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Delaware | 27-1840403 | |||||||
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Large accelerated filer Non-accelerated filer Emerging growth Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock AL New York Stock Exchange 6.150% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A AL PRA New York Stock Exchange and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ No ☐Act. (Check one): ☒☒ Accelerated filer ☐ ☐☐ Smaller reporting company ☐ (Do not check if a smaller reporting company)company☐☐ November 8, 2017,August 2, 2023, there were 103,240,094111,027,252 shares of Air Lease Corporation’s Class A common stock outstanding.PagePage 344567816293030303030303031322
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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 statementinformation 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.
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September 30, 2017 December 31, 2016 (unaudited) Assets Cash and cash equivalents $ 226,019 $ 274,802 Restricted cash 19,411 Flight equipment subject to operating leases 14,397,998 Less accumulated depreciation (1,725,061) (1,555,605) 12,672,937 Deposits on flight equipment purchases 1,551,750 Other assets 431,530 Total assets $ 14,901,647 $ 13,975,616 Liabilities and Shareholders’ Equity Accrued interest and other payables $ 232,399 $ 256,775 Debt financing, net of discounts and issuance costs 9,237,320 Security deposits and maintenance reserves on flight equipment leases 850,363 Rentals received in advance 102,442 Deferred tax liability 823,540 Total liabilities $ 11,246,064 $ 10,593,429 Shareholders’ Equity Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued or outstanding — — Class A common stock, $0.01 par value; authorized 500,000,000 shares; issued and outstanding 103,239,538 and 102,844,477 shares at September 30, 2017 and December 31, 2016, respectively 1,032 1,010 Class B non-voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding — — Paid-in capital 2,248,950 2,237,866 Retained earnings 1,405,601 1,143,311 Total shareholders’ equity $ 3,655,583 $ 3,382,187 Total liabilities and shareholders’ equity $ 14,901,647 $ 13,975,616 OPERATIONS AND OTHER COMPREHENSIVE INCOME/(LOSS) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (unaudited) Revenues Rental of flight equipment $ 359,487 $ 340,864 $ 1,072,254 $ 985,375 Aircraft sales, trading and other 17,278 14,237 45,655 63,193 Total revenues 376,765 355,101 1,117,909 1,048,568 Expenses Interest 63,514 64,720 193,591 188,870 Amortization of debt discounts and issuance costs 6,959 8,081 22,388 22,630 Interest expense 70,473 72,801 215,979 211,500 Depreciation of flight equipment 127,553 113,251 377,952 333,962 Selling, general and administrative 19,262 19,874 65,677 59,929 Stock-based compensation 5,358 4,602 14,435 12,342 Total expenses 222,646 210,528 674,043 617,733 Income before taxes 154,119 144,573 443,866 430,835 Income tax expense (54,931) (51,297) (158,816) (152,898) Net income $ 99,188 $ 93,276 $ 285,050 $ 277,937 Net income per share of Class A and Class B common stock: Basic $ 0.96 $ 0.91 $ 2.76 $ 2.70 Diluted $ 0.90 $ 0.86 $ 2.59 $ 2.55 Weighted-average shares outstanding Basic 103,221,692 102,842,996 103,117,695 102,786,822 Diluted 111,709,545 110,788,913 111,558,125 110,737,889 Class A Class B Non-Voting Preferred Stock Common Stock Common Stock Paid-in Retained (unaudited) Shares Amount Shares Amount Shares Amount Capital Earnings Total Balance at December 31, 2016 — $ — 102,844,477 $ 1,010 — $ — $ 2,237,866 $ 1,143,311 $ 3,382,187 Cumulative effect adjustment upon adoption of ASU 2016-09 — — — — — — — 458 458 Issuance of common stock upon vesting of restricted stock units and upon exercise of options and warrants — — 533,208 22 — — 2,249 — 2,271 Stock-based compensation — — — — — — 14,435 — 14,435 Cash dividends (declared $0.225 per share) — — — — — — — (23,218) (23,218) Tax withholding related to vesting of restricted stock units and exercise of stock options — — (138,147) — — — (5,600) — (5,600) Net income — — — — — — — 285,050 285,050 Balance at September 30, 2017 — $ — 103,239,538 $ 1,032 — $ — $ 2,248,950 $ 1,405,601 $ 3,655,583 Nine Months Ended September 30, 2017 2016 (unaudited) Operating Activities Net income $ 285,050 $ 277,937 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of flight equipment 377,952 333,962 Stock-based compensation 14,435 12,342 Deferred taxes 158,816 152,898 Amortization of debt discounts and issuance costs 22,388 22,630 Gain on aircraft sales, trading and other activity (23,785) (47,687) Changes in operating assets and liabilities: Other assets (80,509) (24,305) Accrued interest and other payables (5,768) 23,769 Rentals received in advance 3,057 9,933 Net cash provided by operating activities 751,636 761,479 Investing Activities Acquisition of flight equipment under operating lease (1,304,317) (1,436,679) Payments for deposits on flight equipment purchases (565,343) (641,737) Proceeds from aircraft sales, trading and other activity 595,796 649,210 Acquisition of aircraft furnishings, equipment and other assets (134,709) (165,378) Net cash used in investing activities (1,408,573) (1,594,584) Financing Activities Issuance of common stock upon exercise of options and warrants 2,214 — Cash dividends paid (23,191) (15,413) Tax withholdings on stock-based compensation (5,600) (5,890) Net change in unsecured revolving facilities 670,000 298,000 Proceeds from debt financings 1,101,673 1,526,001 Payments in reduction of debt financings (1,266,440) (1,000,559) Net change in restricted cash (3,411) (534) Debt issuance costs (4,164) (4,362) Security deposits and maintenance reserve receipts 173,879 153,151 Security deposits and maintenance reserve disbursements (36,806) (47,142) Net cash provided by financing activities 608,154 903,252 Net (decrease)/increase in cash (48,783) 70,147 Cash and cash equivalents at beginning of period 274,802 156,675 Cash and cash equivalents at end of period $ 226,019 $ 226,822 Supplemental Disclosure of Cash Flow Information Cash paid during the period for interest, including capitalized interest of $33,618 and $30,137 at September 30, 2017 and 2016, respectively $ 252,806 $ 224,420 Supplemental Disclosure of Noncash Activities Buyer furnished equipment, capitalized interest, deposits on flight equipment purchases and seller financing applied to acquisition of flight equipment and other assets applied to payments for deposits on flight equipment purchases $ 398,024 $ 642,417 Cash dividends declared, not yet paid $ 7,742 $ 5,142 September 30, 2017 December 31, 2016 Unsecured Senior notes $ 6,919,871 $ 6,953,343 Revolving credit facility 1,436,000 766,000 Term financings 211,782 211,346 Convertible senior notes 199,985 199,995 Total unsecured debt financing 8,767,638 8,130,684 Secured Term financings 511,353 619,767 Export credit financing 46,583 51,574 Total secured debt financing 557,936 671,341 Total debt financing 9,325,574 8,802,025 Less: Debt discounts and issuance costs (88,254) (88,151) Debt financing, net of discounts and issuance costs $ 9,237,320 $ 8,713,874 September 30, 2017 December 31, 2016 Nonrecourse $ 215,165 $ 245,155 Recourse 342,771 426,186 Total secured debt financing $ 557,936 $ 671,341 Number of aircraft pledged as collateral 21 25 Net book value of aircraft pledged as collateral $ 1,197,399 $ 1,421,657 securities (including Medium-Term Note Program) 2022, the outstanding balance on other debt financings was $708.3 million and the Company had pledged three aircraft as collateral with a net book value of $212.1 million. Years ending December 31, 2017 $ 39,677 2018 1,565,765 2019 1,091,216 2020 1,258,535 2021 2,345,679 Thereafter 3,024,702 Total $ 9,325,574 Aircraft Type 2017 2018 2019 2020 2021 Thereafter Total Airbus A321-200 — 2 — — — — 2 Airbus A320/321neo(1) 2 18 32 26 22 44 144 Airbus A330-900neo — 7 5 5 5 5 27 Airbus A350-900/1000 2 4 2 7 9 — 24 Boeing 737-7/8/9 MAX 2 12 27 27 35 27 130 Boeing 787-9/10 2 7 12 9 7 8 45 Total(2) 8 50 78 74 78 84 372 change based on Airbus agreements. Years ending December 31, 2017 $ 998,592 2018 4,444,854 2019 5,732,940 2020 5,989,309 2021 5,859,304 Thereafter 5,063,064 Total $ 28,088,063 Subsidiaries as follows (in thousands): six months ended Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Basic net income per share: Numerator Net income $ 99,188 $ 93,276 $ 285,050 $ 277,937 Denominator Weighted-average common shares outstanding 103,221,692 102,842,996 103,117,695 102,786,822 Basic net income per share $ 0.96 $ 0.91 $ 2.76 $ 2.70 Diluted net income per share: Numerator Net income $ 99,188 $ 93,276 $ 285,050 $ 277,937 Assumed conversion of convertible senior notes 1,426 1,472 4,263 4,382 Net income plus assumed conversions $ 100,614 $ 94,748 $ 289,313 $ 282,319 Denominator Number of shares used in basic computation 103,221,692 102,842,996 103,117,695 102,786,822 Weighted-average effect of dilutive securities 8,487,853 7,945,917 8,440,430 7,951,067 Number of shares used in per share computation 111,709,545 110,788,913 111,558,125 110,737,889 Diluted net income per share $ 0.90 $ 0.86 $ 2.59 $ 2.55 2022, the estimated fair value of the foreign currency exchange derivative liability was $2.5 million. Values criteria: those RSUs that vest based on the attainment of Stock Options. Remaining Aggregate Exercise Contractual Term Intrinsic Value Shares Price (in years) (in thousands)(1) Balance at December 31, 2016 3,308,158 $ 20.40 3.50 $ 46,086 Granted — $ — — $ — Exercised (97,500) $ 22.71 — $ 1,618 Forfeited/canceled — $ — — $ — Balance at September 30, 2017 3,210,658 $ 20.33 2.74 $ 71,569 Vested and exercisable as of September 30, 2017 3,210,658 $ 20.33 2.74 $ 71,569 Stock Options Exercisable and Vested Weighted- Average Number of Remaining Life Range of exercise prices Shares (in years) $20.00 3,090,658 2.71 $28.80 120,000 3.57 $20.00 - $28.80 3,210,658 2.74 During the Unvested Restricted Stock Units Weighted-Average Grant-Date Number of Shares Fair Value Unvested at December 31, 2016 1,129,045 $ 37.47 Granted 505,545 $ 45.05 Vested (311,259) $ 37.43 Forfeited/canceled (103,364) $ 48.27 Unvested at September 30, 2017 1,219,967 $ 39.71 2028 with ongoing delays that could extend through 2029, with an estimated aggregate commitment of $23.2 billion. We have placed 100% of our committed orderbook on long-term leases for aircraft delivering through the end of 2024 and have placed 58% of our entire orderbook. We ended the net investments in sales-type leases unless the context indicates otherwise. Portfolio metrics of our September 30, 2017 December 31, 2016 Aggregate fleet net book value $ 12.7 billion $ 12.0 billion Weighted-average fleet age(1) 3.7 years 3.8 years Weighted-average remaining lease term(1) 6.8 years 6.9 years Owned fleet 236 237 Managed fleet 51 30 Order book 372 363 Current fleet contracted rentals $ 9.6 billion $ billion Committed fleet rentals $ 13.7 billion $ billion Total committed rentals $ 23.3 billion $ billion The following table sets forth the net book value and percentage of the net book value of our September 30, 2017 December 31, 2016 Net Book Net Book Region Value % of Total Value % of Total Europe $ 4,077,350 32.2 % $ % China 2,746,775 21.7 % 23.0 % Asia (excluding China) 2,651,270 20.9 % 22.7 % The Middle East and Africa 1,171,528 9.2 % % Central America, South America and Mexico 979,000 7.7 % % U.S. and Canada 605,312 4.8 % % Pacific, Australia and New Zealand 441,702 3.5 % % Total $ 12,672,937 100.0 % $ 12,041,925 100.0 % September 30, 2017 December 31, 2016 Number of Number of Aircraft type Aircraft % of Total Aircraft % of Total Airbus A319-100 1 0.4 % % Airbus A320-200 40 17.0 % % Airbus A320-200neo 5 2.1 % % Airbus A321-200 29 12.3 % % Airbus A321-200neo 3 1.3 % — — % Airbus A330-200 16 6.8 % % Airbus A330-300 5 2.1 % % Boeing 737-700 3 1.3 % % Boeing 737-800 101 42.8 % % Boeing 767-300ER 1 0.4 % % Boeing 777-200ER 1 0.4 % % Boeing 777-300ER 24 10.2 % % Boeing 787-9 6 2.5 % 3 % Embraer E190 1 0.4 % 6 % Total 236 100.0 % 237 100.0 % Aircraft Type 2017 2018 2019 2020 2021 Thereafter Total Airbus A321-200 — 2 — — — — 2 Airbus A320/321neo(1) 2 18 32 26 22 44 144 Airbus A330-900neo — 7 5 5 5 5 27 Airbus A350-900/1000 2 4 2 7 9 — 24 Boeing 737-7/8/9 MAX 2 12 27 27 35 27 130 Boeing 787-9/10 2 7 12 9 7 8 45 Total(2) 8 50 78 74 78 84 372 shown in the following table. The table is subject to change based on Airbus Number of Number Delivery Year Aircraft Leased % Leased 2017 8 8 100.0 % 2018 50 48 96.0 % 2019 78 68 87.2 % 2020 74 28 37.8 % 2021 78 6 7.7 % Thereafter 84 2 2.4 % Total 372 160 Revenues Liquidity and Capital Resources investment and debt financing needs for the next twelve months and potentially beyond. Our September 30, 2017 December 31, 2016 Unsecured Senior notes $ 6,919,871 $ Revolving credit facility 1,436,000 Term financings 211,782 Convertible senior notes 199,985 Total unsecured debt financing 8,767,638 Secured Term financings 511,353 Export credit financing 46,583 51,574 Total secured debt financing 557,936 671,341 Total debt financing 9,325,574 8,802,025 Less: Debt discounts and issuance costs (88,254) (88,151) Debt financing, net of discounts and issuance costs $ 9,237,320 $ 8,713,874 Selected interest rates and ratios: Composite interest rate(1) 3.11 % 3.42 % Composite interest rate on fixed-rate debt(1) 3.29 % 3.69 % Percentage of total debt at fixed-rate 78.08 % 83.48 % securities (including Medium-Term Note Program) Ratings The following table summarizes our current credit ratings: Long-term Corporate Date of Last Standard and Poor's Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (unaudited) Revenues Rental of flight equipment $ 359,487 $ 340,864 $ 1,072,254 $ 985,375 Aircraft sales, trading and other 17,278 14,237 45,655 63,193 Total revenues 376,765 355,101 1,117,909 1,048,568 Expenses Interest 63,514 64,720 193,591 188,870 Amortization of debt discounts and issuance costs 6,959 8,081 22,388 22,630 Interest expense 70,473 72,801 215,979 211,500 Depreciation of flight equipment 127,553 113,251 377,952 333,962 Selling, general and administrative 19,262 19,874 65,677 59,929 Stock-based compensation 5,358 4,602 14,435 12,342 Total expenses 222,646 210,528 674,043 617,733 Income before taxes 154,119 144,573 443,866 430,835 Income tax expense (54,931) (51,297) (158,816) (152,898) Net income $ 99,188 $ 93,276 $ 285,050 $ 277,937 Net income per share of Class A and B common stock Basic $ 0.96 $ 0.91 $ 2.76 $ Diluted $ 0.90 $ 0.86 $ 2.59 $ Other financial data Pre-tax profit margin 40.9 % 40.7 % 39.7 % 41.1 % Adjusted net income before income taxes(1) $ 166,436 $ 157,256 $ 479,739 $ 460,557 Adjusted margin before income taxes(1) 44.2 % 44.3 % 43.0 % 44.1 % Adjusted diluted earnings per share before income taxes(1) $ 1.50 $ 1.43 $ 4.34 $ 4.20 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (unaudited) (unaudited) Reconciliation of net income to adjusted net income before income taxes: Net income $ 99,188 $ 93,276 $ 285,050 $ 277,937 Amortization of debt discounts and issuance costs 6,959 8,081 22,388 22,630 Stock-based compensation 5,358 4,602 14,435 12,342 Insurance recovery on settlement — — (950) (5,250) Provision for income taxes 54,931 51,297 158,816 152,898 Adjusted net income before income taxes $ 166,436 $ 157,256 $ 479,739 $ 460,557 Reconciliation of denominator of adjusted margin before income taxes: Total revenues $ 376,765 $ 355,101 $ 1,117,909 $ 1,048,568 Insurance recovery on settlement — — (950) (5,250) Total revenues, excluding insurance recovery on settlement $ 376,765 $ 355,101 $ 1,116,959 $ 1,043,318 Adjusted margin before income taxes(1) 44.2 % 44.3 % 43.0 % 44.1 % The following table shows the reconciliation of Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 (unaudited) (unaudited) Reconciliation of net income to adjusted diluted earnings per share before income taxes: Net income $ 99,188 $ 93,276 $ 285,050 $ 277,937 Amortization of debt discounts and issuance costs 6,959 8,081 22,388 22,630 Stock-based compensation 5,358 4,602 14,435 12,342 Insurance recovery on settlement — — (950) (5,250) Provision for income taxes 54,931 51,297 158,816 152,898 Adjusted net income before income taxes $ 166,436 $ 157,256 $ 479,739 $ 460,557 Assumed conversion of convertible senior notes 1,426 1,472 4,263 4,382 Adjusted net income before income taxes plus assumed conversions $ 167,862 $ 158,728 $ 484,002 $ 464,939 Weighted-average diluted shares outstanding 111,709,545 110,788,913 111,558,125 110,737,889 Adjusted diluted earnings per share before income taxes $ 1.50 $ 1.43 $ 4.34 $ 4.20 The following table shows the reconciliation of pre-tax return on common equity to adjusted pre-tax return on common equity (in thousands, except percentages): 2022 fleet. during the three months ended June 30, 2022. funds each increase in the future. to our fleet. 