1、2022 Annual ReportCORPORATE DIRECTORY(as of March 2023)BOARD OF DIRECTORSSteven F.Udvar-HzyExecutive Chairman of the BoardJohn L.PluegerChief Executive Officer and PresidentRobert A.MiltonLead Independent DirectorChair,Nominating and Corporate Governance CommitteeAudit CommitteeLeadership Developmen
2、t and Compensation CommitteeMatthew J.HartChair,Audit CommitteeNominating and Corporate Governance CommitteeIan M.SainesAudit CommitteeCheryl Gordon KrongardChair,Leadership Development and Compensation CommitteeNominating and Corporate Governance CommitteeMarshall O.LarsenNominating and Corporate G
3、overnance CommitteeLeadership Development and Compensation CommitteeSusan R.McCawLeadership Development and Compensation CommitteeYvette Hollingsworth ClarkAudit CommitteeLEADERSHIP TEAMExecutive LeadershipSteven F.Udvar-HzyExecutive Chairman of the BoardJohn L.PluegerChief Executive Officer and Pre
4、sidentMarketing and Commercial AffairsAlex A.KhatibiExecutive Vice PresidentKishore KordeExecutive Vice PresidentGrant LevyExecutive Vice PresidentLegalCarol ForsyteExecutive Vice President,General Counsel,Corporate Secretary and Chief Compliance OfficerFinance and AccountingGregory B.WillisExecutiv
5、e Vice President and Chief Financial OfficerSabrina LemmensSenior Vice President and ControllerDaniel VerwholtSenior Vice President and TreasurerTechnical Asset ManagementEric HoogenkampSenior Vice PresidentAircraft Procurement and SpecificationJohn PoerschkeExecutive Vice PresidentCommercial Contra
6、ctsSara EvansSenior Vice PresidentAircraft Sales&TradingDavid BekerSenior Vice PresidentManagement BusinessShirley LuVice PresidentInvestor RelationsJason ArnoldVice PresidentHuman Resources&Office ManagementCourtney McKeownSenior Vice PresidentInformation TechnologyJohn RojasVice PresidentUNITED ST
7、ATESSECURITIES 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 December 31,2022TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the trans
8、ition period fromtoCommission File Number 001-35121AIR LEASE CORPORATION(Exact name of registrant as specified in its charter)Delaware27-1840403(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)2000 Avenue of the Stars,Suite 1000NLos Angeles,California900
9、67(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 classTrading Symbol(s)Name of each exchangeon which registeredClass A Common StockALNew York Stock Exchange6.150
10、%Fixed-to-Floating RateNon-Cumulative Perpetual Preferred Stock,Series AAL PRANew York Stock ExchangeSecurities 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 c
11、heck mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the ExchangeAct.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 the SecuritiesExchange Act of 1934 during the preceding 12
12、months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submittedpursu
13、ant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that theregistrant was required to submit such files).Yes No Indicate by check mark whether the Registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a s
14、mallerreporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reportingcompany,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
15、 Emerging growth company If an emerging growth company,indicate by check mark if the Registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark wheth
16、er the registrant has filed a report on and attestation to its managements assessment of theeffectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by theregistered public accounting firm that prepared or issued its audit report.Ye
17、s No If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of theregistrant included in the filing reflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error correct
18、ions are restatements that required a recovery analysis of incentive-basedcompensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the E
19、xchange Act).Yes No The aggregate market value of registrants voting stock held by non-affiliates was approximately$3.5 billion on June 30,2022,based upon the last reported sales price on the New York Stock Exchange.As of February 15,2023,there were 110,912,629 shares of Class Acommon stock outstand
20、ing.DOCUMENTS INCORPORATED BY REFERENCEDesignated portions of the Proxy Statement relating to registrants 2023 Annual Meeting of Shareholders,which will be filed withthe Securities and Exchange Commission within 120 days after the end of the 2022 fiscal year,are incorporated by reference into Part I
21、II ofthis Report.Form 10-KFor the Fiscal Year Ended December 31,2022INDEXTABLE OF CONTENTSPagePART I.Item 1.Business.4Item 1A.Risk Factors.15Item 1B.Unresolved Staff Comments.33Item 2.Properties.33Item 3.Legal Proceedings.35Item 4.Mine Safety Disclosures.35PART IIItem 5.Market for Registrants Common
22、 Equity,Related Stockholder Matters and Issuer Purchases ofEquity Securities.36Item 6.RESERVED.37Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.38Item 7A.Quantitative and Qualitative Disclosures About Market Risk.59Item 8.Financial Statements and Suppleme
23、ntary Data.61Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.93Item 9A.Controls and Procedures.93Item 9B.Other Information.94Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.95PART IIIItem 10.Directors,Executive Officers and Corp
24、orate Governance.96Item 11.Executive Compensation.96Item 12.Security Ownership of Certain Beneficial Owners and Management Related StockholderMatters.96Item 13.Certain Relationships and Related Transactions,and Director Independence.97Item 14.Principal Accounting Fees and Services.97PART IVItem 15.E
25、xhibits,Financial Statement Schedules.98Item 16.Form 10-K Summary.1222FORWARD 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 Litigati
26、onReform Act of 1995.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,the impact ofRussias invasion of Ukraine and the impact of sanctions imposed on Russia,the impa
27、ct of lease deferrals andother accommodations,aircraft delivery delays,the impact of inflation,rising interest rates and othermacroeconomic conditions,and other factors affecting our financial condition or results of operations.Wordssuch as“can,”“could,”“may,”“predicts,”“potential,”“will,”“projects,
28、”“continuing,”“ongoing,”“expects,”“anticipates,”“intends,”“plans,”“believes,”“seeks,”“estimates”and“should,”and variations of these wordsand similar expressions,are used in many cases to identify these forward-looking statements.Any such forward-looking statements are not guarantees of future perfor
29、mance and involve risks,uncertainties,and other factorsthat may cause our actual results,performance or achievements,or industry results to vary materially from ourfuture results,performance or achievements,or those of our industry,expressed or implied in such forward-looking statements.Such factors
30、 include,among others,general commercial aviation industry,economic,andbusiness conditions,which will,among other things,affect demand for aircraft,availability,and creditworthinessof current and prospective lessees;lease rates;availability and cost of financing and operating expenses;governmental a
31、ctions and initiatives;and environmental and safety requirements,as well as the factors discussedunder“Item 1A.Risk Factors”in this Annual Report on Form 10-K.You are therefore cautioned not to placeundue reliance on such statements.Any forward-looking statement speaks only as of the date on which i
32、t ismade,and we do not intend and undertake no obligation to update any forward-looking information to reflectactual results or events or circumstances after the date on which the statement is made or to reflect the occurrenceof unanticipated events.3PART IITEM 1.BUSINESSOverviewAir Lease Corporatio
33、n(the“Company”,“ALC”,“we”,“our”or“us”)is a leading aircraft leasingcompany that was founded by aircraft leasing industry pioneer,Steven F.Udvar-Hzy.We are principallyengaged in purchasing the most modern,fuel-efficient new technology commercial jet aircraft directly fromaircraft manufacturers,such a
34、s The Boeing Company(“Boeing”)and Airbus S.A.S.(“Airbus”),and leasing thoseaircraft to airlines throughout the world with the intention to generate attractive returns on equity.In addition toour leasing activities,we sell aircraft from our fleet to third parties,including other leasing companies,fin
35、ancialservices companies,airlines and other investors.We also provide fleet management services to investors andowners of aircraft portfolios for a management fee.Our operating performance is driven by the growth of ourfleet,the terms of our leases,the interest rates on our debt,and the aggregate am
36、ount of our indebtedness,supplemented by gains from aircraft sales and our management fees.We currently have relationships with over 200 airlines across 70 countries.We operate our business on aglobal basis,providing aircraft to airline customers in every major geographical region,including markets
37、suchas Asia,Europe,the Middle East and Africa,U.S.and Canada,Central America,South America and Mexico,andthe Pacific,Australia and New Zealand.As air travel continues to recover from the impact of the COVID-19pandemic,we expect demand for our modern fuel-efficient aircraft will continue to increase.
