Air Lease Corp (AL) 2016年年度報告「NYSE」.pdf

1、Exceeding Expectations2016 ANNUAL REPORTTOTAL REVENUE(In Billions)TOTAL ASSETS(In Billions)23730853.86.9$23.836351Owned AircraftManaged AircraftAirlineCustomersAverage Fleet Age(Years)Average Remaining Lease Term(Years)Committed Future Rentals(In Billions)Order BookCountries$0.662012$0.862013$1.0520

2、14$1.222015$1.422016Continuing Generated record levels of revenues,returns on equity,and earnings Growth per shareExploring Took advantage of strong marketplace by profitably selling 46 aircraft Opportunity for proceeds of$1.2 billionThinking Continued success of the management business with additio

3、nal Strategically strategic initiatives underwayBuilding Achieved BBB rating from Fitch and ratings upgrade to BBB from S&P Strength due to business consistency and strong credit metricsEnhancing Quarterly dividend increased by 50%in effort to strengthen Returns shareholder returnsALC FLIGHT LOG$7.2

4、82012$9.242013$10.692014$12.362015$13.982016TO OUR FELLOW SHAREHOLDERSALC concluded 2016 with record revenues of$1.4 billion,an industry leading 40.9%pretax margin anddiluted earnings per share of$3.44.Revenues have grown at a compounded annual growth rate of 21%since2012.In November,we raised our q

5、uarterly cash dividend by 50%,from$0.05 per share to$0.075 per share,marking the fourth increase since it was initiated.We are proud of ALCs ability to generate superior financialresults and return value to our shareholders.Overall airline industry trends remain favorable and many of our airline cus

6、tomers have never beenhealthier.Demand for both new and used aircraft remains solid as evident by our lease placements and sales andtrading activity.The International Air Transport Association(IATA)reported that global passenger traffic grew6.3%in 2016,marking the seventh year of positive growth.Cer

7、tainly 2016 was a year marked with headlines of apprehension.After decades of experience,we areno stranger to the risks and concerns of our operating environment.Worries about geopolitical risks,fuel prices,currency fluctuation,aircraft values,production rates and increased competition just to name

8、a few havebecome almost normal course.Our ability to navigate through these fears with growth and success validates whatwe have said time and time again:We believe ALC is structured to succeed,and opportunity can be found,in allbusiness environments.2016 demonstrated this quite well.Throughout the y

9、ear we saw continued demand for both narrow andwidebody aircraft in our orderbook,with 92%of our orderbook placed through 2019.Our aircraft sales exceeded$1 billion for the first time(including the profitable sale of our ATR and Embraer fleet).We did not lose sight ofthe need to think strategically

10、while executing our core business.We took time to explore potential businessopportunities within our core competency that we have not yet taken advantage of or developed fully.Thesuccess of Blackbird Capital,as well as the structuring of the related ABS financing,is a prime example of theability we

11、have to utilize our market knowledge,expertise and relationships in innovative ways.We continue towork on new strategic initiatives to enhance our business.Since inception,we have been committed to a high quality investment grade credit profile.Our successduring the year was not at the sacrifice of

12、our prudent financial strategies,and this has continued to berecognized.ALC was upgraded to BBB from Standard and Poors in October and received a BBB rating fromFitch Ratings this January.We look to continue financing our business with unsecured debt issuances havingsuccessfully issued$2.0 billion o

13、f senior unsecured notes in 2016 alone.Moving forward,we remain steadfast inour strategy to achieve maximum flexibility as it relates to accessing diverse sources of capital and being wellpositioned to take advantage of opportunities in the future.We take great pride in the level of talent and exper

14、tise within Air Lease today.We believe that our teamis the best in the business as demonstrated by our financial results year after year.We remain confident andoptimistic about the future of our company and continue to love what we do.Thank you for your support and ongoing confidence.Respectfully yo

15、urs,Steven F.Udvar-HzyJohn L.PluegerExecutive Chairman of the BoardChief Executive Officer and PresidentUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the fiscal year ended De

16、cember 31,2016TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period fromtoCommission File Number 001-35121AIR LEASE CORPORATION(Exact name of registrant as specified in its charter)Delaware27-1840403(State or other jurisdiction ofincorporatio

17、n or organization)(I.R.S.EmployerIdentification No.)2000 Avenue of the Stars,Suite 1000NLos Angeles,California90067(Address of principal executive offices)(Zip Code)(Registrants telephone number,including area code):(310)553-0555Securities registered pursuant to Section 12(b)of the Act:Title of each

18、 className of each exchange on which registeredClass A Common StockNew YorkSecurities registered pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the SecuritiesAct.Yes No Indicate by check mark if the registran

19、t is not required to file reports pursuant to Section 13 or Section 15(d)of theExchange Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such shorter

20、 period that the registrant was required to filesuch reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website,if any,every Interactive Data File required to b

21、e 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 suchfiles).Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regu

22、lation S-K is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerat

23、ed filer,an accelerated filer,a non-accelerated filer,or asmaller reporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”inRule 12b-2 of the Exchange Act.(Check One):Large accelerated filer Accelerated filer Non-accelerated filer(Do not che

24、ck if asmaller reporting company)Smaller reporting company Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the ExchangeAct).Yes No The aggregate market value of registrants voting stock held by non-affiliates was approximately$2.6 billion on June 30,2016,

25、based upon the last reported sales price on the New York Stock Exchange.As of February 22,2017,there were 102,844,477shares of Class A common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEDesignated portions of the Proxy Statement relating to registrants 2017 Annual Meeting of Shareholders ha

26、ve beenincorporated by reference into Part III of this report.Form 10-KFor the Fiscal Year Ended December 31,2016INDEXTABLE OF CONTENTSPagePART I.Item 1.Business.4Item 1A.Risk Factors.14Item 1B.Unresolved Staff Comments.36Item 2.Properties.36Item 3.Legal Proceedings.38Item 4.Mine Safety Disclosures.

27、38PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases ofEquity Securities.39Item 6.Selected Financial Data.41Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.44Item 7A.Quantitative and Qualitative Disclosures

28、About Market Risk.65Item 8.Financial Statements and Supplementary Data.67Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.97Item 9A.Controls and Procedures.97Item 9B.Other Information.97PART IIIItem 10.Directors,Executive Officers and Corporate Governance.9

29、8Item 11.Executive Compensation.98Item 12.Security Ownership of Certain Beneficial Owners and Management Related StockholderMatters.98Item 13.Certain Relationships and Related Transactions,and Director Independence.98Item 14.Principal Accounting Fees and Services.98PART IVItem 15.Exhibits,Financial

30、Statement Schedules.99Item 16.Form 10-K Summary.1072FORWARD LOOKING STATEMENTSThis Annual Report on Form 10-K and other publicly available documents may contain or incorporatestatements that constitute forward-looking statements within the meaning of the Private Securities LitigationReform Act of 19

31、95.Those statements appear in a number of places in this Form 10-K and include statementsregarding,among other matters,the state of the airline industry,our access to the capital markets,our ability torestructure leases and repossess aircraft,the structure of our leases,regulatory matters pertaining

32、 to compliancewith governmental regulations and other factors affecting our financial condition or results of operations.Wordssuch as“expects,”“anticipates,”“intends,”“plans,”“believes,”“seeks,”“estimates”and“should,”and variationsof these words and similar expressions,are used in many cases to iden

33、tify these forward-looking statements.Anysuch forward-looking statements are not guarantees of future performance and involve risks,uncertainties andother factors that may cause our actual results,performance or achievements,or industry results to varymaterially from our future results,performance o

34、r achievements,or those of our industry,expressed or implied insuch forward-looking statements.Such factors include,among others,general commercial aviation industry,economic and business conditions,which will,among other things,affect demand for aircraft,availability andcreditworthiness of current

35、and prospective lessees,lease rates,availability and cost of financing and operatingexpenses,governmental actions and initiatives,and environmental and safety requirements,as well as the factorsdiscussed under“Item 1A.Risk Factors,”in this Annual Report on Form 10-K.We do not intend and undertakeno

36、obligation to update any forward-looking information to reflect actual results or future events orcircumstances.3PART IITEM 1.BUSINESSOverviewAir Lease Corporation(the“Company”,“ALC”,“we”,“our”or“us”)is a leading aircraft leasingcompany that was founded by aircraft leasing industry pioneer,Steven F.

37、Udvar-Hzy.We are principallyengaged in purchasing new commercial jet transport aircraft directly from aircraft manufacturers,such as TheBoeing Company(“Boeing”)and Airbus S.A.S.(“Airbus”),and leasing those aircraft to airlines throughout theworld with the intention to generate attractive returns on

38、equity.In addition to our leasing activities,we sellaircraft from our operating lease portfolio to third parties,including other leasing companies,financial servicescompanies and airlines.We also provide fleet management services to investors and owners of aircraft portfoliosfor a management fee.Our

39、 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 ouraircraft sales and trading activities and our management fees.We currently have relationships with over 20

40、0 airlines across 70 countries.We operate our business on aglobal basis,providing aircraft to airline customers in every major geographical region,including markets suchas Asia,the Pacific Rim,Latin America,the Middle East,Europe,Africa and North America.Many of thesemarkets are experiencing increas

41、ed demand for passenger airline travel and have lower market saturation thanmore mature markets such as the United States and Western Europe.We expect that these markets will alsopresent significant replacement opportunities in upcoming years as many airlines look to replace aging aircraftwith new,m

42、odern technology,fuel efficient jet aircraft.An important focus of our strategy is meeting the needsof this replacement market.Airlines in some of these markets have fewer financing alternatives,enabling us tocommand relatively higher lease rates compared to those in more mature markets.We mitigate

43、the risks of owning and leasing aircraft through careful management and diversification ofour leases and lessees by geography,lease term,and aircraft age and type.We believe that diversification of ouroperating lease portfolio reduces the risks associated with individual lessee defaults and adverse

44、geopolitical andregional economic events.We mitigate the risks associated with cyclical variations in the airline industry bymanaging customer concentrations and lease maturities in our operating lease portfolio to minimize periods ofconcentrated lease expirations.In order to maximize residual value

