10-K – 2026-02-27 – ftai-20251231.htm

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Aviation Ltd. (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes, and with Part I, Item 1A, “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.
A discussion of our cash flows for 2025 compared to 2024 is included in our Annual Report on Form 10-K for the year ended December 31, 2025 , under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. We repair and rebuild engines in our maintenance facilities and with our joint venture partners, and sell or lease the engines to airlines and asset owners around the world. Our primary business model is to sell or lease engines via exchange through our proprietary Maintenance, Repair and Exchange (“MRE”) model which is reported under our Aerospace Products segment.
We also own and manage a portfolio of on- and off-lease aircraft and engines through our Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, we launched our Strategic Capital Initiative, which consists of an asset management business that manages third-party capital to invest in on-lease aircraft and engines. We expect our primary investment activities to be through our Strategic Capital Initiative going forward.
As of December 31, 2025, we had total consolidated assets of $4.4 billion and total equity of $334.2 million.
Internalization of Management
On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company’s management function. As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; and (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP.
In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. In addition, the Former Manager was required to continue to provide the services that were reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%).
Impact of Russia’s Invasion of Ukraine
Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the three months ended March 31, 2022. As a result of the sanctions imposed on Russian airlines, we terminated all lease agreements with Russian airlines. We determined that it is unlikely that we will regain possession of the aircraft and engines that had not yet been recovered from Ukraine and Russia. As a result, we recognized an impairment charge totaling $120.0 million, net of maintenance deposits for the year ended December 31, 2022, to write-off the entire carrying value of leasing equipment assets that we did not expect to recover from Ukraine and Russia. As of December 31, 2025, eight aircraft and seventeen engines were still located in Russia.
Our lessees are required to provide insurance coverage with respect to leased aircraft and engines, and we are named as insureds under those policies in the event of a total loss of an aircraft or engine. We also purchase insurance which provides us with coverage when our aircraft or engines are not subject to a lease or where a lessee’s policy fails to indemnify us. The insured value of the aircraft and engines that remain in Russia is $210.7 million. We intend to pursue all of our claims under these policies. However, the timing and amount of any recoveries under these policies are uncertain.
The extent of the impact of Russia’s invasion of Ukraine and the related sanctions on our results, including the ability for us to recover our leasing equipment in the region, will depend on future developments, including the duration of the conflict, sanctions and restrictions imposed by Russian and international governments, all of which remain uncertain.
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Strategic Capital Initiative
On December 30, 2024, we announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, allows us to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The first partnership under the initiative (the “2025 Partnership”) focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments.
The 2025 Partnership, and follow-on partnerships, is the primary buyer of all future on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, provides aircraft management services to the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors.
Operating Segments
The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aerospace Products and (ii) Aviation Leasing. The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines . The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, directly and also through its equity method investment.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production.
Adjusted EBITDA (Non-GAAP)
Besides net income (loss), the chief operating decision maker (“CODM”) utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance.
Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, asset impairment charges, incentive allocations, depreciation and amortization expense, dividends on preferred shares and interest expense, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities, if any.

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Results of Operations  

The following table presents our consolidated results of operations:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24
 '24 vs '23

Revenues
Aerospace products revenue $ 1,600,456   $ 1,079,821  $ 454,970  $ 520,635  $ 624,851 
MRE Contract revenue
335,788   —  —  335,788  — 
Lease income 235,210   255,338  207,936  (20,128) 47,402 
Maintenance revenue 218,499   200,809  191,347  17,690  9,462 
Asset sales revenue 106,945   192,176  303,141  (85,231) (110,965)
Other revenue (1)
10,511   6,757  13,502  3,754  (6,745)
Total revenues 2,507,409   1,734,901  1,170,896  772,508  564,005 

Expenses
Cost of sales 1,349,719   825,884  502,132  523,835  323,752 
Operating expenses 152,541   115,861  110,163  36,680  5,698 
General and administrative 9,478   14,263  13,700  (4,785) 563 
Acquisition and transaction expenses 28,587   32,296  15,194  (3,709) 17,102 
Management fees and incentive allocation to affiliate —   8,449  18,037  (8,449) (9,588)
Internalization fee to affiliate —   300,000  —  (300,000) 300,000 
Depreciation and amortization 225,797   218,064  169,877  7,733  48,187 
Asset impairment —   962  2,121  (962) (1,159)
Gain on sale of assets, net —   (18,705) —  18,705  (18,705)
Total expenses 1,766,122   1,497,074  831,224  269,048  665,850 

Other income (expense)
Interest expense (247,751) (221,721) (161,639) (26,030) (60,082)
Loss on extinguishment of debt —   (17,101) —  17,101  (17,101)
Equity in losses of unconsolidated entities (2)
(6,818) (2,200) (1,606) (4,618) (594)
Gain on sale to the 2025 Partnership
46,380   —  —  46,380  — 
Other income 73,586   17,364  7,590  56,222  9,774 
Total other expense (134,603) (223,658) (155,655) 89,055  (68,003)
Income before income taxes
606,684   14,169  184,017  592,515  (169,848)
Provision for (benefit from) income taxes 105,620   5,487  (59,800) 100,133  65,287 

Net income
501,064   8,682  243,817  492,382  (235,135)

Less: Dividends on preferred shares 17,243   32,763  31,795  (15,520) 968 
Less: Loss on redemption of preferred shares 6,327   7,998  —  (1,671) 7,998 
Net income (loss) attributable to shareholders
$ 477,494   $ (32,079) $ 212,022  $ 509,573  $ (244,101)

(1) Includes servicing fees of $10,150 for the year ended December 31, 2025 from the 2025 Partnership.
(2) Includes the profit elimination of $(22,829) for the year ended December 31, 2025 for sales to the 2025 Partnership.

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The following table sets forth a reconciliation of net (loss) income attributable to shareholders from continuing operations to Adjusted EBITDA:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23
Net income (loss) attributable to shareholders
$ 477,494   $ (32,079) $ 212,022  $ 509,573  $ (244,101)
Add: Provision for (benefit from) income taxes 105,620   5,487  (59,800) 100,133  65,287 
Add: Equity-based compensation expense 21,733   6,006  1,638  15,727  4,368 
Add: Acquisition and transaction expenses 28,587   32,296  15,194  (3,709) 17,102 
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 6,327   25,099  —  (18,772) 25,099 

Add: Asset impairment charges —   962  2,121  (962) (1,159)
Add: Incentive allocations —   7,456  17,116  (7,456) (9,660)
Add: Depreciation & amortization expense (1)
267,639   262,031  213,641  5,608  48,390 
Add: Interest expense and dividends on preferred shares 264,994   254,484  193,434  10,510  61,050 
Add: Internalization fee to affiliate —   300,000  —  (300,000) 300,000 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
34,539   (1,892) 310  36,431  (2,202)
Less: Equity in losses (earnings) of unconsolidated entities (3)
(16,011) 2,200  1,606  (18,211) 594 

Adjusted EBITDA (non-GAAP) $ 1,190,922   $ 862,050  $ 597,282  $ 328,872  $ 264,768 

(1) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) depreciation and amortization expense of $225,797, $218,064 and $169,877, (ii) lease intangible amortization of $6,710, $15,597 and $15,126 and (iii) amortization for lease incentives of $35,132, $28,370 and $28,638, respectively.
(2) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) net income of $16,011, net loss of $2,200 and $1,606, (ii) interest expense of $6,899 $0 and $0, (iii) depreciation and amortization expense of $10,932, $308 and $1,488, (iv) acquisition and transaction expense of $769, $0 and $428 and (v) tax benefit of $72, $0 and $0, respectively.
(3) Excludes the profit elimination of $22,829 for the year ended December 31, 2025 for sales to the 2025 Partnership.
Comparison of the years ended December 31, 2025 and 2024
Revenues
Total revenues increased by $772.5 million, driven by the following:
• Aerospace products revenue increased by $520.6 million, primarily due to a $499.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $4.8 million increase in other maintenance service revenues.
• MRE Contract revenue increased by $335.8 million, due to engine and module sales made to the 2025 Partnership.
• Asset sales revenue decreased by $85.2 million, primarily due to change in product mix of assets sold in the current period as compared to the prior period. Specifically, the number of engines sold in the prior period was higher than the current period.
Expenses
Total expenses increased by $269.0 million, driven by the following:
• Cost of sales increased by $523.8 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
• Operating expenses increased by $36.7 million, primarily due to higher compensation and benefits expense incurred during the current year.
• Internalization fee to affiliate decreased by $300.0 million relating to the Internalization effective May 28, 2024.
Other expense
Total other expense increased by $89.1 million due to the following:
• Other income increased by $56.2 million, primarily due to a $54.3 million insurance settlement related to aircraft and engines located in Russia.
• Gain on sale to the 2025 Partnership increased by $46.4 million, primarily resulting from the sale of 45 aircraft to the 2025 Partnership within the Aviation Leasing Segment.
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• Loss on debt extinguishment decreased by $17.1 million, driven by the 2024 redemption of Senior Notes due 2025 and Senior Notes due 2027.
• Interest expense increased by $26.0 million, reflecting increases in interest expense in (i) the 7.00% Senior Notes due 2032 of $26.0 million, (ii) the 5.875% Senior Notes due 2033 of $22.7 million, and (iii) the 7.00% Senior Notes due 2031 of $13.8 million. These were partially offset by decreases in interest expense in (i) the 9.75% senior notes due 2027 of $22.3 million, and (ii) the 6.5% senior notes due 2025 of $13.0 million.
Provision for (benefit from) income taxes
The Provision for income taxes increased $100.1 million, primarily driven by the higher income generated in the Aerospace Products segment within taxable jurisdictions for the twelve months ended December 31, 2025, and the higher income generated in the Aviation Leasing segment within taxable jurisdictions for the twelve months ended December 31, 2025.
Net income (loss)
Net income increased by $492.4 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITD A increased by $328.9 million, primarily due to the changes noted above.
Comparison of the years ended December 31, 2024 and 2023
Total revenue s increased by $564.0 million, dr iven by the following:
• Aerospace products revenue increased by $624.9 million, primarily due to a $546.0 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $28.5 million increase in parts inventory sales, and other revenues of $47.7 million from the QuickTurn and LMCES acquisitions.
• Lease income increased by $47.4 million, primarily due to an increase in engine lease revenue of $37.3 million and an increase in aircraft lease revenue of $17.5 million, driven by an increased number of aircraft and engines on lease. This was partially offset by a decrease of $7.3 million in the Offshore Energy business driven by one of our vessels having fewer days on-hire in 2024 compared to 2023, as well as the sale of the two vessels during 2024.
• Maintenance revenue increased by $9.5 million. Engine maintenance revenue increased by $43.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $32.7 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023, partially offset by an increased number of aircraft on lease in 2024.
• Asset sales revenue decreased by $111.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, three aircraft and 14 engines were sold in 2024 as compared to 13 aircraft and 41 engines sold in 2023.
• Other revenue decreased by $6.7 million, primarily due to a decrease in assets with end-of-lease redelivery compensation. During 2024, one aircraft and three engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023.
Expenses
Total expenses increased $665.9 million, driven by the following:
• Cost of sales increased by $323.8 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period. This was partially offset by a decrease of $69.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue.
• Internalization fee to affiliate increased by $300.0 million relating to the Internalization effective May 28, 2024.
• Depreciation and amortization increased by $48.2 million, primarily driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered.
• Acquisition and transaction expenses increased by $17.1 million, primarily due to higher professional fees incurred in evaluating and completing strategic transactions and fees associated with the Internalization and the acquisition of LMCES in Q3 2024.
• Operating expenses increased by $5.7 million, primarily due to the acquisition of LMCES in Q3 2024.
• Gain on sale of assets, net increased $18.7 million driven by the sale of two vessels within the Offshore Energy business during the fourth quarter of 2024.
• Management fees and incentive allocation to affiliate decreased by $9.6 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024.
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Other income (expense)
Total other expense increased by $68.0 million due to the following:
• Interest expense increased by $60.1 million, reflecting an increase in the average debt outstanding of approximately $779.3 million, primarily due to increases in (i) the Senior Notes due 2030 of $414.1 million, issued in November 2023 (ii) Senior Notes due 2031 of $525.0 million, issued in April 2024 (iii) Senior Notes due 2032 of $466.7 million, issued in June 2024, (iv) Senior Notes due 2033 of $124.4 million, issued in October 2024, partially offset by decreases in the (v) Senior Notes due 2025 of $489.6 million, which were redeemed in April 2024, (vi) Senior Notes due 2027 of $189.8 million, which were fully redeemed in October 2024, and the (vii) Revolving Credit Facility of $70.4 million.
• Loss on extinguishment of debt increased by $17.1 million, primarily due to the redemption of the Senior Notes due 2025 and Senior Notes due 2027.
• Other income increased by $9.8 million, primarily driven by a $10.8 million insurance settlement received within our Aviation Leasing Segment.
Provision for (benefit from) income taxes
The Provision for income taxes increased $65.3 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from leasing and Aerospace Products activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes. This increase was partially offset by the tax benefit from the Internalization fee paid to the affiliate.
Net income (loss) from continuing operations
Net income from continuing operations decreased by $235.1 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $264.8 million, primarily due to the changes noted above.
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Aerospace Products Segment
The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes, and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B, and V2500 commercial aircraft engines. Our engine, module, and parts sales are facilitated through a dedicated commercial maintenance program designed to focus on modular and parts repair and refurbishment of CFM56-7B and CFM56-5B engines. In addition, other serviceable used modules and parts are sold through our exclusive partnership, which is responsible for the teardown, repair, marketing, and sales of parts from our CFM56 engine pool. On December 30, 2025, the Company announced the launch of FTAI Power, a platform focused on converting CFM56 engines to power turbines.
In 2023, we acquired the remaining interest in Quick Turn Engine Center LLC (“QuickTurn”), a dedicated hospital maintenance and testing facility specializing in the CFM56-7B and CFM56-5B engines.
In 2024, we acquired Lockheed Martin Commercial Engine Solutions (“LMCES”) to establish permanent engine and module manufacturing capabilities.
In 2025, we entered into an agreement within our MRE business to supply replacement aircraft engines and modules for the life of the 2025 Partnership. We also acquired Pacific Aerodynamic Inc. (“Pac Aero”), a specialist in CFM56 compressor blade and vane repairs, expanding our repair capabilities, and the MRE business of AerotechOPS (“ATOPS”), expanding our MRE business in Miami.
Additionally, we maintain a (i) 25% equity interest in the Advanced Engine Repair joint venture, which focuses on developing innovative cost-saving programs for engine repairs, and a (ii) 50% equity interest in QuickTurn Europe, which operates as a dedicated maintenance, repair, and overhaul facility for CFM56 engines.
The following table presents our results of operations:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23
Revenues