38、In markets such asthe United States and Western Europe,our strategy is to focus on the replacement market as many airlines lookto replace aging aircraft with new,modern technology,fuel efficient jet aircraft.In less saturated markets,including parts of Asia,in addition to the replacement market,we s
39、erve customers expanding their fleets.Many of these markets are experiencing increased demand for passenger airline travel and have lowermarket saturation than more mature markets such as the United States and Western Europe.We expect that thesemarkets will also present significant replacement oppor
40、tunities in upcoming years as many airlines look toreplace aging aircraft with new,modern technology,fuel efficient jet aircraft.An important focus of our strategyis meeting the needs of this replacement market.Airlines in some of these markets have fewer financingalternatives,enabling us to command
41、 higher lease rates compared to those in more mature markets.We mitigate 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 ourfleet reduces the risks as
42、sociated with individual lessee defaults and adverse geopolitical and regional economicevents.We mitigate the risks associated with cyclical variations in the airline industry by managing customerconcentrations and lease maturities in our fleet to minimize periods of concentrated lease expirations.I
43、n order tomaximize residual values and minimize the risk of obsolescence,our strategy is to own an aircraft during the firstthird of its expected 25-year useful life.During the year ended December 31,2022,we purchased 60 new aircraft from Boeing and Airbus,purchased one aircraft from the secondary m
44、arket,sold six aircraft and wrote-off our interests in 21 aircraft in ourowned fleet that were detained in Russia.However,in October 2022,we recovered one of these aircraft.See“Impact of Russia-Ukraine conflict”in“Item 7.Managements Discussion and Analysis of Financial Condition andResults of Operat
45、ions”of this Annual Report on Form 10-K for further discussion.We ended the year with a total of417 aircraft in our owned fleet.The net book value of our fleet grew by 7.2%to$24.5 billion as of December 31,2022 compared to$22.9 billion as of December 31,2021.The weighted average age of our fleet was
46、 4.5 years andthe weighted average lease term remaining was 7.1 years as of December 31,2022.Our managed fleet wascomprised of 85 aircraft as of December 31,2022 as compared to 92 aircraft as of December 31,2021.We have aglobally diversified customer base comprised of 117 airlines in 62 countries as
47、 of December 31,2022.We continueto have a strong lease utilization rate of 99.6%for the year ended December 31,2022.4As of December 31,2022,we had commitments to purchase 398 aircraft from Boeing and Airbus fordelivery through 2029,with an estimated aggregate commitment of$25.5 billion.We have place
48、d approximately90%of our committed orderbook on long-term leases for aircraft delivering through the end of 2024 and haveplaced 60%of our entire orderbook.We ended 2022 with$31.4 billion in committed minimum future rentalpayments,consisting of$15.6 billion in contracted minimum rental payments on th
49、e aircraft in our existing fleetand$15.8 billion in minimum future rental payments related to aircraft which will deliver between 2023 through2028.We typically finance the purchase of aircraft and our business with available cash balances,internallygenerated funds from our aircraft leasing and sales
50、 activities,and debt financings.Our debt financing strategy isfocused on raising unsecured debt in the global bank and debt capital markets,with limited utilization ofgovernment guaranteed export credit or other forms of secured financing.In 2022,we issued approximately$2.2 billion in aggregate prin
51、cipal amount of senior unsecured notes with maturities ranging from 2027 to 2032with a weighted average interest rate of 3.59%.We ended 2022 with total debt outstanding of$18.8 billion,ofwhich 91.3%was at a fixed rate and 99.3%of which was unsecured.As of December 31,2022,our compositecost of funds
52、raised through debt financings was 3.07%.Our total revenues for the year ended December 31,2022 increased by 11.0%to$2.3 billion ascompared to 2021.The increase in total revenues was primarily driven by the continued growth in our fleet andsignificantly lower COVID-19 related lease restructuring and
53、 cash basis losses.During the year ended December 31,2022,we recorded net loss attributable to shareholders of$138.7 million,or net loss of$1.24 per diluted share,as compared to net income attributable to shareholders of$408.2 million,or$3.57 per diluted share,for the year ended December 31,2021.Des
54、pite the growth of ourfleet,the decrease was due to the net impact of the write-off of our Russian fleet,which totaled approximately$771.5 million for the year ended December 31,2022.See“Item 7.Managements Discussion and Analysis ofFinancial Condition and Results of Operations”for more information o
55、n our financial results for the year endedDecember 31,2022.Our adjusted net income before income taxes excludes the effects of certain non-cash items,one-time ornon-recurring items that are not expected to continue in the future and certain other items,such as the net impactof the write-off of our R
56、ussian fleet.Adjusted net income before income taxes for the year ended December 31,2022 increased 11.9%to$659.9 million compared to$589.7 million for the year ended December 31,2021.Adjusted net income before income taxes per diluted share increased 14.4%to$5.89 per adjusted diluted sharefor the ye
57、ar ended December 31,2022 compared to$5.15 per adjusted diluted share for the year endedDecember 31,2021.Our adjusted net income before income taxes and adjusted diluted earnings per share beforeincome taxes increased for the year ended December 31,2022 as compared to 2021,primarily due to thecontin
58、ued growth of our fleet and the increase in revenues.Adjusted net income before income taxes and adjusted diluted earnings per share before income taxesare measures of financial and operational performance that are not defined by U.S.Generally AcceptedAccounting Principles(“GAAP”).See“Results of Ope
59、rations”in“Item 7.Managements Discussion andAnalysis of Financial Condition and Results of Operations”of this Annual Report on Form 10-K for a discussionof adjusted net income before income taxes and adjusted diluted earnings per share before income taxes asnon-GAAP measures and a reconciliation of
60、these measures to net income attributable to common stockholders.Industry OutlookPerformance of the commercial airline industry is linked to global economic health and development.Passenger traffic has historically expanded at a faster rate than global gross domestic product(“GDP”)growth,inpart due
61、to the expansion of the middle class and the ease and affordability of air travel and we expect this trend tocontinue.Global air travel continues to recover following the impact of the COVID-19 pandemic.The International5Air Transport Association(“IATA”)reported that passenger traffic was up 64%duri
62、ng 2022 relative to the prioryear,due to a significant acceleration in international traffic and strong continued expansion of domestic traffic inmost markets.International traffic in 2022 rose 153%relative to the prior year,benefiting from further relaxation ofinternational travel restrictions in a
63、 number of countries.Global domestic traffic rose 11%during 2022 as comparedto the prior year,with most major markets experiencing double-digit percentage increases except for China,whichwas constrained by temporary domestic travel restrictions.According to IATA,several international routes are nowe
64、xceeding 2019 traffic levels or are expected to exceed those levels near term and several domestic markets arequickly approaching 2019 levels.In January 2023,international travel restrictions in China were lifted,whichshould further bolster global international traffic volumes this year and beyond.A
65、dditionally,IATA has previouslyreported that it expects global passenger departures to return to 2019 levels by 2024.Fundamental drivers of our business have demonstrated significant durability through numerous cyclesand downturns.These drivers include:the growth of passenger traffic over time;the i
66、ncreased role of lessors tofinance a greater share of the worlds fleet;and the need and desire for airlines to replace aging aircraft.Elevatedfuel costs and other expenses inherent in operating older aircraft,along with environmental sustainabilityinitiatives are also driving increased demand for ne
67、w aircraft.Operations to DateCurrent FleetThe net book value of our fleet increased by 7.2%to$24.5 billion as of December 31,2022 compared to$22.9 billion as of December 31,2021.As of December 31,2022,we owned 417 aircraft in our aircraft portfolio,comprised of 306 narrowbody aircraft and 111 widebo
68、dy aircraft.As of December 31,2022,the weightedaverage fleet age and weighted average remaining lease term of our fleet was 4.5 years and 7.1 years,respectively.We had a managed fleet of 85 aircraft as of December 31,2022 compared to 92 as of December 31,2021.References throughout this Annual Report
69、 on Form 10-K to“our fleet”refer to the aircraft included inflight equipment subject to operating leases and do not include aircraft in our managed fleet or aircraft classifiedas net investments in sales-type leases unless the context indicates otherwise.Geographic DiversificationOver 95%of our airc
70、raft 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 airlines principal place of business:Year EndedDecember 31,2022Year EndedDecember 31,2021Year E
71、ndedDecember 31,2020RegionAmount ofRentalRevenue%of TotalAmount ofRentalRevenue%of TotalAmount ofRentalRevenue%of Total(in thousands,except percentages)Asia(excluding China).$625,35528.2%$558,02027.9%$573,72229.5%Europe.611,09127.6%564,47928.2%525,54327.0%China.359,97616.3%352,37517.6%341,12117.5%Th
72、e Middle East and Africa.251,24311.3%210,97710.5%220,01711.3%U.S.and Canada.143,2666.5%130,7176.5%106,6945.5%Central America,South America andMexico.141,6386.4%104,3155.2%88,1134.5%Pacific,Australia,and New Zealand.81,9393.7%82,4544.1%91,4104.7%Total.$2,214,508100.0%$2,003,337100.0%$1,946,620100.0%6
73、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 31,2022 and2021:Year EndedDecember 31,2022Year EndedDecember 31,2021RegionNet BookValue%of TotalNet Bo
74、okValue%of Total(in thousands,except percentages)Europe.$7,985,31732.5%$7,439,99332.5%Asia(excluding China).7,144,18829.1%5,952,98126.0%China.2,792,02211.4%2,934,22412.8%The Middle East and Africa.2,253,3429.3%2,447,91910.7%Central America,South America,and Mexico.1,924,2167.8%1,566,1336.8%U.S.and C
75、anada.1,557,2606.3%1,638,4507.2%Pacific,Australia,and New Zealand.882,0403.6%919,3044.0%Total.$24,538,385100.0%$22,899,004100.0%At December 31,2022 and 2021,we owned and managed leased aircraft to customers in the followingregions based on each airlines principal place of business:Year EndedDecember
76、 31,2022Year EndedDecember 31,2021RegionNumber ofCustomers(1)%of TotalNumber ofCustomers(1)%of TotalEurope.4941.9%5042.5%Asia(excluding China).2319.7%2218.6%The Middle East and Africa.1412.0%1411.9%U.S.and Canada.1311.1%1311.0%China.86.8%97.6%Central America,South America and Mexico.76.0%75.9%Pacifi
77、c,Australia,and New Zealand.32.5%32.5%Total.117100.0%118100.0%(1)A customer is an airline with its own operating certificate.For the years ended December 31,2022,2021,and 2020,China was the only individual country thatrepresented at least 10%of our rental revenue based on each airlines principal pla
78、ce of business;however,noindividual airline contributed more than 10%to our rental revenue.Our customer base is highly diversified,withour average customer representing approximately 1.0%of our fleet net book value as of December 31,2022.Wealso have a global customer base with the average country re
79、presenting approximately 1.8%of our fleet net bookvalue as of December 31,2022.Aircraft Acquisition StrategyWe seek to acquire the most highly in demand and widely distributed,modern technology,fuel efficientand lowest emissions narrowbody and widebody commercial jet aircraft.Our strategy is to orde