45、s and minimize the risk of obsolescence,ourstrategy is to own an aircraft during the first third of its expected 25 year useful life.During the year ended December 31,2016,the net book value of our fleet increased by 11.4%to$12.0 billion.During 2016,we purchased 43 aircraft and sold 46 aircraft,endi

46、ng the year with a total of 237owned aircraft and 30 aircraft in our managed fleet portfolio.We leased and managed aircraft to a globallydiversified customer base comprised of 85 airlines in 51 countries.As of December 31,2016,the weightedaverage lease term remaining of our operating lease portfolio

47、 was 6.9 years and the weighted average age of ourfleet was 3.8 years.During 2016,we entered into supplemental agreements and amendments to existing agreements withAirbus and Boeing to purchase 10 additional aircraft.From Airbus,we agreed to purchase one A350-900 aircraftand one A321-200 aircraft.Fr

48、om Boeing,we agreed to purchase six additional 737-8MAX aircraft and two787-9 aircraft.Deliveries of the 10 additional aircraft are scheduled to commence in 2017 and continue through2021.As of December 31,2016,we had commitments to purchase 363 aircraft from Boeing and Airbus fordelivery through 202

49、3,with an estimate aggregate commitment of$27.9 billion,making us one of the worldslargest customers for new commercial jet aircraft.During 2016,we signed lease agreements,letters of intent,and lease extension agreements for 122aircraft with 39 customers across 33 countries.As a result,the minimum f

50、uture rental payments that our airline4customers have committed to us have increased to$23.8 billion from$20.9 billion in the prior year.Thisincludes$9.4 billion in contracted minimum rental payments on the 237 aircraft in our existing fleet and$14.4 billion in minimum future rental payments on the

51、167 aircraft that we have ordered from the manufacturerswhich will deliver between 2017 and 2021.In 2016,total revenues increased by 16.0%to$1.42 billion,compared to 2015.This is comprised ofrental revenues on our operating lease portfolio of$1.34 billion and aircraft sales,trading and other revenue

52、 of$80.1 million.During the year ended December 31,2016,we sold 46 aircraft for proceeds of$1.2 billion,recording gains on aircraft sales and trading activity of$61.5 million.During the year ended December 31,2015,we sold 24 aircraft for proceeds of$784.7 million,recording gains on aircraft sales an

53、d trading activity of$33.9 million.In December 2015,we entered into an agreement to sell our fleet of 25 ATR turboprop aircraft.As ofDecember 31,2016,we have completed the sale of all the ATR aircraft to Nordic Aviation Capital A/S(“NAC”).In addition,in May 2016,we entered into an agreement to sell

54、25 Embraer E190 and E175 aircraft toNAC.As of December 31,2016,20 aircraft had been transferred to NAC and the remaining five aircraft wereheld for sale.We expect the sale of the five aircraft held for sale to be completed during the first quarter of 2017.We finance the purchase of aircraft and our

55、business with available cash balances,internally generatedfunds,including aircraft sales and trading activities,and debt financings.Our debt financing strategy is focusedon raising unsecured debt in the global bank and debt capital markets,with a limited utilization of export creditor secured financ

56、ing.In 2016,we issued$2.0 billion senior unsecured notes with an average interest rate of2.875%,with maturities ranging from 2020 to 2023.In 2016,we increased our unsecured revolving credit facilitycapacity to$3.2 billion,representing a 14.3%increase from 2015 and extended the final maturity to May

57、5,2020.We ended 2016 with total debt outstanding,net of discounts and issuance costs,of$8.7 billion,of which 83.5%was at a fixed rate and 92.4%of which was unsecured,with a composite cost of funds of 3.42%.In October 2016,Standard and Poors(“S&P”)rating services raised our corporate credit and senio

58、runsecured ratings to BBBwith a stable outlook,and Kroll Bond Ratings(“Kroll”)reconfirmed our credit ratingof A-with a stable outlook in December 2016.In January 2017,Fitch Ratings,Inc.(“Fitch”)assigned aninvestment grade rating of BBBto our senior unsecured debt and long-term issuer default rating

59、with a stableoutlook.Our investment grade credit ratings help us to lower our cost of funds and broaden our access toattractively priced capital.Our net income for the year ended December 31,2016 was$374.9 million compared to$253.4 millionfor the year ended December 31,2015,an increase of$121.5 mill

60、ion or 48.0%.Our diluted earnings per share forthe year ended December 31,2016 was$3.44 compared to$2.34 for the year ended December 31,2015.Ourpre-tax profit margin for the year ended December 31,2016 was 40.9%compared to 32.1%for the year endedDecember 31,2015.Excluding the effects of certain non-

61、cash items,one-time or non-recurring items,such as settlementexpense,net of recoveries,that are not expected to continue in the future and certain other items,our adjusted netincome before income taxes was$622.9 million for the year ended December 31,2016 compared to$508.0 million for the year ended

62、 December 31,2015,an increase of$114.9 million or 22.6%.Our adjustedmargin before income taxes for the year ended December 31,2016 was 44.1%compared to 41.7%for the yearended December 31,2015.Adjusted diluted earnings per share before income taxes increased to$5.67 for theyear ended December 31,2016

63、,compared to$4.64 for the year ended December 31,2015.Adjusted net incomebefore income taxes,adjusted margin before income taxes and adjusted diluted earnings per share before incometaxes are measures of financial and operational performance that are not defined by GAAP.See Note 2 in“Item6.Selected

64、Financial Data”of this Annual Report on Form 10-K for a discussion of adjusted net income beforeincome taxes and adjusted diluted earnings per share before income taxes as non-GAAP measures andreconciliation of these measures to net income.5Operations to DateCurrent FleetOur fleet,based on net book

65、value,increased by 11.4%to$12.0 billion as of December 31,2016compared to$10.8 billion as of December 31,2015.As of December 31,2016,we owned 237 aircraft,comprisedof 188 single-aisle narrowbody jet aircraft and 49 twin-aisle widebody jet aircraft,with a weighted average ageof 3.8 years.As of Decemb

66、er 31,2015,we owned 240 aircraft,comprised of 181 single-aisle narrowbody jetaircraft,40 twin-aisle widebody jet aircraft and 19 turboprop aircraft,with a weighted average age of 3.6 years.In addition,we also managed 30 jet aircraft for third party owners on a fee basis as of December 31,2016compare

67、d to 29 jet aircraft as of December 31,2015.Geographic DiversificationOver 95%of our aircraft are operated internationally.The following table sets forth the dollar amountand percentage of our rental of flight equipment revenues attributable to the respective geographical regionsbased on each airlin

68、es principal place of business:Year EndedDecember 31,2016Year EndedDecember 31,2015Year EndedDecember 31,2014RegionAmount ofRentalRevenue%of TotalAmount ofRentalRevenue%of TotalAmount ofRentalRevenue%of Total(dollars in thousands)Europe.$400,49129.9%$380,29532.4%$337,34934.0%Asia(excluding China).30

69、8,65823.1%223,28419.0%190,38919.2%China.293,20621.9%265,45022.6%218,62522.1%Central America,South America andMexico.112,0688.4%114,6729.8%111,58311.3%The Middle East and Africa.106,3007.9%90,4167.7%47,9584.9%U.S.and Canada.69,9185.2%54,2944.6%55,0075.4%Pacific,Australia,New Zealand.48,3613.6%46,1333

70、.9%30,3303.1%Total.$1,339,002100.0%$1,174,544100.0%$991,241100.0%The following table sets forth the regional concentration based on each airlines principal place ofbusiness of our flight equipment subject to operating lease based on net book value as of December 31,2016 and2015:December 31,2016Decem

71、ber 31,2015RegionNet BookValue%of TotalNet BookValue%of Total(dollars in thousands)Europe.$3,547,29429.5%$3,238,32330.0%China.2,779,54623.0%2,444,37022.6%Asia(excluding China).2,739,55422.7%2,313,47721.4%Central America,South America and Mexico.937,2877.8%923,3528.5%The Middle East and Africa.935,96

72、87.8%1,023,7159.5%U.S.and Canada.647,7435.4%446,8394.1%Pacific,Australia,New Zealand.454,5333.8%423,3993.9%Total.$12,041,925100.0%$10,813,475100.0%6At December 31,2016,2015 and 2014,we owned and managed leased aircraft to customers in thefollowing regions based on each airlines principal place of bu

73、siness:December 31,2016December 31,2015December 31,2014RegionNumber ofCustomers(1)%of TotalNumber ofCustomers(1)%of TotalNumber ofCustomers(1)%of TotalEurope.2731.8%2730.0%2430.0%Asia(excluding China).1821.2%1921.1%1822.5%U.S.and Canada.1214.1%1112.2%810.0%China.910.6%1213.4%1113.8%Central America,S

74、outh America andMexico.910.6%1112.2%1012.5%The Middle East and Africa.78.2%88.9%78.8%Pacific,Australia,New Zealand.33.5%22.2%22.4%Total.85100.0%90100.0%80100.0%(1)A customer is an airline with its own operating certificate.For the years ended December 31,2016,2015 and 2014,China was the only individ

75、ual country thatrepresented at least 10%of our rental revenue based on each airlines principal place of business.In 2016,2015and 2014,no individual airline represented at least 10%of our rental revenue.Aircraft Acquisition StrategyWe seek to acquire the most highly in demand and widely distributed,m

76、odern technology,fuel efficientnarrowbody and widebody commercial jet transport aircraft.Our strategy is to order new aircraft directly fromthe manufacturers.When placing new aircraft orders with the manufacturers,we strategically target thereplacement of aging aircraft with modern technology aircra

77、ft.Additionally,we look to supplement our orderpipeline with opportunistic purchases of aircraft in the secondary market and participate in sale-leasebacktransactions with airlines.Prior to ordering aircraft,we evaluate the market for specific types of aircraft.We consider the overalldemand for the

78、aircraft type in the marketplace based on our deep knowledge of the aviation industry and ourcustomer relationships.It is important to assess the airplanes economic viability,the operating performancecharacteristics,engine variant options,intended utilization by our customers,and which aircraft type

