10-Q 1 al-20240930.htm 10-Q al-20240930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

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

For the quarterly period ended September 30, 2024

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from         to       

Commission file number 001-35121
AIR LEASE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware27-1840403
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
2000 Avenue of the Stars,Suite 1000N90067
Los Angeles,California
(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (310) 553-0555

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common StockALNew York Stock Exchange
3.700% Medium-Term Notes, Series A, due April 15, 2030AL30New York Stock Exchange

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

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

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

1
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

At November 5, 2024, there were 111,376,884 shares of Air Lease Corporation’s Class A common stock outstanding.

2

Air Lease Corporation and Subsidiaries

Form 10-Q
For the Quarterly Period Ended September 30, 2024

TABLE OF CONTENTS
Page


3
NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and other publicly available documents may contain or incorporate statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this Form 10-Q and include statements regarding, among other matters, the state of the airline industry, our access to the capital and debt markets, the impact of Russia’s invasion of Ukraine and the impact of sanctions imposed on Russia, the impact of the Israel Hamas conflict, aircraft and engine delivery delays and manufacturing flaws, including as a result of the Boeing labor strike, our aircraft sales pipeline and expectations, changes in inflation and interest rates and other macroeconomic conditions and other factors affecting our financial condition or results of operations. Words such as “can,” “could,” “may,” “predicts,” “potential,” “will,” “projects,” “continuing,” “ongoing,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and “should,” and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others:

•our inability to obtain additional capital on favorable terms, or at all, to acquire aircraft, service our debt obligations and refinance maturing debt obligations;
•increases in our cost of borrowing, decreases in our credit ratings or changes in interest rates;
•our inability to generate sufficient returns on our aircraft investments through strategic aircraft acquisitions and profitable leasing;
•the failure of an aircraft or engine manufacturer to meet its contractual obligations to us, including or as a result of labor strikes, aviation supply chain constraints, manufacturing flaws, or technical or other difficulties with aircraft or engines before or after delivery;
•our ability to recover losses related to aircraft detained in Russia, including through insurance claims and related litigation;
•obsolescence of, or changes in overall demand for, our aircraft;
•changes in the value of, and lease rates for, our aircraft, including as a result of aircraft oversupply, manufacturer production levels, our lessees’ failure to maintain our aircraft, inflation, and other factors outside of our control;
•impaired financial condition and liquidity of our lessees, including due to lessee defaults and reorganizations, bankruptcies or similar proceedings;
•increased competition from other aircraft lessors;
•the failure by our lessees to adequately insure our aircraft or fulfill their contractual indemnity obligations to us, or the failure of such insurers to fulfill their contractual obligations;
•increased tariffs and other restrictions on trade;
•changes in the regulatory environment, including changes in tax laws and environmental regulations;
•other events affecting our business or the business of our lessees and aircraft manufacturers or their suppliers that are beyond our or their control, such as the threat or realization of epidemic diseases, natural disasters, terrorist attacks, war or armed hostilities between countries or non-state actors; and
•any additional factors discussed under “Part I — Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2023 and other Securities and Exchange Commission (“SEC”) filings, including future SEC filings.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. You are therefore cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not intend and undertake no obligation to update any forward-looking information to reflect actual results or events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

4
PART I—FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Air Lease Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value amounts)

September 30, 2024December 31, 2023
(unaudited)
Assets
Cash and cash equivalents$460,785 $460,870 
Restricted cash4,565 3,622 
Flight equipment subject to operating leases33,853,006 31,787,241 
Less accumulated depreciation(5,958,105)(5,556,033)
27,894,901 26,231,208 
Deposits on flight equipment purchases1,050,268 1,203,068 
Other assets2,743,310 2,553,484 
Total assets$32,153,829 $30,452,252 
Liabilities and Shareholders’ Equity
Accrued interest and other payables$1,072,033 $1,164,140 
Debt financing, net of discounts and issuance costs20,161,860 19,182,657 
Security deposits and maintenance reserves on flight equipment leases1,757,104 1,519,719 
Rentals received in advance129,303 143,861 
Deferred tax liability1,357,832 1,281,837 
Total liabilities$24,478,132 $23,292,214 
Shareholders’ Equity
Preferred Stock, $0.01 par value; 50,000,000 shares authorized at each of September 30, 2024 and December 31, 2023; 10,900,000 (aggregate liquidation preference of $1,150,000) shares issued and outstanding at September 30, 2024; 10,600,000 (aggregate liquidation preference of $850,000) shares issued and outstanding at December 31, 2023
$109 $106 
Class A common stock, $0.01 par value; 500,000,000 shares authorized; 111,376,884 and 111,027,252 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
1,114 1,110 
Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding
— — 
Paid-in capital3,598,407 3,287,234 
Retained earnings4,079,173 3,869,813 
Accumulated other comprehensive (loss)/income(3,106)1,775 
Total shareholders’ equity$7,675,697 $7,160,038 
Total liabilities and shareholders’ equity$32,153,829 $30,452,252 

(See Notes to Consolidated Financial Statements)

5
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(In thousands, except share and per share amounts)


Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(unaudited)
Revenues
Rental of flight equipment$625,180 $604,027 $1,849,014 $1,833,533 
Aircraft sales, trading and other64,984 55,337 171,748 134,876 
Total revenues690,164 659,364 2,020,762 1,968,409 
Expenses
Interest203,092 161,769 574,691 485,555 
Amortization of debt discounts and issuance costs14,371 13,695 40,772 40,414 
Interest expense217,463 175,464 615,463 525,969 
Depreciation of flight equipment290,132 267,393 849,374 795,659 
Selling, general and administrative44,418 42,770 137,592 136,216 
Stock-based compensation expense7,919 8,719 25,031 23,330 
Total expenses559,932 494,346 1,627,460 1,481,174 
Income before taxes130,232 165,018 393,302 487,235 
Income tax expense(26,261)(32,568)(78,519)(93,664)
Net income$103,971 $132,450 $314,783 $393,571 
Preferred stock dividends(12,325)(10,425)(35,258)(31,275)
Net income attributable to common stockholders$91,646 $122,025 $279,525 $362,296 
Other comprehensive income/(loss):
Foreign currency translation adjustment$(35,976)$7,453 $(2,956)$500 
Change in fair value of hedged transactions31,833 (7,629)(3,254)(1,733)
Total tax benefit on other comprehensive income886 37 1,329 263 
Other comprehensive income/(loss), net of tax(3,257)(139)(4,881)(970)
Total comprehensive income attributable for common stockholders$88,389 $121,886 $274,644 $361,326 
Earnings per share of common stock:
Basic$0.82 $1.10 $2.51 $3.26 
Diluted$0.82 $1.10 $2.50 $3.25 
Weighted-average shares of common stock outstanding
Basic111,376,884 111,027,252 111,308,222 110,997,619 
Diluted111,804,113 111,346,799 111,801,757 111,383,257 
Dividends declared per share of common stock$0.21 $0.20 $0.63 $0.60 