2022. 2023 decreased to 19.2% from 19.8% in the prior year period. The effective tax rate decreased due to changes in permanent items. attributable to common stockholders in the current year period. 2022 fleet. transactions. funds each increase in the future. our fleet. We expect our depreciation expense to increase as we continue to add aircraft to our fleet. 19.8%, respectively. The effective tax rate current year period. selling, general and administrative expenses as discussed above. 2017 2018 2019 2020 2021 Thereafter Total Long-term debt obligations $ 39,677 $ 1,565,765 $ 1,091,216 $ 1,258,535 $ 2,345,679 $ 3,024,702 $ 9,325,574 Interest payments on debt outstanding(1) 49,498 260,424 209,968 172,260 133,112 739,706 1,564,968 Purchase commitments 998,592 4,444,854 5,732,940 5,989,309 5,859,304 5,063,064 28,088,063 Operating leases 649 2,926 3,232 3,111 2,946 6,804 19,668 Total $ 1,088,416 $ 6,273,969 $ 7,037,356 $ 7,423,215 $ 8,341,041 $ 8,834,276 $ 38,998,273 Critical Accounting Estimates date, subject to an outside limit on such adjustments. objectives as the Company’s controls are designed to do, and management necessarily was required to apply its judgment in evaluating the risk related to controls and procedures. 2023. 31.2 32.1 32.2 101.INS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE /s/ John L. Plueger John L. Plueger Chief Executive Officer and President (Principal Executive Officer) /s/ Gregory B. Willis Gregory B. Willis Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)16,000 13,597,530 12,041,925 1,290,676 352,213 8,713,874 856,335 99,385 667,060 June 30, 2023 December 31, 2022 (unaudited) Assets Cash and cash equivalents $ 576,730 $ 766,418 Restricted cash 3,705 13,599 Flight equipment subject to operating leases 30,623,894 29,466,888 Less accumulated depreciation (5,108,155) (4,928,503) 25,515,739 24,538,385 Deposits on flight equipment purchases 1,105,299 1,344,973 Other assets 2,556,349 1,733,330 Total assets $ 29,757,822 $ 28,396,705 Liabilities and Shareholders’ Equity Accrued interest and other payables $ 1,427,631 $ 696,899 Debt financing, net of discounts and issuance costs 18,895,793 18,641,063 Security deposits and maintenance reserves on flight equipment leases 1,410,766 1,293,929 Rentals received in advance 141,294 147,654 Deferred tax liability 1,029,685 970,797 Total liabilities $ 22,905,169 $ 21,750,342 Shareholders’ Equity Preferred Stock, $0.01 par value; 50,000,000 shares authorized; 10,600,000 (aggregate liquidation preference of $850,000) shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively $ 106 $ 106 Class A common stock, $0.01 par value; 500,000,000 shares authorized; 111,027,252 and 110,892,097 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively 1,110 1,109 Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding — — Paid-in capital 3,267,230 3,255,973 Retained earnings 3,582,683 3,386,820 Accumulated other comprehensive income 1,524 2,355 Total shareholders’ equity $ 6,852,653 $ 6,646,363 Total liabilities and shareholders’ equity $ 29,757,822 $ 28,396,705 4INCOMEThree Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (unaudited) Revenues Rental of flight equipment $ 611,733 $ 545,271 $ 1,229,506 $ 1,111,825 Aircraft sales, trading and other 61,171 12,425 79,540 42,533 Total revenues 672,904 557,696 1,309,046 1,154,358 Expenses Interest 172,174 118,997 323,786 236,274 Amortization of debt discounts and issuance costs 13,646 13,413 26,719 26,610 Interest expense 185,820 132,410 350,505 262,884 Depreciation of flight equipment 268,586 235,284 528,266 470,591 Write-off of Russian fleet — — — 802,352 Selling, general and administrative 45,832 38,512 93,447 71,277 Stock-based compensation expense 8,715 6,558 14,611 4,035 Total expenses 508,953 412,764 986,829 1,611,139 Income/(loss) before taxes 163,951 144,932 322,217 (456,781) Income tax (expense)/benefit (31,550) (28,655) (61,096) 104,065 Net income/(loss) $ 132,401 $ 116,277 $ 261,121 $ (352,716) Preferred stock dividends (10,425) (10,425) (20,850) (20,850) Net income/(loss) attributable to common stockholders $ 121,976 $ 105,852 $ 240,271 $ (373,566) Other comprehensive income/(loss): Foreign currency translation adjustment $ (6,123) $ 9,349 $ (6,953) $ 6,330 Change in fair value of hedged transactions 5,748 (9,941) 5,896 (4,712) Total tax benefit/(expense) on other comprehensive income/loss 80 127 226 (346) Other comprehensive income/(loss), net of tax (295) (465) (831) 1,272 Total comprehensive income/(loss) attributable for common stockholders $ 121,681 $ 105,387 $ 239,440 $ (372,294) Earnings/(loss) per share of common stock: Basic $ 1.10 $ 0.95 $ 2.16 $ (3.32) Diluted $ 1.10 $ 0.95 $ 2.16 $ (3.32) Weighted-average shares of common stock outstanding Basic 111,021,133 110,868,040 110,982,557 112,373,092 Diluted 111,239,004 111,043,836 111,307,049 112,373,092 Dividends declared per share of common stock $ 0.20 $ 0.185 $ 0.40 $ 0.37 5STATEMENTSTATEMENTS OF SHAREHOLDERS’STOCKHOLDERS’ EQUITYPreferred Stock Class A
Common StockClass B Non‑Voting
Common StockAccumulated Other
Comprehensive Income(unaudited) Shares Amount Shares Amount Shares Amount Paid‑in
CapitalRetained
EarningsTotal Balance at December 31, 2022 10,600,000 $ 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 1 — — — — — 1 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) — — — (3,230) — — (3,230) Net income — — — — — — — 128,720 — 128,720 Balance at March 31, 2023 10,600,000 $ 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, 2023 10,600,000 $ 106 111,027,252 $ 1,110 — $ — $ 3,267,230 $ 3,582,683 $ 1,524 $ 6,852,653 Preferred Stock Class A
Common StockClass B Non‑Voting
Common StockAccumulated Other
Comprehensive Income/(Loss)(unaudited) Shares Amount Shares Amount Shares Amount Paid‑in
CapitalRetained
EarningsTotal Balance at December 31, 2021 10,600,000 $ 106 113,987,154 $ 1,140 — $ — $ 3,399,245 $ 3,609,885 $ (1,808) $ 7,008,568 Issuance of common stock upon vesting of restricted stock units — — 477,656 5 — — (3) — — 2 Common stock repurchased — — (2,959,458) (30) — — (129,519) — — (129,549) Stock-based compensation expense — — — — — — (2,523) — — (2,523) Cash dividends (declared $0.185 per share of Class A common stock) — — — — — — — (21,136) — (21,136) 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 — — — — — — — — 1,738 1,738 Tax withholdings on stock-based compensation — — (188,093) (2) — — (8,095) — — (8,097) Net loss — — — — — — — (468,993) — (468,993) Balance at March 31, 2022 10,600,000 $ 106 111,317,259 $ 1,113 — $ — $ 3,259,105 $ 3,109,331 $ (70) $ 6,369,585 Issuance of common stock upon vesting of restricted stock units — — 59,603 — — — — — — — Common stock repurchased — — (461,416) (4) — — (20,450) — — (20,454) Stock-based compensation expense — — — — — — 6,558 — — 6,558 Cash dividends (declared $0.185 per share of Class A common stock) — — — — — — — (20,511) — (20,511) 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 — — — — — — — — (465) (465) Tax withholdings on stock-based compensation — — (23,349) — — — (931) — — (931) Net income — — — — — — — 116,277 — 116,277 Balance at June 30, 2022 10,600,000 $ 106 110,892,097 $ 1,109 — $ — $ 3,244,282 $ 3,194,672 $ (535) $ 6,439,634 6Six Months Ended
June 30,2023 2022 (unaudited) Operating Activities Net income/(loss) Net income/(loss) $ 261,121 $ (352,716) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation of flight equipment 528,266 470,591 Write-off of Russian fleet Write-off of Russian fleet — 802,352 Stock-based compensation expense Stock-based compensation expense 14,611 4,035 Deferred taxes 59,114 (104,963) Amortization of discounts and debt issuance costs Amortization of discounts and debt issuance costs 26,719 26,610 Amortization of prepaid lease costs Amortization of prepaid lease costs 36,064 23,355 Gain on aircraft sales, trading and other activity (86,838) (71,753) Changes in operating assets and liabilities: Other assets 7,028 (147,685) Accrued interest and other payables 38,986 26,590 Rentals received in advance (4,172) 12,423 Net cash provided by operating activities 880,899 688,839 Investing Activities Acquisition of flight equipment under operating lease (2,416,609) (1,569,310) Payments for deposits on flight equipment purchases (134,825) (345,643) Proceeds from aircraft sales, trading and other activity 1,261,476 1,166 Acquisition of aircraft furnishings, equipment and other assets (125,541) (106,655) Net cash used in investing activities (1,415,499) (2,020,442) Financing Activities Cash dividends paid on Class A common stock Cash dividends paid on Class A common stock (44,382) (42,223) Common shares repurchased Common shares repurchased — (150,000) Cash dividends paid on preferred stock Cash dividends paid on preferred stock (20,850) (20,850) Tax withholdings on stock-based compensation (3,354) (9,027) Net change in unsecured revolving facility Net change in unsecured revolving facility (20,000) 520,000 Proceeds from debt financings 1,538,087 1,497,615 Payments in reduction of debt financings (1,287,880) (718,687) Debt issuance costs (9,149) (5,613) Security deposits and maintenance reserve receipts 188,471 198,763 Security deposits and maintenance reserve disbursements (5,925) (12,819) Net cash provided by financing activities 335,018 1,257,159 Net decrease in cash Net decrease in cash (199,582) (74,444) Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at beginning of period 780,017 1,108,292 Cash, cash equivalents and restricted cash at end of period Cash, cash equivalents and restricted cash at end of period $ 580,435 $ 1,033,848 Supplemental Disclosure of Cash Flow Information Cash paid during the period for interest, including capitalized interest of $21,336 and $19,127 at June 30, 2023 and 2022, respectively Cash paid during the period for interest, including capitalized interest of $21,336 and $19,127 at June 30, 2023 and 2022, respectively $ 325,365 $ 254,349 Cash paid for income taxes Cash paid for income taxes $ 5,573 $ 3,557 Supplemental Disclosure of Noncash Activities Buyer furnished equipment, capitalized interest and deposits on flight equipment purchases applied to acquisition of flight equipment Buyer furnished equipment, capitalized interest and deposits on flight equipment purchases applied to acquisition of flight equipment $ 552,058 $ 343,794 Cash dividends declared on Class A common stock, not yet paid Cash dividends declared on Class A common stock, not yet paid $ 22,205 $ 20,511 7 together with its subsidiaries (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 areThe Company is principally engaged in purchasing the most modern, fuel-efficient, new technology commercial jet transport aircraft directly from theaircraft manufacturers, such as The Boeing Company (“Boeing”) and Airbus S.A.S. (“Airbus”), and leasing them. The Company leases these aircraft to airlines throughout the world.world with the intention to generate attractive returns on equity. As of June 30, 2023, the Company owned 448 aircraft, managed 80 aircraft and had 359 aircraft on order with aircraft manufacturers. In addition to ourits leasing activities, we sellthe Company sells aircraft from ourits fleet to third parties, including other leasing companies, financial services companies, airlines and airlines. Weother investors. The Company also provideprovides fleet management services to investors and owners of aircraft portfolios for a management fee. As of September 30, 2017, we owned a fleet of 236 aircraft, managed 51 aircraft and had 372 aircraft on order with the manufacturers.we havethe Company has a controlling financial interest, including the accounts of any Variable Interest Entity in which we are determined to bethe 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.consolidated financial statementsConsolidated Financial Statements include all adjustments, includingconsisting 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 SeptemberJune 30, 2017,2023, and for all periods presented. The results of operations for the three and ninesix months ended SeptemberJune 30, 20172023 are not necessarily indicative of the operating results expected for the year ending December 31, 2017.2023. These financial statements and related notes should be read in conjunction with the consolidated financial statementsConsolidated Financial Statements and related notes included in ourthe Company’s Annual Report on Form 10-K for the year ended December 31, 2016.Stock-based compensationEffective2022.Company adopted a change in accounting policyaircraft will be recorded at fair value in accordance with Accounting Standards Update (“ASU”) 2016-09 (“ASU 2016-09”), “Compensation-Stock Compensation (Topic 718),” wherein all