Aerospace products revenue $ 1,600,456   $ 1,079,821  $ 454,970  $ 520,635  $ 624,851 
MRE Contract Revenue
335,788   —  —  335,788  — 
Total Revenues
1,936,244   1,079,821  454,970  856,423  624,851 

Expenses
Cost of sales 1,240,368   673,907  280,280  566,461  393,627 
Operating expenses 34,514   23,818  20,459  10,696  3,359 
Acquisition and transaction expenses 3,198   4,906  1,722  (1,708) 3,184 
Depreciation and amortization 15,764   6,630  661  9,134  5,969 
Total expenses 1,293,844   709,261  303,122  584,583  406,139 

Other income (expense)
Equity in earnings (losses) of unconsolidated entities
2,896   (1,993) (1,458) 4,889  (535)
Other income 5,441   —  5,347  5,441  (5,347)
Total other income (expense)
8,337   (1,993) 3,889  10,330  (5,882)
Income before income taxes 650,737   368,567  155,737  282,170  212,830 
Provision for (benefit from) income taxes 102,391   22,221  (24,440) 80,170  46,661 

Net income attributable to shareholders $ 548,346   $ 346,346  $ 180,177  $ 202,000  $ 166,169 

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The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23
Net income attributable to shareholders $ 548,346   $ 346,346  $ 180,177  $ 202,000  $ 166,169 
Add: Provision for (benefit from) income taxes 102,391   22,221  (24,440) 80,170  46,661 
Add: Equity-based compensation expense 671   309  225  362  84 
Add: Acquisition and transaction expenses 3,198   4,906  1,722  (1,708) 3,184 
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations —   —  —  —  — 

Add: Asset impairment charges —   —  —  —  — 
Add: Incentive allocations —   —  —  —  — 
Add: Depreciation and amortization expense 15,764   6,630  661  9,134  5,969 
Add: Interest expense and dividends on preferred shares —   —  —  —  — 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)
3,778   (1,769) 206  5,547  (1,975)
Less: Equity in (earnings) losses of unconsolidated entities
(2,896) 1,993  1,458  (4,889) 535 

Adjusted EBITDA (non-GAAP) $ 671,252   $ 380,636  $ 160,009  $ 290,616  $ 220,627 

(1) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) net income of $2,896, net loss of $1,993 and net loss of $1,458 (ii) depreciation and amortization of $954, $224 and $1,236 (iii) acquisition and transaction expense of $0, $0, and $428 and (iv) tax benefit of $72, $0 and $0, respectively.
Comparison of the years ended December 31, 2025 and 2024
Revenues
Total revenues increased by $856.4 million, due to the following:
• Aerospace Products revenue increased by $520.6 million, primarily due to a $499.7 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales, as well as a $4.8 million increase in other maintenance service revenues.
• MRE Contract revenue increased by $335.8 million, primarily due to an increase in engine and module sales made to the 2025 Partnership.
Expenses
Total expenses increased by $584.6 million, due to the following:
• Cost of sale s increased by $566.5 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
• Operating expenses increased by $10.7 million, primarily due to higher compensation and benefits expense due to the acquisition of LMCES.
• Depreciation and amortization increased by $9.1 million due to the acquisition of LMCES in the third quarter of 2024.
Provision for (benefit from) income taxes
The Provision for income taxes increased by $80.2 million, primarily due to the increase in income discussed above from Aerospace Products activities in jurisdictions subject to taxes.
Net income
Net income increased by $202.0 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $290.6 million, primarily due to the changes noted above.
Comparison of the years ended December 31, 2024 and 2023
Revenues
Total Aerospace products revenue increased by $624.9 million, primarily due to a $546.0 million increase in CFM56-7B, CFM56-5B and V2500 engine and module sales, a $28.5 million increase in parts inventory sales, and other revenues of $47.7 million from the QuickTurn and LMCES acquisitions.
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Expenses
Total expenses increased by $406.1 million, due to the following:
• Cost of sales increased by $393.6 million, primarily due to increases in CFM56-7B, CFM56-5B and V2500 engine and module sales, parts inventory sales, and directly corresponds to components of increases in Aerospace products revenue over the same period.
• Depreciation and amortization increased by $6.0 million due to the acquisitions of LMCES in Q3 2024 and QuickTurn in Q4 2023.
• Operating expenses increased by $3.4 million, primarily due to the acquisition of LMCES in Q3 2024.
• Acquisition and transaction expenses increased by $3.2 million, primarily driven by higher professional fees incurred in evaluating and completing strategic transactions
Provision for (benefit from) income taxes
The Provision for income taxes increased by $46.7 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from Aerospace Products activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes.
Net income
Net income increased by $166.2 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $220.6 million, primarily due to the changes noted above.

Aviation Leasing Segment
As of December 31, 2025, in our Aviation Leasing segment, we own and manage 290 aviation assets, consisting of 47 commercial aircraft and 243 engines, including eight aircraft and seventeen engines that were still located in Russia.
As of December 31, 2025, 37 of our commercial aircraft and 143 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease. Our aviation equipment was approximately 77% utilized during the three months ended December 31, 2025, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 44 months, and our engines currently on-lease have an average remaining lease term of 38 months. The table below provides additional information on the assets in our Aviation Leasing segment, including transfers which involve aircraft breakdowns, engine transfers from leasing equipment to inventory for manufacturing and sales, and engine transfers from inventory to leasing equipment for rebuilding and sales:

Aviation Assets Widebody Narrowbody Total
Aircraft
Assets at January 1, 2025
5   104   109  
Purchases —  28  28  
Sales —  (47) (47)
Transfers —  (43) (43)
Assets at December 31, 2025
5   42   47  

Engines
Assets at January 1, 2025
23   289   312  
Purchases —  113  113  
Sales (5) (216) (221)
Transfers —  39  39  
Assets at December 31, 2025
18   225   243  

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The following table presents our results of operations for our Aviation Leasing segment:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23
Revenues
Lease income $ 235,210   $ 234,411  $ 179,704  $ 799  $ 54,707 
Maintenance revenue 218,499   200,809  191,347  17,690  9,462 
Asset sales revenue 106,945   192,176  303,141  (85,231) (110,965)
Other revenue (1)
10,507   1,041  7,419  9,466  (6,378)
Total revenues 571,161   628,437  681,611  (57,276) (53,174)

Expenses
Cost of sales 109,351   151,977  221,852  (42,626) (69,875)
Operating expenses 37,307   35,495  37,876  1,812  (2,381)
Acquisition and transaction expenses 9,182   9,740  7,150  (558) 2,590 
Depreciation and amortization 205,687   201,497  158,354  4,190  43,143 
Asset impairment —   962  2,121  (962) (1,159)
Total expenses 361,527   399,671  427,353  (38,144) (27,682)

Other income (expense)
Equity in (losses) earnings of unconsolidated entities 13,115   (207) (148) 13,322  (59)
Gain on sale to the 2025 Partnership
46,380   —  —  46,380  — 
Other income 64,455   14,669  1,300  49,786  13,369 
Total other income 123,950   14,462  1,152  109,488  13,310 
Income before income taxes 333,584   243,228  255,410  90,356  (12,182)
Provision for (benefit from) income taxes 62,232   32,979  (36,193) 29,253  69,172 

Net income attributable to shareholders $ 271,352   $ 210,249  $ 291,603  $ 61,103  $ (81,354)

(1) Includes servicing fees of $10,150 for the year ended December 31, 2025 from the 2025 Partnership.

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The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23
Net income attributable to shareholders $ 271,352   $ 210,249  $ 291,603  $ 61,103  $ (81,354)
Add: Provision for (benefit from) income taxes 62,232   32,979  (36,193) 29,253  69,172 
Add: Equity-based compensation expense 971   584  337  387  247 
Add: Acquisition and transaction expenses 9,182   9,740  7,150  (558) 2,590 
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations —   —  —  —  — 

Add: Asset impairment charges —   962  2,121  (962) (1,159)
Add: Incentive allocations —   —  —  —  — 
Add: Depreciation and amortization expense (1)
247,529   245,464  202,118  2,065  43,346 
Add: Interest expense and dividends on preferred shares —   —  —  —  — 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
30,761   (123) 104  30,884  (227)
Less: Equity in losses (earnings) of unconsolidated entities (13,115) 207  148  (13,322) 59 

Adjusted EBITDA (non-GAAP) $ 608,912   $ 500,062  $ 467,388  $ 108,850  $ 32,674 

(1) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) depreciation expense of $205,687, $201,497 and $158,354, (ii) lease intangible amortization of $6,710, $15,597 and $15,126 and (iii) amortization for lease incentives of $35,132, $28,370 and $28,638, respectively.
(2) Includes the following items for the years ended December 31, 2025, 2024 and 2023: (i) net income of $13,115, net loss of $207 and $148 (ii) interest expense of $6,899, $0 and $0 (iii) depreciation and amortization of $9,978, $84 and $252 and (iv) acquisition and transaction expenses of $769, $0 and $0, respectively.
Comparison of the years ended December 31, 2025 and 2024
Revenues
Total revenues decreased by $57.3 million, driven by the following:
• Asset sales revenue decreased by $85.2 million, primarily due to change in product mix of assets sold in the current period as compared to the prior period. Specifically, the number of engines sold in the prior period was higher than the current period.
• Maintenance revenue increased by $17.7 million, primarily due to an increase in aircraft maintenance revenue of $18.1 million, driven by higher end-of-lease return compensation and an increase in the recognition of maintenance deposits due to aircraft redelivery, partially offset by the sale of Seed Assets to the 2025 Partnership, as well as a decrease in utilization.
• Other revenue increased by $9.5 million, primarily as a result of servicing fees earned in our capacity as the Servicer to the 2025 Partnership.
Expenses
Total expenses decreased by $38.1 million, driven by the following:
• Cost of sales decreased by $42.6 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue.
• Depreciation and amortization expense increased by $4.2 million, primarily driven by a higher average book value of engines on lease, partially offset by the sale of Seed Assets to the 2025 Partnership during the period.
Other income
Total other income increased by $109.5 million, primarily due to the following:
• Gains on sale to the 2025 Partnership of $46.4 million.
• Equity in earnings of unconsolidated entities increased by $13.3 million, driven by net income realized by the 2025 Partnership in the current period.
• $54.3 million from an insurance settlement in the current year, compared to $10.8 million from an insurance settlement in the prior year.
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Provision for (benefit from) income taxes
The Provision for income taxes increased by $29.3 million, primarily due to the respective changes in income discussed above from leasing activities in jurisdictions subject to taxes.
Net income
Net income decreased by $61.1 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $108.9 million, primarily due to the changes noted above.
Comparison of the years ended December 31, 2024 and 2023
Revenues
Total revenues decreased by $53.2 million, driven by the following:
• Asset sales revenue decreased by $111.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines. Specifically, three aircraft and 14 engines were sold in 2024 as compared to 13 aircraft and 41 engines sold in 2023.
• Other revenue decreased by $6.4 million, primarily due to a decrease in end-of-lease redelivery compensation. During 2024, one aircraft and three engines had end-of-lease redelivery compensation, as compared to eight aircraft and four engines in 2023.
• Lease income increased by $54.7 million, due to an increase in engine lease revenue of $37.3 million and an increase in aircraft lease revenue of $17.5 million, driven by an increased number of engines and aircraft on lease.
• Maintenance revenue increased by $9.5 million. Engine maintenance revenue increased by $43.2 million, driven by an increased number of engines on lease in 2024 as compared to 2023. This increase was partially offset by a decrease in aircraft maintenance revenue of $32.7 million, primarily due to $20.1 million of higher maintenance reserves taken into revenue in 2023, partially offset by an increased number of aircraft on lease in 2024.
Expenses
Total expenses decreased by $27.7 million, driven by the following:
• Cost of sales decreased by $69.9 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines and is in line with an overall decrease in the corresponding asset sales revenue. Specifically, three aircraft and 14 engines were sold in 2024 compared to 13 aircraft and 41 engines sold in 2023.
• Operating expenses decreased by $2.4 million, primarily driven by a decrease in bad debt expense of $5.9 million, partially offset by increases in legal fees of $2.7 million and repairs and maintenance expense of $1.0 million.
• Depreciation and amortization expense increased by $43.1 million, driven by an increase in the number of assets owned and on lease, partially offset by an increase in the number of aircraft redelivered and parted out into our engine leasing pool.
• Acquisition and transaction expen ses increased by $2.6 million, primarily due to higher legal fees incurred in evaluating and completing strategic transactions.
Other income (expense)
Total other incom e increased by $13.3 million primarily driven by a $10.8 million insurance settlement as well as a $3.9 million increase in interest income earned on financing receivables during 2024.
Provision for (benefit from) income taxes
The Provisio n for income taxes increased by $69.2 million, primarily due to the benefit from income taxes recorded in 2023 in connection with a tax law change in Bermuda as well as the increase in income from leasing activities in jurisdictions subject to taxes. As the company’s operations in these areas grew, so did the corresponding tax obligations, resulting in a higher provision for income taxes.
Net income
Net income decreased by $81.4 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $32.7 million, primarily due to the changes noted above.