80、r new aircraftdirectly from the manufacturers.When placing new aircraft orders with the manufacturers,we strategically targetthe replacement of aging aircraft with modern technology aircraft.Additionally,we look to supplement our orderpipeline with opportunistic purchases of aircraft in the secondar
81、y market and participate in sale-leasebacktransactions with airlines.In addition to our focus on commercial aircraft,we have expanded our focus to includethe cargo market based on customer demand.7Prior to ordering aircraft,we evaluate the market for specific types of aircraft.We consider the overal
82、ldemand for the 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 whi
83、ch aircraft types it willreplace or compete within the global market.Additionally,we study the effects of global airline passenger trafficgrowth in order to determine the likely demand for our new aircraft upon delivery.For new aircraft deliveries,we source many components separately,which include s
84、eats,safetyequipment,avionics,galleys,cabin finishes,engines,and other equipment.Oftentimes,we are able to achievelower pricing through direct bulk purchase contracts with the component manufacturers than would beachievable if we relied on the airframe manufacturers to source the components for the
85、aircraft themselves.Airframe manufacturers such as Boeing and Airbus install these buyer furnished equipment in our aircraft duringthe final assembly process at their facilities.With this purchasing strategy,we are able to both meet specificcustomer configuration requirements and lower our total acq
86、uisition cost of the aircraft.Aircraft Leasing StrategyThe airline industry is complex and constantly evolving due to changes in the competitive landscape andpassenger traffic patterns.Fleet flexibility is key to the airlinesability to effectively operate and compete in theirrespective markets.Opera
87、ting leases offer airlines significant fleet flexibility by allowing them to adapt andmanage their fleets through varying market conditions without bearing the full financial risk associated withthese capital intensive assets which have an expected useful life of 25 years.We work closely with our ai
88、rlinecustomers throughout the world to help optimize their long-term aircraft fleet strategies.We may also,from timeto time,work with our airline customers to assist them in obtaining financing for aircraft.We work to mitigate the risks associated with owning and leasing aircraft and cyclical variat
89、ions in theairline industry through careful management of our fleet,including managing customer 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 f
90、leet reduces the risksassociated with individual customer defaults and the impact of adverse geopolitical and regional economicevents.In order to maximize residual values and minimize the risk of obsolescence,our strategy is generally toown an aircraft for approximately the first third of its expect
91、ed 25-year useful life.Our management team identifies prospective airline 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 perfor
92、mance of the airline.Management obtainsand reviews relevant business materials from all prospective customers before entering into a lease agreement.Under certain circumstances,the customer may be required to obtain guarantees or other financial support from asovereign entity or a financial institut
93、ion.We work closely with our existing customers and potential lessees todevelop 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 orderbook.Once the aircraft has beendelivered a
94、nd operated by the airline,we look to remarket the aircraft and sign a follow-on lease six to 12 monthsahead of the scheduled expiry of the initial lease term.Our leases are typically structured as operating leases with fixed rates and terms and typically requirecash security deposits and maintenanc
95、e reserve payments.In addition,our leases are all structured as triple netleases,whereby the lessee is responsible for all operating costs,including taxes,insurance and maintenance andalso contain provisions which require payment whether or not the aircraft is operated,irrespective of thecircumstanc
96、es.Substantially all of our leases require payments to be made in U.S.dollars.In addition,our leases require the lessee to be responsible for compliance with applicable laws andregulations with respect to the aircraft.We require our lessees to comply with the standards of either the8U.S.Federal Avia
97、tion Administration(“FAA”)or its equivalent in foreign jurisdictions.As a function of theselaws and the provisions in our lease contracts,the lessees are responsible for performing all maintenance of theaircraft and returning the aircraft and its components in a specified return condition.Generally,
98、we receive a cashdeposit and maintenance reserves as security for the lessees performance of its obligations under the lease andthe condition of the aircraft upon return.In addition,most leases contain extensive provisions regarding ourremedies and rights in the event of a default by a lessee.The le
99、ssee generally is required to continue to makelease payments under all circumstances,including periods during which the aircraft is not in operation due tomaintenance or grounding.Some foreign countries have currency and exchange laws regulating the international transfer ofcurrencies.When necessary
100、,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 tominimize our c
101、urrency 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 leasepayments in a foreign currency.After we agree to the rental payment currency with an airline,the negoti
102、atedcurrency 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 immaterial tous.We may,in connection with the lease of used aircraft,agree to contri
103、bute 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 received to lesse
104、es 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 lessees.Wemaintain a h
105、igh 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,the impact ofdelivery delays,changes in general economic conditions,emerging competition,new government regul
106、ations,regional catastrophes,and other unforeseen shocks that are relevant to the airlines market.This enables us toidentify lessees that may be experiencing operating and financial difficulties.This identification assists us inassessing the lessees ability to fulfill its obligations under the lease
107、.This monitoring also identifies candidates,where appropriate,to restructure the lease prior to the lessees insolvency or the initiation of bankruptcy orsimilar proceedings.Once an insolvency or bankruptcy occurs,we typically have less control over,and wouldmost likely incur greater costs in connect
108、ion with,the restructuring of the lease or the repossession of the aircraft.During the life of the lease,situations may emerge that place our customers under significant financialpressure,such as the circumstances resulting from the COVID-19 pandemic,which may lead us to repossess ouraircraft or res
109、tructure our leases with our airline customers.When we repossess an aircraft leased in a foreigncountry,we generally expect to export the aircraft from the lessees jurisdiction.In some situations,the lesseesmay not fully cooperate in returning the aircraft.In those cases,we will take appropriate leg
110、al action,a processthat could ultimately delay the return and export of the aircraft.In addition,in connection with the repossessionof an aircraft,we may be required to pay outstanding mechanicsliens,airport charges,navigation fees and otheramounts secured by liens on the repossessed aircraft.These
111、charges could relate to other aircraft that we do notown but were operated by the lessee.9RemarketingOur lease agreements are generally structured to require lessees to notify us six to 12 months in advanceof the leases expiration if a lessee desires to renew or extend the lease.Requiring lessees to
112、 provide us with suchadvance notice provides our management team with an extended period of time to consider a broad set ofalternatives with respect to the aircraft,including assessing general market and competitive conditions andpreparing to remarket or sell the aircraft.If a lessee fails to provid
113、e 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.As discussed above,our leases contain detailed provisions regarding the required condition of the aircraftand its components upon r
114、eturn at the end of the lease term.Aircraft Sales&Trading StrategyOur strategy is to maintain a portfolio of young modern aircraft with a widely diversified customer base.In order to achieve this profile,we primarily order new planes directly from the manufacturers,place them onlong-term leases,and
115、sell the aircraft when they near the end of the first third of their expected 25-year economicuseful life.We typically sell aircraft that are currently operated by an airline with multiple years of lease termremaining on the contract,in order to achieve the maximum disposition value of the aircraft.
116、Buyers of theaircraft may include other leasing companies,financial institutions,airlines and other investors.We also,fromtime to time,buy and sell aircraft on an opportunistic basis for trading profits.Additionally,as discussed below,we may provide management services to buyers of our aircraft asse
117、ts 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 our airline customers andexpand our existing airline customer base by pr
118、oviding additional leasing opportunities beyond our own aircraftportfolio,new order pipeline,and customer or regional concentration limits.As of December 31,2022,we had amanaged fleet of 85 aircraft.Financing StrategyWe finance the purchase of aircraft and our business with available cash balances,i
119、nternally generatedfunds,including through aircraft sales and trading activity and an array of financing products.We aim tomaintain investment-grade credit metrics and focus our debt financing strategy on funding our business primarilyon an unsecured basis with mostly fixed-rate debt from public bon
120、d offerings.Unsecured financing provides uswith operational flexibility when selling or transitioning aircraft from one airline to another.We also have theability to seek debt financing secured by our assets,as well as financings supported through the Export-ImportBank of the United States and other
121、 export credit agencies for aircraft deliveries.InsuranceWe require our lessees to carry those types of insurance that are customary in the air transportationindustry,including comprehensive liability insurance,aircraft all-risk hull insurance,and war-risk insurancecovering risks such as hijacking,t
122、errorism but excluding coverage for weapons of mass destruction and nuclearevents),confiscation,expropriation,seizure,and nationalization.We generally require a certificate of insurancefrom the lessees insurance broker prior to delivery of an aircraft.Generally,all certificates of insurance containa
123、 breach of warranty endorsement so that our interests are not prejudiced by any act or omission of the lessee.Lease agreements generally require hull 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
124、 acknowledged by the broker or carrier.The territorial coverage,in each case,should be suitable for the lessees area of operations and based on available10insurance coverages.We generally require that the certificates of insurance contain,among other provisions,aprovision prohibiting cancellation or
125、 material change without at least 30 daysadvance written notice to theinsurance broker(who would be obligated to give us prompt notice),except in the case of hull war and liabilitywar insurance policies,which customarily only provide seven daysadvance written notice for cancellation andmay be subjec
126、t to shorter notice under certain market conditions.Furthermore,the insurance is primary and notcontributory,and we require that all insurance carriers be required to waive rights of subrogation against us.The stipulated loss value schedule under aircraft hull insurance policies is on an agreed-valu
127、e 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,which would includethe purchase of additional“Total Loss Only”coverage for the deficiency.Airc
