss during 2020.
See above discussion regarding presentation of asset sales. • Maintenance revenue increased $42.5 million primarily due to the recognition of maintenance deposits due to the early redelivery of five aircraft, an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation. • Lease income increased $20.6 million primarily due to an increase in the number of aircraft and engines placed on lease during the year, partially offset by an increase in the number of aircraft and engines redelivered. • Other revenue decreased $4.1 million primarily due to a decrease in end-of-lease redelivery compensation.
Other income Total other income increased $30.7 million primarily due to an increase of $29.4 million in gain on sale of assets, net and a decrease of $1.9 million in our proportionate share of unconsolidated entities’ net loss. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $33.2 million primarily due to the changes noted above.
Other income (expense) Total other income increased $31.9 million primarily due to an increase of $30.4 million in G ain on the sale of assets, net due to more opportunistic sales transactions. Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $58.7 million primarily due to the changes noted above.
None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing.
We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing.
Upon merger completion, Fortress Transportation and Infrastructure Investors LLC public common shareholders’ shares of the Company were exchanged automatically for shares of FTAI Aviation Ltd. without any further action from the shareholders. Operating Segments As a result of the spin-off of FTAI Infrastructure effective August 1, 2022, the Company reevaluated its operating segments.
Upon merger completion, Fortress Transportation and Infrastructure Investors LLC public common shareholders’ shares of the Company were exchanged automatically for shares of FTAI Aviation Ltd. without any further action from the shareholders. Operating Segments The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services.
The table below provides additional information on the assets in our Aviation Leasing segment: Aviation Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2022 13 95 108 Purchases 1 38 39 Sales (3) (5) (8) Transfers (3) (30) (33) Assets at December 31, 2022 8 98 106 Engines Assets at January 1, 2022 68 139 207 Purchases 2 62 64 Sales (36) (35) (71) Transfers 6 18 24 Assets at December 31, 2022 40 184 224 37 The following table presents our results of operations for our Aviation Leasing segment: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Revenues Lease income $ 158,628 $ 161,986 $ 166,331 $ (3,358) $ (4,345) Maintenance revenue 148,846 128,819 101,462 20,027 27,357 Finance lease income 440 1,747 2,260 (1,307) (513) Asset sales revenue 208,500 — — 208,500 — Other revenue 11,499 5,569 11,158 5,930 (5,589) Total revenues 527,913 298,121 281,211 229,792 16,910 Expenses Cost of sales 159,490 — — 159,490 — Operating expenses 81,232 32,757 20,667 48,475 12,090 Acquisition and transaction expenses 1,923 982 6,687 941 (5,705) Depreciation and amortization 144,258 139,678 133,904 4,580 5,774 Asset impairment 137,219 10,463 33,978 126,756 (23,515) Total expenses 524,122 183,880 195,236 340,242 (11,356) Other income (expense) Equity in earnings (losses) of unconsolidated entities 740 — (1,932) 740 1,932 Gain (loss) on sale of assets, net 58,649 29,098 (300) 29,551 29,398 Other income (expense) 246 (527) 94 773 (621) Total other income (expense) 59,635 28,571 (2,138) 31,064 30,709 Income before income taxes 63,426 142,812 83,837 (79,386) 58,975 Provision for (benefit from) income taxes 2,502 2,073 (4,812) 429 6,885 Net income 60,924 140,739 88,649 (79,815) 52,090 Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — Net income attributable to shareholders $ 60,924 $ 140,739 $ 88,649 $ (79,815) $ 52,090 38 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2022 2021 2020 '22 vs '21 '21 vs '20 Net income attributable to shareholders $ 60,924 $ 140,739 $ 88,649 $ (79,815) $ 52,090 Add: Provision for (benefit from) income taxes 2,502 2,073 (4,812) 429 6,885 Add: Equity-based compensation expense — — — — — Add: Acquisition and transaction expenses 1,923 982 6,687 941 (5,705) Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges 137,219 10,463 33,978 126,756 (23,515) Add: Incentive allocations — — — — — Add: Depreciation and amortization expense (1) 181,372 167,656 164,250 13,716 3,406 Add: Interest expense and dividends on preferred shares — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 925 — (1,932) 925 1,932 Less: Equity in (earnings) losses of unconsolidated entities (740) — 1,932 (740) (1,932) Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ 384,125 $ 321,913 $ 288,752 $ 62,212 $ 33,161 __________________________________________________ (1) Includes the following items for the years ended December 31, 2022, 2021 and 2020: (i) depreciation expense of $144,258, $139,678 and $133,904, (ii) lease intangible amortization of $13,913, $4,993 and $3,747 and (iii) amortization for lease incentives of $23,201, $22,985 and $26,599, respectively.