excess tax benefits and tax deficiencies related to employee stock compensation will be recognized within income tax expense on the Consolidated Statement of Income. Previously, only net tax deficiencies were recognized as tax expense. As a result of adopting ASU 2016-09, we recognized $1.7 million as a discrete itemCompany’s Fair Value Policy, resulting in income tax expense relating to stock-based compensation expense for tax deficiencies incurred during the three months ended March 31, 2017. We did not recognize any additional income tax expense for the three months ended September 30, 2017 from the adoption of ASU 2016-09. Additionally, in connection with the adoption of ASU 2016-09, the Company recorded excess tax benefits relating to prior periods of $0.5 million on a modified retrospective basis through a cumulative effect adjustment to retained earnings.In addition, ASU 2016-09 requires excess tax benefits and deficiencies to be classified as operating activities on the Statement of Cash Flow. Previously, these items were classified as financing activities. We have elected to present the cash flow statement on a prospective transition method and there were no adjustments to the Consolidated Statement of Cash Flows for the nine months ended September 30, 2017 as a result of this adoption.Finally, ASU 2016-09 provides an accounting policy election to account for forfeitures as they occur or to account for forfeitures on an estimated basis. We elected to change our policy from estimating forfeitures to accounting for forfeitures as they are incurred. This change in accounting policy was made on a prospective basis.8Note 3.Recently Issued Accounting StandardsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (“ASU 2014-09”), “Revenue from Contracts with Customers (Topic 606).” amendments in ASU 2014-09 supersede most of the current revenue recognition requirements. The guidance provides a single comprehensive model for entities to use in accounting for revenue arising from contracts. The guidance specifically notes that lease contracts with customers are a scope exception however, the standard impacts accounting for our revenue other than lease revenue. ASU 2014-09 will be effective for annual reporting periods beginning after December 15, 2017 for public entities, including interim periods within that reporting period, and is required to be applied using either a full retrospective approach or a modified retrospective approach. Early adoption is only permittedCompany’s consolidated debt as of reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The standard will not have a material impact on our consolidated financial statements and will not have an impact on our historical consolidated financial statements. We plan to adopt the guidance effective January 1, 2018.In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), “Leases (Topic 842).” The amendments in ASU 2016-02 set out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. According to the guidance, accounting for leases by lessors would remain basically unchanged from the current existing concepts. ASU 2016-02 will be effective for annual reporting periods beginning after December 15, 2018 for public entities and is required to be applied using the modified retrospective transition approach. Early adoption is permitted. We noted that Lessor accounting is similar to the current model but the guidance will impact us in scenarios where we are the Lessee. We are currently evaluating this guidance but do not believe that the adoption of the standard will have a material impact on our consolidated financial statements.In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-01 (“ASU 2017-01”), “Business Combinations (Topic 805).” The amendments in ASU 2017-01 provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 will be effective for annual reporting periods beginning after December 15, 2017 for public entities. Early adoption is permitted. We have concluded our evaluation of this guidance and determined that the standard will not have an impact on our financial statements.Note 4.Debt FinancingThe Company’s debt financing was comprised of the following at SeptemberJune 30, 20172023 and December 31, 2016 (dollars2022 is summarized below:June 30, 2023 December 31, 2022 (in thousands) Unsecured Senior unsecured securities $ 17,202,069 $ 17,095,116 Revolving credit facility 1,000,000 1,020,000 Term financings 668,300 582,950 Total unsecured debt financing 18,870,369 18,698,066 Secured Export credit financing 112,184 11,646 Term financings 107,133 113,717 Total secured debt financing 219,317 125,363 Total debt financing 19,089,686 18,823,429 Less: Debt discounts and issuance costs (193,893) (182,366) Debt financing, net of discounts and issuance costs $ 18,895,793 $ 18,641,063 thousands):9Thethe Company’s secured obligations as of SeptemberJune 30, 20172023 and December 31, 20162022 are summarized below (dollarsrecourse in thousands):notesSeptemberJune 30, 2017,2023, the Company had $6.9$17.2 billion in senior unsecured notessecurities outstanding. As of December 31, 2016,2022, the Company had $7.0$17.1 billion in senior unsecured notessecurities outstanding.On12, 2017,30, 2023, the Company issued $700.0 million in aggregate principal amount of 5.30% Medium-Term Notes due 2028.senior unsecured notes5.85% trust certificates due 2022 that bear interest at2028 in a rate of 2.625%.On March 8, 2017,Sukuk financing. If the Company issued $500.0 million in aggregate principal amountfails to meet its obligations under the Sukuk financing, the sole rights of senioreach of the holders of the trust certificates will be against the Company to perform its obligations under the arrangements to which it is a party. notes due 2027 that bear interest at a rate of 3.625%.Unsecured revolving credit facilityIn November 2017,executed a commitment increase tohad $1.0 billion, outstanding under its unsecured revolving credit facility. This increasedfacility (the “Revolving Credit Facility”). Borrowings under the aggregate facility capacity by $50.0 millionRevolving Credit Facility are used to $3.8 billion.In May 2017,finance the Company’s working capital needs in the ordinary course of business and for other general corporate purposes.unsecured revolving credit facility whereby,Revolving Credit Facility through an amendment that, among other things, the Company extended the final maturity date from May 5, 20202026 to May 5, 20212027 and increasedamended the total revolving commitments thereunder to approximately $3.7$7.2 billion from approximately $3.5 billion with anas of May 5, 2023. The amended Revolving Credit Facility also decreased the SOFR credit spread adjustment applicable to borrowings for all interest periods. As of June 30, 2023, borrowings under the Revolving Credit Facility 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.LIBOR plus 1.05% with a 0.20% facility fee. Lenders holdAugust 3, 2023, lenders held revolving commitments totaling approximately $3.1$6.8 billion that mature on May 5, 2021,2027, commitments totaling approximately $217.7$320.0 million that mature on May 5, 2020,2026, and commitments totaling $290.0$32.5 million that mature on May 5, 2019, and commitments totaling $55.0 million that mature on May 5, 2018.The total amount outstanding under our2025.facilityfacilities, unsecured term financings and secured term financings, including export credit.approximately $1.4 billion$887.6 million and $766.0 millionthe Company had pledged three aircraft as collateral with a net book value of September 30, 2017 and$318.2 million. As of December 31, 2016, respectively.SeptemberJune 30, 20172023 are as follows (in thousands):Years ending December 31, 2023 $ 1,300,288 2024 2,946,128 2025 2,400,016 2026 3,621,710 2027 3,787,044 Thereafter 5,034,500 Total $ 19,089,686 10(in thousands) Net book value as of December 31, 2022 $ 24,538,385 Purchase of aircraft 3,010,033 Depreciation (528,266) Sale of aircraft (599,616) Transferred to Held for Sale (904,797) Net book value as of June 30, 2023 $ 25,515,739 Accumulated depreciation as of June 30, 2023 $ (5,108,155) SeptemberJune 30, 2017 and through November 9, 2017,2023, the Company had commitments to acquire a totalpurchase 359 aircraft from Boeing and Airbus for delivery through 2028, with ongoing delays that could extend through 2029, with an estimated aggregate commitment of 372 new aircraft scheduled$23.2 billion.deliver through 2023 as follows:(1)Our Airbus A320/321neo aircraft orders include 55 long-range variants.(2)In addition to the aircraft from our orderbook, we have commitments to purchase five used Boeing 737-800 aircraft from an airline which are scheduled for delivery in 2017.has informed us to expect several monthand Boeing delivery delays. As noted below, the Company expects delivery delays relatingfor a majority of the aircraft in its orderbook. The Company remains in discussions with Boeing and Airbus to determine the extent and duration of delivery delays; however, the Company is not yet able to determine the full impact of these delays.Estimated Delivery Years Aircraft Type 2023 2024 2025 2026 2027 Thereafter Total Airbus A220-100/300 11 20 17 21 — — 69 12 20 21 35 35 40 163 Airbus A330-900neo 3 6 — — — — 9 Airbus A350-900/1000 1 3 — — — — 4 Airbus A350F — — — 2 2 3 7 Boeing 737-8/9 MAX 15 26 30 16 — — 87 Boeing 787-9/10 4 6 9 1 — — 20 46 81 77 75 37 43 359 (1) The Company’s Airbus A320/321neo aircraft orders include 12 long-range variants and 49 extra long-range variants. (2) The table above reflects Airbus and Boeing aircraft delivery delays based on contractual documentation. scheduledordered. 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 both Boeing and Airbus.in 2017delays 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 2018. The delays have been reflected in our commitment schedules above. Our leases containthe lessee with cancellation clausesrights related to certain aircraft delivery delays that typically for aircraft delays greater than one year. Ourparallel the cancellation rights in the Company’s purchase agreements contain similar clauses. As of November 9, 2017, none of our lease contracts are subject to cancellation.and other equipmentcalculated at an estimated aggregate purchase price (including adjustments for anticipated inflation) of approximately $28.1$23.2 billion at Septemberas of June 30, 2017 and through November 9, 20172023, are as follows (in thousands):We haveYears ending December 31, 2023 (excluding the six months ended June 30, 2023) $ 3,560,678 2024 5,510,954 2025 4,787,013 2026 4,302,205 2027 2,484,140 Thereafter 2,567,640 Total $ 23,212,630 the aircraft for which we have commitments to purchaseflight equipment purchases of $1.6$1.1 billion and $1.3 billion as of SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively, which are subject to manufacturer performance commitments. If we arethe Company is unable to satisfy ourits purchase commitments, wethe Company may be forced to forfeit our deposits. Further, we wouldits deposits and may also be subjectexposed to breach of contract claims by ourits lessees as well as the manufacturers.manufacturers.SeptemberJune 30, 2017,2023, minimum future rentals on non-cancellable operating leases of flight equipment in the Company had a non-binding commitment to acquire up to five A350-1000 aircraft. DeliveriesCompany’s owned fleet, which have been delivered as of these aircraftJune 30, 2023 are scheduled to commence in 2023 and continue through 2024.Years ending December 31, 2023 (excluding the six months ended June 30, 2023) $ 1,162,804 2024 2,292,014 2025 2,141,677 2026 1,914,232 2027 1,705,007 Thereafter 7,022,358 Total $ 16,238,092 6.Net Earnings7. Earnings/(Loss) Per Sharenet earningsearnings/(loss) per share is computed by dividing net incomeincome/(loss) 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,non-voting, 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 SeptemberJune 30, 2017, we2023, the Company did not have any Class B Non-Votingnon-voting common stock outstanding. net earnings per share takes into account the potential conversion of stock options, restricted stock units, and warrants using the treasury stock method and convertible notes using the if-converted method. For the three and nine 11SeptemberJune 30, 2017,2023, the Company did not haveexclude any potentially anti-dilutivedilutive securities, whichwhose effect would require exclusionhave been anti-dilutive, from the computation of diluted earnings per share. Since the Company was in a loss position for the six months ended June 30, 2022, diluted net loss per share is the same as basic net loss per share for the period as the inclusion of all potential common shares outstanding would have been anti-dilutive. For the six months ended June 30, 2022, the Company excluded 301,279 potentially dilutive securities, whose effect would have been anti-dilutive, from the computation of diluted earnings per share. For the three months ended June 30, 2022, 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 1,085,559969,698 and 994,001978,036 shares related to restricted stock units for which the performance metric had yet to be achieved as of SeptemberJune 30, 20172023 and 2016,2022, respectively.net incomeearnings/(loss) per share (in thousands, except share and per share amounts):share:Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (in thousands, except share and per share) Basic earnings/(loss) per share: Numerator Net income/(loss) $ 132,401 $ 116,277 $ 261,121 $ (352,716) Preferred stock dividends (10,425) (10,425) (20,850) (20,850) Net income/(loss) attributable to common stockholders $ 121,976 $ 105,852 $ 240,271 $ (373,566) Denominator Weighted-average shares outstanding 111,021,133 110,868,040 110,982,557 112,373,092 Basic earnings/(loss) per share $ 1.10 $ 0.95 $ 2.16 $ (3.32) Diluted earnings/(loss) per share: Numerator Net income/(loss) $ 132,401 $ 116,277 $ 261,121 $ (352,716) Preferred stock dividends (10,425) (10,425) (20,850) (20,850) Net income/(loss) attributable to common stockholders $ 121,976 $ 105,852 $ 240,271 $ (373,566) Denominator Number of shares used in basic computation 111,021,133 110,868,040 110,982,557 112,373,092 Weighted-average effect of dilutive securities 217,871 175,796 324,492 — Number of shares used in per share computation 111,239,004 111,043,836 111,307,049 112,373,092 Diluted earnings/(loss) per share $ 1.10 $ 0.95 $ 2.16 $ (3.32) 7.8. Fair Value Measurementshad no assets or liabilitieshas a cross-currency swap related to its Canadian dollar Medium-Term Notes, which are measured atwere issued in December 2019. The fair value of the swap as a foreign currency exchange derivative is categorized as a Level 2 measurement in the fair value hierarchy and is measured on a recurring or non-recurring basis asbasis. As of SeptemberJune 30, 2017 or2023, the estimated fair value of the foreign currency exchange derivative asset was $3.4 million. As of December 31, 2016.ValueSeptemberJune 30, 20172023 was $9.6$17.9 billion compared to a book value of $9.3$19.1 billion. The estimated fair value of debt financing as of December 31, 20162022 was $8.9$17.5 billion compared to a book value of $8.8$18.8 billion.consolidated balance sheetConsolidated Balance Sheets at SeptemberJune 30, 2017,2023, but require disclosure of their fair values: cash and cash equivalents and restricted cash. The estimated fair value of such instruments at SeptemberJune 30, 20172023 and December 31, 2022 approximates their carrying value as reported on the consolidated balance sheet.Consolidated Balance Sheets. The fair value of all these instruments would be categorized as Level 1 in the fair value hierarchy.Shares Issued and Outstanding as of June 30, 2023 Liquidation Preference