(See Notes to Consolidated Financial Statements)

6
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share and per share amounts)

Preferred StockClass A
Common Stock		Class B Non‑Voting
Common Stock		Accumulated Other
Comprehensive Income/(loss)
(unaudited)SharesAmountSharesAmountSharesAmountPaid‑in
Capital		Retained
Earnings		Total
Balance at December 31, 202310,600,000 $106 111,027,252 $1,110 — $— $3,287,234 $3,869,813 $1,775 $7,160,038 
Issuance of common stock upon vesting of restricted stock units— — 567,154 6 — — — — — 6 
Stock-based compensation expense— — — — — — 8,275 — — 8,275 
Cash dividends (declared $0.21 per share of Class A common stock)
— — — — — — — (23,387)— (23,387)
Cash dividends (declared on preferred stock)— — — — — — — (10,425)— (10,425)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax— — — — — — — — (1,113)(1,113)
Tax withholdings on stock based-compensation— — (227,905)(2)— — (9,387)— — (9,389)
Net income— — — — — — — 107,866 — 107,866 
Balance at March 31, 202410,600,000 $106 111,366,501 $1,114 — $— $3,286,122 $3,943,867 $662 $7,231,871 
Issuance of common stock upon vesting of restricted stock units— — 10,383 — — — — — — — 
Stock-based compensation expense— — — — — — 8,837 — — 8,837 
Cash dividends (declared $0.21 per share of Class A common stock)
— — — — — — — (23,389)— (23,389)
Cash dividends (declared on preferred stock)— — — — — — — (12,508)— (12,508)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax— — — — — — — — (511)(511)
Net income— — — — — — — 102,946 — 102,946 
Balance at June 30, 202410,600,000 $106 111,376,884 $1,114 — $— $3,294,959 $4,010,916 $151 $7,307,246 
Issuance of preferred stock300,000 3 — — — — 295,529 — — 295,532 
Stock-based compensation expense— — — — — — 7,919 — — 7,919 
Cash dividends (declared $0.21 per share of Class A common stock)
— — — — — — — (23,389)— (23,389)
Cash dividends (declared on preferred stock)— — — — — — — (12,325)— (12,325)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax— — — — — — — — (3,257)(3,257)
Net income— — — — — — — 103,971 — 103,971 
Balance at September 30, 202410,900,000 $109 111,376,884 $1,114 — $— $3,598,407 $4,079,173 $(3,106)$7,675,697 

7
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share and per share amounts)
Preferred StockClass A
Common Stock		Class B Non‑Voting
Common Stock		Accumulated Other
Comprehensive Income
(unaudited)SharesAmountSharesAmountSharesAmountPaid‑in
Capital		Retained
Earnings		Total
Balance at December 31, 202210,600,000 $106 110,892,097 $1,109 — $— $3,255,973 $3,386,820 $2,355 $6,646,363 
Issuance of common stock upon vesting of restricted stock units— — 198,437 2 — — — — — 2 
Stock-based compensation expense— — — — — — 5,896 — — 5,896 
Cash dividends (declared $0.20 per share of Class A common stock)
— — — — — — — (22,203)— (22,203)
Cash dividends (declared on preferred stock)— — — — — — — (10,425)— (10,425)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax— — — — — — — — (536)(536)
Tax withholdings on stock based-compensation— — (75,116)(1)— — (3,230)— — (3,231)
Net income— — — — — — — 128,720 — 128,720 
Balance at March 31, 202310,600,000 $106 111,015,418 $1,110 — $— $3,258,639 $3,482,912 $1,819 $6,744,586 
Issuance of common stock upon vesting of restricted stock units— — 14,962 — — — — — — — 
Stock-based compensation expense— — — — — — 8,715 — — 8,715 
Cash dividends (declared $0.20 per share of Class A common stock)
— — — — — — — (22,205)— (22,205)
Cash dividends (declared on preferred stock)— — — — — — — (10,425)— (10,425)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax— — — — — — — — (295)(295)
Tax withholdings on stock based-compensation— — (3,128)— — — (124)— — (124)
Net income— — — — — — — 132,401 — 132,401 
Balance at June 30, 202310,600,000 $106 111,027,252 $1,110 — $— $3,267,230 $3,582,683 $1,524 $6,852,653 
Stock-based compensation expense— — — — — — 8,719 — — 8,719 
Cash dividends (declared $0.20 per share of Class A common stock)
— — — — — — — (22,205)— (22,205)
Cash dividends (declared on preferred stock)— — — — — — — (10,425)— (10,425)
Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax— — — — — — — — (139)(139)
Net income— — — — — — — 132,450 — 132,450 
Balance at September 30, 202310,600,000 $106 111,027,252 $1,110 — $— $3,275,949 $3,682,503 $1,385 $6,961,053 


(See Notes to Consolidated Financial Statements)
8
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
20242023
(unaudited)
Operating Activities
Net income$314,783 $393,571 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of flight equipment849,374 795,659 
Stock-based compensation expense25,031 23,330 
Deferred taxes77,324 91,410 
Amortization of discounts and debt issuance costs40,772 40,414 
Amortization of prepaid lease costs77,271 54,962 
Gain on aircraft sales, trading and other activity(149,018)(147,174)
Changes in operating assets and liabilities:
Other assets(3,509)40,496 
Accrued interest and other payables29,494 (6,380)
Rentals received in advance(14,467)(3,982)
Net cash provided by operating activities1,247,055 1,282,306 
Investing Activities
Acquisition of flight equipment under operating lease(2,816,375)(2,782,507)
Payments for deposits on flight equipment purchases(461,788)(249,231)
Proceeds from aircraft sales, trading and other activity884,045 1,568,420 
Acquisition of aircraft furnishings, equipment and other assets(284,050)(205,368)
Net cash used in investing activities(2,678,168)(1,668,686)
Financing Activities
Net proceeds from preferred stock issuance295,532 — 
Cash dividends paid on Class A common stock(70,092)(66,587)
Cash dividends paid on preferred stock(35,258)(31,275)
Tax withholdings on stock-based compensation(9,384)(3,354)
Net change in unsecured revolving facility186,000 758,000 
Proceeds from debt financings3,541,706 1,783,973 
Payments in reduction of debt financings(2,781,604)(2,566,518)
Debt issuance costs(10,626)(10,590)
Security deposits and maintenance reserve receipts328,351 269,171 
Security deposits and maintenance reserve disbursements(12,654)(10,723)
Net cash provided by financing activities1,431,971 122,097 
Net increase/(decrease) in cash858 (264,283)
Cash, cash equivalents and restricted cash at beginning of period464,492 780,017 
Cash, cash equivalents and restricted cash at end of period$465,350 $515,734 
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest, including capitalized interest of $32,859 and $31,708 at September 30, 2024 and 2023, respectively
$590,697 $532,922 
Cash paid for income taxes$22,746 $6,250 
Supplemental Disclosure of Noncash Activities
Buyer furnished equipment, capitalized interest and deposits on flight equipment purchases applied to acquisition of flight equipment and other assets$838,170 $620,280 
Flight equipment subject to operating leases reclassified to flight equipment held for sale$1,143,096 $1,411,564 
Flight equipment subject to operating leases reclassified to investment in sales-type lease$74,017 $33,641 
Cash dividends declared on Class A common stock, not yet paid$23,389 $22,205 