128、raft hull policies generally contain standard clauses covering aircraft and engines.The lessee isrequired to pay all deductibles.Furthermore,the hull war policies generally contain full war risk endorsements,including,but not limited to,confiscation(where available),seizure,hijacking and similar for
129、ms of retention orterrorist acts.The comprehensive liability insurance listed on certificates of insurance generally includes provisionsfor bodily injury,property damage,passenger liability,cargo liability,and such other provisions reasonablynecessary in commercial passenger and cargo airline operat
130、ions.We expect that such certificates of insurance listcombined comprehensive single liability limits of not less than$500 million for Airbus and Boeing aircraft.As astandard in the industry,airline operators policies contain a sublimit for third-party war risk liability generally inthe amount of at
131、 least$150 million.We require each lessee to purchase higher limits of third-party war riskliability or obtain an indemnity from its respective government.The international aviation insurance market has exclusions for physical damage to aircraft hulls causedby dirty bombs,bio-hazardous materials,and
132、 electromagnetic pulsing.Exclusions for the same type of perilscould be introduced into liability policies in the future.We cannot assure you that our lessees will be adequately insured against all risks in all territories inwhich they operate,that lessees will at all times comply with their obligat
133、ions to maintain insurance,that anyparticular claim will be paid,or that lessees will be able to obtain adequate insurance coverage at commerciallyreasonable rates in the future.In addition to the insurance coverage obtained by our lessees,we separately purchase contingentliability insurance and con
134、tingent hull insurance on all aircraft in our owned fleet and maintain other insurancecovering the specific needs of our business operations.While we believe our insurance is adequate both as tocoverages and amounts based on industry standards in the current market,we cannot assure you that we aread
135、equately insured against all risks and in all territories in which our aircraft operate.For example,following theRussia-Ukraine conflict,Russia,Ukraine and Belarus are now generally excluded from coverage in ourcontingent liability,contingent hull and contingent hull war insurance consistent with in
136、surance market termsavailable at the time these policies were last renewed.CompetitionThe leasing,remarketing,and sale of aircraft is highly competitive.While we are one of the largestaircraft lessors operating on a global scale,the aircraft leasing industry is diversified with a large number ofcomp
137、etitors.We face competition from aircraft manufacturers,banks,financial institutions,other leasingcompanies,aircraft brokers and airlines.Some of our competitors may have greater operating and financialresources and access to lower capital costs than we have.Competition for leasing transactions is b
138、ased on anumber of factors,including delivery dates,lease rates,lease terms,other lease provisions,aircraft condition,andthe availability in the marketplace of the types of aircraft required to meet the needs of airline customers.11Competition in the purchase and sale of used aircraft is based princ
139、ipally on the availability of used aircraft,price,the terms of the lease to which an aircraft is subject,and the creditworthiness of the lessee,if any.Government RegulationThe air transportation industry is highly regulated.We do not operate commercial jet aircraft,and thusmay not be directly subjec
140、t to many industry laws and regulations,such as regulations of the U.S.Department ofState(the“DOS”),the U.S.Department of Transportation,or their counterpart organizations in foreign countriesregarding the operation of aircraft for public transportation of passengers and property.As discussed below,
141、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 jurisdictions in which they are registered or operate.These lawsgovern,among other things,the registration,operation,maintenance,and condition of t
142、he aircraft.We are required to register our aircraft with an aviation authority mutually agreed upon with our lessee.Each aircraft registered to fly must have a Certificate of Airworthiness,which is a certificate demonstrating theaircrafts compliance with applicable government rules and regulations
143、and that the aircraft is consideredairworthy.Each airline we lease to must have a valid operation certificate to operate our aircraft.Our lessees areobligated to maintain the Certificates of Airworthiness for the aircraft they lease.Our involvement with the civil aviation authorities of foreign juri
144、sdictions consists largely of requests toregister and deregister our aircraft on those countriesregistries.We are also subject to the regulatory authority 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 forei
145、gn entities and theexport of parts to be installed on our aircraft.We may be required to obtain export licenses for parts installed inaircraft exported 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
146、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 entitiesin those countries and with other entities or individuals subject to blocking orders.The U.S.Patriot Act of 2001(the“Patriot Act”)prohibits fin
147、ancial transactions by U.S.persons,including U.S.individuals,entities,andcharitable organizations,with individuals and organizations designated as terrorists and terrorist supporters bythe U.S.Secretary of State or the U.S.Secretary of the Treasury.The U.S.Customs and Border Protection,a lawenforcem
148、ent agency of the U.S.Department of Homeland Security,enforces regulations related to the import ofaircraft into the United States for maintenance or lease and the importation of parts into the U.S.for installation.Jurisdictions in which aircraft are registered as well as jurisdictions in which they
149、 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 intervals for inspection,maintenance and repair.To the extent that aircraft are not subje
150、ct to a lease or a lessee is not in compliance,weare required to comply with such requirements,possibly at our own expense.Environmental Strategy and GHG EmissionsClimate ChangeThe airline industry is focused on addressing its environmental impact in response to increasinglystringent environmental l
151、aws and regulations concerning air emissions and other impacts to the environment.Ourfleet of modern fuel-efficient aircraft continues to expand,with each new aircraft delivered from our orderbookproviding an approximately 20%to 25%reduction in fuel consumption and emissions relative to the priorgen
152、erations they replace.Approximately 80%of commercial passenger aircraft in service worldwide are priorgeneration aircraft and we believe this will result in our airline customers accelerating their transition to the mostmodern technology,fuel-efficient commercial aircraft we own and have on order.12
153、With 398 of the most modern aircraft available currently on order through 2029,we are committed topurchasing the most fuel-efficient commercial aircraft available and leasing them to our customers worldwide,primarily targeting airline customers looking to replace older aircraft or airlines looking t
154、o add routes.Below is a summary of the GHG emissions factors used and the GHG emissions by type for the fiscalyear ended December 31,2021.Scope 1 and Scope 2 GHG emissions information has been prepared inaccordance with the World Resources Institute(WRI)/World Business Council for Sustainable Develo
155、pment(WBCSD)Greenhouse Gas Protocol:A Corporate Accounting and Reporting Standard and WRI/WBCSD GHGProtocol Scope 2 Guidance,collectively referred to herein as the GHG Protocol(the“GHG Protocol”).GHG Emissions FactorsEmissions ScopeEmissions SourceEmissions Factor EmployedScope 1(Direct).Natural Gas
156、Diesel BackupGeneratorsAviation FuelNatural gas:US EPAs Emission Factors for Greenhouse GasInventories,dated April 2022,were applied.For all natural gasemission sources at international locations,the UK GovernmentGHG Conversion Factors for Company Reporting,dated January2022,were applied.Diesel for
157、backup generators:CGHGP Emission Factors fromCross Sector Tools,dated May 2017,were applied.Aviation fuel:Aviation fuel emission factors within the UKGovernment GHG Conversion Factors for Company Reportingdated January 2022 were applied.Scope 2(Indirect-Location-Based).ElectricityChilled WaterThe ap
158、propriate eGRID region was identified from the US EPAsEmission Factors for Greenhouse Inventories,dated April 2022,(if aU.S.facility)or a publicly available regional factor(if internationalfacility).The most recently published electricity emission factorfrom the Sustainable Energy Authority of Irela
159、nd was applied toDublin and the Carbon Footprint Country specific Electricity GridGreenhouse Gas Emission Factors,dated March 2022,was appliedto Hong Kong.GHG Emissions by TypeCarbon DioxideMethaneNitrous OxideTotalScope 1 Direct.4,3943424,439Scope 2 Indirect-Location-Based.2201221All GHG emissions
160、figures are in metric tonnes of carbon dioxide equivalents(CO2e).In accordancewith the GHG Protocol,we have included in our reporting carbon dioxide(CO2),methane(CH4),and nitrousoxide(N2O).Hydrofluorocarbons(HFCs),perfluorocarbons(PFCs),sulphur hexafluoride(SF6),and nitrogentrifluoride(NF3)emissions
161、 have been omitted as they are not material sources of greenhouse gases for us.Theemissions figures provided above are based on the reporting tools and information reasonably available to usduring the fiscal year ended December 31,2021.There may be variations in methodology used by othercompanies in
162、 reporting emissions data,and consequently it is not always practical to directly compare emissionsfrom different companies.In addition,future emissions results may vary as the methodology and performancemeasures applied by the aviation industry and by us continue to evolve.Human Capital ResourcesCu
163、lture and ValuesWe strive to conduct our business with integrity and in an honest and responsible manner and to buildand maintain long-term,mutually beneficial relationships with our customers,suppliers,shareholders,employees13and other stakeholders.We are also committed to fostering,cultivating and
164、 preserving a culture of diversity,equity,and inclusion.We believe that a diverse and inclusive culture helps maintain our position as a preeminentaircraft leasing company.As of December 31,2022,more than 30%of our employees are multicultural and over50%are female.Our values and priorities are furth
165、er specified in our code of conduct and our ethics-relatedcompliance policies,procedures,trainings,and programs.Ethical and inclusive behavior is strongly promoted bythe management team and these values are reflected in our long-term strategy and our way of doing business.Employees,Compensation and
166、BenefitsPay equity is central to our mission to attract and retain the best talent.Our compensation philosophyand reward structure are designed to compensate employees equitably and free of any bias.We demonstrate ourcommitment to pay equity by regularly reviewing our compensation practices for all
167、our employees.Further,thehealth and wellness of our employees is a priority,and we offer employee benefits including a competitivecompensation philosophy with comprehensive benchmarking analysis.Other benefits for which our employees inthe United States,and to the extent practicable outside of the U
168、nited States,are eligible for include but are notlimited to:cash bonus programs,our long-term incentive plan,employee-funded 401(k)programs with companymatching,education reimbursement,company-paid medical,dental and vision insurance,company-paid lifeinsurance,reimbursement accounts and remote healt
169、hcare services among other health and wellness offerings.Asof December 31,2022,we had 151 full-time employees.None of our employees are represented by a union orcollective bargaining agreements.Access to Our InformationWe file annual,quarterly,current reports,proxy statements and other information w