The table below provides additional information on the assets in our Aviation Leasing segment: Aviation Assets Widebody Narrowbody Total Aircraft Assets at January 1, 2023 8 98 106 Purchases — 40 40 Sales (2) (11) (13) Transfers (1) (36) (37) Assets at December 31, 2023 5 91 96 Engines Assets at January 1, 2023 40 184 224 Purchases 7 94 101 Sales (17) (24) (41) Transfers 2 (19) (17) Assets at December 31, 2023 32 235 267 37 The following table presents our results of operations for our Aviation Leasing segment: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Revenues Lease income $ 179,704 $ 159,068 $ 163,733 $ 20,636 $ (4,665) Maintenance revenue 191,347 148,846 128,819 42,501 20,027 Asset sales revenue 303,141 183,535 — 119,606 183,535 Other revenue 7,419 11,499 5,569 (4,080) 5,930 Total revenues 681,611 502,948 298,121 178,663 204,827 Expenses Cost of sales 221,852 138,904 — 82,948 138,904 Operating expenses 37,876 81,232 32,757 (43,356) 48,475 Acquisition and transaction expenses 7,150 1,923 982 5,227 941 Depreciation and amortization 158,354 144,258 139,678 14,096 4,580 Asset impairment 2,121 137,219 10,463 (135,098) 126,756 Total expenses 427,353 503,536 183,880 (76,183) 319,656 Other income (expense) Equity in (losses) earnings of unconsolidated entities (148) 740 — (888) 740 Gain on sale of assets, net — 59,048 28,631 (59,048) 30,417 Other income (expense) 1,300 246 (527) 1,054 773 Total other income 1,152 60,034 28,104 (58,882) 31,930 Income before income taxes 255,410 59,446 142,345 195,964 (82,899) (Benefit from) provision for income taxes (36,193) 2,502 2,073 (38,695) 429 Net income 291,603 56,944 140,272 234,659 (83,328) Less: Net loss attributable to non-controlling interest in consolidated subsidiaries — — — — — Net income attributable to shareholders $ 291,603 $ 56,944 $ 140,272 $ 234,659 $ (83,328) 38 The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA: Year Ended December 31, Change (in thousands) 2023 2022 2021 '23 vs '22 '22 vs '21 Net income attributable to shareholders $ 291,603 $ 56,944 $ 140,272 $ 234,659 $ (83,328) Add: (Benefit from) provision for income taxes (36,193) 2,502 2,073 (38,695) 429 Add: Equity-based compensation expense 337 — — 337 — Add: Acquisition and transaction expenses 7,150 1,923 982 5,227 941 Add: Losses on the modification or extinguishment of debt and capital lease obligations — — — — — Add: Changes in fair value of non-hedge derivative instruments — — — — — Add: Asset impairment charges 2,121 137,219 10,463 (135,098) 126,756 Add: Incentive allocations — — — — — Add: Depreciation and amortization expense (1) 202,118 181,372 167,656 20,746 13,716 Add: Interest expense and dividends on preferred shares — — — — — Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) 104 925 — (821) 925 Less: Equity in losses (earnings) of unconsolidated entities 148 (740) — 888 (740) Less: Non-controlling share of Adjusted EBITDA — — — — — Adjusted EBITDA (non-GAAP) $ 467,388 $ 380,145 $ 321,446 $ 87,243 $ 58,699 __________________________________________________ (1) Includes the following items for the years ended December 31, 2023, 2022 and 2021: (i) depreciation expense of $158,354, $144,258 and $139,678, (ii) lease intangible amortization of $15,126, $13,913 and $4,993 and (iii) amortization for lease incentives of $28,638, $23,201 and $22,985, respectively.