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Corporate and Other
The following table presents our results of operations:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23
Revenues
Lease income $ —   $ 20,927  $ 28,232  $ (20,927) $ (7,305)
Other revenue 4   5,716  6,083  (5,712) (367)
Total revenues 4   26,643  34,315  (26,639) (7,672)

Expenses
Operating expenses 80,720   56,548  51,828  24,172  4,720 
General and administrative 9,478   14,263  13,700  (4,785) 563 
Acquisition and transaction expenses 16,207   17,650  6,322  (1,443) 11,328 
Management fees and incentive allocation to affiliate —   8,449  18,037  (8,449) (9,588)
Internalization fee to affiliate —   300,000  —  (300,000) 300,000 
Depreciation and amortization 4,346   9,937  10,862  (5,591) (925)
Gain on sale of assets, net —   (18,705) —  18,705  (18,705)
Total expenses 110,751   388,142  100,749  (277,391) 287,393 

Other income (expense)
Loss on extinguishment of debt —   (17,101) —  17,101  (17,101)
Interest expense (247,751) (221,721) (161,639) (26,030) (60,082)
Other income (expense) 3,690   2,695  943  995  1,752 
Total other expense (244,061) (236,127) (160,696) (7,934) (75,431)
Loss before income taxes (354,808) (597,626) (227,130) 242,818  (370,496)
(Benefit from) provision for income taxes (59,003) (49,713) 833  (9,290) (50,546)
Net loss (295,805) (547,913) (227,963) 252,108  (319,950)

Less: Dividends on preferred shares 17,243   32,763  31,795  (15,520) 968 
Less: Loss on redemption of preferred shares 6,327   7,998  —  (1,671) 7,998 
Net loss attributable to shareholders
$ (319,375) $ (588,674) $ (259,758) $ 269,299  $ (328,916)

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The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:

Year Ended December 31, Change
(in thousands) 2025 2024 2023  '25 vs '24  '24 vs '23
Net loss attributable to shareholders
$ (319,375) $ (588,674) $ (259,758) $ 269,299  $ (328,916)
Add: (Benefit from) provision for income taxes (59,003) (49,713) 833  (9,290) (50,546)
Add: Equity-based compensation expense 20,091   5,113  1,076  14,978  4,037 
Add: Acquisition and transaction expenses 16,207   17,650  6,322  (1,443) 11,328 
Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations 6,327   25,099  —  (18,772) 25,099 

Add: Asset impairment charges —   —  —  —  — 
Add: Incentive allocations —   7,456  17,116  (7,456) (9,660)
Add: Depreciation and amortization expense 4,346   9,937  10,862  (5,591) (925)
Add: Interest expense and dividends on preferred shares 264,994   254,484  193,434  10,510  61,050 
Add: Internalization fee to affiliate —   300,000  —  (300,000) 300,000 
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities —   —  —  —  — 
Less: Equity in (earnings) losses of unconsolidated entities —   —  —  —  — 

Adjusted EBITDA (non-GAAP) $ (66,413) $ (18,648) $ (30,115) $ (47,765) $ 11,467 

Comparison of the years ended December 31, 2025 and 2024
Revenues
Total revenues decreased by $26.6 million, primarily due to the sale of the two vessels within the Offshore Energy business during the fourth quarter of 2024.
Expenses
Total expenses decreased by $277.4 million, primarily due to the Internalization effective May 28, 2024, which resulted in an internalization fee to affiliate of $300.0 million in 2024.
Other expense
Total other expense increased by $7.9 million, due to the following:
• Interest expense increased by $26.0 million, reflecting increases in interest expense in (i) the 7.00% Senior Notes due 2032 of $26.0 million, (ii) the 5.875% Senior Notes due 2033 of $22.7 million, and (iii) the 7.00% Senior Notes due 2031 of $13.8 million. These were partially offset by decreases in interest expense in (i) the 9.75% senior notes due 2027 of $22.3 million, and (ii) the 6.5% senior notes due 2025 of $13.0 million.
• Loss on extinguishment of debt decreased by $17.1 million, driven by the 2024 redemption of Senior Notes due 2025 and Senior Notes due 2027.
(Benefit from) provision for income taxes
The benefit from income taxes increased by $9.3 million. The increase was mainly driven by higher corporate overhead expenses deductible for 2025 tax purposes.
Net loss
Net loss decreased by $252.1 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA decreased by $47.8 million, primarily due to the changes noted above.
Comparison of the years ended December 31, 2024 and 2023
Revenues
Total revenues decreased by $7.7 million, primarily due to a $7.3 million decrease in the Lease income. Lease income declined primarily due to one of our vessels in the Offshore Energy business having fewer days on-hire in 2024 compared to 2023, as well as the sale of the two vessels during 2024.
Expenses
Total expenses increased by $287.4 million, due to the following:
• Internalization fee to affiliate increased by $300.0 million for the Internalization effective May 28, 2024.
40

• Acquisition and transaction expenses increased by $11.3 million, primarily due to higher legal and other professional fees incurred for the Internalization on May 28, 2024 and the acquisition of LMCES on September 9, 2024.
• Gain on sale of assets, net, increased $18.7 million due to the sale of the two vessels within the Offshore Energy business.
• Management fees and incentive allocation to affiliate decreased by $9.6 million, due to a decrease in management and incentive fees to the Former Manager during 2024, with the Internalization effective May 28, 2024, as compared to fees paid during the year ended 2024 compared to 2023.
Other income (expense)
Total other expense increased by $75.4 million, due to the following:
• Interest expense increased by $60.1 million, reflecting an increase in the average debt outstanding of approximately $779.3 million, primarily due to increases in (i) the Senior Notes due 2030 of $414.1 million, issued in November 2023 (ii) Senior Notes due 2031 of $525.0 million, issued in April 2024 (iii) Senior Notes due 2032 of $466.7 million, issued in June 2024, (iv) Senior Notes due 2033 of $124.4 million, issued in October 2024, partially offset by decreases in the (v) Senior Notes due 2025 of $489.6 million, which were redeemed in April 2024, (vi) Senior Notes due 2027 of $189.8 million, which were fully redeemed in October 2024, and the (vii) Revolving Credit Facility of $70.4 million.
• Loss on extinguishment of debt increased by $17.1 million, driven by the redemption of Senior Notes due 2025 and a redemption of Senior Notes due 2027.
• Other income increased by $1.8 million, driven by interest income generated from the Company’s investments in money market funds.
(Benefit from) provision for income taxes
The benefit from income taxes increased by $50.5 million. This increase was primarily attributable to a substantial tax benefit arising from the Internalization fee paid to the affiliate. The fee provided a favorable impact on the company's overall tax position.
Net loss
Net loss increased by $320.0 million, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased $11.5 million, primarily due to the changes noted above.

Transactions with Affiliates and Affiliated Entities
Former Management Agreement
Prior to May 28, 2024, FTAI Aviation Ltd. operated under the Management Agreement with the Former Manager, and the Master GP, each an affiliate of Fortress. For their services, the Former Manager was entitled to management fees and the Master GP was entitled to certain incentive allocations, both defined in, and in accordance with the terms of, the Management Agreement. On May 28, 2024, the Company entered into the Internalization Agreement, pursuant to which the Management Agreement was terminated effective May 28, 2024 (the “Effective Date”), except that certain indemnification and other obligations survive, and the Company internalized its management functions (such transactions, the “Internalization”). As a result of the Internalization, the Company ceased to be externally managed and operates as an internally managed company. In connection with the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) $150.0 million (the “Cash Consideration”), the compensation accrued and payable, but not yet paid, under the Management Agreement, and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) 1,866,949 ordinary shares of the Company (the “Share Consideration”); and (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. In addition, the Former Manager repaid to the Company certain annual bonus payments due to certain employees of the Former Manager or its affiliates who provide services to the Company with respect to the 2024 calendar year on a pro rata basis. The Company financed the cash payments through one or more debt financings, along with cash on hand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP.
Strategic Capital Initiative
Potential conflicts of interest may arise with respect to our decisions regarding how to allocate investment opportunities between us and partnerships in our Strategic Capital Initiative. Allocating investment opportunities appropriately frequently involves significant and subjective judgments. Investors in our Strategic Capital Initiative and our shareholders may perceive conflicts of interest regarding such investment decisions, which could harm our reputation with such investors and our shareholders. See “Risks Related to Our Business-Our Strategic Capital Initiative involves certain risks which could adversely affect our business, prospects, financial condition, results of operations and cash flows.”
41

Geographic Information
Please refer to Note 13 of our consolidated financial statements included in Item 8 in this Annual Report on Form 10-K for a report, by geographic area for each segment, of revenues from our external customers and lessees, for the years ended December 31, 2025, 2024 and 2023, as well as a report of our total property, plant and equipment as of December 31, 2025 and 2024.

Liquidity and Capital Resources
We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during various environments. This includes limiting discretionary spending across the organization and re-prioritizing our investments as necessary.
On December 30, 2024, the Company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, allows the Company to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The first partnership under the initiative, the 2025 Partnership, focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments.
The 2025 Partnership, and follow-on partnerships, is the primary buyer of all future on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, manages the aircraft in the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors.
Our principal uses of liquidity have been and continue to be (i) acquisitions of aircraft and engines, (ii) dividends to our ordinary and preferred shareholders, (iii) expenses associated with our operating activities, and (iv) debt service obligations associated with our investments.
• Cash used for the purpose of making investments was $1,130.3 million, $1,526.2 million and $861.5 million during the years ended December 31, 2025, 2024, and 2023, respectively.
• Distributions to shareholders, including cash dividends, were $145.4 million, $154.3 million and $151.6 million during the years ended December 31, 2025, 2024 and 2023, respectively.
• Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities.
Our principal sources of liquidity to fund these uses have been and continue to be (i) revenues from our aviation assets (including finance lease collections and maintenance reserve collections) net of operating expenses, (ii) proceeds from borrowings or the issuance of securities and (iii) proceeds from asset sales.
• Cash flows from operating activities, plus the principal collections on finance leases and maintenance reserve collections were $(260.1) million, $(136.5) million and $163.0 million during the years ended December 31, 2025, 2024, and 2023, respectively.
• During the year ended December 31, 2025, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $480.0 million and $480.0 million, respectively.
During the year ended December 31, 2024, additional borrowings were obtained in connection with the (i) Senior Notes due 2033 of $500.0 million, (ii) Senior Notes due 2032 of $800.0 million, (iii) Senior Notes due 2031 of $700.0 million and (iv) Revolving Credit Facility of $745.0 million.
During the year ended December 31, 2023 , additional borrowings were obtained in connection with the (i) Revolving Credit Facility of $455.0 million and (ii) Senior Notes Due 2030 of $500.0 million.
• Proceeds from the sale of assets were $1,712.5 million, $969.3 million and $477.9 million during the years ended December 31, 2025, 2024, and 2023, respectively.
• Proceeds from the issuance of preferred shares, net of underwriters discount and issuance costs, were $61.7 million during the year ended December 31, 2023. There were no issuances of preferred shares during the years ended December 31, 2025 and 2024.
On May 28, 2024, we entered into definitive agreements with the Former Manager and Master GP to internalize our management function. As part of the termination of the Management Agreement, we agreed to pay $150.0 million to the Former Manager. Following the internalization of management on May 28, 2024, we no longer pay a management fee or incentive distribution to the Former Manager or Master GP. Consequently, we have assumed general and administrative, and compensation and benefit expenses directly. We anticipate a savings in operation costs as a result of the Internalization.
We are currently evaluating several potential transactions and related financings, including, but not limited to, certain additional debt and equity financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing.
42

Historical Cash Flow
The following table presents our historical cash flow from both continuing and discontinued operations:
Year Ended December 31,
(in thousands) 2025 2024 2023
Cash flow data:
Net cash (used in) provided by operating activities
$ (310,745) $ (187,956) $ 128,982 
Net cash provided by (used in) investing activities
723,314   (469,498) (373,349)
Net cash (used in) provided by financing activities
(227,209) 681,814  282,208 

Comparison of the years ended December 31, 2025 and 2024
Net cash used in operating activities increased $122.8 million, primarily reflecting an increase in our Net income of $492.4 million and certain adjustments to reconcile net income to cash used in operating activities, including an:
• increase in Deferred income taxes of $75.8 million; partially offset by
• decrease in Changes in net working capital of $448.1 million,
• decrease in Non-cash termination fee to affiliate of $150.0 million,
• increase in Gain on insurance recoveries of $54.3 million, and
• increase in Gain on sale of assets to the 2025 Partnership of $46.4 million.
Net cash provided by investing activities increased $1.2 billion, primarily due to an:
• increase in Proceeds from the sale of assets to the 2025 partnership of $530.0 million,
• increase in Proceeds from the sale of assets of $213.2 million,
• decrease in Acquisition of leasing equipment of $488.5 million,
• decrease in Acquisition of business, net of cash acquired of $98.5 million,
• decrease in Deposits for acquisition of leasing equipment of $92.4 million,
• decrease in Investments in financing receivables of $64.1 million, and
• increase in Proceeds from settlement of insurance claims of $54.3 million; partially offset by
• increase in Investment in unconsolidated entities of $328.5 million.
Net cash used in financing activities increased $909.0 million, primarily due to a:
• decrease in Proceeds from debt of $2.1 billion, and
• increase in Redemption of preferred shares of $18.8 million; partially offset by
• decrease in Repayment of debt of $1.2 billion.