170、ith the Securitiesand Exchange Commission(the“SEC”).We make our public SEC filings available,at no cost,through ourwebsite at http:/ as soon as reasonably practicable after the report is electronically filedwith,or furnished to,the SEC.The information contained on or connected to our website is not
171、incorporated byreference into this Annual Report on Form 10-K and should not be considered part of this or any other reportfiled with the SEC.We will also provide these reports in electronic or paper format free of charge upon writtenrequest made to Investor Relations at 2000 Avenue of the Stars,Sui
172、te 1000N,Los Angeles,California 90067.Our SEC filings are also available free of charge on the SECs website at http:/www.sec.gov.Corporate InformationOur website is http:/.We may post information that is important to investors onour website.Information included or referred to on,or otherwise accessi
173、ble through,our website is not intendedto form a part of or be incorporated by reference into this report.Information about our Executive OfficersSet forth below is certain information concerning each of our executive officers as of February 16,2023,including his/her age and current position with th
174、e Company.All of our executive officers have been employedby us during the past five years.NameAgeCompany PositionSteven F.Udvar-Hzy.76Executive Chairman of the Board of DirectorsJohn L.Plueger.68Chief Executive Officer,President and DirectorCarol H.Forsyte.60Executive Vice President,General Counsel
175、,Corporate Secretary and ChiefCompliance OfficerGregory B.Willis.44Executive Vice President and Chief Financial OfficerAlex A.Khatibi.62Executive Vice PresidentKishore Korde.49Executive Vice President,MarketingGrant A.Levy.60Executive Vice President,Marketing and Commercial AffairsJohn D.Poerschke.6
176、1Executive Vice President of Aircraft Procurement and Specifications14ITEM 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 differmaterial
177、ly from those stated in 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
178、us or that wecurrently 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 capital requirements and debt financings
179、Our substantial indebtedness will require significant capital to refinance our outstanding indebtedness and toacquire aircraft;our inability to make our debt payments and obtain incremental capital may have a materialadverse effect on our business.We and our subsidiaries have a significant amount of
180、 indebtedness.As of December 31,2022,our totalconsolidated indebtedness,net of discounts and issuance costs,was approximately$18.6 billion and our interestpayments were approximately$533.9 million for the year ended December 31,2022.We expect these amounts togrow as we acquire more aircraft.Our leve
181、l of debt could have important consequences,including making itmore difficult for us to satisfy our debt payment obligations and requiring a substantial portion of our cash flowsto be dedicated to debt service payments;limiting our ability to obtain additional financing;increasing ourvulnerability t
182、o negative economic and industry conditions;increasing our interest rate risk;and limiting ourflexibility in planning for and reacting to changes in our industry.Growing our fleet will require us to obtain substantial capital through additional financing,which maynot be available to us on favorable
183、terms or at all.As of December 31,2022,we had 398 new aircraft on orderwith an estimated aggregate purchase price of approximately$25.5 billion.In addition to utilizing cash flow fromoperations to meet these commitments and to maintain an adequate level of unrestricted cash,we will need toraise addi
184、tional funds by accessing committed debt facilities,securing additional financing from banks orthrough capital markets offerings.We also need to maintain access to the capital and credit markets and othersources of financing in order to repay or refinance our outstanding debt obligations.Our access
185、to financing sources depends upon a number of factors over which we have limited control,including general market conditions and interest rate fluctuations;periods of unexpected market disruption andvolatility;the markets view of the quality of our assets,perception of our growth potential and asses
186、sment of ourcredit risk;the relative attractiveness of alternative investments;and the trading prices of our debt securities andpreferred and common equity securities.Depending on market conditions at the time and our access to capital,we may also have to rely more heavily on additional equity issua
187、nces or on less efficient forms of debt financingthat may require a larger portion of our cash flow from operations to service,thereby reducing funds available forour operations,future business opportunities and other purposes.Further,the issuance of additional shares of ouroutstanding preferred sto
188、ck or any other preferred stock approved by our board of directors pursuant to ourcharter may result in such preferred stockholders having rights,preferences or privileges senior to existingClass A common stockholders,who would not have the ability to approve such issuance.These alternativemeasures
189、may not be successful and may not permit us to make required repayments on our debt or meet ouraircraft purchase commitments as they come due and other cash needs.The issuance of additional equity may bedilutive to existing shareholders or otherwise may be on terms not favorable to us or existing sh
190、areholders.If we are unable to generate sufficient cash flows from operations and cannot obtain capital on termsacceptable to us,we may be forced to seek alternatives,such as to reduce or delay investments and aircraftpurchases,or to sell aircraft.We also may not be able to satisfy funding requireme
191、nts for any aircraft acquisition15commitments then in place,which could force us to forfeit our deposits and/or expose us to potential breach ofcontract claims by our lessees and manufacturers.As a result of these risks and repercussions,our inability to make our debt payments and/or obtainincrement
192、al capital to fund future aircraft purchases may have a material adverse effect on our business.Cost of borrowing or interest rate increases may adversely affect our net income and our ability to compete inthe marketplace.We finance our business through a combination of short-term and long-term debt
193、 financings,with mostbearing interest at a fixed rate and some bearing interest at a floating rate that varies with changes in theapplicable reference rate.As of December 31,2022,we had$17.2 billion of fixed rate debt and$1.6 billion offloating rate debt outstanding.Further,we have outstanding prefe
194、rred stock with an aggregate stated amount of$850.0 million that currently pays dividends at a fixed rate,but will alternate to paying dividends based on afloating rate after the initial five years from issuance.Any increase in our cost of borrowing directly impacts ournet income.Throughout the fisc
195、al year ended December 31,2022,market interest rates increased substantially,with the federal funds rate increasing from approximately 0.25%in the beginning of 2022 to approximately4.25%at the end of 2022 and such increases may continue in the future.If the composite interest rate on ouroutstanding
196、floating rate debt were to increase by 1.0%,we would expect to incur additional annual interestexpense on our existing indebtedness as of December 31,2022,of approximately$16.3 million.Our cost ofborrowing is affected primarily by the markets assessment of our credit risk and fluctuations in interes
197、t rates andgeneral market conditions.Interest rates that we obtain on our debt financings can fluctuate based on,amongother things,changes in views of our credit risk,fluctuations in U.S.Treasury rates and the Secured OvernightFinancing Rate(“SOFR”),as applicable,changes in credit spreads,and the du
198、ration of the debt being issued.Increased interest rates prevailing in the market at the time of our incurrence of new debt will also increase ourinterest expense.Moreover,if interest rates continue to rise sharply,we will not be able to immediately offset thenegative impact on our net income by inc
199、reasing lease rates,even if the market were able to bear the increasedlease rates.Our leases are generally for multiple years with fixed lease rates over the life of the lease and,therefore,lags will exist because our lease rates with respect to a particular aircraft cannot generally be increasedunt
200、il the expiration of the lease.Higher interest expense and the need to offset higher borrowing costs byincreasing lease rates may ultimately impact our ability to compete with other aircraft leasing companies in themarketplace,especially if those companies have lower cost of funding.Decreases in int
201、erest rates may also adversely affect our business.Since our fixed rate leases are based,in part,on prevailing interest rates at the time we enter into the lease,if interest rates decrease,new fixed rateleases we enter into may be at lower lease rates and our lease revenue will be adversely affected
202、.In addition,certain of our debt instruments and equity securities that accrue dividends at a floating rateinclude the London Interbank Offered Rate(“LIBOR”)as the benchmark or reference rate.The Chief Executiveof the U.K.Financial Conduct Authority(the“FCA”),which regulates LIBOR,publicly announced
203、 thatpublication of certain tenors of U.S.dollar LIBOR(including overnight and one,three,six and 12 months)willpermanently cease after June 30,2023.While all of the agreements governing our LIBOR linked debt and SeriesA Preferred Stock obligations that are set to mature after June 30,2023,contain LI
204、BOR transition fallbackprovisions,the lack of a standard market practice and inconsistency in fallback provisions in recent years isreflected across these agreements.For example,our Series A Preferred Stock contains LIBOR fallbackprovisions that will allow for the use of an alternative reference rat
205、e selected by the central bank,reserve bank,monetary authority or any similar institution that is consistent with market practice regarding a substitute forthree-month LIBOR.If we determine there is no such alternative reference rate,then we must select anindependent financial advisor to determine a
206、 substitute rate for LIBOR,and if an independent financial advisorcannot determine an alternative reference rate,the dividend rate,business day convention and manner of16calculating dividends applicable during the fixed-rate period of the Series A Preferred Stock will be in effect.Theimplementation
207、of a substitute reference rate for the calculation of interest rates under our LIBOR linked debtobligations and our Series A Preferred Stock may cause us to incur expenses in effecting the transition and mayresult in disputes with our lenders or holders of Series A Preferred Stock over the appropria
208、teness orcomparability to LIBOR of the substitute reference rate selected.In addition,any substitute reference rates couldresult in interest and dividend payments that do not correlate over time with the payments that would have beenmade on our indebtedness or Series A Preferred Stock,as applicable,
209、if LIBOR was available in its current form.If any of these circumstances occur,our net income and/or our ability to compete in the marketplacemay be adversely affected.Negative changes in our credit ratings may limit our ability to obtain financing or increase our borrowingcosts,which may adversely
210、impact our net income and/or our ability to compete in the marketplace.We are currently subject to periodic review by independent credit rating agencies S&P,Fitch and Kroll,each of which currently maintains an investment grade rating with respect to us,and we may become subject toperiodic review by
211、other independent credit rating agencies in the future.Our ability to obtain debt financing andour cost of debt financing is dependent,in part,on our credit ratings and we cannot assure you that these creditratings will remain in effect or that a rating will not be lowered,suspended or withdrawn.Mai