79、s it willreplace or compete with in the global market.Additionally,we study the effects of global airline passenger trafficgrowth in order to determine the likely demand for our new aircraft.For new aircraft deliveries,we source many components separately,which include seats,safetyequipment,avionics

80、,galleys,cabin finishes,engines and other equipment.Often times we are able to achievelower pricing through direct bulk purchase contracts with the component manufacturers than would beachievable if the airframe manufacturers sourced the components for the airplane.Manufacturers such as Boeingand Ai

81、rbus install this buyer furnished equipment in our aircraft during the final assembly process at theirfacilities.With this purchasing strategy,we are able to meet specific customer configuration requirements andlower the total acquisition cost of the aircraft.Aircraft Leasing StrategyThe airline ind

82、ustry is a complex industry with constantly evolving competition,code shares(where twoor more airlines share the same flight),alliances and passenger traffic patterns.This requires frequent updatingand flexibility within an airlines fleet.The operating lease allows airlines to effectively adapt and

83、manage theirfleets through varying market conditions without bearing the full financial risk associated with these capital7intensive assets which have an expected useful life of 25 years.This fleet flexibility enables airlines to moreeffectively operate and compete in their respective markets.We wor

84、k closely with our airline customersthroughout the world to help optimize their long-term aircraft fleet strategies.We work to mitigate the risks associated with owning and leasing aircraft and cyclical variations in theairline industry through careful management of our fleet,including managing cust

85、omer concentrations bygeography and region,entering into long term leases,staggering lease maturities,balancing aircraft typeexposures,and maintaining a young fleet age.We believe that diversification of our operating lease portfolioreduces the risks associated with individual customer defaults and

86、the impact of adverse geopolitical and regionaleconomic events.In order to maximize residual values and minimize the risk of obsolescence,our strategy isgenerally to own an aircraft for approximately the first third of its expected 25 year useful life.Our management team identifies prospective airli

87、ne customers based upon industry knowledge andlong-standing relationships.Prior to leasing an aircraft,we evaluate the competitive positioning of the airline,thestrength and quality of the management team,and the financial performance of the airline.Management obtainsand reviews relevant business ma

88、terials from all prospective customers before entering into a lease agreement.Under certain circumstances,the customer may be required to obtain guarantees or other financial support from asovereign entity or a financial institution.We work closely with our existing customers and potential lessees t

89、odevelop customized lease structures that address their specific needs.We typically enter into a lease agreement18 to 36 months in advance of the delivery of a new aircraft from our order book.Once the aircraft has beendelivered and operated by the airline,we look to remarket the aircraft and sign a

90、 follow-on lease six to 12 monthsahead of the scheduled expiry of the initial lease term.Our leases typically contain the following key provisions:our leases are primarily structured as operating leases,whereby we retain the residual rights to theaircraft;our leases are triple net leases,whereby the

91、 lessee is responsible for all operating costs includingtaxes,insurance,and aircraft maintenance;our leases typically require all payments be made in U.S.dollars;our leases are typically for fixed rates and terms;our leases typically require cash security deposits and maintenance reserve payments;an

92、dour leases contain provisions which require payment whether or not the aircraft is operated,irrespective of the circumstances.The lessee is responsible for compliance with applicable laws and regulations with respect to theaircraft.We require our lessees to comply with the standards of either the U

93、.S.Federal Aviation Administration(“FAA”)or its equivalent in foreign jurisdictions.As a function of these laws and the provisions in our leasecontracts,the lessees are responsible to perform all maintenance of the aircraft and return the aircraft and itscomponents in a specified return condition.Ge

94、nerally,we receive a cash deposit and maintenance reserves assecurity for the lessees performance of obligations under the lease and the condition of the aircraft upon return.In addition,most leases contain extensive provisions regarding our remedies and rights in the event of a defaultby a lessee.T

95、he lessee generally is required to continue to make lease payments under all circumstances,including periods during which the aircraft is not in operation due to maintenance or grounding.Some foreign countries have currency and exchange laws regulating the international transfer ofcurrencies.When ne

96、cessary,we may require,as a condition to any foreign transaction,that the lessee orpurchaser in a foreign country obtain the necessary approvals of the appropriate government agency,financeministry or central bank for the remittance of all funds contractually owed in U.S.dollars.We attempt to8minimi

97、ze our currency and exchange risks by negotiating the designated payment currency in our leases to beU.S.dollars.To meet the needs of certain of our airline customers,we have agreed to accept certain of our leasepayments in a foreign currency.After we agree to the rental payment currency with an air

98、line,the negotiatedcurrency typically remains for the term of the lease.We may enter into contracts to mitigate our foreign currencyrisk,but we expect that the economic risk arising from foreign currency denominated leases will be insignificantto us.We may,in connection with the lease of used aircra

99、ft,agree to contribute specific additional amounts tothe cost of certain first major maintenance events or modifications,which usually reflect the usage of the aircraftprior to the commencement of the lease.We may be obligated under the leases to make reimbursements ofmaintenance reserves previously

100、 received to lessees for expenses incurred for certain planned majormaintenance.We also,on occasion,may contribute towards aircraft modifications and recover any such costsover the life of the lease.MonitoringDuring the lease term,we closely follow the operating and financial performance of our less

101、ees.Wemaintain a high level of communication with the lessee and frequently evaluate the state of the market in whichthe lessee operates,including the impact of changes in passenger air travel and preferences,emergingcompetition,new government regulations,regional catastrophes and other unforeseen s

102、hocks that are relevant tothe airlines market.This enables us to identify lessees that may be experiencing operating and financialdifficulties.This identification assists us in assessing the lessees ability to fulfill its obligations under the lease.This monitoring also identifies candidates,where a

103、ppropriate,to restructure the lease prior to the lesseesinsolvency or the initiation of bankruptcy or similar proceedings.Once an insolvency or bankruptcy occurs wetypically have less control over,and would most likely incur greater costs in connection with,the restructuring ofthe lease or the repos

104、session of the aircraft.During the life of the lease,situations may lead us to restructure leases with our lessees.When werepossess an aircraft leased in a foreign country,we generally expect to export the aircraft from the lesseesjurisdiction.In some very limited situations,the lessees may not full

105、y cooperate in returning the aircraft.In thosecases,we will take appropriate legal action,a process that could ultimately delay the return and export of theaircraft.In addition,in connection with the repossession of an aircraft,we may be required to pay outstandingmechanicsliens,airport charges,and

106、navigation fees and other amounts secured by liens on the repossessedaircraft.These charges could relate to other aircraft that we do not own but were operated by the lessee.RemarketingOur lease agreements are generally structured to require lessees to notify us nine to 12 months inadvance of the le

107、ases expiration if a lessee desires to renew or extend the lease.Requiring lessees to provide uswith such advance notice provides our management team with an extended period of time to consider a broad setof alternatives with respect to the aircraft,including assessing general market and competitive

108、 conditions andpreparing to remarket or sell the aircraft.If a lessee fails to provide us with notice,the lease will automaticallyexpire at the end of the term,and the lessee will be required to return the aircraft pursuant to the conditions in thelease.Our leases contain detailed provisions regardi

109、ng the required condition of the aircraft and its componentsupon redelivery at the end of the lease term.Aircraft Sales&Trading StrategyOur strategy is to maintain a portfolio of young aircraft with a widely diversified customer base.Inorder to achieve this profile,we primarily order new planes dire

110、ctly from the manufacturers,place them on longterm leases,and sell the aircraft when they near the end of the first third of their expected 25 year economicuseful lives.We typically sell aircraft that are currently operated by an airline with multiple years of lease term9remaining on the contract,in

111、 order to achieve the maximum disposition value of the aircraft.Buyers of theaircraft may include leasing companies,financial institutions and airlines.We also buy and sell aircraft on anopportunistic basis for trading profits.In the past three years ending December 31,2016,we sold 93 aircraft.Addit

112、ionally,we may provide management services to buyers of our aircraft asset for a fee.Aircraft Management StrategyWe supplement our core business model by providing fleet management services to third party investorsand owners of aircraft portfolios for a management fee.This allows us to better serve

113、our airline customers andexpand our existing airline customer base by providing additional leasing opportunities beyond our own aircraftportfolio,new order pipeline and customer or regional concentration limits.Financing StrategyWe finance the purchase of aircraft and our business with available cas

114、h balances,internally generatedfunds,including aircraft sales and trading activity,and debt financings.We have structured the Company to haveinvestment grade credit metrics and our debt financing strategy has focused on funding our business on anunsecured basis.Unsecured financing provides us with o

115、perational flexibility when selling or transitioningaircraft from one airline to another.We may,to a limited extent,utilize export credit or secured financing insupport of our new aircraft deliveries.InsuranceWe require our lessees to carry those types of insurance that are customary in the air tran

116、sportationindustry,including comprehensive liability insurance,aircraft all-risk hull insurance and war-risk insurancecovering risks such as hijacking,terrorism(but excluding coverage for weapons of mass destruction and nuclearevents),confiscation,expropriation,seizure and nationalization.We general

117、ly require a certificate of insurancefrom the lessees insurance broker prior to delivery of an aircraft.Generally,all certificates of insurance containa breach of warranty endorsement so that our interests are not prejudiced by any act or omission of the lessee.Lease agreements generally require hul

118、l and liability limits to be in U.S.dollars,which are shown on thecertificate of insurance.Insurance premiums are to be paid by the lessee,with coverage acknowledged by the broker or carrier.The territorial coverage,in each case,should be suitable for the lessees area of operations.We generally requ

119、irethat the certificates of insurance contain,among other provisions,a provision prohibiting cancellation or materialchange without at least 30 daysadvance written notice to the insurance broker(who would be obligated to giveus prompt notice),except in the case of hull war insurance policies,which c

120、ustomarily only provide seven daysadvance written notice for cancellation and may be subject to shorter notice under certain market conditions.Furthermore,the insurance is primary and not contributory,and we require that all insurance carriers be requiredto waive rights of subrogation against us.The

121、 stipulated loss value schedule under aircraft hull insurance policies is on an agreed-value basisacceptable to us and usually exceeds the book value of the aircraft.In cases where we believe that the agreedvalue stated in the lease is not sufficient,we make arrangements to cover such deficiency,whi