as of June 30, 2023Issue Date Dividend Rate in Effect at June 30, 2023 Next dividend rate reset date Dividend rate after reset date Series A 10,000,000 $ 250,000 March 5, 2019 6.150 % March 15, 2024 Series B 300,000 300,000 March 2, 2021 4.650 % June 15, 2026 5 Yr U.S. Treasury plus 4.076% Series C 300,000 300,000 October 13, 2021 4.125 % December 15, 2026 5 Yr U.S. Treasury plus 3.149% Total 10,600,000 $ 850,000 (1) 3M Term SOFR includes a credit spread adjustment of 0.10%. 8.10. Stock-based Compensation7, 2014,3, 2023, the stockholders of the Company approved the Air Lease Corporation 2023 Equity Incentive Plan (the “2023 Plan”). Upon approval of the 2023 Plan, no new awards under the Air Lease Corporation 2014 Equity Incentive Plan (the “2014 Plan”). Upon approval of the 2014 Plan, no new awards may could be granted under the Amended and Restated 2010 Equity Incentive Plan (the “2010 Plan”).granted. As of SeptemberJune 30, 2017,2023, the number of stock options (“shares of Class A Common Stock Options”) andavailable for new award grants under the 2023 Plan is approximately 4,133,835. The Company has issued restricted stock units (“RSUs”) remaining under the 2014 Plan is approximately 5,769,256, which includes 769,256 shares which were previously reserved for issuance under the 2010 Plan. Stock Options are generally granted for a term of 10 years and generally vest over a threeyear period. The Company has issued RSUs with four different vesting12book valuebook-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 book value RSUs generally vest ratably over three years, if the performance condition has been met. Book value RSUs for which the performance metric has not been met are forfeited. The TSR RSUscliff vest at the end of a three-yearone or two year period. The numberTSR RSUs that will ultimately vest is based uponJune 30, 2023, the percentile ranking ofCompany had no outstanding stock options (“Stock Options”) and no unrecognized compensation costs related to outstanding Stock Options. For the Company’s TSR among a peer group. The number of shares that will ultimately vest will range from 0%three and six months ended June 30, 2023 and 2022, there were no stock-based compensation expenses related to 200% of the RSUs initially granted depending on the extent to which the TSR metric is achieved.$5.4$8.7 million and $4.6$6.6 million of stock-based compensation expense related to RSUs for the three months ended SeptemberJune 30, 20172023 and 2016,2022, respectively.$14.4$14.6 million and $12.3$4.0 million of stock-based compensation expense related to RSUs for the ninesix months ended September 30, 2017 and 2016, respectively.Stock OptionsA summary of stock option activity for the nine month period ended September 30, 2017 follows:(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the closing stock price of our Class A common stock as of the respective date.The Company’s outstanding stock options fully vested on June 30, 20132023 and there2022, respectively. For the six months ended June 30, 2022, the Company recorded a net reversal of previously recognized stock-based compensation of $2.5 million. Such net reversal was a result of reductions in the underlying vesting estimates of certain book value RSUs as the performance criteria were no unrecognized compensation costs related to outstanding stock options aslonger considered probable of September 30, 2017. As a result, there was no stock-based compensation expense related to Stock Options forbeing achieved during the three and ninesix months ended SeptemberJune 30, 20172022.2016.The following table summarizes additional information regarding exercisable and vested stock options at September 30, 2017:stock awardsRSUs is measured at the grant date based on fair value and recognized over the vesting period. The fair value of book value and 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 RSUsgoals 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.13ninesix months ended SeptemberJune 30, 2017,2023, the Company granted 505,545704,565 RSUs of which 228,938121,608 are TSR RSUs and 243,206 are book value RSUs. The following table summarizes the activities for ourthe Company’s unvested RSUs for the ninesix months ended SeptemberJune 30, 2017:Unvested Restricted Stock Units Number of
SharesWeighted-Average
Grant-Date
Fair ValueUnvested at December 31, 2022 Unvested at December 31, 2022 1,514,875 $ 45.90 Granted 704,565 $ 44.73 Vested (229,187) $ 44.19 Forfeited/canceled (373,567) $ 42.43 Unvested at June 30, 2023 Unvested at June 30, 2023 1,616,686 $ 46.44 Expected to vest after June 30, 2023 Expected to vest after June 30, 2023 1,767,130 $ 46.18 The Company recorded $5.4 million and $4.6stock-basedunrecognized compensation expense related to RSUs for the three months ended September 30, 2017 and 2016, respectively. The Company recorded $14.4 million and $12.3 million ofunvested stock-based compensation expense related to RSUs for the nine months ended September 30, 2017 and 2016, respectively.As of September 30, 2017, there was $21.6 million of unrecognized compensation cost related to unvested RSUspayments granted to employees. Total unrecognized compensation costexpense will be recognized over a weighted-average remaining period of 1.872.01 years.9.InvestmentsOn November 4, 2014, a wholly owned subsidiary11. Aircraft Under Managemententered into an agreement withmanaged 80 aircraft across three aircraft management platforms. The Company managed 45 aircraft through its Thunderbolt platform, 34 aircraft through the Blackbird investment funds and one aircraft on behalf of a co-investment vehicle arranged by Napier Park Global Capital (US) LP (‘‘Napier Park’’) to participate in a joint venturefinancial institution.formed Blackbird Capital I, LLC (‘‘Blackbird’’) for the purpose of investingII. These funds invest in commercial jet aircraft and leasinglease them to airlines aroundthroughout the globe. We provideworld. The Company provides management services to the joint venturethese funds for a fee based upon aircraft assets under management. The Company’sfee. As of June 30, 2023, the Company's non-controlling interestinterests in Blackbird iseach fund were 9.5% and it isare accounted for as an investment under the equity method of accounting. The Company incurred $0.3Company’s investments in these funds aggregated $65.6 million and $64.7 million as of losses and recognized $0.8 million of gains on the sale of aircraft to Blackbird during the nine months ended SeptemberJune 30, 2017 and September 30, 2016, respectively. On each of September 30, 20172023 and December 31, 2016, the amounts due from Blackbird to the Company were $0.7 million. The Company's investment in Blackbird was $31.9 million and $25.1 million as of September 30, 2017 and December 31, 2016,2022, respectively, and is recordedare included in otherOther assets on the Consolidated Balance Sheet.On August 1, 2017, a wholly owned subsidiary ofSheets.entered into an agreement with a co-investment vehicle arranged by Napier Parkcontinues to participate in a joint venture and formed Blackbird Capital II, LLC (‘‘Blackbird II’’) formanage aircraft that it sells through its Thunderbolt platform. The Thunderbolt platform facilitates the purposesale of investing in commercialmid-life aircraft and leasing them to airlines aroundinvestors while allowing the globe. We provideCompany to continue the management services to the joint ventureof these aircraft for a fee based uponfee. As of June 30, 2023, the Company managed 45 aircraft assets under management.across three separate transactions. The Company’sCompany has non-controlling interestinterests in Blackbird II is 9.5% and will betwo of these entities of approximately 5.0%, which are accounted for as an investment under the equitycost method of accounting. The Company recognized $1.8 million of gains on the sale of aircraft to Blackbird II during the three and nine months ended September 30, 2017. The Company'sCompany’s total investment in Blackbird IIaircraft sold through its Thunderbolt platform was $3.1$8.8 million as of Septembereach of June 30, 2017.2023 and December 31, 2022 and is included in Other assets on the Consolidated Balance Sheets.June 30, 2023 Future minimum lease payments to be received $ 224,475 Estimated residual values of leased flight equipment 91,688 Less: Unearned income (42,323) Net Investment in Sales-type Leases $ 273,840 Years ending December 31, 2023 (excluding the six months ended June 30, 2023) $ 12,300 2024 24,600 2025 24,600 2026 24,600 2027 24,600 Thereafter 113,775 Total $ 224,475 10.Flight13. Flight Equipment Held for SaleSeptemberJune 30, 2017, we2023, the Company had one19 aircraft, with a carrying value of $42.5 million,$0.9 billion, which waswere held for sale and included in flight equipment subject to operating leasesOther assets on the Consolidated Balance Sheet. We expect to completeSheets. The Company expects the sale of all 19 aircraft to be completed by end of the aircraft in the fourthsecond quarter of 2017. We cease2024. During the three months ended June 30, 2023, the Company received an aggregate of $639.7 million in purchase deposits pursuant to conditional sale agreements related to 10 of the 19 aircraft, which amount is included in Accrued interest and other payables on the Consolidated Balance Sheets.2016, we2022, the Company had sixfour aircraft, with a carrying value of $163.4$153.5 million, which were held for sale and included in flightFlight equipment subject to operating leases on the Consolidated Balance Sheet.Sheets.1411.Subsequent14. Subsequent EventsNovember 8, 2017, ourAugust 2, 2023, the Company’s board of directors approved a quarterly cash dividend of $0.10 per share on our outstanding common stock. The dividend will be paid on January 4, 2018 to holders of record of ourdividends for the Company’s Class A common stock asand Series A, B and C Preferred Stock. The following table summarizes the details of December 14, 2017.the dividends that were declared:15Title of each class Cash dividend per share Record Date Payment Date Class A Common Stock $ 0.20 September 12, 2023 October 6, 2023 Series A Preferred Stock $ 0.384375 August 31, 2023 September 15, 2023 Series B Preferred Stock $ 11.625 August 31, 2023 September 15, 2023 Series C Preferred Stock $ 10.3125 August 31, 2023 September 15, 2023 consolidated financial statementsConsolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q. transport aircraft directly from aircraft manufacturers, such as The Boeing Company (“Boeing”) and Airbus S.A.S. (“Airbus”), and leasing those aircraft to airlines throughout the world with the intention to generate attractive returns on equity. In addition to our leasing activities, we sell aircraft from our operating lease portfoliofleet to third-parties, including other leasing companies, financial services companies, airlines and airlines.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 the gains from our aircraft sales and trading activities and our management fees.ninethree months ended SeptemberJune 30, 2017,2023, we purchased and took delivery of 2219 aircraft from our new order pipeline purchased six incremental aircraft and sold 29eight aircraft, ending the period with a total of 236448 aircraft with a net book valuein our owned aircraft portfolio. The weighted average age of $12.7 billion. Theour flight equipment subject to operating lease was 4.5 years and the weighted average lease term remaining on our operating lease portfolio was 6.8 years and the weighted average age of our fleet was 3.77.2 years as of SeptemberJune 30, 2017.2023. Our fleet grew by 5.2% based on net book value of $12.7 billion as of September 30, 2017 compared to $12.0 billion as of December 31, 2016. In addition, our managed fleet increased to 51was comprised of 80 aircraft as of SeptemberJune 30, 2017 from 302023 as compared to a managed fleet of 85 aircraft as of December 31, 2016.2022. We have a globally diversified customer base comprised of 90118 airlines in 55 countries. 