212、ntaining our creditratings depends in part on strong financial results and other factors,including the outlook of the rating agencieson our sector and on the market generally.Ratings are not a recommendation to buy,sell or hold any security,and each agencys rating should be evaluated independently o
213、f any other agencys rating.Actual or anticipatedchanges or downgrades in our credit ratings,including any announcement that our ratings are under review for adowngrade,could increase our borrowing costs and limit our access to the capital markets,which may adverselyimpact our net income and/or our a
214、bility to compete in the marketplace.Certain of our debt agreements contain covenants that impose restrictions on us and our subsidiaries that maylimit our flexibility to operate our business.Some of the agreements governing our indebtedness contain financial and non-financial covenants.Forinstance,
215、our unsecured revolving credit facility requires us to comply with certain financial maintenancecovenants(measured at the end of each fiscal quarter)including minimum consolidated shareholdersequity,minimum consolidated unencumbered assets,and an interest coverage test.Complying with such covenants
216、mayat times necessitate that we forego other opportunities,including incurring additional indebtedness,declaring orpaying certain dividends and distributions or entering into certain transactions,investments,acquisitions,loans,guarantees or advances.Moreover,our failure to comply with any of these c
217、ovenants could constitute a defaultand could accelerate some,if not all,of the indebtedness outstanding under such agreements and could createcross-defaults under other debt agreements,which would have a negative effect on our business and our ability tocontinue as a going concern.In addition,for ou
218、r secured debt,if we are unable to repay such indebtedness whendue and payable,the lenders under our secured debt could proceed against,among other things,the aircraft orother assets securing such indebtedness.As the result of the existence of these financial and non-financialcovenants and our need
219、to comply with them,the flexibility we have to operate our business may be limited.Operational risks relating to our businessWe may be unable to generate sufficient returns on our aircraft investments which may have an adverseimpact on our net income.Our business model and results are driven by our
220、ability to acquire strategically attractive commercialpassenger aircraft,profitably lease and re-lease them,and finally sell such aircraft in order to generate sufficientrevenues to finance our growth and operations,pay our debt service obligations,and meet our other corporateand contractual obligat
221、ions.We rely on our ability to negotiate and enter into leases with favorable lease terms17and to evaluate the ability of lessees to perform their obligations to us prior to receiving the delivery of ourorderbook aircraft from the manufacturers.When our leases expire or our aircraft are returned pri
222、or to the datecontemplated in the lease,we bear the risk of re-leasing or selling the aircraft.Because our leases arepredominantly operating leases,only a portion of an aircrafts value is recovered by the revenues generated fromthe lease and we may not be able to realize the aircrafts residual value
223、 after lease expiration.Our ability toprofitably purchase,lease,re-lease,sell or otherwise dispose of our aircraft will depend on conditions in theairline industry and general market and competitive conditions at the time of purchase,lease and disposition.Inaddition to factors linked to the aviation
224、 industry in general,other factors that may affect our ability to generateadequate returns from our aircraft include the maintenance and operating history of the airframe and engines,thenumber of operators using the particular type of aircraft,and aircraft age.If we are unable to generate sufficient
225、returns on our aircraft due to any of the above factors within or outside of our control,it may have an adverseimpact on our net income.Failure to close our aircraft acquisition commitments would negatively affect our ability to further grow ourfleet and net income.As of December 31,2022,we had ente
226、red into binding purchase commitments to acquire a total of 398new aircraft for delivery through 2029.If we are unable to complete the purchase of such aircraft,we would faceseveral risks,including forfeiting deposits and progress payments and having to pay and expense certainsignificant costs relat
227、ing to these commitments;not realizing any of the benefits of completing the acquisitions;damage to our reputation and relationship with aircraft manufacturers;and defaulting on our lease commitments,which could result in monetary damages and damage to our reputation and relationships with lessees.I
228、f wedetermine that the capital required to satisfy these commitments is not available on terms we deem attractive,wemay eliminate or reduce any then-existing dividend program to preserve capital to apply to such commitments.These risks,whether financial or reputational,would negatively affect our ab
229、ility to further grow our fleet andnet income.Failure to complete our planned aircraft sales could affect our net income and may lead us to use alternativesources of liquidity.Proceeds from the sale of aircraft in our owned portfolio help to supplement our liquidity position andcontribute to our net
230、 income.We currently expect to sell approximately$1.0 billion to$2.0 billion in aircraft in2023.If we are unable to complete the sales of such aircraft on the timeline anticipated,or at all,it could impactour net income and may lead us to use alternative sources of liquidity to fund our operations s
231、uch as additionalcapital markets issuances or borrowings under our revolving credit facility or other debt facilities.The failure of an aircraft or engine manufacturer to meet its delivery obligations to us may negatively impactour ability to grow our fleet and our earnings.The supply of commercial
232、aircraft is dominated by a limited number of airframe and enginemanufacturers.As a result,we depend on these manufacturersability to remain financially stable,produceproducts and related components which meet airlinesdemands and regulatory requirements,and fulfill anycontractual obligations they hav
233、e to us,which is in turn dependent on a number of factors over which we havelittle or no control.Those factors include the availability of raw materials and manufactured components,changes in highly exacting performance requirements and product specifications,economic conditions,changesin the regula
234、tory environment and labor relations and negotiations between manufacturers and their respectiveworkforces.If manufacturers fail to meet their contractual obligations to us,we may experience:missed or late aircraft deliveries and potential inability to meet our contractual delivery obligationsowed t
235、o our lessees,resulting in potential lost or delayed revenues,and strained customerrelationships;18an inability to acquire aircraft and engines resulting in lower growth or contraction of our aircraftfleet;reduced demand for a particular manufacturers product,which may lead to reduced market leasera
236、tes and lower aircraft residual values and may affect our ability to remarket or sell at a profit,or atall,some of the aircraft in our fleet;andtechnical or other difficulties with aircraft or engines after delivery that subject aircraft to operatingrestrictions or groundings,resulting in a decline
237、in residual value and lease rates of such aircraft andimpair our ability to lease or dispose of such aircraft on favorable terms or at all.There have been well-publicized delivery delays by airframe and engine manufacturers.For example,we have experienced delivery delays of Boeing and Airbus aircraf
238、t due to manufacturingrelated issues.Although Boeing and Airbus have expressed their desire to increase production rates on severalaircraft types,they have yet to meaningfully increase production.At their current production pace,we do notcurrently see this improving the delivery delay situation thro
239、ugh at least 2023.Our leases and purchaseagreements with Boeing and Airbus typically provide for cancellation rights starting at one year after the originalcontractual delivery date,regardless of cause.If there are delivery delays greater than one year for aircraft thatwe have made future lease comm
240、itments,some or all of our affected lessees could elect to cancel their lease withrespect to such delayed aircraft.Any such cancellation could strain our relationship with such lessee goingforward and would negatively affect our business.Should the severity of the delivery delays from the manufactur
241、ers continue or worsen,or should newdelays arise,such delays may negatively impact our ability to grow our fleet and our earnings.If our aircraft become obsolete or experience a decline in customer demand,our ability to lease and sell thoseaircraft and our results of operations may be negatively imp
242、acted and may result in impairment charges.Aircraft are long-lived assets,requiring long lead times to develop and manufacture,with modelsbecoming obsolete or less in demand over time,in particular when newer,more advanced aircraft aremanufactured.Our fleet,as well as the aircraft that we have on or
243、der,have exposure to a decline in customer demandor obsolescence,particularly if unanticipated events occur which shorten the life cycle of such aircraft types,including:the introduction of superior aircraft or technology,such as new airframes or engines with higher fuelefficiency;the entrance of ne
244、w manufacturers which could offer aircraft that are more attractive to our targetlessees,including manufacturers of alternative technology aircraft;the advent of alternative transportationtechnologies which could make travel by air less desirable;government regulations,including those limitingnoise
245、and emissions and the age of aircraft operating in a jurisdiction;the costs of operating an aircraft,includingmaintenance which increases with aircraft age;and compliance with airworthiness directives.Obsolescence ofcertain aircraft may also trigger impairment charges,increase depreciation expense o
246、r result in losses related toaircraft asset value guarantees,if we provide such guarantees.The demand for our aircraft is also affected by other factors outside of our control,including:airpassenger demand;air cargo demand;air travel restrictions;airline financial health;changes in fuel costs,intere
247、strates,foreign currency,inflation and general economic conditions;technical problems associated with aparticular aircraft model;airport and air traffic control infrastructure constraints;and the availability and cost offinancing.As demand for particular aircraft declines,lease rates for that type o
248、f aircraft are likely tocorrespondingly decline,the residual values of that type of aircraft could be negatively impacted,and we may be19unable to lease or sell such aircraft on favorable terms,if at all.In addition,the risks associated with a decline indemand for a particular aircraft model or type
249、 increase if we acquire a high concentration of such aircraft.If demand declines for a model or type of aircraft of which we own or of which we have a relativelyhigh concentration,or should the aircraft model or type become obsolete,our ability to lease or sell those aircraftand our results of opera
250、tions may be negatively impacted and may result in impairment charges.The value and lease rates for aircraft that we own or acquire could decline resulting in an impact to ourearnings and cash flows.From time to time,aircraft values and lease rates have experienced declines due to a variety of facto
251、rsoutside of our control.These factors may impact the aviation industry as a whole or may be more specific tocertain types of aircraft in our fleet.For example,the effects of COVID-19 pandemic related travel restrictions,as well as,groundings and aircraft production delays,have each impacted,and may
252、 continue to impact lease ratesor our ability to lease certain aircraft in our fleet or orderbook.Other factors include,but are not limited to:manufacturer production levels and technological innovation;the number of airlines operating the aircraft;ourlesseesfailure to maintain our aircraft;the impa