122、ch would includethe purchase of additional“Total Loss Only”coverage for the deficiency.Aircraft hull policies generally contain standard clauses covering aircraft engines.The lessee is requiredto pay all deductibles.Furthermore,the hull war policies generally contain full war risk endorsements,inclu

123、ding,but not limited to,confiscation(where available),seizure,hijacking and similar forms of retention or terroristacts.The comprehensive liability insurance listed on certificates of insurance generally include provisions forbodily injury,property damage,passenger liability,cargo liability and such

124、 other provisions reasonably10necessary in commercial passenger and cargo airline operations.We expect that such certificates of insurance listcombined comprehensive single liability limits of not less than$500.0 million for Airbus and Boeing aircraft and$200.0 million for Embraer S.A.(“Embraer”).As

125、 a standard in the industry,airline operators policies contain asublimit for third-party war risk liability generally in the amount of at least$150.0 million.We require eachlessee to purchase higher limits of third-party war risk liability or obtain an indemnity from its respectivegovernment.The int

126、ernational aviation insurance market has exclusions for physical damage to aircraft hulls causedby dirty bombs,bio-hazardous materials and electromagnetic pulsing.Exclusions for the same type of perilscould be introduced into liability policies in the future.We cannot assure you that our lessees wil

127、l be adequately insured against all risks,that lessees will at alltimes comply with their obligations to maintain insurance,that any particular claim will be paid,or that lesseeswill be able to obtain adequate insurance coverage at commercially reasonable rates in the future.Separately,we purchase c

128、ontingent liability insurance and contingent hull insurance on all aircraft in ourfleet and maintain other insurance covering the specific needs of our business operations.While we believe ourinsurance is adequate both as to coverages and amounts,we cannot assure you that we are adequately insuredag

129、ainst all risks.CompetitionThe leasing,remarketing and sale of aircraft is highly competitive.We are one of the largest aircraftlessors operating on a global scale.We face competition from aircraft manufacturers,banks,financialinstitutions,other leasing companies,aircraft brokers and airlines.Some o

130、f our competitors may have greateroperating and financial resources and access to lower capital costs than we have.Competition for leasingtransactions is based on a number of factors,including delivery dates,lease rates,lease terms,other leaseprovisions,aircraft condition and the availability in the

131、 marketplace of the types of aircraft required to meet theneeds of airline customers.Competition in the purchase and sale of used aircraft is based principally on theavailability of used aircraft,price,the terms of the lease to which an aircraft is subject and the creditworthiness ofthe lessee,if an

132、y.Government RegulationThe air transportation industry is highly regulated.We do not operate commercial aircraft,and thus maynot be directly subject to many industry laws and regulations,such as regulations of the U.S.Department of State(the“DOS”),the U.S.Department of Transportation,or their counte

133、rpart organizations in foreign countriesregarding the operation of aircraft for public transportation of passengers and property.As discussed below,however,we are subject to government regulation in a number of respects.In addition,our lessees are subject toextensive regulation under the laws of the

134、 jurisdictions in which they are registered or operate.These lawsgovern,among other things,the registration,operation,maintenance and condition of the aircraft.We are required to register our aircraft with an aviation authority mutually agreed upon with our lessee.Each aircraft registered to fly mus

135、t have a Certificate of Airworthiness,which is a certificate demonstrating theaircrafts compliance with applicable government rules and regulations and that the aircraft is consideredairworthy.Each airline we lease to must have a valid operation certificate to operate our aircraft.Our lessees areobl

136、igated to maintain the Certificates of Airworthiness for the aircraft they lease.Our involvement with the civil aviation authorities of foreign jurisdictions consists largely of requests toregister and deregister our aircraft on those countriesregistries.We are also subject to the regulatory authori

137、ty of the DOS and the U.S.Department of Commerce(the“DOC”)to the extent such authority relates to the export of aircraft for lease and sale to foreign entities and the11export of parts to be installed on our aircraft.We may be required to obtain export licenses for parts installed inaircraft exporte

138、d to foreign countries.The DOC and the U.S.Department of the Treasury(through its Office ofForeign Assets Control,or“OFAC”)impose restrictions on the operation of U.S.-made goods,such as aircraftand engines,in sanctioned countries,as well as on the ability of U.S.companies to conduct business with e

139、ntitiesin those countries.The U.S.Patriot Act of 2001(the“Patriot Act”)prohibits financial transactions by U.S.persons,including U.S.individuals,entities and charitable organizations,with individuals and organizationsdesignated as terrorists and terrorist supporters by the U.S.Secretary of State or

140、the U.S.Secretary of theTreasury.The U.S.Customs and Border Protection,a law enforcement agency of the U.S.Department ofHomeland Security,enforces regulations related to the import of aircraft into the United States for maintenanceor lease and the importation of parts into the U.S.for installation.J

141、urisdictions in which aircraft are registered as well as jurisdictions in which they operate may imposeregulations relating to noise and emission standards.In addition,most countriesaviation laws require aircraft tobe maintained under an approved maintenance program with defined procedures and inter

142、vals for inspection,maintenance and repair.To the extent that aircraft are not subject to a lease or a lessee is not in compliance,weare required to comply with such requirements,possibly at our own expense.EmployeesAs of December 31,2016,we had 76 full-time employees.On average,our senior managemen

143、t team hasapproximately 26 years of experience in the commercial aviation industry.None of our employees arerepresented by a union or collective bargaining agreements.Access to Our InformationWe file annual,quarterly,current reports,proxy statements and other information with the Securitiesand Excha

144、nge Commission(the“SEC”).We make our public SEC filings available,at no cost,through ourwebsite at as soon as reasonably practicable after the report is electronically filed with,orfurnished to,the SEC.The information contained on or connected to our website is not incorporated by referenceinto this

145、 Annual Report on Form 10-K and should not be considered part of this or any other report filed with theSEC.We will also provide these reports in electronic or paper format free of charge upon written request made toInvestor Relations at 2000 Avenue of the Stars,Suite 1000N,Los Angeles,California 90

146、067.Our SEC filings arealso available free of charge on the SECs website at www.sec.gov.The public may also read and copy anydocument we file with the SEC at the SECs public reference room located at 100 F Street NE,Washington,DC 20549.Please call the SEC at 1-800-SEC-0330 for further information on

147、 the operation of the publicreference room.Corporate InformationAir Lease Corporation incorporated in Delaware and launched in February 2010.Our website .We may post information that is important to investors on our website.Informationincluded or referred to on,or otherwise accessible through,our we

148、bsite is not intended to form a part of or beincorporated by reference into this report.12Executive Officers of the CompanySet forth below is certain information concerning each of our executive officers as of February 23,2017,including his/her age,current position with the Company and business expe

149、rience during the past five years.NameAgeCompany PositionPrior PositionsSteven F.Udvar-Hzy.71Executive Chairman of the Boardof Directors(since July 2016)Chairman and Chief ExecutiveOfficer,February 2010-June 2016John L.Plueger.62Chief Executive Officer,Presidentand Director(since July 2016)President

150、,Chief Operating Officerand Director,March 2010-June 2016Carol H.Forsyte.54Executive Vice President,GeneralCounsel,Corporate Secretary andChief Compliance Officer(sinceSeptember 2012)Corporate Vice President Law ofMotorola Mobility LLC*,July 2012-September 14,2012Corporate Vice President andSecretar

151、y of Motorola Mobility Inc.,January 2011-July 2012Gregory B.Willis.38Executive Vice President andChief Financial Officer(since July2016)Senior Vice President and ChiefFinancial Officer March 2012-June2016Vice President,Finance,and ChiefAccounting Officer,March2010-March 2012Marc H.Baer.52Executive V

152、ice President,Marketing(since April 2010)Jie Chen.53Executive Vice President andManaging Director of Asia(sinceAugust 2010)Alex A.Khatibi.56Executive Vice President(sinceApril 2010)Kishore Korde.43Executive Vice President,Marketing(since May 2015)Senior Vice President,Marketing,2010-May 2015Grant A.

153、Levy.54Executive Vice President(sinceApril 2010)John D.Poerschke.55Executive Vice President ofAircraft Procurement andSpecifications(since February2017)Senior Vice President of AircraftProcurement and SpecificationsMarch 2010-February 2017*Motorola Mobility LLC,Motorola Mobility,Inc.,and Motorola In

154、c.are manufacturers of communicationequipment.13ITEM 1A.RISK FACTORSThe following important risk factors,and those risk factors described elsewhere in this report or inour other filings with the Securities and Exchange Commission,could cause our actual results to differmaterially from those stated i

155、n forward-looking statements contained in this document and elsewhere.Theserisks are not presented in order of importance or probability of occurrence.Further,the risks described beloware not the only risks that we face.Additional risks and uncertainties not currently known to us or that wecurrently

156、 deem immaterial may also impair our business operations.Any of these risks may have a materialadverse effect on our business,reputation,financial condition,results of operations,profitability,cash flowsor liquidity.Risks Relating to Our BusinessWe cannot assure you that we will be able to enter int

157、o profitable leases for any aircraft acquired,whichfailure to do so would negatively affect our financial condition,cash flow and results of operations.We cannot assure you that we will be able to enter into profitable leases upon the acquisition of theaircraft we purchase in the future.Our financia

158、l condition,cash flow and results of operations depend upon ourmanagement teams judgment and ability to evaluate the ability of lessees and other counterparties to performtheir obligations to us and to negotiate transaction documents.We cannot assure you that our management teamwill be able to perfo

159、rm such functions in a manner that will achieve our investment objectives,which wouldnegatively affect our financial condition,cash flow and results of operations.Our business model depends on the continual leasing and remarketing of our aircraft,and we may not be ableto do so on favorable terms,whi

160、ch would negatively affect our financial condition,cash flow and results ofoperations.Our business model depends on the continual leasing and remarketing of our aircraft in order to generatesufficient revenues to finance our growth and operations,pay our debt service obligations and generate cashflo

161、ws from operations.Our ability to lease and remarket our aircraft will depend on general market andcompetitive conditions at the time the initial leases are entered into and expire.If we are not able to lease orremarket an aircraft or to do so on favorable terms,we may be required to attempt to sell