(See Notes to Consolidated Financial Statements)

9
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 1. Company Background and Overview

Air Lease Corporation (the “Company”, “ALC”, “we”, “our” or “us”) is a leading aircraft leasing company that was founded by aircraft leasing industry pioneer, Steven F. Udvar-Házy. The Company is principally engaged in purchasing the most modern, fuel-efficient, new technology commercial jet aircraft directly from aircraft manufacturers, such as The Boeing Company (“Boeing”) and Airbus S.A.S. (“Airbus”). The Company leases these aircraft to airlines throughout the world with the intention to generate attractive returns on equity. As of September 30, 2024, the Company owned 485 aircraft, managed 64 aircraft and had 287 aircraft on order with aircraft manufacturers. In addition to its leasing activities, the Company sells aircraft from its fleet to third parties, including other leasing companies, financial services companies, airlines and other investors. The Company also provides fleet management services to investors and owners of aircraft portfolios for a management fee.

Note 2. Basis of Preparation and Critical Accounting Policies

The Company consolidates financial statements of all entities in which the Company has a controlling financial interest, including the accounts of any Variable Interest Entity in which the Company has a controlling financial interest and for which it is the primary beneficiary. All material intercompany balances are eliminated in consolidation. The accompanying Consolidated Financial Statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

The accompanying unaudited Consolidated Financial Statements include all adjustments, consisting only of normal, recurring adjustments, which are in the opinion of management necessary to present fairly the Company’s financial position, results of operations and cash flows at September 30, 2024, and for all periods presented. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the operating results expected for the year ending December 31, 2024. These financial statements and related notes should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The new requirements will be effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is still evaluating the impact of ASU 2023-09 but does not expect the application of this guidance to have a material impact on its financial statement disclosures.

In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires disaggregated information for specified categories of expenses, including inventory purchases, employee compensation, depreciation, amortization, and depletion, to be presented in certain expense captions on the face of the income statement. The new standard is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively, to financial statements issued after the effective date, or retrospectively, to all prior periods presented. The Company is currently evaluating the impact of ASU 2024-03 on its financial statement disclosures.

10
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 3. Debt Financing

The Company’s consolidated debt as of September 30, 2024 and December 31, 2023 is summarized below:

September 30, 2024December 31, 2023
(in thousands)
Unsecured
Senior unsecured securities$16,429,118 $16,329,605 
Term financings 2,082,800 1,628,400 
Revolving credit facility1,286,000 1,100,000 
        Total unsecured debt financing19,797,918 19,058,005 
Secured
Term financings 357,629 100,471 
Export credit financing 194,120 204,984 
        Total secured debt financing551,749 305,455 
Total debt financing 20,349,667 19,363,460 
Less: Debt discounts and issuance costs(187,807)(180,803)
Debt financing, net of discounts and issuance costs$20,161,860 $19,182,657 

As of September 30, 2024, management of the Company believes it is in compliance in all material respects with the covenants in its debt agreements, including minimum consolidated shareholders’ equity, minimum consolidated unencumbered assets, and an interest coverage ratio test.

Senior unsecured securities (including Medium-Term Note Program)

As of September 30, 2024 and December 31, 2023, the Company had $16.4 billion and $16.3 billion in senior unsecured securities outstanding, respectively.

During the nine months ended September 30, 2024, the Company issued (i) $500.0 million in aggregate principal amount of 5.10% Medium-Term Notes due 2029, (ii) Canadian dollar (“C$”) denominated debt of C$400.0 million in additional aggregate principal amount of 5.40% Medium-Term Notes due 2028 (“2024 C$ notes”), (iii) Euro (“€”) denominated debt of €600.0 million in aggregate principal amount of 3.70% Medium-Term Notes due 2030 (“2024 € notes”), (iv) $600.0 million in aggregate principal amount of 5.30% Medium-Term Notes due 2026 and (v) $600.0 million in aggregate principal amount of 5.20% Medium-Term Notes due 2031.

The 2024 C$ notes issued in 2024 have the same terms as, and constitute a single tranche with, the C$500.0 million aggregate principal amount of 5.40% Medium-Term Notes issued in November 2023. The Company hedged the 2024 C$ notes through a cross-currency swap that converts the borrowing rate to a fixed 5.95% U.S. dollar denominated rate. The Company also hedged the 2024 € notes through a cross-currency swap that converts the borrowing rate to a fixed 5.441% U.S. dollar denominated rate. The swaps have been designated as cash flow hedges with changes in the fair value of the derivative recognized in other comprehensive income/(loss). See Note 9. “Fair Value Measurements” for additional details on the fair value of the swaps.

Unsecured syndicated revolving credit facility

As of September 30, 2024 and December 31, 2023, the Company had $1.3 billion and $1.1 billion, respectively, outstanding under its unsecured syndicated revolving credit facility (the “Revolving Credit Facility”). Borrowings under the Revolving Credit Facility are used to finance the Company’s working capital needs in the ordinary course of business and for other general corporate purposes.
11
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In April 2024, the Company amended and extended its Revolving Credit Facility through an amendment that, among other things, extended the final maturity date from May 5, 2027 to May 5, 2028 and amended the total revolving commitments thereunder to approximately $7.8 billion as of May 5, 2024. As of November 7, 2024, lenders held revolving commitments totaling approximately $7.5 billion that mature on May 5, 2028, commitments totaling $25.0 million that mature on May 5, 2027, $210.0 million that mature on May 5, 2026 and commitments totaling $25.0 million that mature on May 5, 2025. Borrowings under the Revolving Credit Facility continue to accrue interest at Adjusted Term SOFR (as defined in the Revolving Credit Facility) plus a margin of 1.05% per year. The Company is required to pay a facility fee of 0.20% per year in respect of total commitments under the Revolving Credit Facility. Interest rate and facility fees are subject to changes in the Company’s credit ratings.

Unsecured term financings

As of September 30, 2024 and December 31, 2023, the outstanding balance on the Company’s unsecured term financings was $2.1 billion and $1.6 billion, respectively.