Lease income increased $6.8 million primarily due to an increase in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021. This increase was partially offset by the early termination of aircraft and engine leases as a result of the sanctions imposed on Russian airlines during the first quarter of 2022.
This decrease is partially offset by an increase in the number of aircraft and engines placed on lease during the year, and a $10.1 million increase in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021.
Cash Flows of Discontinued Operations The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows for all periods presented. Cash used in operating activities from discontinued operations were $63.9 million, $61.7 million, and $46.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Cash used in operating activities from discontinued operations were $63.9 million, and $61.7 million for the years ended December 31, 2022 and 2021, respectively. Cash used in investing activities from discontinued operations were $136.3 million, and $828.7 million for the years ended December 31, 2022 and 2021, respectively.
Adjusted EBITDA (Non-GAAP) Adjusted EBITDA decreased $5.0 million primarily due to the changes noted above. 44 Comparison of the years ended December 31, 2021 and 2020 Revenues Total revenues de creased $2.6 million primarily due to a decrease in the Offshore Energy business as one of our vessels was on-hire longer in 2020 compared to 2021.
Comparison of the years ended December 31, 2022 and 2021 Revenues 44 Total revenues in creased $12.8 million primarily due to an increase in the Offshore Energy business as two of our vessels were on-hire longer in 2022 compared to 2021.
Interest expense increased $67.6 million, which reflects an increase in the average outstanding debt of approximately $724.0 million primarily due to increases in (i) the Senior Notes due 2028 of $542.5 million, (ii) the Senior Notes due 2025 of $373.1 million, (iii) the Senior Notes due 2027 of $200.0 million, (iv) the Bridge Loans of $108.3 million and (v) the Revolving Credit Facility of $37.9 million, partially offset by a decrease in (vi) the Senior Notes due 2022 of $540.2 million, which were redeemed in full in May 2021.
Interest expense decreased $7.6 million, which reflects a decrease in the average outstanding debt of approximately $183.8 million primarily due to decreases in (i) the 2021 Bridge Loans of $178.3 million and (ii) the Senior Notes due 2025 of $116.7 million, which were partially redeemed in August 2022, partially offset by increases in (iii) the Revolving Credit Facility of $28.7 million and (iv) the Senior Notes due 2030 of $82.8 million, which were issued in November 2023.
Cash used in investing activities from discontinued operations were $136.3 million, $828.7 million, and $252.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. The absence of cash flows from discontinued operations is not expected to adversely affect our liquidity or our ability to fund capital expenditures or working capital needs.
The absence of cash flows from discontinued operations is not expected to adversely affect our liquidity or our ability to fund capital expenditures or working capital needs.
Net cash provided by financing activities decreased $1.5 billion primarily due to (i) a decrease in proceeds from debt of $2.1 billion and (ii) a decrease in proceeds from issuance of ordinary shares, net of underwriter's discount of $323.1 million, partially offset by (iii) a one-time dividend from spin-off of FTAI Infrastructure, net of cash transferred of $500.6 million and (iv) a decrease in repayments of debt of $408.7 million.
Net cash provided by financing activities increased $237.3 million primarily due to (i) a decrease in Repayment of debt of $539.5 million, (ii) an increase in Proceeds from debt of $137.7 million and (iii) an increase in Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs of $61.7 million, partially offset by a decrease in the one-time Dividend from spin-off of FTAI Infrastructure, net of cash transferred of $500.6 million. 46 Cash Flows of Discontinued Operations The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows for all periods presented.
Aerospace Products revenue increased $23.3 million driven by an increase in sales relating to engine modules, spare parts and used material inventory as operations began in 2021.
Aerospace Products revenue increased $276.5 million driven by an increase in sales relating to the CFM56-7B, CFM56-5B and V2500 engines, engine modules, spare parts and used material inventory as operations continued to ramp-up in 2023. See above discussion regarding presentation of asset sales.