162、 the aircraft to providefunds for our debt service obligations or operating expenses.Our ability to lease,remarket or sell the aircraft onfavorable terms or without significant off-lease time and costs could be negatively affected by depressedconditions in the aviation industry,government and enviro

163、nmental regulations,increased operating costsincluding the price and availability of jet fuel,airline bankruptcies,the effects of terrorism,war,natural disastersand/or epidemic diseases on airline passenger traffic trends,declines in the values of aircraft,and various othergeneral market and competi

164、tive conditions and factors which are outside of our control.If we are unable to leaseand remarket our aircraft on favorable terms,our financial condition,cash flow and results of operations wouldbe negatively impacted.Our success depends in large part on our ability to obtain capital on favorable t

165、erms to finance our growththrough the purchase of aircraft and to repay our outstanding debt obligations as they mature.If we are notable to obtain capital on terms acceptable to us,or at all,it would significantly impact our ability to competeeffectively in the commercial aircraft leasing market an

166、d would negatively affect our financial condition,cashflow and results of operations.Growing our fleet will require substantial additional capital.Accordingly,we will need to obtainadditional financing,which may not be available to us on favorable terms or at all.Further,we must continue tohave acce

167、ss to the capital markets and other sources of financing in order to repay our outstanding obligations as14they mature.Our access to sources of financing will depend upon a number of factors over which we havelimited control,including:general market conditions;the markets view of the quality of our

168、assets;the markets perception of our growth potential;interest rate fluctuations;our current and potential future earnings and cash distributions;andthe market price of our Class A common stock.Weaknesses in the capital and credit markets could negatively affect our ability to obtain financing orcou

169、ld increase the costs of financing.For instance,during the most recent financial crisis,many companiesexperienced downward pressure on their share prices and had limited or no access to the credit markets,oftenwithout regard to their underlying financial strength.If financial market disruption and v

170、olatility were to occuragain,we cannot assure you that we will be able to access capital,which could negatively affect our financialcondition and results of operations.In addition,if there are new regulatory capital requirements imposed on our private lenders,they may berequired to limit,or increase

171、 the cost of,financing they provide to us.In general,this could potentially increaseour financing costs and reduce our liquidity or require us to sell assets at an inopportune time or price.If we are unable to raise additional funds or obtain capital on terms acceptable to us,we may not be ableto sa

172、tisfy funding requirements should we have any aircraft acquisition commitments then in place.If we areunable to satisfy our purchase commitments,we may be forced to forfeit our deposits.Further,we would beexposed to potential breach of contract claims by our lessees and manufacturers.These risks may

173、 also beincreased by the volatility and disruption in the capital and credit markets.Depending on market conditions at thetime,we may have to rely more heavily on additional equity issuances,which may be dilutive to ourstockholders,or on less efficient forms of debt financing that require a larger p

174、ortion of our cash flow fromoperations,thereby reducing funds available for our operations,future business opportunities and other purposes.Further,because our charter permits the issuance of preferred stock,if our board of directors approves theissuance of preferred stock in a future financing tran

175、saction,such preferred stockholders may have rights,preferences or privileges senior to existing stockholders,and you will not have the ability to approve such atransaction.These risks would negatively affect our financial condition,cash flow and results of operations.Incurring significant costs res

176、ulting from lease defaults could negatively affect our financial condition,cashflow and results of operations.If we are required to repossess an aircraft after a lessee default,we may incur significant costs.Thosecosts likely would include legal and other expenses associated with court or other gove

177、rnmental proceedingsparticularly if the lessee is contesting the proceedings or is in bankruptcy.In addition,during any suchproceedings the relevant aircraft would likely not be generating revenue.We could also incur substantialmaintenance,refurbishment or repair costs if a defaulting lessee fails t

178、o pay such costs and where suchmaintenance,refurbishment or repairs are necessary to put the aircraft in suitable condition for remarketing orsale.We may also incur storage costs associated with any aircraft that we repossess and are unable to placeimmediately with another lessee.It may also be nece

179、ssary to pay off liens,taxes and other governmental chargeson the aircraft to obtain clear possession and to remarket the aircraft effectively,including,in some cases,liensthat the lessor might have incurred in connection with the operation of its other aircraft.We could also incurother costs in con

180、nection with the physical possession of the aircraft.15We may suffer other negative consequences as a result of a lessee default,the related termination of thelease and the repossession of the related aircraft.It is likely that our rights upon a lessee default will varysignificantly depending upon t

181、he jurisdiction and the applicable law,including the need to obtain a court orderfor repossession of the aircraft and/or consents for deregistration or export of the aircraft.We anticipate thatwhen a defaulting lessee is in bankruptcy,protective administration,insolvency or similar proceedings,addit

182、ional limitations may apply.Certain jurisdictions give rights to the trustee in bankruptcy or a similar officerto assume or reject the lease or to assign it to a third party,or entitle the lessee or another third party to retainpossession of the aircraft without paying lease rentals or performing al

183、l or some of the obligations under therelevant lease.In addition,certain of our lessees are owned,in whole or in part,by government-related entities,which could complicate our efforts to repossess our aircraft in that lessees domicile.Accordingly,we may bedelayed in,or prevented from,enforcing certa

184、in of our rights under a lease and in remarketing the affectedaircraft.If we repossess an aircraft,we may not necessarily be able to export or deregister and profitablyredeploy the aircraft.For instance,where a lessee or other operator flies only domestic routes in the jurisdictionin which the aircr

185、aft is registered,repossession may be more difficult,especially if the jurisdiction permits thelessee or the other operator to resist deregistration.We may also incur significant costs in retrieving or recreatingaircraft records required for registration of the aircraft,and in obtaining the Certific

186、ate of Airworthiness for anaircraft.If,upon a lessee default,we incur significant costs in connection with repossessing our aircraft,aredelayed in repossessing our aircraft or are unable to obtain possession of our aircraft as a result of lessee defaults,our financial condition,cash flow and results

187、 of operations would be negatively affected.If our lessees fail to discharge aircraft liens,we may be obligated to pay the aircraft liens,which wouldnegatively affect our financial condition,cash flow and results of operations.In the normal course of their business,our lessees are likely to incur ai

188、rcraft liens that secure thepayment of airport fees and taxes,customs duties,air navigation charges,including charges imposed byEurocontrol,the European Organization for the Safety of Air Navigation,landing charges,salvage or other liensthat may attach to our aircraft.These liens may secure substant

189、ial sums that may,in certain jurisdictions or forcertain types of liens,particularly liens on entire fleets of aircraft,exceed the value of the particular aircraft towhich the liens have attached.Aircraft may also be subject to mechanicsliens as a result of routine maintenanceperformed by third part

190、ies on behalf of our lessees.Although we anticipate that the financial obligations relatingto these liens are the responsibility of our lessees,if they fail to fulfill such obligations,the liens may attach toour aircraft and ultimately become our responsibility.In some jurisdictions,aircraft liens m

191、ay give the holderthereof the right to detain or,in limited cases,sell or cause the forfeiture of the aircraft.Until they are discharged,these liens could impair our ability to repossess,remarket or sell our aircraft.Our lessees may not comply with the anticipated obligations under their leases to d

192、ischarge aircraft liens arisingduring the terms of the leases.If they do not,we may find it necessary to pay the claims secured by such aircraftliens in order to repossess the aircraft.Such payments would negatively affect our financial condition,cash flowand results of operations.If our lessees fai

193、l to perform as expected and we decide to restructure or reschedule our leases,therestructuring and rescheduling would likely result in less favorable leases,which would negatively affect ourfinancial condition,cash flow and results of operations.A lessees ability to perform its obligations under it

194、s lease will depend primarily on the lesseesfinancial condition and cash flow,which may be affected by factors outside our control,including:competition;passenger and air cargo rates;16passenger and air cargo demand;geopolitical and other events,including war,acts of terrorism,outbreaks of epidemic

195、diseases andnatural disasters;increases in operating costs,including the price and availability of jet fuel and labor costs;labor difficulties,including pilot shortages;economic conditions and currency fluctuations in the countries and regions in which the lesseeoperates;andgovernmental regulation a

196、nd associated fees affecting the air transportation business.Many of our airline customers do not have investment grade credit profiles.We anticipate that some ofour lessees will experience a weakened financial condition or suffer liquidity problems.This could lead to alessee experiencing difficulti

197、es in performing under the terms of our lease agreement.This could result in thelessee seeking relief under some of the terms of our lease agreement,or it could result in us electing to repossessthe aircraft.Any future downturns in the airline industry could greatly exacerbate the weakened financial

198、 conditionof some of these lessees and further increase the risk of delayed,missed or reduced rental payments.We may notcorrectly assess the credit risk of a lessee,or may not charge lease rates which correctly reflect the related risks,and as a result,lessees may not be able to satisfy their financ

199、ial and other obligations under their leases.Adelayed,missed or reduced rental payment from a lessee would decrease our revenues and cash flow.If we,inthe exercise of our remedies under a lease,repossess an aircraft,we may not be able to remarket the aircraftpromptly or at favorable rates.It is like

200、ly that restructurings and/or repossessions with some of our lessees will occur in the future.Theterms and conditions of possible lease restructurings or rescheduling may result in a significant reduction of leaserevenue,which may negatively affect our financial results and growth prospects.If any r

201、equest for paymentrestructuring or rescheduling is made and granted,reduced or deferred rental payments may be payable over allor some part of the remaining term of the lease.The terms of any revised payment schedules may be unfavorableand such payments may not be made.Our default levels would likel

202、y increase over time if economic conditionsdeteriorate.If lessees of a significant number of our aircraft defaulted on their leases,it would negatively affectour financial condition,cash flow and results of operations.Failure to obtain certain required licenses and approvals could negatively affect

203、our ability to remarket or sellaircraft,which would negatively affect our financial condition,cash flow and results of operations.Airlines are subject to extensive regulation under the laws of the jurisdictions in which they areregistered and in which they operate.As a result,we expect that certain

204、aspects of our leases will requirelicenses,consents or approvals,including consents from governmental or regulatory authorities for certainpayments under our leases and for the import,export or deregistration of the aircraft.Subsequent changes inapplicable law or administrative practice may increase