Contractual Obligations
Our material cash requirements include the following contractual and other obligations:
Debt Obligations — As of December 31, 2025, we had outstanding principal and interest payment obligations of $3.5 billion and $1.2 billion, respectively, of which only interest payments of $228.8 million are due in the next twelve months. Refer to Note 8, “Debt” in our “Notes to Consolidated Financial Statements” for additional information about our debt obligations.
Lease Obligations — As of December 31, 2025, we had outstanding operating and finance lease obligations of $47.8 million, of which $8.8 million is due in the next twelve months.
Other Cash Requirements — In addition to our contractual obligations, we pay quarterly cash dividends on our ordinary shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During the year ended December 31, 2025, we declared cash dividends of $128.2 million and $17.2 million on our ordinary shares and preferred shares, respectively.
We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future financings and net cash provided by our current operations. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required.
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Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Note 2 to the consolidated financial statements describes the significant accounting policies and methods used in the preparation of our consolidated financial statements.
Operating Leases — We lease equipment pursuant to operating leases. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the lease, assuming no renewals. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the lessee is placed on non-accrual status and revenue is recognized when cash payments are received.
Generally, under our aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset or at the end of the lease. Typically, under our aircraft lease agreements, the lessee is responsible for maintenance, repairs and other operating expenses throughout the term of the lease. These periodic maintenance payments accumulate over the term of the lease to fund major maintenance events, and we are contractually obligated to return maintenance payments to the lessee up to the cost of maintenance paid by the lessee. In the event the total cost of maintenance events over the term of a lease is less than the cumulative maintenance payments, we are not required to return any unused maintenance payments to the lessee.
For purchase and lease back transactions, we account for the transaction as a single arrangement. We allocate the consideration paid based on the relative fair value of the aircraft and lease. The fair value of the lease may include a lease premium or discount, which is recorded as a favorable or unfavorable lease intangible.
Maintenance Payments —Typically, under an operating lease of aircraft, the lessee is responsible for performing all maintenance and is generally required to make maintenance payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft or engine. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending on the component, and are generally required to be made monthly in arrears. If a lessee is making monthly maintenance payments, we would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following the completion of the relevant work.
Maintenance payments received for which we expect to repay to the lessee are presented as current and non-current Maintenance Deposits in our Consolidated Balance Sheets. Excess maintenance payments received that we do not expect to repay to the lessee are recorded as Maintenance revenue on our Consolidated Statements of Operations. Estimates in recognizing revenue include mean time between removal for engines on leased aircraft, projected costs for engine maintenance, and forecasted utilization, which are affected by historical usage patterns and overall industry, market and economic conditions. Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period. Reimbursements made to the lessee upon the receipt of evidence of qualifying maintenance work are recorded against the maintenance deposit liability.
In certain acquired leases, we or the lessee may be obligated to make a payment to the other party at lease termination based on redelivery conditions stipulated at the inception of the lease. When the lessee is required to return the aircraft in an improved maintenance condition, we record a maintenance right asset, as a component of other assets in the Consolidated Balance sheets, for the estimated value of the end-of-life maintenance payment at acquisition. We recognize payments received as end-of-lease compensation adjustments, within lease income or as a reduction to the maintenance right asset, when payment is received or collectability is assured. In the event we are required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when we are obligated and can reasonably estimate such payments.
Leasing Equipment and Depreciation —Leasing equipment is stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over estimated useful lives, to estimated residual values which are summarized as follows:

Asset    Range of Estimated Useful Lives    Residual Value Estimates
Aircraft 25 years from date of manufacture
Generally not to exceed 15% of manufacturer’s list price when new
Aircraft engines 2 - 6 years, based on maintenance adjusted service life
Sum of engine core salvage value plus the estimated fair value of life limited parts

In accounting for leasing equipment, the Company makes estimates about the expected useful lives, residual values and the fair value of acquired in-place leases and acquired maintenance liabilities (for aviation equipment). In making these estimates, the Company relies upon observable market data for the same or similar types of equipment and, in the case of aviation equipment, its own estimates with respect to a lessee’s anticipated utilization of the aircraft or engine. When the Company acquires leasing equipment subject to an in-place lease, determining the fair value of the in-place lease requires the Company to make assumptions regarding the current fair values of leases for identical or similar equipment, in order to determine if the in-place lease is within a fair value range of current lease rates. If a lease is below or above the range of current lease rates, the resulting
44

lease discount or premium is recognized as a lease intangible and amortized into lease income over the remaining term of the lease.
Impairment of Long-Lived Assets —We perform a recoverability assessment of each of our long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable. Indicators may include, but are not limited to, a significant lease restructuring or early lease termination; significant traffic decline; a significant change in market conditions; or the introduction of newer technology and the length of time an asset is off lease related to leasing equipment, engines or for manufacturing equipment; a significant decrease in market value; adverse changes in use or condition; legal or regulatory changes; or cash flow reductions. When performing a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the asset exceeds its net book value. The undiscounted cash flows consist of cash flows from currently contracted leases and contracts, future projected leases, transition costs, estimated down time and estimated residual or scrap values for leasing equipment or operating cash flows for manufacturing equipment, and maintenance and operating costs. In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge.
Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, information received from third party industry sources, usage assumptions, asset lifespan for leasing equipment, and expected operating income and costs associated with operating and maintaining the manufacturing asset. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, residual values, economic conditions, technology, demand for a particular asset type and other factors, expected income and operating costs, maintenance and repairs, capital expenditures, and duration of the cash flows.
Recoverability of Goodwill —Goodwill is not amortized but rather is tested at least annually during the fourth quarter for impairment, or more often if events or circumstances indicate the carrying value of an asset may not be recoverable.
We assess the recoverability of goodwill using a qualitative evaluation or a quantitative test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The determination of fair value requires management to make assumptions and to apply judgment to estimate industry and economic factors and the profitability of future business strategies. The Company conducts impairment testing based on current business strategy in light of present industry and economic conditions, as well as future expectations.
Recent Accounting Pronouncements
Please see Note 2 to our consolidated financial statements included elsewhere in this filing for recent accounting pronouncements.

45

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.
Interest Rate Risk
Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. Interest rate risk is highly sensitive to many factors, including the U.S. government’s monetary and tax policies, global economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposure relates to our Revolving Credit Facility.
Certain borrowing agreements of ours require payments based on a variable interest rate index, such as SOFR. Therefore, to the extent our borrowing costs are not fixed, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding increase in rents or cash flow from our leases. We may elect to manage our exposure to interest rate movements through the use of interest rate derivatives (interest rate swaps and caps).
The following discussion about the potential effects of changes in interest rates is based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts on our financial condition and results of operations. Although we believe a sensitivity analysis provides the most meaningful analysis permitted by the rules and regulations of the SEC, it is constrained by several factors, including the necessity to conduct the analysis based on a single point in time and by the inability to include the extraordinarily complex market reactions that normally would arise from the market shifts modeled. Although the following results of a sensitivity analysis for changes in interest rates may have some limited use as a benchmark, they should not be viewed as a forecast. This forward-looking disclosure also is selective in nature and addresses only the potential interest expense impacts on our financial instruments and, in particular, does not address the mark-to-market impact on our interest rate derivatives, if any. It also does not include a variety of other potential factors that could affect our business as a result of changes in interest rates.
As of December 31, 2025, assuming we do not hedge our exposure to interest rate fluctuations related to our outstanding floating rate debt, a hypothetical 100-basis point increase/decrease in our variable interest rate on our borrowings would not have increased or decreased interest expense over the next 12 months.
46

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements:
Consolidated Financial Statements of FTAI Aviation Ltd.:
Report of Independent Registered Public Accounting Firm (PCAOB ID: 185 )
48

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
50

Consolidated Balance Sheets as of December 31, 2025 and 2024
51

Consolidated Statements of Operations for the years ended December 31, 2025, 2024 and 2023
52

Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023
53

Consolidated Statement of Changes in Equity for the years ended December 31, 2025, 2024 and 2023
54

Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023
55

Notes to Consolidated Financial Statements
57

47

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of FTAI Aviation Ltd.
Opinion on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheet of FTAI Aviation Ltd. and subsidiaries (the Company) as of December 31, 2025, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Basis for Opinion
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
48

Recognition of maintenance revenue for aircraft leases
As discussed in Note 2 to the consolidated financial statements, excess maintenance payments received under aircraft lease agreements that the Company does not expect to repay to the lessee are recorded as maintenance revenue. Estimates in recognizing maintenance revenue for aircraft leases include mean time between removal for engines on leased aircraft (MTBR), projected costs for engine maintenance, and forecasted utilization, which are affected by historical usage patterns and overall industry, market and economic conditions. For the year ended December 31, 2025, maintenance revenue was $218,499 thousand, a portion of which related to maintenance revenue for aircraft leases.
We identified the recognition of maintenance revenue for aircraft leases as a critical audit matter. Specifically, auditing maintenance revenue for aircraft leases was challenging due to the high degree of audit effort, including specialized knowledge and skills, and subjective auditor judgment involved in evaluating the MTBR.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the determination of the MTBR.
We evaluated the MTBR by comparing the Company’s estimate to data provided by a third-party specialist. We also assessed the Company’s retrospective review of the MTBR to actual results. In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the knowledge, skill, and ability of the third-party specialist used in the Company’s process and assessing the MTBR for reasonableness by comparing to relevant industry and market information.

/s/ KPMG LLP

We have served as the Company’s auditor since 2025.

New York, New York
February 27, 2026

49

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of FTAI Aviation Ltd.
Opinion on the Financial Statements
We have audited the consolidated balance sheet of FTAI Aviation Ltd. (the Company) as of December 31, 2024, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (the 2024 consolidated financial statements). In our opinion, the 2024 consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provided a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We served as the Company’s auditor from 2016 to 2025.

New York, New York
March 3, 2025
50

FTAI AVIATION LTD.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share data)

Notes
December 31,
2025 2024
Assets
Current Assets
Cash and cash equivalents 2 $ 300,476   $ 115,116  
Accounts receivable, net (1)
2 209,907   150,823  
Inventory, net 2 1,193,773   551,156  
Other current assets (2)
2 408,364   408,923  
Total current assets 2,112,520   1,226,018  
Leasing equipment, net 5 1,545,804   2,373,730  
Property, plant, and equipment, net 2 120,068   107,451  
Investments 6 314,156   19,048  
Intangible assets, net 7 19,929   42,205  
Goodwill 2, 3, 4
94,221   61,070  
Other non-current assets 2 167,060   208,430  
Total assets $ 4,373,758   $ 4,037,952  

Liabilities
Current Liabilities
Accounts payable $ 208,224   $ 69,119  
Accrued liabilities 90,009   96,910  
Current maintenance deposits 2 25,439   62,552  
Current security deposits 2 14,001   18,100  
Other current liabilities 2 62,202   100,565  
Total current liabilities 399,875   347,246  
Long-term debt, net 8 3,448,891   3,440,478  
Non-current maintenance deposits 2 46,237   44,179  
Non-current security deposits 2 15,211   26,830  
Other non-current liabilities 129,370   97,851  
Total liabilities $ 4,039,584   $ 3,956,584  

Commitments and contingencies 15

Equity
Ordinary shares ($ 0.01 par value per share; 2,000,000,000 shares authorized; 102,573,283 and 102,550,975 shares issued and outstanding as of December 31, 2025 and 2024, respectively)
$ 1,026   $ 1,026  
Preferred shares ($ 0.01 par value per share; 200,000,000 shares authorized; 6,800,000 and 11,740,000 shares issued and outstanding as of December 31, 2025 and 2024, respectively)
68   117  
Additional paid in capital 50,567   153,328  
Retained Earnings (accumulated deficit)
282,513   ( 73,103 )
Shareholders' equity 334,174   81,368  

Total liabilities and equity $ 4,373,758   $ 4,037,952  

(1) Includes accounts receivable from the 2025 Partnership of $ 47,294 and $ 0 as of December 31, 2025 and December 31, 2024, respectively.
(2) Includes receivables from the 2025 Partnership of $ 20,681 and $ 0 as of December 31, 2025 and December 31, 2024, respectively.

See accompanying notes to consolidated financial statements.
51

FTAI AVIATION LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share data)

Year Ended December 31,
Notes 2025 2024 2023
Revenues
Aerospace products revenue 2 $ 1,600,456   $ 1,079,821   $ 454,970  
MRE Contract revenue
2, 12
335,788   —   —  
Lease income 2 235,210   255,338   207,936  
Maintenance revenue 2 218,499   200,809   191,347  
Asset sales revenue 2 106,945   192,176   303,141  
Other revenue (1)
10,511   6,757   13,502  
Total revenues 13 2,507,409   1,734,901   1,170,896  

Expenses
Cost of sales 1,349,719   825,884   502,132  
Operating expenses 2 152,541   115,861   110,163  
General and administrative 9,478   14,263   13,700  
Acquisition and transaction expenses 28,587   32,296   15,194  
Management fees and incentive allocation to affiliate 12 —   8,449   18,037  
Internalization fee to affiliate 16 —   300,000   —  
Depreciation and amortization 5, 7
225,797   218,064   169,877  
Asset impairment —   962   2,121  
Gain on sale of assets, net
—   ( 18,705 ) —  
Total expenses 1,766,122   1,497,074   831,224  

Other (expense)

Interest expense ( 247,751 ) ( 221,721 ) ( 161,639 )
Loss on extinguishment of debt —   ( 17,101 ) —  
Equity in losses of unconsolidated entities (2)
6 ( 6,818 ) ( 2,200 ) ( 1,606 )
Gain on sale to the 2025 Partnership
46,380   —   —  
Other income 73,586   17,364   7,590  
Total other (expense)
( 134,603 ) ( 223,658 ) ( 155,655 )
Income before income taxes
606,684   14,169   184,017  
Provision for (benefit from) income taxes 11 105,620   5,487   ( 59,800 )

Net income
501,064   8,682   243,817  

Less: Dividends on preferred shares 17,243   32,763   31,795  
Less: Loss on redemption of preferred shares 6,327   7,998   —  
Net income (loss) attributable to shareholders
$ 477,494   $ ( 32,079 ) $ 212,022  

Earnings (Loss) earnings per share:
14
Basic
$ 4.66   $ ( 0.32 ) $ 2.12  
Diluted
$ 4.60   $ ( 0.32 ) $ 2.11  

Weighted average shares outstanding:
Basic 102,563,486   101,538,835   99,908,214  
Diluted 103,846,914   101,538,835   100,425,777  

(1) Includes servicing fees of $ 10,150 for the year ended December 31, 2025, from the 2025 Partnership.
(2) Includes the profit elimination of $( 22,829 ) for the year ended December 31, 2025, for sales to the 2025 Partnership.