In August 2024, the Company amended its existing $750.0 million term loan that, among other things, increased the aggregate term loan commitments by an additional $500.0 million and reduced the interest rate applicable to borrowings. Under the terms of the loan agreement, the Company had the ability to set the funding date of the additional commitments, subject to an outside funding date of November 15, 2024. The Company elected to borrow the additional $500.0 million on October 1, 2024. As amended, the term loan bears interest at a floating rate of Term SOFR plus 1.20% plus a credit spread adjustment of 0.10% and has a final maturity on November 24, 2026. The term loan contains customary covenants and events of default consistent with the Company’s Revolving Credit Facility. As of September 30, 2024 and October 1, 2024, the Company had $750.0 million and $1.25 billion in borrowings outstanding under the term loan, respectively.

In addition, during the three months ended September 30, 2024, the Company entered into a $250.0 million unsecured term loan with a one-year maturity bearing interest at a floating rate of Term SOFR plus 1.25% plus a credit spread adjustment of 0.10%.

Secured debt financings

In August 2024, the Company entered into a $267.3 million secured term loan and pledged six aircraft as collateral with a net book value of $346.6 million. The term loan bears interest at a floating rate of Term SOFR plus 1.35% and has a final maturity on July 31, 2031. The term loan contains customary covenants and events of default consistent with the Company’s Revolving Credit Facility.

As of September 30, 2024, the Company had an outstanding balance of $551.7 million in secured debt financings, including the secured term loan mentioned above, and had pledged ten aircraft as collateral, with a net book value of $778.9 million. As of December 31, 2023, the Company had an outstanding balance of $305.5 million in secured debt financings and pledged four aircraft as collateral with a net book value of $445.9 million. All of the Company’s secured obligations as of September 30, 2024 and December 31, 2023 are recourse in nature.

Maturities

Maturities of debt outstanding as of September 30, 2024 are as follows (in thousands):
Years ending December 31,
2024$423,509 
20252,798,505 
20265,281,687 
20272,786,350 
20284,238,788 
Thereafter 4,820,828 
Total$20,349,667 

12
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 4. Flight equipment subject to operating lease

The following table summarizes the activities for the Company’s flight equipment subject to operating lease for the nine months ended September 30, 2024:

(in thousands)
Net book value as of December 31, 2023$26,231,208 
Purchase of aircraft3,730,181 
Depreciation(849,374)
Flight equipment subject to operating leases reclassified to flight equipment held for sale(1,143,097)
Flight equipment subject to operating leases reclassified to investment in sales-type lease(74,017)
Net book value as of September 30, 2024$27,894,901 
Accumulated depreciation as of September 30, 2024$(5,958,105)

Update on Russian fleet

As previously disclosed in the Company’s filings with the U.S. Securities and Exchange Commission, in June 2022, the Company and certain of its subsidiaries submitted insurance claims to the insurers on its aviation insurance policies to recover losses relating to aircraft detained in Russia for which the Company recorded a net write-off of its interests in its owned and managed aircraft totaling approximately $771.5 million for the year ended December 31, 2022. In December 2022, the Company filed suit in the Los Angeles County Superior Court of the State of California against its aviation insurance carriers in connection with its previously submitted insurance claims for which a trial date has been set for April 17, 2025. The Company continues to have significant claims against its aviation insurance carriers and will continue to vigorously pursue all available insurance claims and its related insurance litigation, and all rights and remedies therein. Collection, timing and amounts of any future insurance and related recoveries and the outcome of the Company’s ongoing insurance litigation remain uncertain at this time.

In January 2024, the Company and certain of its subsidiaries filed suit in the High Court of Justice, Business & Property Courts of England & Wales, Commercial Court against the Russian airlines’ aviation insurers and reinsurance insurers (collectively, the “Airlines’ Insurers”) seeking recovery under the Russian airlines’ insurance policies for certain aircraft that remain in Russia. The lawsuit against the Airlines’ Insurers is in the early stages and no trial date has been set.

As of November 7, 2024, 16 aircraft previously included in the Company’s owned fleet are still detained in Russia. The operators of these aircraft have continued to fly most of the aircraft notwithstanding the termination of leasing activities and the Company’s ongoing demands for the return of its assets.

Note 5. Flight Equipment Held for Sale

As of September 30, 2024, the Company had 23 aircraft, with a carrying value of $741.1 million, which were classified as held for sale and included in Other assets on the Consolidated Balance Sheets. The Company expects the sale of all 23 aircraft to be completed by the second half of 2025. During the nine months ended September 30, 2024, the Company received an aggregate of $186.9 million in purchase deposits pursuant to sale agreements related to five of the 23 aircraft, which amount is included in Accrued interest and other payables on the Consolidated Balance Sheets.

13
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

During the nine months ended September 30, 2024, the Company transferred 35 aircraft from flight equipment subject to operating lease to flight equipment held for sale and completed the sale of 25 aircraft from its held for sale portfolio. The Company ceases recognition of depreciation expense once an aircraft is classified as held for sale. As of December 31, 2023, the Company had 14 aircraft, with a carrying value of $605.1 million, which were held for sale and included in Other assets on the Consolidated Balance Sheets.

The following table summarizes the activities of the Company’s flight equipment held for sale for the nine months ended September 30, 2024 based on carrying value:
(in thousands)
Flight equipment held for sale as of December 31, 2023$605,104 
Flight equipment subject to operating leases reclassified to flight equipment held for sale1,143,097 
Aircraft sales(1,007,111)
Flight equipment held for sale as of September 30, 2024$741,090 

Note 6. Commitments and Contingencies

Aircraft Acquisition

As of September 30, 2024, the Company had commitments to purchase 287 aircraft from Airbus and Boeing for delivery through 2029, with an estimated aggregate commitment of $18.2 billion. The following table shows the Company’s contractual delivery commitment schedule as of September 30, 2024:

Estimated Delivery Years
Aircraft TypeLast 3 months of 20242025202620272028ThereafterTotal
Airbus A220-100/3008 14 6 12 12 2 54 
Airbus A320/321neo(1)
3 7 23 57 40 4 134 
Airbus A330-900neo2 — 1 — — — 3 
Airbus A350F—— — 4 2 1 7 
Boeing 737-8/9 MAX112720 12 2 — 72 
Boeing 787-9/10674 — — — 17 
Total(2)
305554 85 56 7 287 
(1) The Company’s Airbus A320/321neo aircraft orders include seven long-range variants and 49 extra long-range variants.
(2) The table above reflects aircraft deliveries based on contractual documentation and production adjustments as communicated by Airbus and Boeing through November 7, 2024. The Company’s contractual delivery commitment schedule is subject to a number of factors outside its control, including ongoing delays by Airbus and Boeing for certain aircraft, including as a result of the Boeing labor strike, and the Company cannot guarantee delivery of any particular aircraft at any specific time notwithstanding its contractual delivery commitment schedule.