205、 such requirements and governmental consent,once given,could be withdrawn.Furthermore,consents needed in connection with the future remarketing or sale of anaircraft may not be forthcoming.Any of these events could negatively affect our ability to remarket or sellaircraft,which would negatively affe

206、ct our financial condition,cash flow and results of operations.Our aircraft require routine maintenance,and if they are not properly maintained,their value may declineand we may not be able to lease or remarket such aircraft at favorable rates,if at all,which would negativelyaffect our financial con

207、dition,cash flow and results of operations.We may be exposed to increased maintenance costs for our aircraft associated with a lessees failure toproperly maintain the aircraft or pay supplemental maintenance rent.If an aircraft is not properly maintained,its17market value may decline,which would res

208、ult in lower revenues from its lease or sale.We enter into leasespursuant to which the lessees are primarily responsible for many obligations,which include maintaining theaircraft and complying with all governmental requirements applicable to the lessee and the aircraft,includingoperational,maintena

209、nce,government agency oversight,registration requirements,service bulletins issued byaircraft manufacturers and airworthiness directives issued by aviation authorities.Failure of a lessee to performrequired maintenance,or comply with the applicable service bulletins and airworthiness directives duri

210、ng theterm of a lease could result in a decrease in value of an aircraft,an inability to remarket an aircraft at favorablerates,if at all,or a potential grounding of an aircraft.Maintenance failures by a lessee would also likely requireus to incur maintenance and modification costs upon the terminat

211、ion of the applicable lease,which could besubstantial,to restore the aircraft to an acceptable condition prior to remarketing or sale.Any failure by ourlessees to meet their obligations to perform required scheduled maintenance or our inability to maintain ouraircraft would negatively affect our fin

212、ancial condition,cash flow and results of operations.If we experience abnormally high maintenance or obsolescence issues with any of our aircraft or aircraft thatwe acquire,it would negatively affect our financial condition,cash flow and results of operations.Aircraft are long-lived assets,requiring

213、 long lead times to develop and manufacture,with particulartypes and models becoming obsolete or less in demand over time when newer,more advanced aircraft aremanufactured.The weighted average age of our fleet was 3.8 years as of December 31,2016.Our existing fleet,as well as the aircraft that we ha

214、ve ordered,have exposure to obsolescence,particularly if unanticipated eventsoccur which shorten the life cycle of such aircraft types.These events include but are not limited to governmentregulation or changes in our airline customerspreferences,including for instance,an increased demand for morefu

215、el efficient aircraft.These events may shorten the life cycle for aircraft types in our fleet and,accordingly,maynegatively impact lease rates,trigger impairment charges,increase depreciation expense or result in losses relatedto aircraft asset value guarantees,if we provide such guarantees.Further,

216、variable expenses like fuel,crew size or aging aircraft corrosion control or modificationprograms and airworthiness directives could make the operation of older aircraft more costly to our lessees andmay result in increased lessee defaults.We may also incur some of these increased maintenance expens

217、es andregulatory costs upon acquisition or remarketing of our aircraft.Any of these expenses or costs would negativelyaffect our financial condition,cash flow and results of operations.If we acquire a high concentration of a particular model of aircraft,our financial condition,cash flow andresults o

218、f operations would be negatively affected by changes in market demand or problems specific to thataircraft model.If we acquire a high concentration of a particular model of aircraft,our business and financial resultscould be negatively affected if the market demand for that model of aircraft decline

219、s.There are several scenarioswhich could adversely affect the demand for an aircraft.These scenarios include but are not limited to,if theaircraft model is redesigned or replaced by its manufacturer,or if this aircraft model experiences design ortechnical problems,which could ultimately lead to the

220、grounding of the aircraft model.This could lead to thedecline in value and lease rates of such aircraft model,and ultimately we may not be able to lease such aircraftmodel on favorable terms.For instance,our fleet consists of a number of widebody aircraft and many of our newpurchases will consist of

221、 newer,more fuel efficient models.Any changes in demand for these models or othermodels in our fleet could negatively affect our financial condition,cash flow and results of operations.The introduction of superior aircraft technology or a new line of aircraft,in particular more fuel efficientaircraf

222、t,could cause the aircraft that we own to become outdated or obsolete or oversupplied and thereforeless desirable,which would negatively affect our financial condition,cash flow and results of operations.As manufacturers introduce technological innovations and new types of aircraft,some of the aircr

223、aft inour fleet could become less desirable to potential lessees.In particular,the introduction recently of more fuel18efficient aircraft has made some older models less attractive and more difficult to lease.Technologicalinnovations,increased fuel efficiency and new models may increase the rate of

224、obsolescence of existing aircraftfaster than currently anticipated by our management.New aircraft manufacturers could emerge to produceaircraft that compete with the aircraft we own.The introduction of new technologies or introduction of a newtype of aircraft,in particular more fuel efficient models

225、,may negatively affect the value of the aircraft in ourfleet.In addition,the imposition of increased regulation regarding stringent noise or emissions restrictions maymake some of our aircraft less desirable and accordingly less valuable in the marketplace.The development of newaircraft and engine o

226、ptions could decrease the desirability of certain aircraft in our fleet and/or aircraft that we haveordered.This could,in turn,reduce both future residual values and lease rates for certain types of aircraft in ourportfolio.Any of these risks may negatively affect our ability to lease or sell our ai

227、rcraft on favorable terms,if at all,which would negatively affect our financial condition,cash flow and results of operations.We are indirectly subject to many of the economic and political risks associated with emerging markets,including China,which could negatively affect our financial condition,c

228、ash flow and results of operations.Our business strategy emphasizes leasing aircraft to lessees outside of the United States,including toairlines in emerging market countries.Emerging market countries have less developed economies andinfrastructure and are often more vulnerable to economic and geopo

229、litical challenges and may experiencesignificant fluctuations in gross domestic product,interest rates and currency exchange rates,as well as civildisturbances,government instability,nationalization and expropriation of private assets and the imposition oftaxes or other charges by government authori

230、ties.The occurrence of any of these events in markets served by ourlessees and the resulting economic instability that may arise,particularly if combined with high fuel prices,couldnegatively affect the value of our aircraft subject to lease in such countries,or the ability of our lessees,whichopera

231、te in these markets,to meet their lease obligations.As a result,lessees that operate in emerging marketcountries may be more likely to default than lessees that operate in developed countries.In addition,legalsystems in emerging market countries may be less developed,which could make it more difficu

232、lt for us toenforce our legal rights in such countries.Further,demand for aircraft is dependent on passenger and cargo traffic,which in turn is dependent ongeneral business and economic conditions.As a result,weak or negative economic growth in emerging marketsmay have an indirect effect on the valu

233、e of the assets that we acquire if airlines and other potential lessees arenegatively affected.Economic downturns can affect the values of the assets we purchase,which may have anegative effect on our financial condition,cash flow and results of operation.From time to time,the aircraft industry has

234、experienced periods of oversupply during which lease rates andaircraft values have declined,and any future oversupply could negatively affect our financial condition,cashflow and results of operations.The aircraft leasing business has experienced periods of aircraft oversupply following the Septembe

235、r 11,2001 terrorist attacks and the 2008 financial crisis.The oversupply of a specific type of aircraft is likely todepress the lease rates for and the value of that type of aircraft,including upon sale.Further,over recent years,the airline industry has committed to a significant number of aircraft

236、deliveries through order placements withmanufacturers,and in response,aircraft manufacturers have raised their production output.The increase in theseproduction levels could result in an oversupply of relatively new aircraft if growth in airline traffic does not meetairline industry expectations.The

237、 supply and demand for aircraft is affected by various cyclical and non-cyclical factors that areoutside of our control,including:passenger and air cargo demand;fuel costs and general economic conditions;19geopolitical events,including war,prolonged armed conflict and acts of terrorism;outbreaks of

238、communicable diseases and natural disasters;governmental regulation;interest rates;the availability of credit;airline restructurings and bankruptcies;airline fleet planning that reduces capacity or changes the type of aircraft in demand;manufacturer production levels and technological innovation;dis

239、counting by manufacturers on aircraft types nearing end of production;manufacturers merging or exiting the industry or ceasing to produce aircraft types;retirement and obsolescence of aircraft models;reintroduction into service of aircraft previously in storage;andairport and air traffic control inf

240、rastructure constraints.In addition,operating lessors may be sold or merged with other entities.These types of transactions maycall for a reduction in the fleet of the new entity,which could increase supply levels of used and older aircraft inthe market.Any of these factors may produce sharp and pro

241、longed decreases in aircraft lease rates and values.Theymay have a negative effect on our ability to lease or remarket the aircraft in our fleet or in our order book.Any ofthese factors could negatively affect our financial condition,cash flow and results of operations.The value of the aircraft we a

242、cquire and the market rates for leases could decline,which would have anegative effect on our financial condition,cash flow and results of operations.Aircraft values and market rates for leases have from time to time experienced sharp decreases due to anumber of factors including,but not limited to,

243、decreases in passenger and air cargo demand,increases in fuelcosts,government regulation and increases in interest rates.Operating leases place the risk of realization ofresidual values on aircraft lessors because only a portion of the equipments value is covered by contractual cashflows at lease in

244、ception.In addition to factors linked to the aviation industry generally,many other factors mayaffect the value of the aircraft that we acquire and market rates for leases,including:the particular maintenance,operating history and documentary records of the aircraft;the number of operators using tha

245、t type of aircraft;aircraft age;the regulatory authority under which the aircraft is operated;20any renegotiation of an existing lease on less favorable terms;the negotiability of clear title free from mechanicsliens and encumbrances;any regulatory and legal requirements that must be satisfied befor

246、e the aircraft can be purchased,sold or re-leased;compatibility of aircraft configurations or specifications with other aircraft owned by operators ofthat type;comparative value based on newly manufactured competitive aircraft;andthe availability of spare parts.Any decrease in the value of aircraft

247、that we acquire and market rates for leases,which may result fromthe above factors or other unanticipated factors,would have a negative effect on our financial condition,cashflow and results of operations.Competition from other aircraft lessors,including lessors with greater resources or a lower cos