See accompanying notes to consolidated financial statements.
52

FTAI AVIATION LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)

Year Ended December 31,
2025 2024 2023
Net income
$ 501,064   $ 8,682   $ 243,817  
Other comprehensive loss:

Other comprehensive loss related to equity method investees, net in discontinued operations —   —   —  

Comprehensive income
501,064   8,682   243,817  
Comprehensive loss attributable to non-controlling interest:

Discontinued operations —   —   —  
Comprehensive income attributable to shareholders
$ 501,064   $ 8,682   $ 243,817  

See accompanying notes to consolidated financial statements.
53

FTAI AVIATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Dollars in thousands)

Ordinary Shares
Preferred Shares
Additional Paid In Capital (Accumulated Deficit) Retained Earnings
 Non-Controlling Interest in Equity of Consolidated Subsidiaries Total Equity
Equity - December 31, 2022
$ 997   $ 133   $ 343,350   $ ( 325,602 ) $ 524   $ 19,402  
Net income
243,817   243,817  
Total comprehensive income
243,817   —  243,817  
Contributions from non-controlling interest 10   10  
Issuance of ordinary shares 5   924   929  
Dividends declared - ordinary shares ( 119,847 ) ( 119,847 )
Issuance of preferred shares 26   61,703   61,729  
Dividends declared - preferred shares ( 31,795 ) ( 31,795 )
Equity-based compensation 1,638   1,638  
Equity - December 31, 2023
$ 1,002   $ 159   $ 255,973   $ ( 81,785 ) $ 534   $ 175,883  
Net income 8,682   8,682  

Total comprehensive income
8,682   8,682  
Purchase of non-controlling interest ( 534 ) ( 534 )
Redemption of preferred shares ( 42 ) ( 97,313 ) ( 97,355 )
Loss on redemption of preferred shares ( 7,998 ) ( 7,998 )
Dividends declared - ordinary shares ( 121,577 ) ( 121,577 )
Dividends declared - preferred shares ( 32,763 ) ( 32,763 )
Issuance of ordinary shares 24   151,000   151,024  
Equity-based compensation $ 6,006   6,006  
Equity - December 31, 2024
$ 1,026   $ 117   $ 153,328   $ ( 73,103 ) $ —   $ 81,368  
Net income 501,064   —   501,064  

Total comprehensive income 501,064   —   501,064  
Redemption of preferred shares ( 49 ) ( 117,791 ) ( 117,840 )
Loss on redemption of preferred shares ( 6,327 ) ( 6,327 )
Dividends declared - ordinary shares ( 128,205 ) ( 128,205 )
Dividends declared - preferred shares ( 17,243 ) ( 17,243 )
Issuance of ordinary shares 1,121   1,121  
Equity-based compensation 21,733   21,733  
Net settlement on vesting of equity awards ( 1,497 ) ( 1,497 )
Equity - December 31, 2025
$ 1,026   $ 68   $ 50,567   $ 282,513   $ —   $ 334,174  

See accompanying notes to consolidated financial statements.
54

FTAI AVIATION LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

Year Ended December 31,
2025 2024 2023
Cash flows from operating activities:
Net income
$ 501,064   $ 8,682   $ 243,817  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Equity in losses of unconsolidated entities (1)
6,818   2,200   1,606  
Gain on sale of assets ( 377,540 ) ( 377,909 ) ( 160,742 )
Gain on sale of assets to the 2025 Partnership
( 46,380 ) —   —  
Gain on insurance recoveries
( 54,325 ) —   —  
Security deposits and maintenance claims included in earnings ( 20,881 ) ( 16,783 ) ( 40,535 )
Loss on extinguishment of debt —   17,101   —  
Equity-based compensation 21,733   6,006   1,638  
Non-cash termination fee to affiliate (issuance of ordinary shares) —   150,000   —  
Depreciation and amortization 225,797   218,064   169,877  
Asset impairment —   962   2,121  
Deferred income taxes 73,956   ( 1,878 ) ( 63,626 )

Change in fair value of guarantees 3,114   2,086   ( 1,807 )
Amortization of lease intangibles and incentives 41,842   43,967   43,764  
Amortization of deferred financing costs 11,811   11,458   8,860  
Provision for credit losses
574   2,784   6,583  
Other 4,170   ( 273 ) ( 6,646 )
Change in:
 Accounts receivable ( 42,425 ) ( 41,196 ) ( 40,357 )
 Inventory ( 645,464 ) ( 206,880 ) ( 31,884 )
 Other assets ( 136,784 ) ( 14,372 ) ( 5,627 )
 Accounts payable and accrued liabilities 122,779   15,886   1,254  
 Management fees payable to affiliate ( 960 ) ( 5,507 ) 1,683  
 Other liabilities 356   ( 2,354 ) ( 997 )
Net cash (used in) provided by operating activities ( 310,745 ) ( 187,956 ) 128,982  

Cash flows from investing activities:
Investment in unconsolidated entities ( 328,546 ) —   ( 19,500 )
Return of capital from unconsolidated entities
27,113   —   —  
Principal collections on finance leases 1,580   2,157   3,638  
Principal collections on notes receivable 6,680   4,930   4,875  
Acquisition of business, net of cash acquired ( 49,085 ) ( 147,624 ) ( 29,632 )
Acquisition of leasing equipment ( 658,799 ) ( 1,147,341 ) ( 749,780 )
Investments in financing receivables ( 2,764 ) ( 66,858 ) —  
Acquisition of property, plant and equipment ( 27,712 ) ( 9,220 ) ( 6,148 )
Acquisition of lease intangibles 2,509   3,168   ( 20,964 )
Investment in promissory notes ( 4,714 ) —   ( 11,500 )
Deposits for acquisitions of leasing equipment (2)
( 65,926 ) ( 158,297 ) ( 23,937 )
Proceeds from sale of assets 1,182,495   969,280   477,886  
Proceeds from sale of assets to the 2025 Partnership
529,970   —   —  
Proceeds from settlement of insurance claims
54,325   —   —  
Proceeds from deposits on sale of leasing equipment 7,285   79,777   1,413  
Return of deposits for acquisition of leasing equipment (2)
48,903   530   300  
Net cash provided by (used in) investing activities
$ 723,314   $ ( 469,498 ) $ ( 373,349 )

See accompanying notes to consolidated financial statements.
55

FTAI AVIATION LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

Year Ended December 31,
2025 2024 2023
Cash flows from financing activities:
Proceeds from debt $ 480,000   $ 2,581,819   $ 951,665  
Repayment of debt ( 480,000 ) ( 1,672,304 ) ( 605,000 )
Payment of deferred financing costs ( 524 ) ( 17,356 ) ( 12,180 )
Receipt of security deposits under operating lease agreements 5,154   8,104   9,927  
Return of security deposits under operating lease agreements ( 4,265 ) ( 421 ) ( 2,385 )
Receipt of maintenance deposits under operating lease agreements 49,075   49,333   30,354  
Release of maintenance deposits under operating lease agreements ( 5,537 ) ( 7,134 ) ( 275 )
Proceeds from issuance of ordinary shares, net of underwriter's discount —   —   5  
Proceeds from issuance of preferred shares, net of underwriter's discount and issuance costs —   —   61,729  
Capital contributions from non-controlling interests —   —   10  
Settlement of equity-based compensation ( 1,497 ) —   —  
Purchase of non-controlling interest shares
—   ( 534 ) —  
Redemption of preferred shares ( 124,167 ) ( 105,353 ) —  
Cash dividends - ordinary shares ( 128,205 ) ( 121,577 ) ( 119,847 )
Cash dividends - preferred shares ( 17,243 ) ( 32,763 ) ( 31,795 )
Net cash (used in) provided by financing activities
( 227,209 ) 681,814   282,208  

Net increase (decrease) in cash and cash equivalents and restricted cash 185,360   24,360   37,841  
Cash and cash equivalents and restricted cash, beginning of period 115,266   90,906   53,065  
Cash and cash equivalents and restricted cash, end of period $ 300,626   $ 115,266   $ 90,906  

Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest $ 235,160   $ 222,122   $ 150,622  
Cash paid for taxes 15,661   5,655   1,393  

Supplemental disclosure of non-cash investing and financing activities
(see Note 2 for additional non-cash information):
Receipt of notes receivable in connection with the sale of leasing equipment $ 88,004   88,271   46,654  
Acquisition of leasing equipment in accrued liabilities ( 22,521 ) ( 22,119 ) ( 8,962 )
Receipt of leasing equipment in settlement of accounts receivable ( 5,075 ) —   ( 14,250 )
Purchase deposits reclassified to leasing equipment from other assets upon acquisition ( 52,817 ) ( 19,608 ) ( 6,371 )
Decrease in leasing equipment for engines provided to aircraft lessees in lieu of cash reimbursements of maintenance deposits 5,127   —   10,970  
Accounts receivable settled with security deposits ( 3,067 ) ( 4,808 ) ( 6,050 )
Accounts receivable settled with maintenance deposits ( 27,014 ) ( 45,719 ) ( 1,856 )

(1) Includes the profit elimination of $( 22,829 ) for the year ended December 31, 2025, for sales to the 2025 Partnership within the Aerospace Products segment.
(2) Includes deposits for acquisition of leasing equipment paid on behalf of the 2025 Partnership of $ 26,370 for the year ended December 31, 2025, and return of deposits for the acquisition of leasing equipment reimbursed from the 2025 Partnership of $ 45,710 for the year ended December 31, 2025.

See accompanying notes to consolidated financial statements.
56

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

1. ORGANIZATION
FTAI Aviation Ltd. (“FTAI”, “FTAI Aviation” or “the Company”) is a Cayman Islands exempted company, which through its subsidiaries, is a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. The Company repairs and rebuilds engines and aftermarket components of engines as well as develops and manufactures Parts Manufacturer Approval (“PMA”) parts through a joint venture. Additionally, the Company owns and leases aircraft and engines to airlines and asset owners globally. The Company has two reportable segments, (i) Aerospace Products and (ii) Aviation Leasing (see Note 13).
The Company conducts engine maintenance at its 100% owned facilities in Montréal, Miami, Lisbon, and Orange, as well as through its 50 % equity ownership in QuickTurn Europe, located in Rome. Collectively, these facilities span over 950,000 square feet and are equipped with advanced tooling, engine test cells, and engineering capabilities to support a wide range of component repairs and service requirements. In addition, the Company also supports global operations through exclusive arrangements and strategic partnerships at key locations worldwide. The Company’s principal corporate location is in New York City, and has a global presence through offices in Cardiff, Dubai, Dublin and Singapore, in addition to Montréal, Miami, Orange, Lisbon and Rome.
The majority of FTAI’s target customers are small and medium sized airlines which have narrowbody fleets powered by CFM56-5B, CFM56-7B and V2500 engines. There are hundreds of these operators worldwide, which creates a large addressable market in which FTAI focuses and can provide significant value versus competitors.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting — The accompanying consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company and its subsidiaries.
Principles of Consolidation — The Company consolidates all entities in which it has a controlling financial interest and control over significant operating decisions. All adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
The Company uses the equity method of accounting for investments in entities in which it exercises significant influence, but which does not meet the requirements for consolidation. Under the equity method, the Company records its proportionate share of the underlying net income (loss) of these entities.
Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Restructuring Charges — The termination of the Management Agreement in 2024 was a material change in the management structure of the business and is accounted for under ASC 420, Exit or Disposal Cost Obligations . The termination fee payment to the Former Manager under the Internalization Agreement is recorded within Internalization Fee to Affiliate. See Note 16 for additional discussion of the restructuring charges related to the Internalization.
Reclassifications — Certain amounts from prior periods in the Company’s consolidated financial statements and footnotes have been reclassified to align with the presentation in the current period.
Risks and Uncertainties — In the normal course of business, the Company encounters several significant types of economic risk including credit, market, and capital market risks. Credit risk is the risk of the inability or unwillingness of a lessee or customer to make contractually required payments or to fulfill its other contractual obligations. Market risk reflects the risk of a downturn or volatility in the underlying industry segments in which the Company operates, which could adversely impact the pricing of the services offered by the Company or a lessee’s or customer’s ability to make payments, increase the risk of unscheduled lease terminations and depress lease rates and the value of the Company’s leasing equipment or operating assets. Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities. The Company, through its subsidiaries, also conducts operations outside of the United States; such international operations are subject to the same risks as those associated with the Company’s United States operations as well as additional risks, including unexpected changes in regulatory requirements, heightened risk of political and economic instability, potentially adverse tax consequences and the burden of complying with foreign laws. The Company does not have significant exposure to foreign currency risk as all of its leasing arrangements are denominated in U.S. dollars.
Cash and Cash Equivalents — The Company considers all highly liquid short-term investments with a maturity of 90 days or less when purchased to be cash equivalents.
Inventory, net — The Company holds aircraft engines, engine modules, spare parts and used material inventory for sale. At times, inventory is transferred to leasing equipment in connection with a rebuilt engine or engine repair. Inventory is carried at the lower of cost or net realizable value on the Company’s Consolidated Balance Sheets.
57

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Property, Plant and Equipment, Leasing Equipment and Depreciation — Prop erty, plant and equipment and leasing equipment are stated at cost (inclusive of capitalized acquisition costs, where applicable) and depreciated using the straight-line method, over its estimated useful lives, to estimated residual values which are summarized as follows:

Asset Range of Estimated Useful Lives Residual Value Estimates
Aircraft 25 years from date of manufacture
Generally not to exceed 15 % of manufacturer’s list price when new

Aircraft engines 2 - 6 years, based on maintenance adjusted service life
Sum of engine core salvage value plus the estimated fair value of life limited parts
Aviation tooling and equipment 3 - 6 years from date of purchase
Scrap value at end of useful life
Buildings and improvements 40 to 50 years
Scrap value at end of useful life
Machinery and equipment 6 - 23 years
Scrap value at end of useful life
Furniture and fixtures 3 - 6 years from date of purchase
None
Computer hardware and software 2 - 5 years from date of purchase
None
Land N/A N/A
Construction in progress N/A N/A
Other 5 - 7 years
N/A