The table above is subject to change based on Airbus and Boeing delivery delays. As noted below, the Company expects delivery delays for some aircraft in its orderbook. The Company remains in discussions with Airbus and Boeing to determine the extent and duration of delivery delays; however, the Company is not currently able to determine the full impact of these delays.

Pursuant to the Company’s purchase agreements with Airbus and Boeing, the Company agrees to contractual delivery dates for each aircraft ordered. These dates can change for a variety of reasons, however for the last several years, manufacturing delays have significantly impacted the planned purchases of the Company’s aircraft on order with Airbus and Boeing. The Company is currently experiencing delivery delays with both Airbus and Boeing aircraft.

In January 2024, the FAA ordered the temporary grounding of certain Boeing 737-9 MAX aircraft after the in-flight loss of a mid-cabin exit door plug in one aircraft. The 737-9 MAX aircraft has since returned to service; however, Boeing will not be allowed
14
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

by the FAA to increase 737 MAX production rates until quality control issues are resolved. In addition, in September 2024, the Company was notified by Boeing that certain union factory workers had commenced a labor strike. On November 4, 2024, the union factory workers voted to end the labor strike. The Company did not take delivery of any 737 MAX aircraft during the labor strike and some 787 deliveries were impacted. The Company expects its Boeing deliveries will continue to be delayed and is unable to estimate the duration of delays or the impact on the Company’s Boeing orderbook. The residual impacts of the Boeing labor strike have and may continue to impact the broader aviation supply chain.

The aircraft purchase commitments discussed above could also be impacted by cancellations. The Company’s purchase agreements with Airbus and Boeing generally provide each of the Company and the manufacturers with cancellation rights for delivery delays starting at one year after the original contractual delivery date, regardless of cause. In addition, the Company’s lease agreements generally provide each of the Company and the lessee with cancellation rights related to certain aircraft delivery delays that typically parallel the cancellation rights in the Company’s purchase agreements.

Commitments for the acquisition of these aircraft, calculated at an estimated aggregate purchase price (including adjustments for anticipated inflation) of approximately $18.2 billion as of September 30, 2024, are as follows (in thousands):

Years ending December 31,
2024 (excluding the nine months ended September 30, 2024)
$2,341,110 
20253,687,740 
20263,527,040 
20275,227,217 
20283,002,390 
Thereafter 416,433 
Total $18,201,930 

The Company has made non-refundable deposits on flight equipment purchases of $1.1 billion and $1.2 billion as of September 30, 2024 and December 31, 2023, respectively, which are subject to manufacturer performance commitments. If the Company is unable to satisfy its purchase commitments, the Company may be forced to forfeit its deposits and may also be exposed to breach of contract claims by its lessees as well as the manufacturers.

Note 7. Rental Income

As of September 30, 2024, minimum future rentals on non-cancellable operating leases of flight equipment in the Company’s owned fleet, which have been delivered as of September 30, 2024 are as follows (in thousands):

Years ending December 31,
2024 (excluding the nine months ended September 30, 2024)
$637,071 
20252,500,678 
20262,308,894 
20272,109,214 
20281,930,335 
Thereafter8,160,494 
Total$17,646,686 

Note 8. Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if the effect of including these shares would be anti-dilutive. The Company’s two classes of common stock, Class A and Class B non-voting,
15
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

have equal rights to dividends and income, and therefore, basic and diluted earnings per share are the same for each class of common stock. As of September 30, 2024, the Company did not have any Class B non-voting common stock outstanding.    

Diluted earnings per share takes into account the vesting of restricted stock units using the treasury stock method. For the three and nine months ended September 30, 2024, and 2023, the Company did not exclude any potentially dilutive securities, whose effect would have been anti-dilutive, from the computation of diluted earnings per share. The Company excluded 1,047,068 and 965,788 shares related to restricted stock units for which the performance metric had yet to be achieved as of September 30, 2024 and 2023, respectively.

The following table sets forth the reconciliation of basic and diluted earnings per share:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(in thousands, except share and per share)
Basic earnings per share:
Numerator
Net income$103,971 $132,450 $314,783 $393,571 
Preferred stock dividends(12,325)(10,425)(35,258)(31,275)
Net income attributable to common stockholders$91,646 $122,025 $279,525 $362,296 
Denominator
Weighted-average shares outstanding111,376,884 111,027,252 111,308,222 110,997,619 
Basic earnings per share$0.82 $1.10 $2.51 $3.26 
Diluted earnings per share:
Numerator
Net income$103,971 $132,450 $314,783 $393,571 
Preferred stock dividends(12,325)(10,425)(35,258)(31,275)
Net income attributable to common stockholders$91,646 $122,025 $279,525 $362,296 
Denominator
Number of shares used in basic computation111,376,884111,027,252111,308,222110,997,619
Weighted-average effect of dilutive securities427,229 319,547493,535385,638
Number of shares used in per share computation111,804,113 111,346,799 111,801,757 111,383,257 
Diluted earnings per share$0.82 $1.10 $2.50 $3.25 

Note 9. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring and Non-recurring Basis

The Company has four cross-currency swaps related to its Canadian dollar and Euro Medium-Term Notes. The fair value of these swaps as a foreign currency derivative are categorized as a Level 2 measurement in the fair value hierarchy and are measured on a recurring basis. As of September 30, 2024, the estimated fair value of three of the Company’s foreign currency swaps were, in the aggregate, derivative assets of $17.8 million and the remaining one swap was a derivative liability of $4.1 million. As of December 31, 2023, the estimated fair value of two of the Company’s foreign currency swaps were, in the aggregate, derivative assets of $17.0 million. Derivative assets are included in Other assets on the Company’s Consolidated Balance Sheets while derivative liabilities are included in Accrued interest and other payables on the Company’s Consolidated Balance Sheets.

Financial Instruments Not Measured at Fair Values

The fair value of debt financing is estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities, which would be categorized as a Level 2 measurement in the fair value hierarchy. The estimated fair value of debt financing as of September 30, 2024 was $20.2 billion compared to a book value
16
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

of $20.3 billion. The estimated fair value of debt financing as of December 31, 2023 was $18.7 billion compared to a book value of $19.4 billion.

The following financial instruments are not measured at fair value on the Company’s Consolidated Balance Sheets at September 30, 2024, but require disclosure of their fair values: cash and cash equivalents and restricted cash. The estimated fair value of such instruments at September 30, 2024 and December 31, 2023 approximates their carrying value as reported on the Consolidated Balance Sheets. The fair value of all these instruments would be categorized as Level 1 in the fair value hierarchy.