248、t of capitalthan ours,could negatively affect our financial condition,cash flow and results of operations.The aircraft leasing industry is highly competitive.Some of our competitors may have greater resourcesor a lower cost of capital than ours;accordingly,they may be able to compete more effectivel

249、y in one or more ofthe markets we conduct business in.In addition,we may encounter competition from other entities in the acquisition of aircraft such as:airlines;financial institutions;aircraft brokers;public and private partnerships,investors and funds with more capital to invest in aircraft;andot

250、her aircraft leasing companies that we do not currently consider our major competitors.Competition for a leasing transaction is based principally upon lease rates,delivery dates,lease terms,reputation,management expertise,aircraft condition,specifications and configuration and the availability of th

251、etypes of aircraft necessary to meet the needs of the customer.Competition in the purchase and sale of aircraft isbased principally on the availability of the aircraft,the price,and where applicable the terms of the lease to whichan aircraft is subject and the creditworthiness of the lessee.We will

252、not always be able to compete successfullywith our competitors,which could negatively affect our financial condition,cash flow and results of operations.The failure of any manufacturer to meet its delivery obligations to us would negatively affect our cash flowand results of operations.The supply of

253、 commercial aircraft is dominated by a few airframe manufacturers and a limited numberof engine manufacturers.As a result,we are dependent on the success of these manufacturers in remainingfinancially stable,producing products and related components which meet the airlinesdemands and fulfillingany c

254、ontractual obligations they may have to us.21Should the manufacturers fail to respond appropriately to changes in the market environment or fail tofulfill any contractual obligations they might have to us,we may experience:missed or late delivery of aircraft and a potential inability to meet our con

255、tractual obligations owedto any of our then lessees,resulting in potential lost or delayed revenues,lower growth rates andstrained customer relationships;an inability to acquire aircraft and related components on terms which will allow us to lease thoseaircraft to airline customers at a profit,resul

256、ting in lower growth rates or a contraction in ouraircraft fleet;a market environment with too many aircraft available,potentially creating downward pressure ondemand for the anticipated aircraft in our fleet and reduced market lease rates and sale prices;ora reduction in our competitiveness due to

257、deep discounting by the manufacturers,which may lead toreduced market lease rates and aircraft values and may affect our ability to remarket or sell at aprofit,or at all,some of the aircraft in our fleet.There have been recent well-publicized delays by airframe and engine manufacturers in meeting st

258、ateddeadlines in bringing new aircraft to market.If there are manufacturing delays for aircraft for which we havemade future lease commitments,some or all of our affected lessees could elect to terminate their leasearrangements with respect to such delayed aircraft.Any such termination could strain

259、our relations with thoselessees going forward and would negatively affect our cash flow and results of operations.Aircraft have limited economic useful lives and depreciate over time,which would negatively affect ourfinancial condition,cash flow and results of operations.We depreciate our aircraft f

260、or accounting purposes on a straight-line basis to the aircrafts residual valueover its estimated useful life.If reduced demand for an aircraft causes a decline in its projected lease rates,or ifwe dispose of the aircraft for a price that is less than its depreciated book value on our balance sheet,

261、then we willrecognize a loss on the sale of the aircraft or potentially record an impairment charge.For this reason,ourfinancial condition,cash flow and results of operations would be negatively affected.Failure to close our aircraft acquisition commitments could negatively affect our financial cond

262、ition,cashflow and results of operations.As of December 31,2016,we had entered into binding purchase commitments to acquire a total of 363new aircraft for delivery through 2023.If we are unable to maintain our financing sources or find new sources offinancing or if the various conditions to our exis

263、ting commitments are not satisfied,we may be unable to closethe purchase of some or all of the aircraft which we have commitments to acquire.If our aircraft acquisitioncommitments are not closed for these or other reasons,we will be subject to several risks,including thefollowing:forfeiting deposits

264、 and progress payments and having to pay and expense certain significant costsrelating to these commitments,such as actual damages,and legal,accounting and financial advisoryexpenses,not realizing any of the benefits of completing the transactions and damage to ourreputation and relationship with ai

265、rcraft manufacturers;defaulting on our lease commitments,which could result in monetary damages and damage to ourreputation and relationships with lessees;andfailing to capitalize on other aircraft acquisition opportunities that were not pursued due to ourmanagements focus on these commitments.22If

266、we determine that the capital we require to satisfy these commitments may not be available to us,either at all or on terms we deem attractive,we may eliminate or reduce any dividend program that may be inplace at that time in order to preserve capital to apply to these commitments.These risks would

267、negatively affectour financial condition,cash flow and results of operations.Certain of the agreements governing our indebtedness may limit our operational flexibility,our ability toeffectively compete and our ability to grow our business as currently planned,which would negatively affectour financi

268、al condition,cash flow and results of operations.Certain of the agreements governing our indebtedness,including our credit facilities,contain financialand non-financial covenants,such as requirements that we comply with one or more of the following covenants:maximum debt-to-equity ratios,dividend re

269、strictions,limitations on the ability of our subsidiaries to incur debt,minimum net worth and interest coverage ratios,change of control provisions,and prohibitions against ourdisposing of our aircraft or other aviation assets without a lenders prior consent.Complying with such covenantsmay at times

270、 necessitate that we forego other opportunities,such as using available cash to grow our aircraft fleetor promptly disposing of less profitable aircraft or other aviation assets.Moreover,our failure to comply withany of these covenants would likely constitute a default under such agreements and coul

271、d give rise to anacceleration of some,if not all,of our then outstanding indebtedness,which would have a negative effect on ourbusiness and our ability to continue as a going concern.In addition,we cannot assure you that our business will generate cash flow from operations in anamount sufficient to

272、enable us to service our debt and grow our operations as planned.We cannot assure you thatwe will be able to refinance any of our debt on favorable terms,if at all.In addition,we cannot assure you that inthe future we will be able to access long-term financing or credit support on attractive terms,i

273、f at all,or qualifyfor guarantees,or obtain attractive terms for such guarantees,from the export credit agencies.Any inability togenerate sufficient cash flow,maintain our existing fleet and facilities,or access long-term financing or creditsupport would negatively affect our financial condition,cas

274、h flow and results of operations.Negative changes in our credit ratings may limit our ability to obtain financing or increase our borrowingcosts which would negatively affect our financial condition,cash flow and results of operations.We are currently subject to periodic review by independent credit

275、 rating agencies S&P,Fitch and Kroll,each of which currently maintains investment grade credit ratings with respect to us and certain of our debtsecurities,and we may become subject to periodic review by other independent credit rating agencies in thefuture.An increase in the level of our outstandin

276、g indebtedness,or other events that could have a negative impacton our business,properties,financial condition,results of operations or prospects,may cause S&P,Fitch orKroll,or,in the future,other rating agencies,to downgrade or withdraw the credit rating with respect to us or ourdebt securities,whi

277、ch could negatively impact our ability to secure financing and increase our borrowing costs.We cannot assure you that these credit ratings will remain in effect for any given period of time or that arating will not be lowered,suspended or withdrawn entirely by the applicable rating agency,if,in such

278、 ratingagencys sole judgment,circumstances so warrant.Ratings are not a recommendation to buy,sell or hold anysecurity.Each agencys rating should be evaluated independently of any other agencys rating.Actual oranticipated changes or downgrades in our credit ratings,including any announcement that ou

279、r ratings are underfurther review for a downgrade,could increase our corporate borrowing costs and limit our access to the capitalmarkets which would negatively affect our financial condition,cash flow and results of operations.An increase in our borrowing costs would negatively affect our financial

280、 condition,cash flow and results ofoperations.We finance many of the aircraft in our fleet through a combination of short-and long-term debtfinancings.As these debt financings mature,we may have to refinance these existing commitments by entering23into new financings,which could result in higher bor

281、rowing costs,or repay them by using cash on hand or cashfrom the sale of our assets.Moreover,an increase in interest rates under the various debt financing facilities wehave in place would have a negative effect on our earnings and could make our aircraft leasing contractsunprofitable.A limited perc

282、entage of our debt financings bear interest at a floating rate,such that our interest expensewould vary with changes in the applicable reference rate.As a result,our inability to sufficiently protectourselves from changes in our cost of borrowing,as reflected in our composite interest rate,may have

283、a direct,negative impact on our net income.Our lease rental stream is generally fixed over the life of our leases,whereaswe have used floating-rate debt to finance a significant portion of our aircraft acquisitions.As of December 31,2016,we had$1.5 billion in floating-rate debt.If interest rates inc

284、rease,we would be obligated to make higherinterest payments to the lenders of our floating-rate debt.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 would also increase ourinterest expense.If our compo

285、site interest rate were to increase by 1.0%,we would expect to incur additionalinterest expense on our existing indebtedness as of December 31,2016,of approximately$14.5 million on anannualized basis,which would negatively affect our financial condition,cash flow and results of operations.The intere

286、st rates that we obtain on our debt financings have several components,including creditspreads,swap spreads,duration,and new issue premiums.These are all incremental to the underlying risk-freerates,as applicable.Volatility in our perceived risk of default or in a market sectors risk of default will

287、negatively impact our cost of funds.We currently are not involved in any interest rate hedging activities,but we are contemplating engagingin hedging activities in the future.Any such hedging activities will require us to incur additional costs,and therecan be no assurance that we will be able to su

288、ccessfully protect ourselves from any or all negative interest ratefluctuations at a reasonable cost.Our substantial indebtedness incurred to acquire our aircraft requires significant debt service payments whichwould negatively affect our financial condition,cash flow and results of operations.We an

289、d our subsidiaries have a significant amount of indebtedness.As of December 31,2016,our totalconsolidated indebtedness,net of discounts and issuance costs,was approximately$8.7 billion.Furthermore,weexpect this amount to grow as we acquire more aircraft.Our level of debt could have important consequ

290、ences,including the following:making it more difficult for us to satisfy our payment obligations with respect to our debt;limiting our ability to obtain additional financing to fund the acquisition of aircraft or for othercorporate requirements;requiring a substantial portion of our cash flows to be