Major improvements and modifications incurred in connection with the acquisition of property, plant and equipment and leasing equipment that are required to get the asset ready for initial service are capitalized and depreciated over the remaining life of the asset. Project costs of major additions and betterments, including capitalizable engineering costs and other costs directly related to the development or construction of a project, are capitalized and depreciation commences once it is placed into service for leasing equipment and once it is ready for service for property, plant and equipment. Interest costs directly related to and incurred during the construction period of property, plant and equipment are capitalized.
The Company reviews its depreciation policies on a regular basis to determine whether changes have taken place that would suggest that a change in its depreciation policies, useful lives of its equipment, or the assigned residual values is warranted.
For planned major maintenance or component overhaul activities for aviation equipment off lease, the cost of such major maintenance or component overhaul event is capitalized and depreciated on a straight-line basis over the period until the next maintenance or component overhaul event is required. Major maintenance and overhauls of the Company’s maintenance repair facilities and related equipment that extend the life of the asset are capitalized and depreciated over the expected period until the next anticipated major maintenance or overhaul.
Upon retirement or disposal of property, plant and equipment, the cost and related accumulated depreciation are removed from the account, and the resulting gains or losses, if any, are recorded.
In accounting for leasing equipment, the Company makes estimates about the expected useful lives, residual values and the fair value of acquired in-place leases and acquired maintenance liabilities (for aviation equipment). In making these estimates, the Company relies upon observable market data for the same or similar types of equipment and, in the case of aviation equipment, its own estimates with respect to a lessee’s anticipated utilization of the aircraft or engine. When the Company acquires leasing equipment subject to an in-place lease, determining the fair value of the in-place lease requires the Company to make assumptions regarding the current fair values of leases for identical or similar equipment, in order to determine if the in-place lease is within a fair value range of current lease rates. If a lease is below or above the range of current lease rates, the resulting lease discount or premium is recognized as a lease intangible and amortized into lease income over the remaining term of the lease.
Capitalized Interest — The interest cost associated with major development and construction projects are capitalized and included in the cost of the project. Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. The Company capitalized interest of $ 0.0 million, $ 0.2 million and $ 0.7 million during the years ended December 31, 2025, 2024 and 2023, respectively.
Repairs and Maintenance — Repair and maintenance costs that do not extend the lives of the assets are expensed as incurred. The Company's repairs and maintenance expense was $ 3.2 million, $ 9.8 million and $ 7.7 million during the years ended December 31, 2025, 2024 and 2023, respectively, and are included in Operating expenses.
Impairment of Long-Lived Assets — The Company performs a recoverability assessment of each of its long-lived assets whenever events or changes in circumstances, or indicators, indicate that the carrying amount or net book value of an asset may not be recoverable. Indicators may include, but are not limited to, a significant lease restructuring or early lease termination; significant traffic decline; a significant change in market conditions; the introduction of newer technology and the length of time an asset is off lease related to leasing equipment, engines or for manufacturing equipment; a significant decrease in market value; adverse changes in use or condition; legal or regulatory changes; or cash flow reductions.
58

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

If a quantitative recoverability assessment is determined to be needed, the Company measures whether the estimated future undiscounted net cash flows expected to be generated by the asset exceeds its net book value. The undiscounted cash flows consist of cash flows of the asset or asset group. For long lived assets, the undiscounted cash flows consist of cash flows from currently contracted leases and contracts, future projected leases, transition costs, estimated down time and estimated residual or scrap values for leasing equipment or operating cash flows for manufacturing equipment, and maintenance and operating costs. In the event that an asset does not meet the recoverability test, the carrying value of the asset will be adjusted to fair value resulting in an impairment charge.
Management develops the assumptions used in the recoverability analysis based on its knowledge of active contracts, current and future expectations of the global demand for a particular asset and historical experience in the leasing markets, information received from third party industry sources, usage assumptions, asset lifespan for leasing equipment, and expected operating income and costs associated with operating and maintaining the manufacturing asset. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in contracted lease rates, residual values, economic conditions, technology, demand for a particular asset type and other factors, expected income and operating costs, maintenance and repairs, capital expenditures, and duration of the cash flows.
Recoverability of Goodwill — Goodwill is not amortized but rather is tested at least annually during the fourth quarter for impairment, or more often if events or circumstances indicate the carrying value of an asset may not be recoverable.
The Company assesses the recoverability of goodwill using a qualitative evaluation or a quantitative test to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The determination of fair value requires management to make assumptions and to apply judgment to estimate industry and economic factors and the profitability of future business strategies. The Company conducts impairment testing based on current business strategy in light of present industry and economic conditions, as well as future expectations.
The Company performed a qualitative assessment for its goodwill impairment test for the year ended December 31, 2025. No impairment was recorded as a result of these tests for the years ended December 31, 2025, 2024 and 2023, respectively.
Included in goodwill on the Company’s consolidated balance sheet at December 31, 2025 and 2024 was amounts acquired of $ 32.7 million and $ 56.5 million, respectively.
Security Deposits — The Company’s operating leases generally require the lessee to pay a security deposit or provide a letter of credit. Security deposits are held until specified return dates stipulated in the lease or lease expiration.
Maintenance Payments — Typically, under an operating lease of aircraft, the lessee is responsible for performing all maintenance and is generally required to make maintenance payments to the Company for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft or engine. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending on the component, and are generally required to be made monthly in arrears. If a lessee is making monthly maintenance payments, the Company would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following the completion of the relevant work.
The Company records the portion of maintenance payments paid by the lessee that are expected to be reimbursed as maintenance deposit liabilities in the Consolidated Balance Sheets. Reimbursements made to the lessee upon the receipt of evidence of qualifying maintenance work are recorded against the maintenance deposit liability. In certain leases, the Company or the lessee may be obligated to make a payment to the other party at lease termination based on redelivery conditions stipulated at the inception of the lease. When the lessee is required to return the aircraft in an improved maintenance condition, the Company records a maintenance right asset, as a component of other assets, for the estimated value of the end-of-life maintenance payment at acquisition. The Company recognizes payments received as end-of-lease compensation adjustments, within lease income or as a reduction to the maintenance right asset, when payment is received or collectability is assured. In the event the Company is required to make payments at the end of the lease for redelivery conditions, amounts are accrued as additional maintenance liability and expensed when the Company is obligated and can reasonably estimate such payments.
Lease Incentives and Amortization — Lease incentives, which include lease acquisition costs related to reconfiguration of the aircraft cabin, other lessee specific modifications and other direct costs, are capitalized and amortized as a reduction of lease income over the primary term of the lease, assuming no lease renewals.
Intangibles and amortization — Intangibles include the value of acquired favorable and unfavorable leases and are included in Intangible assets, net.
In accounting for acquired leasing equipment, the Company makes estimates about the fair value of the acquired leases. In determining the fair value of these leases, the Company makes assumptions regarding the current fair values of leases for identical or similar equipment in order to determine if the acquired lease is within a fair value range of current lease rates. If a lease is below or above the range of current lease rates, the resulting lease discount or premium is recognized as a lease intangible and amortized into lease income over the remaining term of the lease. Acquired lease intangibles are amortized on a straight-line basis over the remaining lease terms, which collectively had a weighted-average remaining amortization period of 7.7 years as of December 31, 2025, and are recorded as a component of revenues.
59

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Deferred Financing Costs — Costs incurred in connection with obtaining long term financing are capitalized and amortized to interest expense over the term of the underlying loans. Unamortized deferred financing costs of $ 47.4 million and $ 55.5 million as of December 31, 2025 and 2024, respectively, are included in Long-term debt, net.
The Company also has unamortized deferred revolver fees related to its revolving debt o f $ 5.1 million and $ 8.2 million as of December 31, 2025 and 2024, respectively, which are included in Other non-current assets.
Amortization expense was $ 11.8 million, $ 11.5 million and $ 8.9 million for the years ended December 31, 2025, 2024 and 2023, respectively, and is included in Interest expense.
Revenues — Revenues are within the scope of ASC 606, Revenue from contracts with customers, and ASC 842, Leases , unless otherwise noted. The Company has elected to exclude sales tax and other similar taxes from revenues.
Aerospace products revenue — Aerospace products revenue primarily consists of the transaction price related to the sale of CFM56-7B, CFM56-5B and V2500 engines, engine modules, spare parts and used material inventory, and are accounted for within the scope of ASC 606. Revenue is recognized at the point in time when a performance obligation is satisfied by transferring control over the related asset to a customer along with corresponding costs of sales. Aerospace products revenue also consists of engine management service contracts, where the Company has a stand-ready obligation to provide replacement CFM56-7B and CFM56-5B engines to customers as they become unserviceable during the contract term. The Company recognizes revenue related to these engine management service contracts over time using a straight-line attribution method and the costs related to fulfilling the performance obligation are expensed as incurred.
Maintenance, Repair and Exchange (“MRE”) Contract revenue — MRE Contract revenue consists of the transaction price related to the sale of CFM56-5B, CFM56-7B and V2500 commercial aircraft engines and related modules to, and subsequent exchange of unserviceable engines and modules from, the special purpose entities (the “SPVs”) of the first partnership of the strategic capital initiative (the “2025 Partnership”). MRE Contract revenue is recognized under ASC 606 at the point in time when a performance obligation is satisfied by transferring control of the serviceable engine or module to the 2025 Partnership, along with corresponding costs of sales. Refer to Note 12 “Affiliate Transactions and Former Management Agreement” for additional information on the 2025 Partnership and the strategic capital initiative.
Operating Leases — The Company leases equipment pursuant to operating leases. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the lease, assuming no renewals. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the lessee is placed on non-accrual status and revenue is recognized when cash payments are received.
Generally, under the Company’s aircraft lease and engine agreements, the lessee is required to make periodic maintenance payments calculated based on the lessee’s utilization of the leased asset or at the end of the lease. Typically, under the Company’s aircraft lease agreements, the lessee is responsible for maintenance, repairs and other operating expenses throughout the term of the lease. These periodic maintenance payments accumulate over the term of the lease to fund major maintenance events, and the Company is contractually obligated to return maintenance payments to the lessee up to the cost of maintenance events paid by the lessee. In the event the total cost of maintenance events over the term of a lease is less than the cumulative maintenance payments, the Company is not required to return any unused maintenance payments to the lessee.
Maintenance payments received for which the Company expects to repay to the lessee are presented as current and non-current Maintenance deposits in its Consolidated Balance Sheets. Excess maintenance payments received that the Company does not expect to repay to the lessee are recorded as Maintenance revenue on its Consolidated Statements of Operations. Estimates in recognizing revenue include mean time between removal for engines on leased aircraft, projected costs for engine maintenance, and forecasted utilization, which are affected by historical usage patterns and overall industry, market and economic conditions. Significant changes to these estimates could have a material effect on the amount of revenue recognized in the period.
For purchase and lease back transactions, we account for the transaction as a single arrangement. We allocate the consideration paid based on the relative fair value of the aircraft and lease. The fair value of the lease may include a lease premium or discount, which is recorded as a favorable or unfavorable lease intangible.
Finance Leases — From time to time the Company enters into finance lease arrangements that include a lessee obligation to purchase the leased equipment at the end of the lease term, a bargain purchase option, or provides for minimum lease payments with a present value that equals or exceeds substantially all of the fair value of the leased equipment at the date of lease inception. Net investment in finance leases represents the minimum lease payments due from lessee, net of unearned income. The lease payments are segregated into principal and interest components similar to a loan. Unearned income is recognized on an effective interest method over the lease term and is recorded as lease income. The principal component of the lease payment is reflected as a reduction to the net investment in finance leases. Revenue is not recognized when collection is not reasonably assured. When collectability is not reasonably assured, the lessee is placed on non-accrual status and revenue is recognized when cash payments are received.
60

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Asset sales revenue — Asset sales revenue primarily consists of the transaction price related to the sale of aircraft and aircraft engines from the Company’s Aviation Leasing segment. From time to time, the Company may also assign the related lease agreements to the customer as part of the sale of these assets. The Company routinely sells leasing equipment to customers and such transactions are considered recurring and ordinary in nature to its business. As such, these sales are accounted for within the scope of ASC 606. Revenue is recognized when a performance obligation is satisfied by transferring control of an asset to the customer along with corresponding costs of sales.
Leasing Arrangements — At contract inception, the Company evaluates whether an arrangement is or contains a lease for which it is the lessee (that is, arrangements which provide the Company with the right to control a physical asset for a period of time). Operating lease right-of-use (“ROU”) assets are included in Other non-current assets and lease liabilities are included in Other current and non-current liabilities. Finance lease ROU assets are recognized in Other non-current assets and lease liabilities are recognized in Other current and non-current liabilities.
All lease liabilities are measured at the present value of the unpaid lease payments, discounted using the Company’s incremental borrowing rate based on the information available at commencement date of the lease. ROU assets, for both operating and finance leases, are initially measured based on the lease liability, adjusted for prepaid rent and lease incentives. Operating lease ROU assets are subsequently measured at the carrying amount of the lease liability adjusted for prepaid or accrued lease payments and lease incentives. The finance lease ROU assets are subsequently amortized using the straight-line method.
Operating lease expenses are recognized on a straight-line basis over the lease term. With respect to finance leases, amortization of the ROU asset is presented separately from interest expense related to the finance lease liability and is recorded in Operating expenses. Variable lease payments, which are primarily based on usage, are recognized when the associated activity occurs.
The Company has elected to combine lease and non-lease components for all lease contracts where it is the lessee. Additionally, for arrangements with lease terms of 12 months or less, the Company does not recognize ROU assets, and lease liabilities and lease payments are recognized on a straight-line basis over the lease term with variable lease payments recognized in the period in which the obligation is incurred.
Other Income — The 2025 Partnership committed to acquire 45 on-lease narrowbody aircraft from the Company (the “Seed Assets”) and has signed an agreement through which the Company’s MRE business will provide replacement aircraft engines and modules for the life of the 2025 Partnership.
During the year ended December 31, 2025, 45 aircraft were sold for a gain of $ 50.1  million, which was recognized within gain on sale to the 2025 Partnership. The aircraft sales were accounted for under ASC 610-20, Other Income — Gains and Losses from the Derecognition of Nonfinancial Assets , as they were non-recurring in nature and not considered part of the Company’s ordinary activities.
During the year ended December 31, 2025, the Company received $ 54.3  million in insurance recoveries in connection with the settlement of claims related to the aircraft and engines located in Russia and recorded the gain within other income.
Concentration of Credit Risk — The Company is subject to concentrations of credit risk with respect to amounts due from customers and lessees. The Company attempts to limit its credit risk by performing ongoing credit evaluations. The Company earned 13 % and 10 % of its revenue from two customers in the Aerospace Products segment during the twelve months ended December 31, 2025. No single customer or lessee accounted for greater than 10% of total revenue during the years ended December 31, 2024 and 2023.
As of December 31, 2025, there was one customer in the Aerospace Products segment that represented 23 % of total accounts receivable, net. As of December 31, 2024 no single customer or lessee accounted for greater than 10% of total accounts receivable, net.
The Company maintains cash and restricted cash balances, which generally exceed federally insured limits, and subject it to credit risk, in high credit quality financial institutions. The Company monitors the financial condition of these institutions and has not experienced any losses associated with these accounts.
61