253、ct of decisions by the regulatory authority under which theaircraft is operated and any applicable airworthiness directives,service bulletins or other regulatory action thatcould prevent or limit utilization of the aircraft.As a result of these factors,our earnings and cash flows may beimpacted by a
254、ny decrease in the value of aircraft that we own or acquire or decrease in market rates for leases forthese aircraft.Aircraft have limited economic useful lives and depreciate over time and we may be required to record animpairment charge or sell aircraft for a price less than its depreciated book v
255、alue which may impact ourfinancial results.We depreciate our aircraft for accounting purposes on a straight-line basis to the aircrafts residual valueover its estimated useful life.Our management team evaluates on a quarterly basis the need to perform animpairment test whenever facts or circumstance
256、s indicate a potential impairment has occurred.An assessment isperformed whenever events or changes in circumstances indicate that the carrying amount of an aircraft may notbe recoverable from their expected future undiscounted net cash flow.We develop the assumptions used in therecoverability asses
257、sment based on managements knowledge of,and historical experience in,the aircraft leasingmarket and aviation industry,as well as from information received from third-party industry sources.Factorsconsidered in developing estimates for this assessment include changes in contracted lease rates,economi
258、cconditions,technology,and airline demand for a particular aircraft type.Any of our assumptions and estimatesmay prove to be inaccurate,which could adversely impact forecasted cash flow.In the event that an aircraft doesnot meet the recoverability test,the aircraft will be recorded at fair value,res
259、ulting in an impairment charge.Deterioration of future lease rates and the residual values of our aircraft could result in impairment charges whichmay have a significant impact on our financial results.The occurrence of unexpected events or changingconditions may also result in impairment charges.Fo
260、r a description of our impairment policy,see the sectiontitled“Managements Discussion and Analysis of Financial Condition and Results of OperationsCriticalAccounting EstimatesFlight equipment.”If we were to record an impairment charge on aircraft,or if we were to dispose of aircraft for a price that
261、is less than its depreciated book value on our balance sheet,it would reduce our total assets and shareholdersequity.For example,during the year ended December 31,2022,we recognized a net loss from asset write-offs ofour interest in owned and managed aircraft detained in Russia as a result of the Ru
262、ssia-Ukraine conflict totalingapproximately$771.5 million.Depending on the size of the impairment,a reduction in our shareholdersequitymay negatively impact our ability to comply with covenants in certain of our agreements governing ourindebtedness requiring us to maintain a minimum net worth and in
263、terest coverage ratio,and could result in anevent of default under such agreements.For these reasons,our financial results may be impacted.20The Russian-Ukraine conflict and the impact of related sanctions may continue to impact our business.We terminated our leasing activities and wrote-off our int
264、erests in owned and managed aircraft detainedin Russia during 2022 due to the Russian-Ukraine conflict and related sanctions,which may continue to impactour business,the business of our airline customers and global macroeconomic conditions.Some of our customersare impacted by closures of Russian and
265、 Ukrainian airspace,increases in fuel and energy prices,and disruptionsof the global supply chain.Airspace closures have resulted in certain of our airline customers re-routing flights toavoid such airspace which has resulted in increased flight times and fuel costs.Any of these factors could causeo
266、ur lessees to incur higher costs and to generate lower revenues which could adversely affect their ability tomake lease payments which,in turn,could impact our financial results.A large number of our aircraft are on lease to airlines in China and,therefore,we have concentratedexposure to political,l
267、egal and economic risks associated with China and any adverse event involving Chinamay have an adverse effect on our financial condition.Through our lessees and the countries in which they operate,we are exposed to the specific economicand political conditions and associated risks of those jurisdict
268、ions.Approximately 11.4%of our aircraft,based onnet book value as of December 31,2022,are operated by lessees based in China,giving us increased exposure toeconomic and political conditions in China,as well as changes in government relations between China and theU.S.,including trade disputes and tra
269、de barriers.We also have an office in Hong Kong and structure certainleases through our Hong Kong subsidiary.Risks related to concentrated exposure can include economicrecessions,financial,public health and political emergencies,burdensome local regulations,trade disputes,andin extreme cases,increas
270、ed risks of requisition of our aircraft and risks of wide-ranging sanctions prohibiting usfrom leasing flight equipment in certain jurisdictions.An adverse political or economic event in or related toChina,or deterioration of government relations between the U.S.and China,could affect the ability of
271、 our lesseesin China to meet their obligations to us,or expose us to various associated legal or political risks,which couldhave an adverse effect on our financial condition.We are dependent on the ability of our lessees to perform their payment and other obligations to us under ourleases and their
272、failure to do so may materially and adversely affect our financial results and cash flows.We generate substantially all of our revenue from leases of aircraft to commercial airlines and ourfinancial performance is driven by the ability of our lessees to perform their payment and other obligations to
273、 usunder our leases.The airline industry is cyclical,economically sensitive and highly competitive,and our lesseesare affected by several factors over which we and they have limited control,including:air passenger demand;changes in fuel costs,interest rates,foreign currency,inflation,labor difficult
274、ies,including pilot shortages,wagenegotiations or other labor actions;increases in other operating costs,such as increased insurance costs,generaleconomic conditions and governmental regulation and associated fees affecting the air transportation business.Inrecent years,the airline industry has been
275、 substantially impacted by the COVID-19 pandemic.In addition,geopolitical events such as changes in national policy or the imposition of sanctions,including new sanctions,trade barriers or tariffs,as well as events leading to political or economic instability such as war,prolongedarmed conflict and
276、acts of terrorism;epidemics,pandemics and natural disasters;availability of financing,including availability of governmental support;airline financial health may also have an impact.Finally,ourlessees may also be affected by aircraft accidents,in particular a loss if the aircraft is damaged or destr
277、oyed by anevent specifically excluded from insurance policies such as dirty bombs,biohazardous materials andelectromagnetic pulsing.These factors could cause our lessees to incur higher costs and to generate lower revenues which couldadversely affect their ability to make lease payments.In addition,
278、lease default levels will likely increase overtime if economic conditions deteriorate.A majority of our lessees received lease deferrals or other accommodations during the COVID-19pandemic and we may agree to deferrals,restructurings and terminations in the ordinary course of our business in21the fu
279、ture.If a lessee delays,reduces,or fails to make lease payments when due and if we are unable to agree ona lease payment deferral or lease restructuring and we elect to terminate the lease,we may not receive all or anypayments still outstanding,and we may be unable to re-lease the aircraft promptly
280、and at favorable rates,if at all.While deferrals generally shift the timing of payments to a later period,restructurings and terminations generallypermanently reduce our lease revenue.If we perform a significant number of restructurings and terminations,theassociated reduction in lease revenue could
281、 materially and adversely affect our financial results and cash flows.Lessee defaults and reorganizations,bankruptcies or similar proceedings,may result in lost revenues andadditional costs.From time to time,an airline may seek reorganization or protection from creditors under its local lawsor may g
282、o into liquidation.Some of our lessees have defaulted on their lease obligations or filed for bankruptcyor otherwise sought protection from creditors(collectively referred to as“bankruptcy”).One of our lessees issubject to bankruptcy proceedings as of February 15,2023 and lessee bankruptcies may inc
283、rease in the future.Based on historical rates of airline defaults and bankruptcies,we expect that we will experience additional lesseedefaults and bankruptcies in the ordinary course of our business.When a lessee defaults on its lease or files for bankruptcy,we typically incur significant additional
284、costs,including legal and other expenses associated with court or other governmental proceedings.We could alsoincur substantial maintenance,refurbishment or repair costs if a defaulting lessee fails to pay such costs whennecessary to put the aircraft in suitable condition for remarketing or sale.We
285、may also incur storage costsassociated with aircraft that we repossess and are unable to place immediately with another lessee,and we maynot ultimately be able to re-lease the aircraft at a similar or favorable lease rate.It may also be necessary to payoff liens including fleet liens,taxes and other
286、 governmental charges on the aircraft to obtain clear possession andto remarket the aircraft effectively,including,in some cases,liens that the lessee might have incurred inconnection with the operation of its other aircraft.We could also incur other costs in connection with the physicalpossession o
287、f the aircraft.When a lessee fails to fulfill their obligations under the lease or enters into bankruptcy proceedings,thelessee may not make lease payments or may return aircraft to us before the lease expires.When a lessee files forbankruptcy with the intent of reorganizing its business,we may agre
288、e to adjust our lease terms,includingreducing lease payments by a significant amount.Certain jurisdictions give rights to the trustee in a bankruptcyto 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
289、 paying lease rentals or performing all or some of the obligations under therelevant lease.If one or more airline bankruptcies result in a larger number of aircraft being available forpurchase or lease over a short period of time,aircraft values and aircraft lease rates may be depressed,andadditiona
290、l grounded aircraft and lower market values could adversely affect our ability to sell our aircraft or leaseor remarket our aircraft at favorable rates or at all.Our rights upon a lessee default will vary significantly depending upon the jurisdiction and theapplicable law,including the need to obtai
291、n a court order for repossession of the aircraft and/or consents forderegistration or export of the aircraft.When a defaulting lessee is in bankruptcy additional limitations mayapply.There can be no assurance that jurisdictions that have adopted the Cape Town Convention,which providesfor uniformity
292、and certainty for repossession of aircraft,will enforce it as written.In addition,certain of ourlessees are owned,in whole or in part,by government-related entities,which could complicate our efforts torepossess our aircraft in that governments jurisdiction.Accordingly,we may be delayed in,or preven
293、ted from,enforcing certain of our rights under a lease and in remarketing the affected aircraft.If we repossess an aircraft,we may not be able to export or deregister and profitably redeploy theaircraft in a timely manner or at all.Before an aviation authority will register an aircraft that has prev