63 countries as of June 30, 2023. We continue to maintain a strong lease utilization rate of 99.9% for the three and six months ended June 30, 2023.SeptemberJune 30, 2017, all of our aircraft in our operating lease portfolio were subject to lease, except for one aircraft, which is in transition to the follow-on lessee and is currently subject to a signed lease agreement.In 2017,2023, we entered into amendments and supplemental agreements to existing agreements with Airbus and Boeinghad commitments to purchase 30 additional359 aircraft consisting of 12 incremental A321neo aircraft, two A321-200 aircraft, two A330-900 aircraft, 12 737 MAX aircraft and two 787-9 aircraft. Deliveries of the aircraft are scheduled to commence in 2018 and continue through 2023. As of September 30, 2017, we had, in the aggregate, 372 aircraft on order withfrom Boeing and Airbus for delivery through 2023.thirdsecond quarter of 20172023 with $23.3$29.6 billion in committed minimum future rental payments. This includes $9.6payments, consisting of $16.2 billion in contracted minimum rental payments on the aircraft in our existing fleet and $13.7$13.4 billion in minimum future rental payments related to aircraft which will deliver duringbetween 2023 through 2028.remainderpurchase of 2017aircraft and our business with available cash balances, internally generated funds, including through 2021.On May 3, 2017, we entered intoaircraft sales, preferred stock issuances, and debt financings. We ended the second quarter of 2023 with an agreement to sell 19 aircraft to Thunderbolt Aircraft Lease Limited (‘‘Thunderbolt’’), a groupaggregate borrowing capacity under our revolving credit facility of third party investors. We have no ownership in Thunderbolt. All$6.2 billion and total liquidity of the aircraft in Thunderbolt's portfolio are managed by us for a fee. We sold 16$7.6 billion. As of the 19 aircraft to Thunderbolt during the quarter ended June 30, 20172023, we had total debt outstanding of $19.1 billion, of which 90.5% was at a fixed rate and we completed the sale98.9% was unsecured. As of the remaining three aircraft to Thunderbolt during the quarter ended SeptemberJune 30, 2017. On August 1, 2017, a wholly owned subsidiary2023, our composite cost of the Company entered into an agreement with a co-investment vehicle arranged by Napier Park Global Capital (US) LP (‘‘Napier Park’’) to participate in a joint venture and formed Blackbird Capital II, LLC (‘‘Blackbird II’’) for the purpose of investing in commercial aircraft and leasing them to airlines around the globe. We provide management services to the joint venture for a fee based upon aircraft assets under management. The Company’s non-controlling interest in Blackbird II is 9.5%funds raised through debt financings was 3.49%.SeptemberJune 30, 20172023 increased by 6.1%20.7% to $376.8$672.9 million, compared to the quarter ended SeptemberJune 30, 2016. This2022. The increase in total revenues was comprised of rental revenues onprimarily driven by the continued growth in our operating lease portfolio of $359.5 millionfleet and an increase in sales activity. The increase in aircraft sales, trading and other revenue was primarily related to the sale of $17.3 million. eight aircraft which generated approximately $45 million in gains. We did not sell any aircraft for the three months ended June 30, 2022.16We$122.0 million, or $1.10 per diluted share, as compared to net income attributable to common stockholders of $105.9 million, or $0.95 per diluted share, for the three months ended June 30, 2022. Net income attributable to common stockholders increased from the third quarterprior year period due to the growth of 2017 with total debt outstanding, net of discountsour fleet and issuance costs, of $9.2 billion, of which 78.1%increase in sales activity. The increase was at a fixed rate and 94.0% of which was unsecured. Ourpartially offset by an increase in interest expense due to the increases in our composite cost of funds, decreased to 3.11% as of September 30, 2017 from 3.42% as of December 31, 2016.Our net income for the quarter ended September 30, 2017 was $99.2 million compared to $93.3 million for the quarter ended September 30, 2016. Our diluted earnings per share for the quarter ended September 30, 2017 was $0.90 compared to $0.86 for the quarter ended September 30, 2016. Our pre-tax profit margin for the quarter ended September 30, 2017 was 40.9% compared to 40.7% for the quarter ended September 30, 2016. The increase in net income in the third quarter of 2017 as compared to 2016 was primarily due to an increaseaircraft transition costs and increases in our rental revenue resulting from an increaseaviation insurance expense in line with the net book valuegrowth of our fleet of aircraft subject to operating lease.Excludingin the current year period. such as settlement expense, net of recoveries, that are not expected to continue in the future and certain other items, ouritems. For the three months ended June 30, 2023, we recorded adjusted net income before income taxes was $166.4of $175.9 million, or $1.58 per adjusted diluted share, compared to an adjusted net income before income taxes of $154.5 million, or $1.39 per adjusted diluted share, for the three months ended SeptemberJune 30, 2017 compared to $157.3 million for the three months ended September 30, 2016. Our adjusted margin 2022. Adjusted net incomeforincreased from the three months ended September 30, 2017prior year due to the growth of our fleet and an increase in sales activity. The increase was 44.2% comparedpartially offset by an increase in interest expense due to 44.3% for the three months ended September 30, 2016. Adjusted diluted earnings per share before income taxes forincreases in our composite cost of funds, an increase in aircraft transition costs and increases in our aviation insurance expense in line with the three months ended September 30, 2017 was $1.50 compared to $1.43 forgrowth of our fleet in the three months ended September 30, 2016. current year period. before income taxes, adjusted margin before income taxes and adjusted diluted earnings per share before income taxes are measures of financial and operational performance that are not defined by GAAP.U.S. Generally Accepted Accounting Principles (“GAAP”). See Note 1 under the "Results“Results of Operations" tableOperations” below for a discussion of adjusted net income before income taxes, adjusted margin 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.On November 8, 2017, our Board of Directors approved an increaseincome attributable to common stockholders.quarterly cash dividend of 33%, from $0.075 per share to $0.10 per share. The next quarterly dividend of $0.10 per share will be paid on January 4, 2018 to holders of record of our common stockmanaged fleet or aircraft classified as of December 14, 2017.Our fleetaircraft portfoliofleet as of SeptemberJune 30, 20172023 and December 31, 20162022 are as follows:9.4 14.4 23.8 (1)Weighted-average fleet age and remaining lease term calculated based on net book value.June 30, 2023 December 31, 2022 Net book value of flight equipment subject to operating lease $ 25.5 billion $ 24.5 billion 4.5 years 4.5 years 7.2 years 7.1 years 448 417 Managed fleet 80 85 Aircraft on order 359 398 Total 887 900 Current fleet contracted rentals $ 16.2 billion $ 15.6 billion Committed fleet rentals $ 13.4 billion $ 15.8 billion Total committed rentals $ 29.6 billion $ 31.4 billion (1) Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease. (2) As of June 30, 2023, our owned fleet count includes 19 aircraft classified as flight equipment held for sale which is included in Other assets on the Consolidated Balance Sheet. 17aircraft portfolioflight equipment subject to operating leases in the indicated regions based on each airline’s principal place of business as of SeptemberJune 30, 20172023 and December 31, 2016 (dollars in thousands):3,547,294 29.5 2,779,546 2,739,554 935,968 7.8 937,287 7.8 647,743 5.4 454,533 3.8 June 30, 2023 December 31, 2022 Region Net Book
Value% of Total Net Book
Value% of Total (in thousands, except percentages) Europe $ 9,293,860 36.4 % $ 7,985,317 32.5 % Asia (excluding China) 7,689,080 30.1 % 7,144,188 29.1 % The Middle East and Africa 2,119,772 8.3 % 2,253,342 9.3 % Central America, South America, and Mexico 2,086,111 8.2 % 1,924,216 7.8 % China 1,944,999 7.6 % 2,792,022 11.4 % U.S. and Canada 1,518,508 6.0 % 1,557,260 6.3 % Pacific, Australia, and New Zealand 863,409 3.4 % 882,040 3.6 % $ 25,515,739 100.0 % $ 24,538,385 100.0 % (1) As of December 31, 2022, we had four aircraft classified as held for sale with a carrying value of $153.5 million included in the table above. June 30, 2023 Lessee % of Total EVA Air 5.1 % Virgin Atlantic 5.0 % Vietnam Airlines 4.3 % 4.3 % Aeromexico 3.7 % we leasedin our owned fleet by aircraft type as of SeptemberJune 30, 20172023 and December 31, 2016:2022:June 30, 2023 December 31, 2022 Aircraft type Number of
Aircraft% of Total Number of
Aircraft% of Total Airbus A220-300 Airbus A220-300 7 1.6 % 4 1.0 % 3 1.3 Airbus A319-100 1 0.2 % 1 0.2 % 44 18.6 Airbus A320-200 28 6.3 % 28 6.7 % 1 0.4 Airbus A320-200neo 24 5.4 % 23 5.5 % 31 13.1 Airbus A321-200 23 5.1 % 23 5.5 % Airbus A321-200neo 89 19.8 % 78 18.7 % (1)17 7.2 13 2.9 % 13 3.1 % 5 2.1 Airbus A330-300 5 1.1 % 5 1.2 % Airbus A330-900neo Airbus A330-900neo 20 4.5 % 16 3.8 % Airbus A350-900 Airbus A350-900 15 3.3 % 13 3.1 % Airbus A350-1000 Airbus A350-1000 7 1.6 % 6 1.4 % 8 3.4 Boeing 737-700 3 0.7 % 4 1.0 % 95 40.1 Boeing 737-800 80 17.9 % 82 19.7 % 1 0.4 Boeing 737-8 MAX Boeing 737-8 MAX 51 11.4 % 47 11.3 % Boeing 737-9 MAX Boeing 737-9 MAX 25 5.6 % 15 3.7 % 1 0.4 Boeing 777-200ER 1 0.2 % 1 0.2 % 22 9.3 Boeing 777-300ER 24 5.4 % 24 5.8 % 1.3 Boeing 787-9 25 5.6 % 27 6.5 % Boeing 787-10 Boeing 787-10 6 1.2 % 6 1.4 % 2.4 Embraer E190 1 0.2 % 1 0.2 % 448 100.0 % 417 100.0 % (1) As of June 30, 2023, includes one Airbus A330-200 aircraft classified as a freighter. (1) As of June 30, 2023, includes one Airbus A330-200 aircraft classified as a freighter. (2) As of June 30, 2023, our owned fleet count includes 19 aircraft classified as flight equipment held for sale which is included in Other assets on the Consolidated Balance Sheet. (2) As of June 30, 2023, our owned fleet count includes 19 aircraft classified as flight equipment held for sale which is included in Other assets on the Consolidated Balance Sheet. SeptemberJune 30, 2017 and through November 9, 2017,2023, we had contractual commitments to acquire a total of 372359 new aircraft, with an estimated aggregate purchase price (including adjustments for anticipated inflation) of $23.2 billion, for delivery through 2028, with ongoing delays that could extend through 2029, as follows:(1)Our Airbus A320/321neo aircraft orders include 55 long-range variants.(2)In addition to the aircraft from our orderbook, we have commitments to purchase five used Boeing 737-800 aircraft from an airline which are scheduled for delivery in 2017.has informed us toand Boeing delivery delays. As noted below, we expect several month delivery delays relatingfor a majority of the aircraft in our orderbook. We remain in discussions with Boeing and Airbus to determine the extent and duration of delivery delays; however, we are not yet able to determine the full impact of these delays.Estimated Delivery Years Aircraft Type 2023 2024 2025 2026 2027 Thereafter Total Airbus A220-100/300 11 20 17 21 — — 69 12 20 21 35 35 40 163 Airbus A330-900neo 3 6 — — — — 9 Airbus A350-900/1000 1 3 — — — — 4 Airbus A350F — — — 2 2 3 7 Boeing 737-8/9 MAX 15 26 30 16 — — 87 Boeing 787-9/10 4 6 9 1 — — 20 46 81 77 75 37 43 359 (1) Our Airbus A320/321neo aircraft orders include 12 long-range variants and 49 extra long-range variants. (2) The table above reflects Airbus and Boeing aircraft delivery delays based on contractual documentation. scheduledordered. These dates can change for a variety of reasons, however for the last several years, manufacturing delays have significantly impacted the planned purchases of our aircraft on order with both Boeing and Airbus.in 2017delays starting at one year after the original contractual delivery date, regardless of cause. In addition, our lease agreements generally provide each of us and 2018. The delays have been reflected in our commitment schedules above. Our leases contain lesseethe lessees with cancellation clausesrights related to certain aircraft delivery delays that typically forparallel the cancellation rights in our purchase agreements.delays greater than one year. Our purchase agreements contain similar clauses. As of November 9, 2017, none of our lease contracts aredelivery schedule could continue to be subject to cancellation.material changes and delivery delays are expected to extend beyond 2023.18As of September 30, 2017, we had a non-binding commitmentThe following table, which is subject to acquire up to five A350-1000 aircraft. Deliveries of these aircraft are scheduled to commence in 2023change based on Airbus and continue through 2024.Our lease placements are progressing in line with expectations. As of September 30, 2017 and through November 9, 2017, we have entered into contracts forBoeing delivery delays, shows the leasenumber of new aircraft scheduled to be delivered as follows:Delivery Year Number
LeasedNumber of
Aircraft% Leased 2023 46 46 100.0 % 2024 81 81 100.0 % 2025 48 77 62.3 % 2026 20 75 26.7 % 2027 14 37 37.8 % Thereafter 1 43 2.3 % Total 210 359 industryIndustry and sourcesSources of revenuesscheduled and charter airlines. In eachairlines throughout the world. As of the last four calendar years,June 30, 2023, we derived more thanhad a globally diversified customer base of 118 airlines in 63 different countries, with over 95% of our business revenues from airlines domiciled outside of the U.S., and we anticipate that most of our revenues in the future will be generated from foreign customers.Demand for air travel has consistently grown in terms of both passenger traffic and number of aircraft in service. The International Air Transport Association (“IATA”) expects 7.8 billion passengers to travel in 2036, a near doubling of the 4.0 billion air travelers expected to fly this year. The prediction is based on a 3.6% annual global traffic growth over the next 20 years. The number of aircraft in service has grown steadily and the number of leased aircraft in the global fleet has increased. The long‑term outlook for aircraft demand remains robust due to increased passenger traffic and the need to replace aging aircraft.From time to time, our airline customers face financial difficulties. In May 2017, Alitalia, an Italian airline, began the process to file a petition to begin an Extraordinary Administration proceeding in the Italian Bankruptcy Court. Extraordinary Administrative proceedings are aimed at enabling a debtor in financial difficulty to restructure its operations, including its debt, in order to continue its activities. While the Extraordinary Administrative proceeding is pending, the airline is permitted to operate and we understand that Alitalia intends to continue its normal operations. Alitalia operates four of our Airbus A330-200s. In October 2017, the Italian government granted an additional loan to Alitalia and extended the term for the sale of Alitalia and the repayment date of its loans to April 2018.Since the filing of our quarterly report on Form 10-Q on August 3, 2017, three of our airline customers experienced financial difficulties. In August 2017, Air Berlin filed to commence insolvency proceedings under self-administration, and at the time of the filing, two A321-200 aircraft and one A320-200 aircraft from our fleet were on lease with Air Berlin. In September 2017, we learned that VIM Airlines was unlikely to continue as a going concern, and at the time of the filing, one Boeing 777-300ER from our fleet was on lease with VIM Airlines. Finally, in October 2017, Monarch Airlines filed for bankruptcy, and at the time of the filing, two Boeing 737-800 aircraft from our fleet were on lease with Monarch Airlines. We experienced good demand for these aircraft during the remarketing periods. As of November 9, 2017, we have entered into lease agreements or letters of intent for all of these aircraft and are in the process of transitioning these aircraft to follow-on lessees.The successthe strength of global economic development,health and development. Passenger traffic has historically expanded at a faster rate than