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Allowance for Doubtful Accounts — The Company determines the allowance for doubtful accounts based on its assessment of the collectability of its leasing receivables, notes receivables and inventory sales. In assessing the allowance, the Company considers past collection history and specific risks identified among uncollected accounts. The assessment of collectability of its leasing receivables, notes receivables and inventory sales is done quarterly, on a customer-by-customer basis. Receivables are written off after all reasonable means to collect the full amount have been exhausted. The activity in the allowance for doubtful accounts is as follows:

December 31,
2025 2024 2023
Allowance at beginning of period $ 74,947   $ 72,163   $ 65,580  
Bad debt expense
574   2,784   6,583  
Write-offs and recoveries, net
( 47,134 ) —   —  
Allowance at end of period $ 28,387   $ 74,947   $ 72,163  

Economic sanctions and export controls against Russia and Russia’s aviation industry were imposed due to its invasion of Ukraine during the first quarter of 2022. As a result of the sanctions imposed on Russian airlines, the Company terminated all lease agreements with Russian airlines and its allowance for doubtful accounts at December 31, 2024 includes all accounts receivable exposure to Russian and Ukrainian lessees.
Comprehensive Income — The Company’s comprehensive income represents net income adjusted for comprehensive loss related to cash flow hedges of its equity method investees of discontinued operations.
Other Current Assets — Other current assets are summarized as follows:

December 31,
2025 2024
Notes receivable $ 216,298   $ 165,338  
Prepaid expenses including prepayments for maintenance that has not yet been incurred 79,806   87,323  
Financing receivable resulting from failed sale-leaseback transactions 37,740   32,486  
Purchase deposits 12,791   83,229  

Contract asset from the 2025 Partnership 16,835   —  
Other 44,894   40,547  
Other current assets $ 408,364   $ 408,923  

Other Non-Current Assets — Other non-current assets are summarized as follows:

December 31,
2025 2024
Lease incentives $ 43,688   $ 56,812  
Deferred tax assets 31,920   42,893  

Financing receivable resulting from failed sale-leaseback transactions 19,109   28,412  
Maintenance right assets 6,374   25,907  

Other 65,969   54,406  
Other non-current assets $ 167,060   $ 208,430  

Other Current Liabilities — Other current liabilities are summarized as follows:

December 31,
2025 2024
Deposits on sales of leasing equipment 33,755   $ 87,296  
Other 28,447   13,269  
Other current liabilities $ 62,202   $ 100,565  

62

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Dividends — Dividends are recorded if and when declared by the Board of Directors. The Board of Directors declared cash dividends of $ 1.35 , $ 1.20 and $ 1.20 per ordinary share for each of the years ended December 31, 2025, 2024 and 2023, respectively.
Additionally, the Board of Directors declared cash dividends on the Series C Preferred Shares of $ 2.06 , $ 2.06 , $ 2.06 per share for the years ended December 31, 2025, 2024 and 2023, respectively, the Series D Preferred Shares of $ 2.38 , $ 2.38 and $ 1.78 per share for the year ended December 31, 2025, 2024 and 2023, the Series A Preferred Shares of $ 1.55 and $ 2.06 per share for the years ended December 31, 2024, and 2023, respectively, and the Series B Preferred Shares of $ 2.00 and $ 2.00 per share for the years ended December 31, 2024 and 2023, respectively.
Cash Flow Presentation — Included in net cash (used in) provided by operating activities are inflows from the sale of engine modules and parts that were on engines originally purchased and reported as Leasing equipment, net. The purchase of the original engine was reported as an outflow in net cash used in investing activities at the time of purchase through the Acquisition of leasing equipment line item. As part of the Aerospace products business, the Company breaks down generally unserviceable engines with the intent to manufacture modules and parts for creation and sale of new assets. To manufacture the modules and parts and bring them into a salable condition, the Company spends significant costs, often over multiple reporting periods, for new inventory and capitalizable labor (e.g., engineering) that are included in net cash (used in) provided by operating activities as components of the changes in the related working capital accounts.
Therefore, when the costs to manufacture the assets are greater than (predominant to) the estimated value transferred from Leasing equipment into inventory, the related cash receipt has been reported as an inflow in net cash (used in) provided by operating activities.
Additionally, the Company buys inventory from third parties with the intent to use the parts in the manufacturing of the items discussed above, which is reported as an outflow in net cash (used in) provided by operating activities. When rebuilding whole engines for resale, for which the cash inflow upon sale is reported as a cash inflow from investing activities, the Company will transfer modules and parts needed (those purchased from third parties as well as parts from engines previously transferred to inventory from leasing equipment and rebuilt as discussed above) in the rebuild from inventory to leasing equipment.
With respect to purchases of aircraft and engines, when the expected predominant source of cash inflows from the acquired leasing equipment at the time of acquisition is from leasing activities, the related cash outflow is reported as an outflow in net cash used in investing activities. When the expected predominant source of cash inflows is from sales transactions, the related cash outflow is reported as an outflow in net cash (used in) provided by operating activities.
The cash and noncash related activities described above during the years ended December 31, 2025, 2024 and 2023 are detailed below:

Year Ended December 31,
(in thousands) 2025 2024 2023

Cost of modules and parts sold sourced from engines originally within leasing equipment $ 25,558   $ 38,300   $ 41,167  
Transfers of engines from leasing equipment to inventory for manufacturing and sale 259,383   239,462   178,740  
Transfers of inventory to leasing equipment for rebuilding and sale of engines ( 255,845 ) ( 223,129 ) ( 78,788 )
Total outflows related to manufacturing modules and parts - included in net cash (used in) provided by operating activities ( 779,374 ) ( 345,821 ) ( 138,045 )
Cash received for assets sold sourced from leasing equipment - inflow included in cash (used in) provided by operating activities 61,513   76,157   94,222  
Cash received for sales of leasing equipment that include components sourced from inventory - inflow included in cash used in investing activities 1,058,961   436,217   79,474  
Cash paid for engine and aircraft inventory - outflow included in cash provided by (used in) operating activities ( 325,056 ) ( 8,280 ) —  

63

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements — In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures . This ASU modifies the disclosure and presentation requirements of reportable segments. The new guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. This standard is effective retrospectively for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this guidance in the fourth quarter of 2024, and it did not have a material impact on its consolidated financial statements and related disclosures.
In August 2023, the FASB issued ASU 2023‑05, Business Combinations – Joint Venture Formations , which requires that joint ventures, upon formation, apply a new basis of accounting by initially measuring assets and liabilities at fair value. The amendments in ASU 2023‑05 are effective for joint ventures that are formed on or after January 1, 2025. The Company adopted this guidance in the first quarter of 2025. The adoption of ASU 2023-05 did not have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures . This ASU enhances the transparency and decision usefulness of income tax disclosures by expanding the disclosures of an entity’s income tax rate reconciliation and disaggregation of income taxes paid and income tax expense. Under the new guidance, public business entities must annually disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (loss) by the applicable statutory income tax rate. This standard is effective prospectively for all public entities for annual periods beginning after December 15, 2024, with early adoption and retrospective application permitted. The Company adopted this guidance, prospectively, in the fourth quarter of 2025. See note 11 for the Company’s income tax disclosures.
Accounting Pronouncements Not Yet Adopted — In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . In January 2025, the FASB issued Clarifying the Effective Date (“ASU 2025-01”) to add some clarity around the effective date of the guidance. This ASU requires disaggregated information for specified categories of expenses, including inventory purchases, employee compensation, depreciation, amortization, and depletion, to be presented in certain expense captions on the face of the income statement. This standard is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption and either prospective or retrospective application permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient in developing reasonable and supportable forecasts as apart of estimating expected credit losses, allowing entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. The amendments in ASU 2025-05 are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) , which is improves the navigability of the required interim disclosures, provides clarity as to when it is applicable, and provides additional guidance on what disclosures are required in interim reporting periods by establishing a disclosure principle. The guidance is effective for interim reporting periods beginning in 2028 and can be applied either prospectively or retrospectively. The Company is currently determining its method of adoption.
64

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

3. ACQUISITION OF LOCKHEED MARTIN COMMERCIAL ENGINE SOLUTIONS
On September 9, 2024, the Company, through its subsidiary FTAIC Aviation Inc. (“FTAIC”) created on April 25, 2024, acquired certain assets and assumed certain liabilities of Lockheed Martin Commercial Engine Solutions (“LMCES”) from Lockheed Martin Canada for total consideration of $ 170.0  million. LMCES is a 526,000 -square-foot aircraft engine maintenance repair facility located in Montréal, Quebec. The Company acquired LMCES to further enhance its MRE business and establish permanent engine and module manufacturing capabilities in Canada. The facility operates within its Aerospace Products segment, providing extensive engine and piece-part repair capabilities for the CFM56-5B and CFM56-7B engines. The results of operations of LMCES have been included in the Company’s results since the effective date of the acquisition.
In connection with the acquisition, the Company record ed $ 6.9  million of acquisition and transaction expense during the year ended December 31, 2024.
The acquisition of LMCES was accounted for as a business combination and, as such, the following fair values were assigned to assets acquired and liabilities assumed based on the Company’s estimates and assumptions. The significant assumptions used to estimate the fair values of the property, plant, and equipment and inventory included replacement cost estimates and market data for similar assets where available.
Subsequent to the acquisition, in the year ended December 31, 2025, measurement period adjustments as of the acquisition date were made as a result of the finalization of the net working capital adjustments which increased total consideration by $ 14.1  million. This adjustment resulted in an increase in goodwill of $ 14.1  million.
Subsequent to the acquisition, in the quarter ended December 31, 2024, measurement period adjustments as of the acquisition date were made to decrease accounts receivable by $ 1.5  million, decrease inventory by $ 21.5  million, increase other current assets by $ 4.1  million, increase property, plant and equipment by $ 1.0  million, increase other non-current assets by $ 0.1  million, decrease accounts payable by $ 0.4  million, decrease accrued liabilities by $ 0.1  million, decrease other current liabilities by $ 5.0  million, increase other non-current liabilities by $ 1.5  million an increase in total consideration transferred of $ 15.8  million. These adjustments resulted in an increase to goodwill of $ 29.6  million.

The following table summarizes the allocation of the net assets acquired:

September 9, 2024
Fair value of assets acquired:
Current Assets
Accounts receivable $ 10,758  
Inventory 25,498  
Other current assets 6,795  
Total current assets 43,051  
Property, plant, and equipment 72,151  
Leasing equipment 5,675  
Other non-current assets 10,633  
Total assets 131,510  
Fair value of liabilities assumed:
Current Liabilities
Accounts payable 7,669  
Accrued liabilities 1,692  
Other current liabilities 5,130  
Total current liabilities 14,491  
Other non-current liabilities 14,347  
Total liabilities 28,838  
Goodwill (1)
71,040  
Net assets acquired (2)
$ 173,712  

(1) Goodwill is assigned to the Aerospace Products segment and is deductible for income tax purposes.
(2) Total consideration is calculated as cash paid, adjusted for the settlement of pre-existing relationships.
65

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

The following table presents fair values of the components of property, plant and equipment acquired and their estimated useful lives:

Estimated useful life in years Estimated Fair value
Buildings and improvements 25 $ 40,953  
Machinery and equipment 2 - 21
30,397  
Other N/A 801  
Total $ 72,151  

The unaudited financial information in the table below summarizes the combined results of operations of FTAI and LMCES on a pro forma basis. These pro forma results were based on estimates and assumptions which the Company believes are reasonable. The pro forma adjustments are primarily comprised of the following:
• The allocation of the purchase price and related adjustments, including adjustments to depreciation and amortization expense related to the fair value of property, plant and equipment;
• Associated tax-related impacts of adjustments.
The following unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place as of January 1, 2023.

Year ended December 31,
2024 2023
Total revenue $ 1,782,339   $ 1,257,302  
Net (loss) income attributable to shareholders $ ( 35,850 ) $ 211,582  

66

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

4. ACQUISITION OF QUICKTURN
On December 1, 2023, the Company completed the acquisition of the remaining equity interest of Quick Turn Engine Center LLC (“QuickTurn”) from Unical Aviation Inc. (“Unical”) for total cash consideratio n of $ 30.3  million to obtain full ownership.
The Company acquired QuickTurn to better position the Company to have tighter integration over the development and delivery of aerospace products. QuickTurn is a hospital maintenance and testing facility dedicated to the CFM56 engine located in Miami, Florida that operates within the Company’s Aerospace Products segment. The results of operations at QuickTurn have been included in the Consolidated Statements of Operations beginning on the acquisition date.
The acquisition of QuickTurn was accounted for as a business combination and, as such, the following fair values were assigned to assets acquired and liabilities assumed based on management’s estimates and assumptions. The significant assumptions used to estimate the fair value of the property, plant, and equipment included replacement cost estimates and market data for similar assets where available. The significant assumptions used to estimate the value of the customer relationship intangible assets included the discount rate and future revenues and operating expenses.
The following table summarizes the allocation of the net assets acquired:

December 1, 2023
Fair value of assets acquired:
Current Assets
Cash and cash equivalents $ 518  
Restricted cash 150  
Accounts receivable 5,133  
Inventory 9,332  
Other current assets 2,889  
Total current assets 18,022  
Property, plant, and equipment 30,559  
Intangible assets 2,377  
Other non-current assets 1,412  
Total assets 52,370  
Fair value of liabilities assumed:
Current Liabilities
Accounts payable 3,424  
Accrued liabilities 571  
Other current liabilities 1,475  
Total current liabilities 5,470  
Other non-current liabilities 934  
Total liabilities 6,404  
Goodwill (1)
4,630  
Net assets acquired $ 50,596  

(1) Goodwill is assigned to the Aerospace Products segment and is deductible for income tax purposes.