Note 10.     Shareholders’ Equity

The Company was authorized to issue up to 500,000,000 shares of Class A common stock, $0.01 par value, at September 30, 2024 and December 31, 2023. As of September 30, 2024 and December 31, 2023, the Company had 111,376,884 and 111,027,252 shares of Class A common stock issued and outstanding, respectively. The Company was authorized to issue up to 10,000,000 shares of Class B common stock, $0.01 par value at September 30, 2024 and December 31, 2023. The Company did not have any shares of Class B non-voting common stock, $0.01 par value, issued or outstanding as of September 30, 2024 or December 31, 2023.

The Company was authorized to issue up to 50,000,000 shares of preferred stock, $0.01 par value, at September 30, 2024 and December 31, 2023. As of September 30, 2024 and December 31, 2023, the Company had 10.0 million shares of 6.15% Fixed-to-Floating Non-Cumulative Perpetual Preferred Stock, Series A (the “Series A Preferred Stock”), $0.01 par value, issued and outstanding with an aggregate liquidation preference of $250.0 million ($25.00 per share), 300,000 shares of 4.65% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”), $0.01 par value, issued and outstanding with an aggregate liquidation preference of $300.0 million ($1,000 per share) and 300,000 shares of 4.125% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C (the “Series C Preferred Stock”), $0.01 par value, issued and outstanding with an aggregate liquidation preference of $300.0 million ($1,000 per share). On September 17, 2024, the Company issued a notice of redemption for all of its outstanding shares of Series A Preferred Stock, with a redemption date of October 17, 2024 (the “Series A Preferred Stock Redemption Date”), pursuant to which the Company would redeem all outstanding shares of Series A Preferred Stock at a redemption price of $25.00 per share, plus dividends that have been declared but are unpaid in respect of such shares of Series A Preferred Stock for the dividend period in which the Series A Preferred Stock Redemption Date occurs to, but excluding, the Series A Preferred Stock Redemption Date.

On September 24, 2024, the Company issued 300,000 shares of Series D Preferred Stock (the “Series D Preferred Stock”). The Company will pay dividends on the Series D Preferred Stock only when, as and if declared by the board of directors. Dividends will accrue, on a non-cumulative basis, on the stated amount of $1,000 per share at a rate per annum equal to: (i) 6.00% through December 15, 2029, and payable quarterly in arrears beginning on December 15, 2024, and (ii) the Five-year U.S. Treasury Rate as of the applicable reset dividend determination date plus a spread of 2.560% per reset period from December 15, 2029 and reset every five years and payable quarterly in arrears; provided, that the dividend rate per annum during any reset period will not reset below 6.00% (which equals the initial dividend rate per annum on the Series D Preferred Stock).

17
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table summarizes the Company’s preferred stock issued and outstanding as of September 30, 2024 (in thousands, except for share amounts and percentages):

Shares Issued and Outstanding as of September 30, 2024
Liquidation Preference
as of
September 30, 2024(2)
Issue Date
Dividend Rate in Effect at September 30, 2024(3)
Next dividend rate reset date
Dividend rate after reset date(4)
Series A(5)
10,000,000 $250,000 March 5, 2019
3M Term SOFR(1) plus 3.65%
N/AN/A
Series B300,000 300,000 March 2, 20214.65%June 15, 2026
5 Yr U.S. Treasury plus 4.076%
Series C300,000 300,000 October 13, 20214.125%December 15, 2026
5 Yr U.S. Treasury plus 3.149%
Series D300,000 300,000 September 24, 20246.00%December 15, 2029
5 Yr U.S. Treasury plus 2.560%
Total10,900,000 $1,150,000 
(1) 3M Term SOFR includes a credit spread adjustment of 0.10%.
(2) The Series A Preferred Stock has a redemption price of $25.00 per share, plus any declared and unpaid dividends to, but excluding, the redemption date without accumulation of any undeclared dividends. The Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock each have a redemption price of $1,000.00 per share, plus any declared and unpaid dividends to, but excluding, the redemption date without accumulation of any undeclared dividends.
(3) Dividends on preferred stock are discretionary and non-cumulative. When declared, dividends on the Series A Preferred Stock are reset quarterly and payable quarterly in arrears and dividends on the Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are reset every five years and payable quarterly in arrears.
(4) With respect to the Series D Preferred Stock, the dividend rate during any reset period is subject to a 6.00% floor.
(5) On September 17, 2024, the Company issued a notice of redemption for all of its outstanding shares of Series A Preferred Stock.

Note 11.     Stock-based Compensation

On May 3, 2023, the stockholders of the Company approved the Air Lease Corporation 2023 Equity Incentive Plan (the “2023 Plan”). As of September 30, 2024, the number of shares of Class A Common Stock available for new award grants under the 2023 Plan is approximately 3,749,209. The Company has issued restricted stock units (“RSUs”) with four different vesting criteria: those RSUs that vest based on the attainment of book-value goals, those RSUs that vest based on the attainment of total shareholder return (“TSR”) goals, time based RSUs that vest ratably over a time period of three years and RSUs that cliff vest at the end of a one or two year period.

The Company recorded $7.9 million and $8.7 million of stock-based compensation expense related to RSUs for the three months ended September 30, 2024 and 2023, respectively.

The Company recorded $25.0 million and $23.3 million of stock-based compensation expense related to RSUs for the nine months ended September 30, 2024 and 2023, respectively.

Restricted Stock Units

Compensation cost for RSUs is measured at the grant date based on fair value and recognized over the vesting period. The fair value of time based and book value RSUs is determined based on the closing market price of the Company’s Class A common stock on the date of grant, while the fair value of RSUs that vest based on the attainment of TSR goals is determined at the grant date using a Monte Carlo simulation model. Included in the Monte Carlo simulation model were certain assumptions regarding a number of highly complex and subjective variables, such as expected volatility, risk-free interest rate and expected dividends. To appropriately value the award, the risk-free interest rate is estimated for the time period from the valuation date until the vesting date and the historical volatilities were estimated based on a historical timeframe equal to the time from the valuation date until the end date of the performance period.

18
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

During the nine months ended September 30, 2024, the Company granted 827,980 RSUs of which 133,438 were TSR RSUs and 308,421 were book value RSUs. The following table summarizes the activities for the Company’s unvested RSUs for the nine months ended September 30, 2024:
Unvested Restricted Stock Units
Number of
Shares		Weighted-Average
Grant-Date
Fair Value
Unvested at December 31, 2023
1,607,575 $46.44 
Granted827,980 $41.56 
Vested (1)
(591,381)$44.95 
Forfeited/canceled(123,224)$50.61 
Unvested at September 30, 2024
1,720,950 $44.30 
Expected to vest after September 30, 2024
1,926,327 $44.19 
(1) During the nine months ended September 30, 2024, 247,258 performance based RSUs and 344,123 time-based RSUs vested.