global GDP growth, in part due to the expansion of the middle class and the ease and affordability of air travel and we expect this trend to continue. The International Air Transport Association (“IATA”) reported that total passenger traffic was up 39% during the month of May 2023 relative to the prior year period, benefiting from both strong international and domestic traffic expansion globally. International traffic rose 41% in the month of May relative to the prior year period, benefiting from the continued relaxation of international travel restrictions in China and continued traffic expansion in other major regions globally. According to IATA, a number of international routes and domestic markets are now either near or exceeding 2019 traffic levels. Global domestic traffic rose 36% during the month of May 2023 as compared to the prior year, with several major markets experiencing double-digit percentage increases compared to 2022.negatively impactedinfluenced by macroeconomic conditions,several factors including impacts of changes in the competitive landscape of the aircraft leasing industry, supply chain disruptions, evolving international trade matters, epidemic diseases and geopolitical events and policy risks. Nevertheless,therefore, are difficult to project or forecast. We also believe the increase in lease rates and the tightening of credit markets may result in a shortfall of available capital to finance aircraft purchases, which could increase the demand for leasing.the leasing industry has remained resilient over time. Weand remain optimistic about the long‑term growth prospectslong-term fundamentals of our business. We believe leasing will continue to be an attractive form of aircraft financing for air transportation. We see a growing demandairlines because less cash and financing is required for aircraft leasing in the broader industryairlines, lessors maintain key delivery positions, and a roleit provides fleet flexibility while eliminating residual value risk for us in helping airlines modernize their fleets to support the growth of the airline industry. However, with the growth in aircraft leasing worldwide, we are witnessing an increase in competition among aircraft lessors resulting in more variation in lease rates.lessees.19withoperations using available cash balances, internally generated funds, including through aircraft sales and trading activity, and debt financings.an array of financing products. We have structured ourselvesaim to have anmaintain investment-grade credit profilemetrics and focus our debt financing strategy has focused on funding our business primarily on an unsecured basis.basis with mostly fixed-rate debt from public bond offerings. Unsecured financing provides us with operational flexibility when selling or transitioning aircraft from one airline to another. In addition, we may,We also have the ability to seek debt financing secured by our assets, as well as financings supported through government-guaranteed export credit agencies for future aircraft deliveries. We have also issued preferred stock with a total aggregate stated value of $850.0 million. Our access to a limited extent, utilize export creditvariety of financing alternatives including unsecured public bonds, private capital, bank debt, secured financings and preferred stock issuances serves as a key advantage in supportmanaging our liquidity. Ongoing aircraft delivery delays as a product of manufacturer delays are expected to further reduce our new aircraft deliveries.thirdsecond quarter of 20172023 with total debt outstanding net of discounts$19.1 billion, of which 90.5% was at a fixed rate and issuance costs, of $9.2 billion98.9% was unsecured, compared to $8.7total debt outstanding of $18.8 billion as of December 31, 2016. Our unsecured2022, of which 91.3% was at a fixed rate and 99.3% was unsecured. As of June 30, 2023, our composite cost of funds raised through debt increasedfinancings was 3.49%, compared to $8.8 billion as of September 30, 2017 from $8.1 billion3.07% as of December 31, 2016. Our unsecured debt as a percentage of total debt increased to 94.0% as of September 30, 20172022.92.4% as of December 31, 2016.Ouravailable cash flowsbalances, cash generated from ongoing operations, decreased slightly by 1.3% or $9.8 million, to $751.6 million for the nine months ended September 30, 2017 as compared to $761.5 million for the nine months ended September 30, 2016. Our cash flow used in investing activities was $1.4 billion for the nine months ended September 30, 2017, which resulted primarily from the purchase of aircraft partially offset by proceeds on the sale of aircraft. Our cash flow provided by financing activities was $608.2 million for the nine months ended September 30, 2017, which resulted primarily from the issuance of unsecured notes during the first half of 2017, partially offset by the repayment of outstanding debt. We ended the third quarter of 2017 with available liquidity of $2.5 billion which is comprised of unrestricted cash of $226.0 million and undrawn balancesborrowings under our unsecured revolving credit facility of $2.3 billion. We believe that we have sufficient liquidityand general ability to access the capital and debt markets for opportunistic debt financings to satisfy the operating requirements of our business through at least the next twelve12 months.financing plan for the remainder of 2017 is focused on funding the purchase of aircraft and our business with available cash balances, internally generated funds, including aircraft sales and trading activities, and debt financings. Ourlong-term debt financing planstrategy is focused on continuing to raise primarily unsecured debt in the global bank and investment grade capital markets. Our material cash sources include:may utilize, to a limited extent,generate liquidity through other sources of debt financing (including unsecured and secured bank term loans, export credit financingand private placements), issuances of preferred stock and cash received from security deposits and maintenance reserves from our lease agreements.support2022 due to tightening monetary policies of the U.S. and other countries due to inflation concerns, and we expect interest rates to remain elevated for the near term. A higher interest rate environment may adversely affect our businesses through increased borrowing costs, although this impact may be offset in whole or in part by a corresponding increase in our lease rates on new leases and overall demand for aircraft deliveries.We arefrom our airline customers. Historically there has been a lag between a rise in interest rates and a corresponding increase in lease rates which is currently the case, although we expect lease rates will catch up with interest rate increases over time. Currently, the increased demand for our aircraft, combined with rising interest rates and inflation, has been serving to increase lease rates and we expect lease rates to continue to increase in 2023.allthe covenants or other requirementscontained in our debt agreements. While a ratings downgrade would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the costinterest rate applicable to certain of certainour financings. Our liquidity plans are subject to a number of risks and uncertainties, including those described in “Part I—Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016.2022.20
Our material cash requirements are primarily for the purchase of aircraft and debt service payments, along with our general operating expenses. The amount of our cash requirements depends on a variety of factors, including, the ability of aircraft manufacturers to meet their contractual delivery obligations to us, the ability of our lessees to meet their contractual obligations with us, the timing of aircraft sales from our fleet, the timing and amount of our debt service obligations, potential aircraft acquisitions, and the general economic environment in which we operate.2023 2024 2025 2026 2027 Thereafter Total Long-term debt obligations $ 1,300,288 $ 2,946,128 $ 2,400,016 $ 3,621,710 $ 3,787,044 $ 5,034,500 $ 19,089,686 349,851 629,907 552,811 458,738 347,270 340,302 2,678,879 3,560,678 5,510,954 4,787,013 4,302,205 2,484,140 2,567,640 23,212,630 Total $ 5,210,817 $ 9,086,989 $ 7,739,840 $ 8,382,653 $ 6,618,454 $ 7,942,442 $ 44,981,195 (1) Future interest payments on floating rate debt are estimated using floating rates in effect at June 30, 2023. (2) Purchase commitments reflect future Boeing and Airbus aircraft deliveries based on information currently available to us based on contractual documentation. was comprised of the following at SeptemberJune 30, 20172023 and December 31, 2016 (dollars in thousands):6,953,343 766,000 211,346 199,995 8,130,684 619,767 (1)This rate does not include the effect of upfront fees, undrawn fees or discount and issuance cost amortization.June 30, 2023 December 31, 2022 ( in thousands, except percentages) Unsecured Senior unsecured securities $ 17,202,069 $ 17,095,116 Revolving credit facility 1,000,000 1,020,000 Term financings 668,300 582,950 Total unsecured debt financing 18,870,369 18,698,066 Secured Export credit financing 112,184 11,646 Term financings 107,133 113,717 Total secured debt financing 219,317 125,363 Total debt financing 19,089,686 18,823,429 Less: Debt discounts and issuance costs (193,893) (182,366) Debt financing, net of discounts and issuance costs $ 18,895,793 $ 18,641,063 Selected interest rates and ratios: 3.49 % 3.07 % 3.21 % 2.98 % Percentage of total debt at a fixed-rate 90.52 % 91.34 % (1) This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs. notesSeptemberJune 30, 2017,2023, we had $6.9$17.2 billion in senior unsecured notessecurities outstanding. As of December 31, 2016,2022, we had $7.0$17.1 billion in senior unsecured notessecurities outstanding.On12, 2017,30, 2023, we issued $700.0 million in aggregate principal amount of 5.30% Medium-Term Notes due 2028.senior5.85% trust certificates due 2028 in a Sukuk financing. If we fail to meet our obligations under the Sukuk financing, the sole rights of each of the holders of the trust certificates will be against us to perform our obligations under the agreements to which we are a party. notes due 2022 that bear interest at a rate of 2.625%.On March 8, 2017, we issued $500.0 million in aggregate principal amount of senior unsecured notes due 2027 that bear interest at a rate of 3.625%.Unsecured revolving credit facilityIn November 2017, we executed a commitment increase tofacility. Thisfacility (the “Revolving Credit Facility”) as of June 30, 2023 and December 31, 2022. Borrowings under the Revolving Credit Facility are used to finance our working capital needs in the ordinary course of business and for other general corporate purposes.facility capacity of our Revolving Credit Facility by $50.0 million to $3.8 billion.In May 2017,$325.0 million. During the second quarter of 2023, we amended and extended our unsecured revolving credit facility whereby,Revolving Credit Facility through an amendment that, among other things, we extended the final maturity date from May 5, 20202026 to May 5, 20212027 and increasedamended the total revolving commitments thereunder to approximately $3.7$7.2 billion from approximately $3.5 billion with anas of May 5, 2023. The amended Revolving Credit Facility also decreased the SOFR credit spread adjustment applicable to borrowings for all interest periods. As of June 30, 2023, borrowings under the Revolving Credit Facility accrue interest at Adjusted Term SOFR (as defined in the Revolving Credit Facility) plus a margin of 1.05% per year. We are 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 to our credit ratings.LIBOR plus 1.05% with a 0.20% facility fee. Lenders holdAugust 3, 2023, lenders held revolving commitments totaling approximately $3.1$6.8 billion that mature on May 5, 2021,2027, commitments totaling approximately $217.7$320.0 million that mature on May 5, 2020,2026, and commitments totaling $290.0$32.5 million that mature on May 5, 2019,2025.totaling $55.0 million that mature on May 5, 2018.The total amountunder the Revolving Credit Facility and require immediate repayment of all outstanding under ourborrowings.facilityfacilities, unsecured term financings and secured term financings, including export credit.approximately $1.4 billion$887.6 million and $766.0 millionwe had pledged three aircraft as collateral with a net book value of September 30, 2017 and$318.2 million. As of December 31, 2016, respectively.2022, the outstanding balance on other debt financings was $708.3 million and we had pledged three aircraft as collateral with a net book value of $212.1 million.21Shares Issued and Outstanding as of June 30, 2023 Liquidation Preference
as of June 30, 2023Issue Date Dividend Rate in Effect at June 30, 2023 Next dividend rate reset date Dividend rate after reset date Series A 10,000,000 $ 250,000 March 5, 2019 6.150 % March 15, 2024 Series B 300,000 300,000 March 2, 2021 4.650 % June 15, 2026 5 Yr U.S. Treasury plus 4.076% Series C 300,000 300,000 October 13, 2021 4.125 % December 15, 2026 5 Yr U.S. Treasury plus 3.149% Total 10,600,000 $ 850,000 (1) 3M Term SOFR includes a credit spread adjustment of 0.10% Payment Date Title of each class March 15, 2023 June 15, 2023 (in thousands) Series A Preferred Stock $3,844 $3,844 Series B Preferred Stock $3,487 $3,487 Series C Preferred Stock $3,094 $3,094 ratings to lower our cost of funds and broaden our access to attractively priced capital.Rating Agency Outlook Ratings Action Rating AgencyA- DebtA- RatingStable OutlookRatings ActionMarch 24, 2023 FitchBBBBBBStableJuly 24, 2017 Kroll Bond Rating AgencyA−A−StableDecember 16, 2016 BBB BBBBBB BBBStable StableApril 25, 2023 Fitch Ratings October 17, 2016 BBB Stable December 19, 2022 costinterest rate applicable to certain of our financings.nine month periodssix months ended SeptemberJune 30, 20172023 and 20162022 (in thousands, except percentages and per share data)amounts and percentages):2.70 2.55 Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (unaudited) Revenues Rental of flight equipment $ 611,733 $ 545,271 $ 1,229,506 $ 1,111,825 Aircraft sales, trading and other 61,171 12,425 79,540 42,533 Total revenues 672,904 557,696 1,309,046 1,154,358 Expenses Interest 172,174 118,997 323,786 236,274 Amortization of debt discounts and issuance costs 13,646 13,413 26,719 26,610 Interest expense 185,820 132,410 350,505 262,884 Depreciation of flight equipment 268,586 235,284 528,266 470,591 Write-off of Russian fleet — — — 802,352 Selling, general and administrative 45,832 38,512 93,447 71,277 Stock-based compensation expense 8,715 6,558 14,611 4,035 Total expenses 508,953 412,764 986,829 1,611,139 Income/(loss) before taxes 163,951 144,932 322,217 (456,781) Income tax (expense)/benefit (31,550) (28,655) (61,096) 104,065 Net income/(loss) $ 132,401 $ 116,277 $ 261,121 $ (352,716) Preferred stock dividends (10,425) (10,425) (20,850) (20,850) Net income/(loss) attributable to common stockholders $ 121,976 $ 105,852 $ 240,271 $ (373,566) Earnings/(Loss) per share of common stock: Basic $ 1.10 $ 0.95 $ 2.16 $ (3.32) Diluted $ 1.10 $ 0.95 $ 2.16 $ (3.32) Other financial data Pre-tax margin 24.4 % 26.0 % 24.6 % (39.6) % Pre-tax return on common equity (trailing twelve months) 10.3 % (3.0) % 10.3 % (3.0) % $ 175,887 $ 154,478 $ 342,697 $ 355,366 $ 1.58 $ 1.39 $ 3.08 $ 3.15 26.1 % 27.7 % 26.2 % 30.8 % 11.2 % 12.2 % 11.2 % 12.2 % (1)Adjusted net income before income taxes (defined as net income excluding the effects of certain non-cash items, one-time or non-recurring items, such as settlement expense, net of recoveries, that are not expected to continue in the future and certain other items), adjusted margin before income taxes (defined as adjusted net income before income taxes divided by total revenues, excluding insurance recoveries) and adjusted diluted earnings per share before income22