291、 dedicated to debt service payments instead ofother purposes,thereby reducing the amount of cash flows available for dividends,aircraftacquisitions and other general corporate purposes;increasing our vulnerability to general negative economic and industry conditions;exposing us to the risk of increa

292、sed interest rates as certain of our borrowings,including borrowingsunder our various credit facilities,are at variable rates of interest;limiting our flexibility in planning for and reacting to changes in the aircraft industry;placing us at a disadvantage compared to other competitors;andincreasing

293、 our cost of borrowing.24In addition,certain agreements governing our existing indebtedness contain financial maintenancecovenants that require us to satisfy certain ratios and maintain minimum net worth,and other restrictivecovenants that limit our ability to engage in activities that may be in our

294、 long-term best interest.Our failure tocomply with those covenants could result in an event of default which,if not cured or waived,may result in theacceleration of some or all our debt,which would negatively affect our financial condition,cash flow and resultsof operations.Creditors of any subsidia

295、ries we form for purposes of financing will have priority over our stockholders in theevent of a distribution of such subsidiaries assets.Some of the aircraft we acquire are held in special-purpose,bankruptcy-remote subsidiaries of ourCompany.Liens on those assets will be held by a collateral agent

296、for the benefit of the lenders under therespective facility.In addition,funds generated from the lease of aircraft generally are applied first to amountsdue to lenders,with certain exceptions.Creditors of our subsidiaries will have priority over us,our stockholdersand our creditors relating to debt

297、that is not guaranteed or secured by our subsidiaries or their assets in anydistribution of any such subsidiariesassets in a liquidation,reorganization or otherwise.Defaults by one or more of our significant airline customers would negatively affect our financial condition,cash flow and results of o

298、perations.The airline industry is cyclical,economically sensitive and highly competitive.Our lessees are affectedby fuel prices and shortages,political or economic instability,terrorist activities,changes in national policy,competitive pressures,labor actions,pilot shortages,insurance costs,recessio

299、ns,health concerns,and otherpolitical or economic events negatively affecting the world or regional trading markets.Our lesseesabilities toreact to and cope with the volatile competitive environment in which they operate,as well as our owncompetitive environment,will likely affect our revenues and i

300、ncome.The loss of one or more of our significantairline customers or their inability to make operating lease payments due to financial difficulties,bankruptcy orotherwise could have a material negative effect on our cash flow and earnings.This,in turn,could result in abreach of the covenants contain

301、ed in any of our long-term debt facilities,possibly resulting in acceleratedamortization or defaults and would negatively affect our financial condition,cash flow and results of operations.The recent appreciation of the U.S.dollar could negatively impact many of our lessees ability to honor theterms

302、 of their leases and could therefore materially adversely affect our business,financial condition andresults of operations.Many of our lessees are exposed to currency risk due to the fact that they earn revenues in their localcurrencies while a significant portion of their liabilities and expenses a

303、re denominated in U.S.dollars,includingtheir lease payments to us,as well as fuel,debt service,and other expenses.For the year ended December 31,2016,less than 5%of our revenues were derived from customers who have their principal place of business inthe U.S.While we attempt to minimize our currency

304、 and exchange risks by negotiating the designated paymentcurrency in our leases to be U.S.dollars,the ability of our lessees to make lease payments to us in U.S.dollarsmay be adversely impacted in the event of an appreciating U.S.dollar,like we have experienced over the lastyear.Our lessees may not

305、be able to increase their revenues sufficiently to offset the impact of exchange rateson their lease payments and other expenses denominated in U.S.dollars.This is particularly true for non-U.S.airlines whose operations are primarily domestic.Currency volatility,particularly as witnessed recently in

306、 otheremerging market countries,could impact the ability of some of our customers to meet their contractualobligations in a timely manner.Shifts in foreign exchange rates can be significant,are difficult to predict,andcan occur quickly.25Certain of our subsidiaries may be restricted in their ability

307、 to make distributions to us which would negativelyaffect our financial condition and cash flow.The subsidiaries that hold our aircraft are legally distinct from us,and some of these subsidiaries arerestricted from paying dividends or otherwise making funds available to us pursuant to agreements gov

308、erning ourindebtedness.Some of our principal debt facilities have financial covenants.If we are unable to comply withthese covenants,then the amounts outstanding under these facilities may become immediately due and payable,cash generated by our subsidiaries affected by these facilities may be unava

309、ilable to us and/or we may be unableto draw additional amounts under these facilities.The events that could cause some of our subsidiaries not to bein compliance with their loan agreements,such as a lessee default,may be beyond our control,but theynevertheless could have a substantial negative impac

310、t on the amount of our cash flow available to fund workingcapital,make capital expenditures and satisfy other cash needs.For these reasons our financial condition andcash flow would be negatively affected.For a description of the operating and financial restrictions in our debtfacilities,see the sec

311、tion titled“Managements Discussion and Analysis of Financial Condition and Results ofOperationsLiquidity and Capital Resources.”Our aircraft may not at all times be adequately insured either as a result of lessees failing to maintainsufficient insurance during the course of a lease or insurers not b

312、eing willing to cover certain risks whichwould negatively affect our financial condition,cash flow and results of operations.We do not directly control the operation of any aircraft we acquire.Nevertheless,because we hold title,directly or indirectly,to such aircraft,we could be sued or held strictl

313、y liable for losses resulting from theoperation of such aircraft,or may be held liable for those losses on other legal theories,in certain jurisdictionsaround the world,or claims may be made against us as the owner of an aircraft requiring us to expend resourcesin our defense.We require our lessees

314、to obtain specified levels of insurance and indemnify us for,and insureagainst,liabilities arising out of their use and operation of the aircraft.Some lessees may fail to maintainadequate insurance coverage during a lease term,which,although in contravention of the lease terms,wouldnecessitate our t

315、aking some corrective action such as terminating the lease or securing insurance for the aircraft,either of which could negatively affect our financial results.Moreover,even if our lessees retain specified levelsof insurance,and indemnify us for,and insure against,liabilities arising out of their us

316、e and operation of theaircraft,we cannot assure you that we will not have any liability.In addition,there are certain risks or liabilities that our lessees may face,for which insurers may beunwilling to provide coverage or the cost to obtain such coverage may be prohibitively expensive.For example,f

317、ollowing the terrorist attacks of September 11,2001,non-government aviation insurers significantly reduced theamount of insurance coverage available for claims resulting from acts of terrorism,war,dirty bombs,bio-hazardous materials,electromagnetic pulsing or similar events.Accordingly,we anticipate

318、 that our lesseesinsurance or other coverage may not be sufficient to cover all claims that could or will be asserted against usarising from the operation of our aircraft by our lessees.Inadequate insurance coverage or default by lessees infulfilling their indemnification or insurance obligations wi

319、ll reduce the proceeds that would be received by us inthe event that we are sued and are required to make payments to claimants,which would negatively affect ourfinancial condition,cash flow and results of operations.The death,incapacity or departure of key officers could harm our business and negat

320、ively affect our financialcondition,cash flow and results of operations.We believe our senior managements reputation and relationships with lessees,manufacturers,buyersand financiers of aircraft are a critical element to the success of our business.We depend on the diligence,skilland network of busi

321、ness contacts of our management team.We believe there are only a limited number ofavailable qualified executives in the aircraft industry,and we therefore have encountered,and will likelycontinue to encounter,intense competition for qualified employees from other companies in our industry.Ourfuture

322、success will depend,to a significant extent,upon the continued service of our senior management26personnel,particularly:Mr.Udvar-Hzy,our founder,and Executive Chairman of the Board;Mr.Plueger,ourChief Executive Officer and President;and our other senior officers,each of whose services are critical t

323、o thesuccess of our business strategies.We do not have employment agreements with Messrs.Udvar-Hzy or Plueger.If we were to lose the services of any of the members of our senior management team,it could negatively affectour financial condition,cash flow and results of operations.Conflicts of interes

324、t may arise between us and clients who will utilize our fleet management services,whichcould negatively affect our business interests,cash flow and results of operations.Conflicts of interest may arise between us and third-party aircraft owners,financiers and operatinglessors who hire us to perform

325、fleet management services such as leasing,re-leasing,lease management and salesservices.These conflicts may arise because services we anticipate providing for these clients are also services wewill provide for our own fleet,including the placement of aircraft with lessees.We expect our fleet managem

326、entservices agreements will provide that we will use our reasonable commercial efforts in providing services,but,tothe extent that we are in competition with the client for leasing opportunities,we will give priority to our ownfleet.Nevertheless,despite these contractual waivers,competing with our f

327、leet management clients in practicemay result in strained relationships with them,which could negatively affect our business interests,cash flow andresults of operations.We may on occasion enter into strategic ventures with the intent that we would serve as the manager of suchstrategic ventures;howe

328、ver,entering into strategic relationships poses risks in that we most likely would nothave complete control over the enterprise,and our financial condition,cash flow and results of operationscould be negatively affected if we encounter disputes,deadlock or other conflicts of interest with our strate

329、gicpartners.In addition to our Blackbird Capital I,LLC joint venture discussed in Note 12 of Notes to ConsolidatedFinancial Statements included in Part II,Item 8 of this Annual Report on Form 10-K,for which we own anon-controlling interest,we may on occasion enter into strategic ventures with third

330、parties to take advantage offavorable financing opportunities or tax benefits,to share capital and/or operating risk,and/or to earn fleetmanagement fees.Although we anticipate that we would serve as the manager of any such strategic ventures,ithas been our managements experience that most strategic

331、venture agreements will provide the non-managingstrategic partner certain veto rights over various significant actions,including the right to remove us as themanager under certain circumstances.If we were to be removed as the manager from a strategic venture thatgenerates significant management fees

332、,our financial results and growth prospects could be materially andnegatively affected.In addition,if we were unable to resolve a dispute with a significant strategic partner thatretains material managerial veto rights,we might reach an impasse that could require us to dissolve the strategicventure

333、at a time and in a manner that could result in our losing some or all of our original investment in thestrategic venture,which could have a negative effect on our financial condition,cash flow and results ofoperations.Our business and earnings are affected by general business,financial market and economic conditionsthroughout the world,which could have a negative effect on our financial condition,