FTAI retained the aviation business and certain other assets, and FTAI’s remaining outstanding corporate indebtedness. 45 We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times.
We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during various environments. This includes limiting discretionary spending across the organization and re-prioritizing our investments as necessary.
Maintenance revenue increased $27.4 million primarily due to an increase in aircraft and engine utilization and the recognition of maintenance deposits due to the redelivery of aircraft, partially offset by the increase in the number of aircraft and engines redelivered.
Maintenance revenue increased $42.5 million primarily due to the recognition of maintenance deposits due to the early redelivery of five aircraft, an increase in the number of aircraft and engines placed on lease, higher aircraft and engine utilization and higher end-of-lease return compensation. 34 Other revenue decreased $4.7 million primarily due to a decreas e in end-of-lease redelivery compensation.
Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations.
Revenue is recognized when a performance obligation is satisfied by transferring control over the related asset to a customer. Revenue is recorded with corresponding costs of sales, presented on a gross basis in the Consolidated Statements of Operations. Shipping costs to deliver assets to customers are included in cost of sales.
Aviation Leasing Segment As of December 31, 2022, in our Aviation Leasing segment, we own and manage 330 aviation assets, consisting of 106 commercial aircraft and 224 engine s, including four aircraft and one engine that were still located in Ukraine and eight aircraft and seventeen engines that were still located in Russia.
Adjusted EBITDA (Non-GAAP) Adjusted EBITDA increased $105.3 million primarily due to the changes noted above. Aviation Leasing Segment As of December 31, 2023, in our Avi ation Leasing segment, we own and manage 363 aviation assets, consisting of 96 commercial aircraft and 267 engines, including eight aircraft and seventeen engines that were still located in Russia.
Expenses Total expenses increased $78.5 million primarily due to higher interest expense and acquisition and transaction expenses, partially offset by lower management fees and incentive allocation to affiliate. • Interest expense increased $67.6 million , which reflects an increase in the average outstanding debt of approximately $724.0 million primarily due to increases in (i) the Senior Notes due 2028 of $542.5 million, (ii) the Senior Notes due 2025 of $373.1 million, (iii) the Senior Notes due 2027 of $200.0 million, (iv) the Bridge Loans of $108.3 million and (v) the Revolving Credit Facility of $37.9 million, partially offset by a decrease in (vi) the Senior Notes due 2022 of $540.2 million, which were redeemed in full in May 2021. • Acquisition and transaction expenses increased $13.7 million primarily d ue an increase in professional fees related to the acquisition of Transtar and other strategic initiatives. • Management fees and incentive allocation to affiliate decreased $4.8 million which reflects a decrease in the base management fee as our average total equity was lower in 2021 compared to 2020.
Additionally, repairs and maintenance expense increased due to repairs on one of our vessels. • Depreciation and amortization increased $2.5 million primarily due to new assets being placed into service in the Offshore Energy business. • Interest expense decreased $7.6 million, which reflects a decrease in the average outstanding debt of approximately $183.8 million primarily due to decreases in (i) the 2021 Bridge Loans of $178.3 million and (ii) the Senior Notes due 2025 of $116.7 million, which were partially redeemed in August 2022, partially offset by increases in (iii) the Revolving Credit Facility of $28.7 million and (iv) the Senior Notes due 2030 of $82.8 million, which were issued in November 2023. • Acquisition and transaction expenses decreased $4.7 million primarily due to lower professional fees related to strategic transactions.
Comparison of the years ended December 31, 2021 and 2020 Revenues Total revenues increased $16.9 million driven by an increase in maintenance revenue, partially offset by a decrease in other revenue and lease income. • Maintenance revenue increased $27.4 million primarily due to an increase in aircraft and engine utilization due to additional travel and recoveries from COVID and the recognition of maintenance deposits due to the redelivery of aircraft, partially offset by the increase in the number of aircraft and engines redelivered. • Other revenue decreased $5.6 million primarily due to lower end-of-lease redelivery compensation and the settlement of an engine loss during 2020 . • Lease income decreased $4.3 million primarily due to an increase in the number of aircraft redelivered, partially offset by an increase in the number of aircraft and engines placed on lease towards the end of the year.