(1)Adjusted net income before income taxes (defined as net income/(loss) attributable to common stockholders excluding the effects of certain non-cash items, one-time or non-recurring items, such as write-offs of our Russian fleet, that are not expected to continue in the future and certain other items), adjusted pre-tax margin (defined as adjusted net income before income taxes divided by total revenues), adjusted diluted earnings per share before income taxes (defined as adjusted net income before income taxes divided by the weighted average diluted common shares outstanding) and adjusted pre-tax return on common equity (defined as adjusted net income before income taxes divided by average common shareholders’ equity) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income/(loss) attributable to common stockholders, pre-tax margin, earnings/(loss) per share, dilutedtaxes (defined as adjusted net income before income taxes divided by the weighted average diluted common shares outstanding) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income, pre-tax profit margin, earnings per share, and diluted earnings per share, or any other performance measures derived in accordance with GAAP. Adjusted net income before income taxes, adjusted margin before income taxes and adjusted diluted earnings per share before income taxes, are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations. before income taxes and adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity to assess our consolidated financial and operating performance. Management believes these measures are helpful in evaluating the operating performance of our ongoing operations and identifying trends in our performance because they remove 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 from our operating results. Adjusted net income before income taxes, adjusted pre-tax margin, before income taxes and adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity, however, should not be considered in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Adjusted net income before income taxes, adjusted pre-tax margin, before income taxes and adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity do not reflect our cash expenditures or changes in our cash requirements for our working capital needs. In addition, our calculation of adjusted net income before income taxes, adjusted pre-tax margin, before income taxes and adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity may differ from the adjusted net income before income taxes, adjusted pre-tax margin, before income taxes and adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity, or analogous calculations of other companies in our industry, limiting their usefulness as a comparative measure.The following tables show the reconciliation of net income to adjusted net income before income taxes and adjusted margin before income taxes (in thousands, except percentages):(1)Adjusted margin before income taxes is adjusted net income before income taxes divided by total revenues, excluding insurance recovery on settlement.23net income tothe numerator for adjusted pre-tax margin (in thousands, except percentages):Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (unaudited) Reconciliation of the numerator for adjusted pre-tax margin (net income/(loss) attributable to common stockholders to adjusted net income before income taxes): Net income/(loss) attributable to common stockholders $ 121,976 $ 105,852 $ 240,271 $ (373,566) Amortization of debt discounts and issuance costs 13,646 13,413 26,719 26,610 Write-off of Russian fleet — — — 802,352 Stock-based compensation expense 8,715 6,558 14,611 4,035 Income tax expense/(benefit) 31,550 28,655 61,096 (104,065) Adjusted net income before income taxes $ 175,887 $ 154,478 $ 342,697 $ 355,366 Denominator for adjusted pre-tax margin: Total revenues $ 672,904 $ 557,696 $ 1,309,046 $ 1,154,358 26.1 % 27.7 % 26.2 % 30.8 % (a) Adjusted pre-tax margin is adjusted net income before income taxes divided by total revenues 24Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (unaudited) Reconciliation of the numerator for adjusted diluted earnings per share (net income/(loss) attributable to common stockholders to adjusted net income before income taxes): Net income/(loss) attributable to common stockholders $ 121,976 $ 105,852 $ 240,271 $ (373,566) Amortization of debt discounts and issuance costs 13,646 13,413 26,719 26,610 Write-off of Russian fleet — — — 802,352 Stock-based compensation expense 8,715 6,558 14,611 4,035 Income tax expense/(benefit) 31,550 28,655 61,096 (104,065) Adjusted net income before income taxes $ 175,887 $ 154,478 $ 342,697 $ 355,366 Denominator for adjusted diluted earnings per share: Weighted-average diluted common shares outstanding 111,239,004 111,043,836 111,307,049 112,373,092 Potentially dilutive securities, whose effect would have been anti-dilutive — — — 301,279 Adjusted weighted-average diluted common shares outstanding 111,239,004 111,043,836 111,307,049 112,674,371 $ 1.58 $ 1.39 $ 3.08 $ 3.15 (b) Adjusted diluted earnings per share before income taxes is adjusted net income before income taxes divided by adjusted weighted-average diluted common shares outstanding Trailing Twelve Months
June 30,2023 2022 (unaudited) Reconciliation of the numerator for adjusted pre-tax return on common equity (net income/(loss) attributable to common stockholders to adjusted net income before income taxes): Net income/(loss) attributable to common stockholders $ 475,113 $ (131,242) Amortization of debt discounts and issuance costs 53,363 52,693 (Recovery)/Write-off of Russian fleet (30,877) 802,352 Stock-based compensation expense 26,179 18,443 Income tax expense/(benefit) 123,419 (40,258) Adjusted net income before income taxes $ 647,197 $ 701,988 Reconciliation of denominator for pre-tax return on common equity to adjusted pre-tax return on common equity: Common shareholders' equity as of beginning of the period $ 5,589,634 $ 5,951,715 Common shareholders' equity as of end of the period $ 6,002,653 $ 5,589,634 Average common shareholders' equity $ 5,796,144 $ 5,770,675 11.2 % 12.2 % (c) Adjusted pre-tax return on common equity is adjusted net income before income taxes divided by average common shareholders’ equity SeptemberJune 30, 2017,2023, compared to the three months ended SeptemberJune 30, 2016As of September2017,2023, we owned 236 aircraft at a net book value of $12.7 billion and recorded $359.5$611.7 million in rental revenue, for the quarter then ended, which included overhaul revenue, net of amortization ofexpense related to initial direct costs of $0.5 million. In the prior year,$10.2 million as of September 30, 2016, we owned 244 aircraft at a net book value of $11.9 billion and recorded $340.9compared to $545.3 million, in rental revenue for the quarter ended September 30, 2016, which included overhaul revenue, net of amortization ofexpense related to initial direct costs of $2.3 million.$2.4 million for the three months ended June 30, 2022. Our owned fleet increased to 448 aircraft with a net book value of $25.5 billion as of June 30, 2023 from 392 aircraft with a net book value of $23.5 billion as of June 30, 2022. The increase in rental revenuerevenues was primarily due todriven by the increasecontinued growth in net book value of our operating lease portfolio to $12.7 billion as of September 30, 2017 from $11.9 billion as of September 30, 2016.$17.3$61.2 million for the three months ended SeptemberJune 30, 20172023 compared to $14.2$12.4 million for the three months ended SeptemberJune 30, 2016. During the quarter ended September 30, 2017, we recorded $6.6 million2022. The increase in gains fromaircraft sales, trading and other revenue is primarily related to the sale of seveneight aircraft from our operating lease portfolio. Duringin the second quarter ended September 30, 2016, we recorded $10.0 millionof 2023 resulting in gains fromof approximately $45.0 million. The aircraft sold in the salethree months ended June 30, 2023 had a carrying value of seven$600.0 million, primarily weighted towards widebody aircraft. We did not sell any aircraft from our operating lease portfolio. $70.5$185.8 million for the three months ended SeptemberJune 30, 20172023 compared to $72.8$132.4 million for the three months ended SeptemberJune 30, 2016. The decrease was primarily2022. Our interest expense increased due to a decreasean increase in our composite cost of funds partially offset byas compared to the prior year and an increase in our average debt balance. Webalance in connection with the growth of our fleet. Due to the elevated interest rate environment, we expect that our interest expense will continue to increase as our average debt balance outstanding continues to increase. Interest expense will also be impacted by changes inand our composite cost of funds.$127.6$268.6 million in depreciation expense of flight equipment for the three months ended September��June 30, 20172023 compared to $113.3$235.3 million for the three months ended SeptemberJune 30, 2016.2022. The increase in depreciation expense for the three months ended SeptemberJune 30, 2017,2023, compared to the three months ended SeptemberJune 30, 2016,2022, is primarily attributable to the acquisitiongrowth of additionalour fleet. We expect our depreciation expense to increase as we continue to add aircraft during the last twelve months.$19.3$45.8 million for the three months ended SeptemberJune 30, 20172023 compared to $19.9$38.5 million for the three months ended SeptemberJune 30, 2016.2022. The increase in selling, general and administrative expenses was primarily due to the increase in business activity, increased expenses related to the transition of aircraft, and increases in aviation insurance expenses in line with the growth of our fleet. We expect an increase in selling, general and administrative expenses due to higher inflation, increased business activity, and increased aviation insurance expenses in line with the growth of our fleet. Selling, general and administrative expenseexpenses as a percentage of total revenue decreased to 5.1%6.8% for the three months ended SeptemberJune 30, 20172023 compared to 5.6%6.9% for the three months ended SeptemberJune 30, 2016. As we continue to add new aircraft to our portfolio, we expect over the long-term, selling, general and administrative expense to decrease as a percentage of revenue.The was 35.6% and 35.5% for the three months ended SeptemberJune 30, 2017 and 2016, respectively.SeptemberJune 30, 2017,2023, we reported consolidated net income attributable to common stockholders of $99.2$122.0 million, or $0.90$1.10 per diluted share, compared to a consolidated net income attributable to common stockholders of $93.3$105.9 million, or $0.86$0.95 per diluted share, for the three months ended SeptemberJune 30, 2016. Net income increased2022. The increase was due to the growth of our fleet and the increase in the third quarter of 2017 as compared to 2016, primarily due tosales activity. The increase was partially offset by an increase in interest expense due to the increases in our rental revenue resulting fromcomposite cost of funds, an increase in aircraft transition costs, and increases in our aviation insurance expense in line with the net book valuegrowth of our fleet of aircraft subject to operating lease.25
in the current year period.SeptemberJune 30, 2017,2023, we recorded adjusted net income before income taxes of $166.4$175.9 million, or $1.50$1.58 per adjusted diluted share, before income taxes, compared to an adjusted net income before income taxes of $157.3$154.5 million, or $1.43$1.39 per adjusted diluted share, before income taxes, for the three months ended SeptemberJune 30, 2016. The increase in adjusted2022. Adjusted net income before income taxes forincreased from the third quarter of 2017 comparedprior year period due to the third quartergrowth of 2016 was primarily due toour fleet and an increase in our rental revenue resulting fromsales activity. The increase was partially offset by an increase in interest expense due to the net book valueincreases in our composite cost of funds, an increase in aircraft transition costs, and increases in our aviation insurance expense in line with the growth of our fleet of aircraft subject to operating lease. "Results“Results of Operations"Operations” table above for a discussion of adjusted net income before income taxes and adjusted diluted earnings per share before income taxes as non-GAAP measures and reconciliation of these measures to net income.Nineincome attributable to common stockholders.SeptemberJune 30, 2017,2023, compared to the ninesix months ended SeptemberJune 30, 2016As of September2017,2023, we owned 236 aircraft at a net book value of $12.7 billion and recorded $1.1$1.2 billion in rental revenue, for the nine months then ended, which included overhaul revenue, net of amortization ofexpense related to initial direct costs of $3.1 million. In the prior year,$31.3 million as of September 30, 2016, we owned 244 aircraft at a net book value of $11.9compared to $1.1 billion, and recorded $985.4 million in rental revenue for the nine months ended September 30, 2016, which included overhaul revenue, net of amortization ofexpense related to initial direct costs of $1.6 million.$42.1 million for the six months ended June 30, 2022. Our owned fleet increased to 448 aircraft with a net book value of $25.5 billion as of June 30, 2023 from 392 aircraft with a net book value of $23.5 billion as of June 30, 2022. The increase in rental revenuerevenues was primarily due todriven by the increasecontinued growth in net book value of our operating lease portfolio to $12.7 billion as of September 30, 2017 from $11.9 billion as of September 30, 2016.