As of September 30, 2024, there was $38.8 million of unrecognized compensation expense related to unvested stock-based payments granted to employees. Total unrecognized compensation expense will be recognized over a weighted-average remaining period of 1.73 years.

Note 12. Aircraft Under Management

As of September 30, 2024, the Company managed 64 aircraft across three aircraft management platforms. The Company managed 31 aircraft through its Thunderbolt platform, 32 aircraft through the Blackbird investment funds and one aircraft on behalf of a financial institution.

As of September 30, 2024, the Company managed 32 aircraft on behalf of third-party investors through two investment funds, Blackbird I and Blackbird II. These funds invest in commercial jet aircraft and lease them to airlines throughout the world. The Company provides management services to these funds for a fee. As of September 30, 2024, the Company's non-controlling interests in each fund were 9.5% and are accounted for under the equity method of accounting. The Company’s investments in these funds aggregated $71.4 million and $69.4 million as of September 30, 2024 and December 31, 2023, respectively, and are included in Other assets on the Consolidated Balance Sheets.

Additionally, the Company continues to manage aircraft that it sells through its Thunderbolt platform. The Thunderbolt platform facilitates the sale of mid-life aircraft to investors while allowing the Company to continue the management of these aircraft for a fee. As of September 30, 2024, the Company managed 31 aircraft across three separate transactions. The Company has non-controlling interests in two of these entities of approximately 5.0%, which are accounted for under the cost method of accounting. The Company’s total investment in aircraft sold through its Thunderbolt platform was $8.8 million as of each of September 30, 2024 and December 31, 2023 and is included in Other assets on the Consolidated Balance Sheets.

On November 6, 2023, Thunderbolt I entered into an agreement to sell all aircraft in its portfolio, consisting of 13 aircraft. During the nine months ended September 30, 2024, Thunderbolt I completed the sale of 12 of the 13 aircraft and, as of October 30, 2024, the sale of all 13 aircraft was completed. As servicer of Thunderbolt I, the Company facilitated the sale and transfer of the aircraft.

Note 13. Net Investment in Sales-type Leases

As of September 30, 2024, the Company had sales-type leases for 14 aircraft and one engine. As of December 31, 2023, the Company had sales-type leases for 12 aircraft in its owned fleet.

19
Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Net investment in sales-type leases are included in Other assets in the Company’s Consolidated Balance Sheets based on the present value of fixed payments under the contract and the residual value of the underlying asset, discounted at the rate implicit in the lease. The Company’s investment in sales-type leases consisted of the following (in thousands):

September 30, 2024December 31, 2023
Future minimum lease payments to be received$341,757 $285,443 
Estimated residual values of leased flight equipment135,758 108,688 
Less: Unearned income(62,959)(53,412)
Net Investment in Sales-type Leases$414,556 $340,719 

As of September 30, 2024, future minimum lease payments to be received on sales-type leases were as follows:
(in thousands)
Years ending December 31,
2024 (excluding the nine months ended September 30, 2024)
$9,481 
202537,924 
202637,924 
202737,924 
202837,924 
Thereafter180,580 
Total$341,757 

Note 14. Subsequent Events

On October 17, 2024, the Company redeemed all outstanding shares of Series A Preferred Stock at a redemption price of $25.00 per share, plus $0.187219 per share in declared and unpaid dividends to but excluding the redemption date. The redemption price paid in excess of the carrying value of Series A Preferred Stock of $7.9 million will be included as a deemed dividend on redemption of preferred stock in the consolidated statements of operations and other comprehensive income for the year ended December 31, 2024. Following the redemption, all previously authorized shares of the Series A Preferred Stock resumed the status of undesignated shares of the Company’s preferred stock, par value $0.01 per share.

On November 6, 2024, the Company’s board of directors approved quarterly cash dividends for the Company’s Class A common stock and Series B, Series C and Series D preferred stock. The following table summarizes the details of the dividends that were declared:

Title of each classCash dividend per shareRecord DatePayment Date
Class A Common Stock$0.22 December 12, 2024January 9, 2025
Series B Preferred Stock$11.625 November 30, 2024December 15, 2024
Series C Preferred Stock$10.3125 November 30, 2024December 15, 2024
Series D Preferred Stock$13.50 November 30, 2024December 15, 2024

20
ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Overview

Air Lease Corporation (the “Company”, “ALC”, “we”, “our” or “us”) is a leading aircraft leasing company that was founded by aircraft leasing industry pioneer, Steven F. Udvar-Házy. We are principally engaged in purchasing the most modern, fuel-efficient new technology commercial jet aircraft directly from aircraft manufacturers, such as Airbus S.A.S. (“Airbus”) and The Boeing Company (“Boeing”), and leasing those aircraft to airlines throughout the world with the intention to generate attractive returns on equity. In addition to our leasing activities, we sell aircraft from our fleet to third-parties, including other leasing companies, financial services companies, airlines and other investors. We also provide fleet management services to investors and owners of aircraft portfolios for a management fee. Our operating performance is driven by the growth of our fleet, the terms of our leases, the interest rates on our debt, and the aggregate amount of our indebtedness, supplemented by gains from aircraft sales and our management fees.

Third Quarter Overview

During the three months ended September 30, 2024, we purchased 20 new aircraft from Airbus and Boeing and sold nine aircraft. We ended the third quarter with a total of 485 aircraft in our owned fleet. The net book value of our fleet1 grew by 6.3% to $27.9 billion as of September 30, 2024 compared to $26.2 billion as of December 31, 2023. The weighted average age of our fleet was 4.6 years and the weighted average lease term remaining was 7.1 years as of September 30, 2024. Our managed fleet was comprised of 64 aircraft as of September 30, 2024 compared to 78 aircraft as of December 31, 2023. We have a globally diversified customer base comprised of 117 airlines in 59 countries as of September 30, 2024. We continued to maintain a strong lease utilization rate of 100.0% for the three months ended September 30, 2024.

As of September 30, 2024, we had commitments to purchase 287 aircraft from Airbus and Boeing for delivery through 2029, with an estimated aggregate commitment of $18.2 billion. We have placed 100% and 95% of our committed orderbook on long-term leases for aircraft delivering through the end of 2025 and 2026, respectively, and have placed 63% of our entire orderbook. We ended the third quarter of 2024 with $29.7 billion in committed minimum future rental payments, consisting of $17.6 billion in contracted minimum rental payments on the aircraft in our existing fleet and $12.1 billion in minimum future rental payments related to aircraft which will deliver during the last three months of 2024 through 2028.