Comparison of the years ended December 31, 2023 and 2022 Revenues Total revenues increased $178.7 million driven by an increase in asset sales revenue, maintenance revenue and lease income, partially offset by a decrease in other revenue. • Asset sales revenue increased $119.6 million primarily due to an increase in the sale of commercial aircraft and engines.
Other income (expense) Total other income increased $52.9 million primarily due to an increase of $49.3 million in gain on sale of assets, net in the Aviation Leasing and Aerospace Products segments from opportunistic asset sales transactions, partially offset by a decrease of $3.7 million in loss on extinguishment of debt.
Other income (expense) Total other income decreased $51.2 million primarily due to (i) a d ecrease of $77.2 million in Gain on sale of assets, net in the Aviation Leasing and Aerospace Products segments due to the change in presentation of asset sales described above, partially offset by (ii) Loss on extinguishment of debt of $19.9 million recognized during 2022 related to the pay-down of the 2021 Bridge Loan issued in December 2021 and February 2022 and the partial redemption of Senior Notes due 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOn March 5, 2021, the IBA Benchmark Administration confirmed its intention to cease publication of (i) one-week and two-month USD LIBOR settings after December 31, 2021 and (ii) the remaining USD LIBOR settings after June 30, 2023.
Biggest changeThe ICE Benchmark Administration ceased publication of one-week and two-month USD LIBOR settings after December 31, 2021 and the remaining USD LIBOR settings after June 30, 2023, other than certain USD LIBOR settings that are expected to continue to be published under a synthetic methodology until September 2024.
We may elect to manage our exposure to interest rate movements through the use of interest rate derivatives (interest rate swaps and caps). 49 The following discussion about the potential effects of changes in interest rates is based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts on our financial condition and results of operations.
We may elect to manage our exposure to interest rate movements through the use of interest rate derivatives (interest rate swaps and caps). The following discussion about the potential effects of changes in interest rates is based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts on our financial condition and results of operations.
Certain of our borrowing agreements require payments based on a variable interest rate index, such as SOFR. Therefore, to the extent our borrowing costs are not fixed, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our leases.
Our borrowing agreements generally require payments based on a variable interest rate index, such as SOFR. Therefore, to the extent our borrowing costs are not fixed, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our leases.
We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposure relates to our revolver arrangements. LIBOR and other indices which are deemed “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform.
We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposure relates to our term loan arrangements. LIBOR and other indices which are deemed “benchmarks” are the subject of recent national, international, and other regulatory guidance and proposals for reform.
As of December 31, 2022, assuming we do not hedge our exposure to interest rate fluctuations related to our outstanding floating rate debt, a hypothetical 100-basis point increase/decrease in our variable interest rate on our borrowings would result in an increase of approximately $1.5 million or a decrease of approximately $1.5 million in interest expense over the next 12 months. 50
As of December 31, 2023, assuming we do not hedge our exposure to interest rate fluctuations related to our outstanding floating rate debt, a hypothetical 100-basis point increase/decrease in our variable interest rate on our borrowings would not have increased or decreased interest expense over the next 12 months. 49
We are monitoring related reform proposals and evaluating the related risks and, as a result of LIBOR’s phase out, amended our revolving credit facility to incorporate SOFR as the successor rate to LIBOR; however, it is not possible to predict the effects of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for financial instruments tied to variable interest rate indices.
We continue to monitor related reform proposals and evaluate the related risks; however, it is not possible to predict the effects of any of these developments, and any future initiatives to regulate, reform or change the manner of administration of LIBOR, SOFR or other benchmark indices could result in adverse consequences to the rate of interest payable and receivable on, market value of and market liquidity for financial instruments tied to variable interest rate indices.
Added
In anticipation of LIBOR’s phase out, we amended our revolving credit facility to incorporate SOFR as the successor rate to LIBOR.

Other FTAIM 10-K year-over-year comparisons