$45.7$79.5 million for the ninesix months ended SeptemberJune 30, 20172023 compared to $63.2$42.5 million for the ninesix months ended SeptemberJune 30, 2016. During2022. For the ninesix months ended SeptemberJune 30, 2017,2023, we recorded $23.8$53.6 million in gains from the sale of 2910 aircraft from our operating lease portfolio.owned fleet. In addition, we received insurance proceedsrecorded $1.2 million in forfeiture of $1.0 millionsecurity deposit income during the ninesix months ended SeptemberJune 30, 2017 in connection with a litigation settlement.2023. During the ninesix months ended SeptemberJune 30, 2016,2022, we recorded $47.7had approximately $17.9 million in forfeiture of security deposit income from the termination of our leasing activities in Russia and $7.2 million in gains from the sale of 29 aircraft from our operatingfour sales-type lease portfolio. In addition, we received insurance proceeds of $5.25 million during the nine months ended September 30, 2016 in connection with a litigation settlement. $216.0$350.5 million for the ninesix months ended SeptemberJune 30, 20172023 compared to $211.5$262.9 million for the ninesix months ended SeptemberJune 30, 2016. The change was primarily2022. Our interest expense increased due to an increase in our average outstanding debt balances partially offset bycomposite cost of funds as compared to the decreaseprior year and an increase in our average composite costdebt balance in connection with the growth of funds. Weour fleet. Due to the elevated interest rate environment, we expect that our interest expense will continue to increase as our average debt balance outstanding continues to increase. Interest expense will also be impacted by changes inand our composite cost of funds.$378.0$528.3 million in depreciation expense of flight equipment for the ninesix months ended SeptemberJune 30, 20172023 compared to $334.0$470.6 million for the ninesix months ended SeptemberJune 30, 2016.2022. The increase in depreciation expense for the ninesix months ended SeptemberJune 30, 2017,2023, compared to the ninesix months ended SeptemberJune 30, 2016,2022, is primarily attributable to the acquisitiongrowth of additional aircraft.$65.7$93.4 million for the ninesix months ended SeptemberJune 30, 20172023 compared to $59.9$71.3 million for the ninesix months ended SeptemberJune 30, 2016.2022. The increase in selling, general and administrative expenses was primarily due to the increase in business activity, increased expenses related to the transition of aircraft and increases in aviation insurance expense in line with the growth of our fleet. We had approximately $6.0 million of non-recurring expenses associated with our end of lease revenue recognized for the six months ended June 30, 2023. We expect an increase in selling, general and administrative expenses due to higher inflation, increased business activity, and increased aviation insurance expenses in line with the growth of our fleet. Selling, general and administrative expenseexpenses as a percentage of total revenue increased slightly to 5.9%7.1% for the ninesix months ended SeptemberJune 30, 20172023 compared to 5.7%6.2% for the ninesix months ended SeptemberJune 30, 2016. The increase in selling, general2022.administrative26expenses was primarily due to $3.3 million of transaction expenses incurred in 2017 related to the Thunderbolt transaction. As we continue to add new aircraft to our portfolio, we expect over the long-term, selling, general19.0% and administrative expense to decrease as a percentage of revenue.Taxeswas 35.8% and 35.5% fordecreased due to changes in permanent items.ninesix months ended SeptemberJune 30, 2017 and 2016, respectively. The increase in our effective tax rate was due to the adoption of ASU 2016-09 in the first quarter of 2017, which resulted in a discrete income tax expense item related to stock-based compensation of approximately $1.7 million as discussed in Note 2: Basis of Preparation, in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.Net incomeFor the nine months ended September 30, 2017,2023, we reported consolidated net income attributable to common stockholders of $285.1$240.3 million, or $2.59$2.16 per diluted share, compared to a consolidated net incomeloss attributable to common stockholders of $277.9$373.6 million, or $2.55net loss of $3.32 per diluted share, for the ninesix months ended SeptemberJune 30, 2016. Net income increased2022. The increase was due to the growth of our fleet, an increase in sales activity and the effect of the write-off of our Russian fleet in the first nine monthsquarter of 2017 as compared to 2016, this2022. The increase was primarily due topartially offset by an increase in rental revenue resulting frominterest expense due to the increases in our composite cost of funds, an increase in aircraft transition costs, and an increase in our aviation insurance expense in line with the net book valuegrowth of our fleet of aircraft subject to operating lease, partially offset by a decrease in gains on aircraft sales, as well as the receipt of insurance proceeds in 2016 related to a legal settlement in 2015.ninesix months ended SeptemberJune 30, 2017,2023, we recorded adjusted net income before income taxes of $479.7$342.7 million, or $4.34$3.08 per adjusted diluted share, before income taxes, compared to an adjusted net income before income taxes of $460.6$355.4 million, or $4.20$3.15 per adjusted diluted share, before income taxes, for the ninesix months ended SeptemberJune 30, 2016. The increase2022. Despite the continued growth of our fleet, the decrease in our adjusted net income before income taxes for the first ninesix months of 2017ended June 30, 2023 as compared to the first nine months2022 was mainly driven by lower end of 2016 was primarily due to an increaselease revenue recognized and increases in rental revenue resulting from an increase in the net book value of our fleet of aircraft subject to operating lease, partially offset by a decrease in gains on aircraft sales."Results“Results of Operations"Operations” table above for a discussion of adjusted net income before income taxes and adjusted diluted earnings per share before income taxes as non-GAAP measures and reconciliation of these measures to net income.Contractual ObligationsOur contractual obligations as of September 30, 2017, are as follows (in thousands):(1)Future interest payments on floating rate debt are estimated using floating rates in effect at September 30, 2017.27Off-Balance Sheet ArrangementsWe have not established any unconsolidated entities for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. We have, however, from time to time established subsidiaries and created partnership arrangements or trusts for the purpose of leasing aircraft or facilitating borrowing arrangements, all of which are consolidated.Policiespoliciesestimates reflecting management’s estimates and judgments are described in our Annual Report on Form 10-K for the year ended December 31, 2016.2022. We have reviewed recently adopted accounting pronouncements and determined that the adoption of such pronouncements is not expected to have a material impact, if any, on our consolidated financial statements.Consolidated Financial Statements. Accordingly, there have been no material changes to critical accounting policiesestimates in the ninesix months ended SeptemberJune 30, 2017.2023.28OurLease rates, and therefore our revenue from a lease, rental stream isare generally fixed over the life of our leases, whereas weleases. We have usedsome exposure to changing interest rates as a result of our floating-rate debt, to finance a portionprimarily from our Revolving Credit Facility. As of our aircraft acquisitions from time to time. WeJune 30, 2023 and December 31, 2022, we had $2.0$1.8 billion and $1.5$1.6 billion in floating-rate debt outstanding, respectively. Additionally, we have outstanding preferred stock with an aggregate stated amount of $850.0 million that currently pays dividends at a fixed rate, but will alternate to paying dividends based on each of September 30, 2017 and December 31, 2016.a floating rate or be reset to a new fixed rate based on the then-applicable floating rate, after five years from initial issuance. If interest rates increase,remain elevated, which we expect for the near term, we would be obligated to make higher interest payments to our lenders. Aslenders, and eventually, higher dividend payments to the holders of our preferred stock. If we incur significant fixed-rate debt in the future, increased interest rates prevailing in the market at the time of the incurrence of such debt willwould also increase our interest expense. If the composite interest rate on our floating-rateoutstanding floating rate debt werewas to increase by 1.0%, we would expect to incur additional annual interest expense on our existing indebtedness of approximately $20.4$18.1 million and $14.5$16.3 million as of SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively, each on an annualized basis, which would put downward pressure on our operating margins. Further, as of September 30, 2017, 78.1% of our total debt incurred interest at a fixed rate.WeTo partially mitigate the risk of an increasing interest rate environment between the lease signing date and the delivery date of the aircraft, by having interest rate adjusters in a majority of our forward lease contracts have manufacturer escalation protection and/or interest rate adjusters which would adjust the final lease rate upward ifor downward based on changes in the consumer price index or certain benchmark interest rates, are higherrespectively, at the time of delivery of the aircraft than atas compared to the lease signing date.As of September 30, 2017 and December 31, 2016, 1.0%Approximately 0.2% of our lease revenues were denominated in Euros.foreign currency as of June 30, 2023 and December 31, 2022. Approximately 1.6% of our debt obligations were denominated in foreign currency as of June 30, 2023 and December 31, 2022; however, the exposure of such debt has been effectively hedged as described below. As our principal currency is the U.S. dollar, changesfluctuations in the U.S. dollar as compared to other major currencies should not have a significant impact on our future operating results. However, many of our lessees are exposed to currency risk due to the fact that they earn revenues in their local currencies while a significant portion of their liabilities and expenses are denominated in U.S. dollars, including their lease payments to us, as well as fuel, debt service, and other expenses. For the six months ended June 30, 2023, more than 95% of our revenues were derived from customers who have their principal place of business outside the U.S. and most leases designated payment currency is U.S. dollars. The ability of our lessees to make lease payments to us in U.S. dollars may be adversely impacted in the event of an appreciating U.S. dollar.29
In December 2019, we issued C$400.0 million in aggregate principal amount of 2.625% notes due 2024. We effectively hedged our foreign currency exposure on this transaction through a cross-currency swap that converts the borrowing rate to a fixed 2.535% U.S. dollar-denominated rate. See Note 8 of Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details on the fair value of the swap.OurIn designing and evaluating the disclosure controls and procedures, management including the Certifying Officers, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.SeptemberJune 30, 2017.2023. Based on that evaluation, our Certifying Officers have concluded that our disclosure controls and procedures were effective at Septemberas of June 30, 2017.have beenwere no changes in our internal control over financial reporting during the quarter ended SeptemberJune 30, 20172023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Frommatters or material legal proceedings.matters. We maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards.2016.2022.NoneNoneNoneNone30
Rule 10b5-1 Trading Arrangements and Non-Rule 10b5-1 Trading ArrangementsIncorporated by Reference Exhibit Number Exhibit Description Form File No. Exhibit Filing Date 3.1 S-1 333-171734 3.1 January 14, 2011 3.2 8-K 001-35121 3.1 March 27, 2018 3.3 8-A 001-35121 3.2 March 4, 2019 3.4 8-K 001-35121 3.1 March 2, 2021 3.5 8-K 001-35121 3.1 October 13, 2021 4.1 10-Q 001-35121 4.1 November 4, 2021 4.2 Certain instruments defining the rights of holders of long-term debt of Air Lease Corporation and all of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed are being omitted pursuant to paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K. Air Lease Corporation agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. 10.1 8-K 001-35121 10.1 April 26, 2023 10.2§ 8-K 001-35121 10.1 May 5, 2023 10.3§ Filed herewith 10.4§ Filed herewith 10.5§ Filed herewith 10.6§ Filed herewith 3.1Restated Certificate of Incorporation of Air Lease Corporation (incorporatedIncorporated by reference to Exhibit 3.1 to Air Lease Corporation's Registration Statement on Form S-1 filed on January 14, 2011 (File No. 333-17173)).ReferenceExhibit Number Exhibit Description Form File No. Exhibit Filing Date 3.2Filed herewith 10.1†Filed herewith 10.2†Filed herewith 10.3†Filed herewith 10.4†Filed herewith 10.12† Filed herewith 10.5†Filed herewith 10.6†10.7†10.812.131.1Filed herewith Filed herewith Furnished herewith Furnished herewith XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) XBRL Taxonomy Extension Schema XBRL Taxonomy Extension Calculation Linkbase XBRL Taxonomy Extension Definition Linkbase XBRL Taxonomy Extension Label Linkbase XBRL Taxonomy Extension Presentation Linkbase 104 The cover page from Air Lease Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline XBRL and contained in Exhibit 101
† The Company has either (i) omitted confidential portions of the referenced exhibit and filed such confidential portions separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 406 promulgated under the Securities Act of 1933 or (ii) omitted portions of the referenced exhibit pursuant to Item 601(b) of Regulation S-K because it (a) is not material and (b) would be competitively harmful if publicly disclosed.†The registrant has omitted confidential portions of the referenced exhibit and filed such confidential portions separately with the Securities and Exchange Commission pursuant to a request for confidential treatment under Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.31AIR LEASE CORPORATION August 3, 2023 November 9, 2017August 3, 2023 November 9, 201732