294、iously beenregistered in another country,it must receive confirmation that the aircraft has been deregistered by thatcountrys aviation authority.In order to deregister an aircraft,the lessee must comply with applicable laws and22regulations,and the relevant governmental authority must enforce these
295、laws and regulations.For instance,where a lessee or other operator flies only domestic routes in the jurisdiction in which the aircraft is registered,repossession may be more difficult,especially if the jurisdiction permits the lessee or the other operator to resistderegistration.We may also incur s
296、ignificant costs in retrieving or recreating aircraft records required forregistration of the aircraft,and in obtaining a certificate of airworthiness for an aircraft.Upon a lessee default,wemay incur significant costs in connection with repossessing our aircraft and we may be delayed in repossessin
297、gour aircraft or are unable to obtain possession of our aircraft.As a result of the time and process involved with lessee defaults,reorganizations,bankruptcies orsimilar proceedings as described above,which can vary by airline and jurisdiction among other factors,we mayexperience lost revenues and a
298、dditional costs.We may experience increased competition from other aircraft lessors which may impact our ability to executeour long-term strategy.The aircraft leasing industry is highly competitive.Some of our competitors have greater resources,lower capital costs or provide financial or maintenance
299、 services,or other inducements to potential lessees orbuyers that we cannot,which could make them able to compete more effectively in certain markets we operatein.In addition,some competitors may have higher risk tolerances,lower investment return expectations ordifferent risk or residual value asse
300、ssments,which could allow them to consider a wider variety of investments,establish more relationships,bid more aggressively on aviation assets available for sale and offer lower leaserates or sale prices than we can.Our primary competitors are other aircraft leasing companies.The barriers toentry i
301、n the aircraft acquisition and leasing market are comparatively low,and new entrants with private equity,hedge fund,or other funding sources appear from time to time.Lease competition is driven by lease rates,aircraft availability dates,lease terms,relationships,aircraftcondition,specifications and
302、configuration of the aircraft necessary to meet the customers needs.Competition inthe used aircraft market is driven by price,the terms of the lease to which an aircraft is subject and thecreditworthiness of the lessee,if any.Our inability to compete successfully with our competitors may impact oura
303、bility to execute our long-term strategy.Our lessees may fail to adequately insure our aircraft or fulfill their indemnity obligations,or we may not beable to adequately insure our aircraft,which may result in increased costs and liabilities.When an aircraft is on lease,we do not directly control it
304、s operation.Nevertheless,because we hold titleto the aircraft,we could be sued or held strictly liable for losses resulting from the operation of such aircraft,ormay be held liable for losses on other legal theories or claims may be made against us as the owner of an aircraftrequiring us to expend r
305、esources in our defense.As a result,we separately purchase contingent liability insuranceand contingent hull insurance on all aircraft in our owned fleet.While we believe our insurance is adequate bothas to coverages and amounts based on industry standards in the current market,we cannot assure you
306、that we areadequately insured against all risks and in all territories in which our aircraft operate.For example,following theRussia-Ukraine conflict,Russia,Ukraine and Belarus are now generally excluded from coverage in ourcontingent liability,contingent hull and contingent hull war insurance consi
307、stent with insurance market termsavailable at the time these policies were last renewed.We also separately require our lessees to obtain specified levels of insurance customary in the aviationindustry and indemnify us for,and insure against,liabilities arising out of the lessees use and operation of
308、 theaircraft.Lessees are also required to maintain public liability,property damage and all risk hull and war riskinsurance on the aircraft at agreed upon levels.Some lessees may fail to maintain adequate insurance coverageduring a lease term,which,although in contravention of the lease terms,could
309、necessitate our taking somecorrective action such as terminating the lease or securing insurance for the aircraft.Moreover,even if ourlessees retain specified levels of insurance,and indemnify us for,and insure against,liabilities arising out of theiruse and operation of the aircraft,we cannot assur
310、e you that we will not have any liability.23In addition,there are certain risks or liabilities that we or our lessees may face,for which insurers maybe unwilling to provide coverage or the cost to obtain such coverage may be prohibitively expensive.Forexample,following the terrorist attacks of Septe
311、mber 11,2001,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,and increased the premiums for such third-party war risk and terrorism liabilit
312、y insurance and coverage in general.Similarly,following the Russia-Ukraineconflict,aviation insurers have,in some cases,reduced the scope of insurance coverage provided by policies andincreased insurance premiums.Accordingly,our or our lesseesinsurance coverage could be insufficient to coverall clai
313、ms that could be asserted against us arising from the operation of our aircraft.Inadequate insurancecoverage or default by lessees in fulfilling their indemnification or insurance obligations will reduce the proceedsthat would be received by us if we are sued and are required to make payments to cla
314、imants.Moreover,ourlesseesinsurance coverage is dependent on the financial condition of insurance companies,which might not beable to pay claims.Our or our lesseesfailure to adequately insure our aircraft,or our lesseesfailure to fulfill theirindemnity obligations to us,could reduce insurance procee
315、ds otherwise payable to us in certain cases,may resultin increased costs and liabilities for our business.We may experience the death,incapacity or departure of one of our key officers which may negatively impactour business.We believe that our senior managements reputation and relationships with le
316、ssees,manufacturers,buyers and financiers of aircraft are a critical element to the success of our business.We depend on the diligence,skill and network of business contacts of our management team.Our future success will depend,to a significantextent,upon the continued service of our senior manageme
317、nt team,particularly:Mr.Udvar-Hzy,our founder,and Executive Chairman of the Board;Mr.Plueger,our Chief Executive Officer and President;and our othersenior officers,each of whose services are critical to the success of our business strategies.We do not haveemployment agreements with Mr.Udvar-Hzy or M
318、r.Plueger for their services at Air Lease Corporation,although one of our Irish subsidiaries has limited duration employment agreements under which Mr.Udvar-Hzyor Mr.Plueger may terminate their employment at any time.If we were to lose the services of any of themembers of our senior management team,
319、it may negatively impact our business.A cyberattack could lead to a material disruption of our information technology(“IT”)systems or the ITsystems of our third-party providers and the loss of business information,which may hinder our ability toconduct our business effectively and may result in lost
320、 revenues and additional costs.We depend on our and our third-party providers IT systems to conduct our operations.Such systemsare subject to damage or interruption from power outages,computer and telecommunications failures,computerviruses,security breaches,ransomware attacks,social-engineering att
321、acks(including through phishing attacks),malicious code(such as viruses and worms),malware(including as a result of advanced persistent threatintrusions),fire and natural disasters.In particular,severe ransomware attacks are becoming increasinglyprevalent and can lead to significant interruptions in
322、 our operations,loss of sensitive data and income,reputational harm,and diversion of funds.Extortion payments may alleviate the negative impact of aransomware attack,but we may be unwilling or unable to make such payments due to,for example,applicablelaws or regulations prohibiting such payments.Dam
323、age or interruption to such IT systems may requiresignificant investment to fix or replace,and we may suffer operational interruptions.Potential interruptionsassociated with the implementation of new or upgraded systems and technology or with maintenance of existingsystems could also disrupt or redu
324、ce operational efficiency.Remote work has become more common and hasincreased risks to our information technology systems and data,as more of our employees utilize networkconnections,computers and devices outside our premises or network,including working at home and whiletraveling.24Parts of our bus
325、iness depend on the secure operation of our and our third-party providersIT systems tomanage,process,store,and transmit aircraft leasing information.We have,from time to time,experiencedthreats to our data and systems,including malware and computer virus attacks.A cyberattack could adverselyimpact o
326、ur daily operations and lead to the loss of sensitive information,including our proprietary informationand that of our customers,suppliers and employees.Such losses could harm our reputation and result incompetitive disadvantages,litigation,regulatory enforcement actions,lost revenues,reputational h
327、arm,interruptions in our operations,additional costs and liabilities.Applicable data privacy and security obligationsmay also require us to notify relevant stakeholders of cyberattacks.Such disclosures are costly,and thedisclosure or the failure to comply with such requirements could lead to adverse
328、 consequences.While we devotesubstantial resources to maintaining adequate levels of cyber-security,our resources and technical sophisticationmay be unable to prevent all types of cyberattacks.We take steps to detect and remediate vulnerabilities in our ITsystems,but we may not be able to detect and
329、 remediate all vulnerabilities because the threats and techniquesused to exploit the vulnerability change frequently and are often sophisticated in nature.Therefore,suchvulnerabilities could be exploited but may not be detected until after a cyberattack has occurred.Thesevulnerabilities pose materia
330、l risks to our business.Further,we may experience delays in developing anddeploying remedial measures designed to address any such identified vulnerabilities.A cyberattack leading to asignificant disruption of our IT systems or of those of our third-party providers may negatively affect our abilityt
331、o conduct our business effectively and may result in lost revenues and additional costs.Conflicts of interest between us and clients utilizing our fleet management services could arise which mayresult in legal challenges or reputational harm.Conflicts of interest may arise between us and customers f
332、rom our managed business who hire us toperform fleet management services such as leasing,remarketing,lease management and sales services.Theseconflicts may arise because services we provide for these clients are also services which we provide for our ownfleet,including placement of aircraft with les
333、sees.Our current fleet management services agreements providethat we will use our reasonable commercial efforts in providing services.Nevertheless,despite these contractualwaivers,competing with our fleet management clients in practice may result in strained relationships with them.Any conflicts of interest that arise between us and the clients which utilize our fleet management services mayresult
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