We finance the purchase of aircraft and our business with our available cash balances and internally generated funds, which includes cash flows from our leases, as well as aircraft sales and debt financing activities. Our debt financing strategy is focused on raising unsecured debt in the global bank and debt capital markets, with limited utilization of government guaranteed export credit or other forms of secured financing. During the third quarter of 2024, we entered into a variety of committed term loans totaling approximately $1.0 billion. We ended the third quarter of 2024 with an aggregate borrowing capacity under our unsecured revolving credit facility of approximately $6.5 billion and total liquidity of $7.5 billion. As of September 30, 2024, we had total debt outstanding of $20.3 billion, of which 81.0% was at a fixed rate and 97.3% was unsecured, and in the aggregate, our composite cost of funds was 4.21%.

Our total revenues for the quarter ended September 30, 2024 increased by 4.7% to $690.2 million, compared to the quarter ended September 30, 2023. Our total revenues increased from the prior year due to the growth of our fleet and an increase in our sales activity, partially offset by a slight decrease in our lease yields due to the sales of older aircraft with higher lease yields and the purchases of new aircraft with lower initial lease yields. We recorded $41.5 million in gains from the sale of nine aircraft for the three months ended September 30, 2024, compared to $39.0 million in gains from the sale of eight aircraft for the three months ended September 30, 2023. We also experienced a decline in end of lease revenue of approximately $12.4 million as compared to the prior period due to fewer aircraft returns during the three months ended September 30, 2024.

During the three months ended September 30, 2024, we recorded net income attributable to common stockholders of $91.6 million, or $0.82 per diluted share, as compared to net income attributable to common stockholders of $122.0 million, or $1.10 per
1 References throughout this Quarterly Report on Form 10-Q to “our fleet” refer to the aircraft included in flight equipment subject to operating leases and do not include aircraft in our managed fleet, flight equipment held for sale or aircraft classified as net investments in sales-type leases unless the context indicates otherwise.
21
diluted share, for the three months ended September 30, 2023. The decrease from the prior year period is primarily due to higher interest expense, driven by the increase in our composite cost of funds and overall outstanding debt balance, partially offset by the increase in our total revenues as discussed above.

For the three months ended September 30, 2024, we recorded adjusted net income before income taxes2 of $140.2 million, or $1.25 per adjusted diluted share, compared to an adjusted net income before income taxes of $177.0 million, or $1.59 per adjusted diluted share, for the three months ended September 30, 2023. Adjusted net income before income taxes decreased primarily due to higher interest expense, driven by the increase in our composite cost of funds and overall outstanding debt balance, partially offset by an increase in our total revenues as discussed above.

Our Fleet

We continue to own one of the youngest fleets among aircraft lessors, including some of the most fuel-efficient commercial jet aircraft available. Our fleet, based on net book value, increased by 6.3%, to $27.9 billion as of September 30, 2024, compared to $26.2 billion as of December 31, 2023. During the three months ended September 30, 2024, we purchased 20 new aircraft from Airbus and Boeing and sold nine aircraft. We ended the period with a total of 485 aircraft in our owned fleet. As of September 30, 2024, the weighted average fleet age and weighted average remaining lease term of our fleet were 4.6 years and 7.1 years, respectively. We also managed 64 aircraft as of September 30, 2024.

Our portfolio metrics as of September 30, 2024 and December 31, 2023 are as follows:
September 30, 2024December 31, 2023
Net book value of flight equipment subject to operating lease
$27.9 billion$26.2 billion
Weighted-average fleet age(1)
4.6 years4.6 years
Weighted-average remaining lease term(1)
7.1 years7.0 years
Owned fleet(2)
485463
Managed fleet6478
Aircraft on order287334
Total
836875
Current fleet contracted rentals
$17.6 billion$16.4  billion
Committed fleet rentals
$12.1  billion$14.6  billion
Total committed rentals
$29.7  billion$31.0  billion
(1) Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease.
(2) As of September 30, 2024 and December 31, 2023, our owned fleet count included 23 and 14 aircraft classified as flight equipment held for sale, respectively, and 14 and 12 aircraft classified as net investments in sales-type leases, respectively, which are all included in Other assets on the Consolidated Balance Sheet.
2 Adjusted net income before income taxes excludes the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items. Adjusted net income before income taxes and adjusted diluted earnings per share before income taxes are measures of financial and operational performance that are not defined by U.S. Generally Accepted Accounting Principles (“GAAP”). See “Results of Operations” below for a discussion of adjusted net income before income taxes and adjusted diluted earnings per share before income taxes as non-GAAP measures and a reconciliation of these measures to net income attributable to common stockholders.
22
The following table sets forth the net book value and percentage of the net book value of our flight equipment subject to operating leases in the indicated regions based on each airline’s principal place of business as of September 30, 2024 and December 31, 2023:

September 30, 2024December 31, 2023
RegionNet Book
Value		% of TotalNet Book
Value		% of Total
(in thousands, except percentages)
Europe$11,427,738 41.0 %$9,881,024 37.7 %
Asia Pacific10,153,630 36.4 %10,456,435 39.8 %
Central America, South America, and Mexico2,711,561 9.7 %2,361,089 9.0 %
The Middle East and Africa1,985,424 7.1 %2,062,420 7.9 %
U.S. and Canada1,616,548 5.8 %1,470,240 5.6 %
Total$27,894,901 100.0 %$26,231,208 100.0 %

The following table sets forth our top five lessees by net book value as of September 30, 2024:

September 30, 2024
Lessee% of Total
Air France-KLM Group6.3 %
Virgin Atlantic5.8 %
ITA5.5 %
Aeromexico4.5 %
EVA Air4.4 %
23
The following table sets forth the number of aircraft in our owned fleet by aircraft type as of September 30, 2024 and December 31, 2023:
September 30, 2024December 31, 2023
Aircraft typeNumber of
Aircraft		% of TotalNumber of
Aircraft		% of Total
Airbus A220-1005 1.0 %2 0.4 %
Airbus A220-30017 3.5 %13 2.8 %
Airbus A319-1001 0.2 %1 0.2 %
Airbus A320-20026 5.4 %28 6.0 %
Airbus A320-200neo23 4.7 %25 5.4 %
Airbus A321-20021 4.3 %23 5.0 %
Airbus A321-200neo108 22.3 %95 20.6 %
Airbus A330-200(1)
13 2.7 %13 2.8 %
Airbus A330-3005 1.0 %5 1.1 %
Airbus A330-900neo26 5.4 %23 5.0 %
Airbus A350-90017 3.5 %14 3.0 %
Airbus A350-10008 1.6 %7 1.5 %
Boeing 737-7002 0.4 %3 0.6 %
Boeing 737-80064 13.2 %73 15.8 %
Boeing 737-8 MAX58 12.0 %52 11.2 %
Boeing 737-9 MAX30 6.2 %29 6.3 %
Boeing 777-200ER1 0.2 %1 0.2 %
Boeing 777-300ER24 4.9 %24 5.2 %
Boeing 787-926 5.4 %25