67

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

5. LEASING EQUIPMENT, NET
Leasing equipment, net is summarized as follows:
December 31,
2025 2024

Leasing equipment $ 2,057,624   $ 2,963,452  
Less: Accumulated depreciation ( 511,820 ) ( 589,722 )
Leasing equipment, net $ 1,545,804   $ 2,373,730  

The Company identified certain assets in its leasing equipment portfolio with indicators of impairment. During the year ended December 31, 2025, the Company did not record any transactional impairment charges. In comparison, for the year ended December 31, 2024, the Company recorded transaction impairment charges of $ 1.0 million, net of redelivery compensation.
In the fourth quarter of 2024, the Company completed the sale of the two vessels included within Corporate and Other. The Company sold the two offshore vessels for total proceeds of $ 142.6  million and the book value was $ 123.9  million. This transaction resulted in a gain of $ 18.7  million and is reflected in the Gain on sale of assets, net, for the year ended December 31, 2024.
Depreciation expense for leasing equipment is summarized as follows:

Year Ended December 31,
2025 2024 2023
Depreciation expense for leasing equipment $ 208,987   $ 211,047   $ 168,901  

6. INVESTMENTS
The following table presents the ownership interests and carrying values of the Company’s investments:

Carrying Value
Investment Ownership Percentage December 31, 2025 December 31, 2024
Advanced Engine Repair JV Equity method 25 % $ 22,429   $ 19,048  
2025 Partnership Equity method 19 % 281,740   —  
QuickTurn Europe Equity method 50 % 9,987   —  
$ 314,156   $ 19,048  

The Company did not recognize any other-than-temporary impairments for the year ended December 31, 2025 and 2024.
The following table presents the Company’s proportionate share of equity in (losses) earnings:

Year Ended December 31,
2025 2024 2023
Advanced Engine Repair JV $ 3,381   $ ( 1,993 ) $ 833  
2025 Partnership (1)
( 9,715 ) —   —  
Falcon MSN 177 LLC (2)
—   ( 207 ) ( 148 )
QuickTurn Europe ( 484 ) —   —  
Quick Turn Engine Center LLC (3)
—   —   ( 2,291 )
Total $ ( 6,818 ) $ ( 2,200 ) $ ( 1,606 )

(1) Includes the profit elimination of $( 22,829 ) for the year ended December 31, 2025 for sales to the 2025 Partnership.
(2) On May 3, 2024, the Company purchased the remaining interest of Falcon MSN 177 LLC (“Falcon”). As a result, Falcon became a consolidated subsidiary, and is no longer accounted for as an equity method investment.
(3) On December 1, 2023, the Company purchased the remaining interest in QuickTurn.
Equity Method Investments
Advanced Engine Repair JV
In December 2016, the Company invested $ 15  million for a 25 % interest in an advanced engine repair joint venture. This joint venture is focused on developing new cost savings programs for engine repairs.
68

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

In August 2019, the Company expanded the scope of its joint venture and invested an additional $ 13.5  million and maintained a 25 % interest. The Company exercises significant influence over this investment and accounts for this investment as an equity method investment.
Falcon MSN 177 LLC
Since November 2021, the Company owned a 50 % interest in Falcon MSN 177 LLC (“Falcon”), an entity that consists of one Dassault Falcon 2000 aircraft. Falcon leases the aircraft to charter operators on aircraft, crew maintenance, and insurance contracts. The Company accounted for its investment in Falcon as an equity method investment as it has significant influence through its interest.
On May 3, 2024, the Company purchased the remaining interest from S7 Aerospace for total cash consideration of $ 0.8  million and it is now a consolidated subsidiary.
Quick Turn Engine Center LLC
On January 4, 2023, the Company invested $ 19.5  million for a 50 % interest ( 45 % pro rata distribution of income until return of the JV partner’s initial investment) in Quick Turn Engine Center LLC (previously iAero Thrust LLC), a hospital maintenance and testing facility dedicated to the CFM56 engine. The Company accounts for its investment in QuickTurn as an equity method investment as it has significant influence through its interest.
On December 1, 2023, the Company purchased the remaining interest in QuickTurn.
2025 Partnership
In the year ended December 31, 2025, the Company invested $ 291.5  million in the 2025 Partnership, an investment focused on acquiring 737NG and A320ceo on-lease narrowbody aircraft, for which the Company is the Servicer and holds a 19 % limited partner ownership. The Company exercises significant influence over this investment and accounts for it using the equity method. As the Servicer, the Company is responsible for lessee invoicing and collections, airline relationship management, contracts management including lease extension and aircraft deliveries and redeliveries. The Company's proportionate share of equity in earnings related to this investment is based on the contractual profit-sharing arrangement and the elimination of profit on sales of engine and modules to the 2025 Partnership under ASC 606. The profit from the MRE Contract revenue is eliminated through equity method earnings and will be recognized over time as the 2025 Partnership generates income from leasing and sales activities.
QuickTurn Europe
On June 5, 2025, the Company invested $ 10.5  million for a 50 % interest in Quick Turn Engine Center Europe S.r.l. (previously IAG Engine Center Europe S.r.l.) or “QuickTurn Europe”, a 200,000 square-foot CFM56 engine maintenance repair and overhaul facility located at the Rome Fiumicino Airport. The joint venture was established to expand the Company’s global engine maintenance capabilities and meet increasing demand for MRE services. The Company accounts for its investment in QuickTurn Europe as an equity method investment as it has significant influence through its interest.

7. INTANGIBLE ASSETS AND LIABILITIES, NET
The Company’s intangible assets and liabilities, net are summarized as follows:
December 31, 2025 December 31, 2024
Intangible assets
Acquired favorable lease intangibles $ 17,245   $ 70,375  
Less: Accumulated amortization ( 8,935 ) ( 29,664 )
Acquired favorable lease intangibles, net 8,310   40,711  
Acquired customer relationships 12,607   1,907  
Less: Accumulated amortization ( 988 ) ( 413 )
Acquired customer relationships, net 11,619   1,494  
Total intangible assets, net $ 19,929   $ 42,205  

Intangible liabilities
Acquired unfavorable lease intangibles $ 7,688   $ 13,767  
Less: Accumulated amortization ( 2,132 ) ( 1,259 )
Acquired unfavorable lease intangibles, net $ 5,556   $ 12,508  

69

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

The weighted average amortization period of intangible assets acquired during the year ended December 31, 2025 is as follows:

Weighted Average Amortization Period
Lease intangibles
3.5 years
Customer relationships
10.5 years
Total intangible assets
7.7 years

Intangible liabilities relate to unfavorable lease intangibles and are included as a component of Other non-current liabilities.
Amortization of intangible assets and liabilities is recorded as follows:

Classification in Consolidated Statements of Operations Year Ended December 31,
2025 2024 2023
Lease intangibles Lease income $ 6,710   $ 15,597   $ 15,126  
Customer relationships Depreciation and amortization 603   403   11  
Total $ 7,313   $ 16,000   $ 15,137  

As of December 31, 2025, estimated net annual amortization of intangibles is as follows:

2026
$ 2,444  
2027 1,877  
2028 2,436  
2029 1,480  
2030 1,398  
Thereafter 4,738  
Total $ 14,373  

70

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

8. DEBT, NET
The Company’s debt, net is summarized as follows:
December 31, 2025 December 31, 2024
Outstanding Borrowings Stated Interest Rate Maturity Date Outstanding Borrowings
Loans payable
Revolving Credit Facility (1)
$ —   (i) Base Rate + 1.75 %; or
(ii) Adjusted Term SOFR Rate + 2.75 %
5/22/27 $ —  
Total loans payable —   —  
Bonds payable
Senior Notes due 2028 (2)
1,000,995   5.50 % 5/1/28 1,001,382  
Senior Notes due 2030 (3)
497,470   7.88 % 12/1/30 497,071  
Senior Notes due 2031 700,000   7.00 % 5/1/31 700,000  
Senior Notes due 2032 800,000   7.00 % 6/15/32 800,000  
Senior Notes due 2033 (4)
497,784   5.88 % 4/15/33 497,551  
Total bonds payable 3,496,249   3,496,004  
Debt 3,496,249   3,496,004  
Less: Debt issuance costs ( 47,358 ) ( 55,526 )
Total debt, net $ 3,448,891   $ 3,440,478  

Total debt due within one year $ —   $ —  

(1) Requires a quarterly commitment fee at a rate of 0.50 % on the average daily unused portion, as well as customary letter of credit fees and agency fees.
(2) Includes an unamortized premium of $ 995 and $ 1,382 at December 31, 2025 and December 31, 2024, respectively.
(3) Includes an unamortized discount of $ 2,530 and $ 2,929 at December 31, 2025 and December 31, 2024, respectively.
(4) Includes an unamortized discount of $ 2,216 and $ 2,449 at December 31, 2025 and December 31, 2024, respectively.
Revolving Credit Facility — On May 23, 2024, the Company amended and restated its Revolving Credit Facility by executing a Third Amended and Restated Credit Agreement (the “Revolver Amendment”). The Revolver Amendment provides for revolving loans to be made available to the Company in an aggregate principal amount of up to $ 400.0  million, of which up to $ 25.0  million may be utilized for the issuance of letters of credit.
Senior Notes due 2031 — On April 11, 2024, the Company issued $ 700.0  million aggregate principal amount of senior unsecured notes due 2031 (the “Senior Notes due 2031”). The Senior Notes due 2031 bear interest at a rate of 7.00 % per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2024. Using a portion of the net proceeds, the Company completed a cash tender offer for $ 324.6  million aggregate principal amount of 2025 Notes validly tendered on April 11, 2024. Holders whose notes were accepted for purchase received equal consideration per $1,000 principal amount of 2025 Notes, plus accrued and unpaid interest to, but not including, April 11, 2024. The Company used the remaining net proceeds to redeem the remaining $ 325.4  million aggregate principal amount of Senior Notes due 2025, plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $ 2.7  million . The remaining net proceeds were used for general corporate purposes, including the funding of acquisitions and investments.
Senior Notes due 2032 — On June 17, 2024, the Company issued $ 800.0  million aggregate principal amount of senior unsecured notes due 2032 (the “Senior Notes due 2032”). These notes bear interest at a rate of 7.00 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, commencing on December 15, 2024. The Company utilized the net proceeds from the issuance for several purposes: (i) to fully repay outstanding amounts under the Company’s Revolving Credit Facility provided under the Revolver Amendment, without reduction in commitments, (ii) to fund the cash termination fee for the previously announced management Internalization described in Note 12, (iii) to complete a cash tender offer for up to $ 300.0  million in aggregate principal amount of Senior Notes due 2027 validly tendered on June 18, 2024, plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $ 11.2  million , (iv) to cover fees and expenses related to the aforementioned transactions, and (v) for general corporate purposes.
71

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Senior Notes due 2033— On October 9, 2024, the Company issued $ 500.0  million aggregate principal amount of senior unsecured notes due 2033 (the “Senior Notes due 2033”). The Senior Notes due 2033 bear interest at a rate of 5.875 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2025. Using a portion of the net proceeds, the Company redeemed the remaining $ 130.5  million aggregate principal amount of Senior Notes due 2027, plus accrued and unpaid interest, and recognized a loss on extinguishment of debt of $ 3.2  million. The Company used the remaining net proceeds to pay down in full the Company’s Revolving Credit Facility, with any excess proceeds intended for general corporate purposes, including funding acquisitions and investments.
The Company was in compliance with all debt covenants as of December 31, 2025.
As of December 31, 2025, scheduled principal repayments under the Company’s debt agreements for the next five years and thereafter are summarized as follows:

2026
2027 2028 2029 2030 Thereafter Total
Revolving Credit Facility —   —   —   —   —   —   —  
Senior Notes due 2028 —   —   1,000,000   —   —   —   1,000,000  
Senior Notes due 2030 —   —   —   —   500,000   —   500,000  
Senior Notes due 2031 —   —   —   —   —   700,000   700,000  
Senior Notes due 2032 —   —   —   —   —   800,000   800,000  
Senior Notes due 2033 —   —   —   —   —   500,000   500,000  
Total principal payments on loans and bonds payable $ —   $ —   $ 1,000,000   $ —   $ 500,000   $ 2,000,000   $ 3,500,000  

9. FAIR VALUE MEASUREMENTS
Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:
• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
• Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.
• Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants price the asset or liability.
The valuation techniques that may be used to measure fair value are as follows:
• Market approach—Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
• Income approach—Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts.
• Cost approach—Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).
The Company’s cash and cash equivalents and restricted cash consist largely of demand deposit accounts with maturities of 90 days or less when purchased that are considered to be highly liquid. These instruments are valued using inputs observable in active markets for identical instruments and are therefore classified as Level 1 within the fair value hierarchy.
Except as discussed below, the Company’s financial instruments other than cash and cash equivalents and restricted cash consist principally of accounts receivable, notes receivable, accounts payable and accrued liabilities, security deposits, maintenance deposits and management fees payable, whose fair values approximate their carrying values based on an evaluation of pricing data, vendor quotes, and historical trading activity or due to their short maturity profiles, which are classified on the balance sheet.
72

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

The fair values of the Company’s bonds payable are presented in the table below and classified as Level 2 within the fair value hierarchy:

December 31, 2025 December 31, 2024

Senior Notes due 2028 1,001,880   980,140  
Senior Notes due 2030 531,735   526,380  
Senior Notes due 2031 737,618   713,923  
Senior Notes due 2032 842,240   816,904  
Senior Notes due 2033 508,525   483,100  

The Company has contingent obligations under ASC 460, Guarantees , in connection with certain sales of aircraft on lease, which are measured at fair value. The guarantees are valued a t $ 12.0  million and $ 8.9  million as of December 31, 2025 and December 31, 2024, respectively, and are reflected as a component of Other non-current liabilities. The fair values of the guarantees, which were first recorded in 2022, are determined based on the estimated condition of the e ngines at the end of each lease term and the estimated cost of replacement and applicable discount rates and are classified as Level 3. During the year ended December 31, 2025 and 2024, the Company recorded a $ 3.1  million and $ 2.1  million increase, respectively, related to the change in fair value, which is recorded in Asset sales revenue. During the year ended December 31, 2023, the Company recorded $ 4.8  million in guarantees related to the sale of seven aircraft and a $ 1.8  million decrease related to the change in fair value, which is recorded in Asset sales revenue. During the years ended December 31, 2025, 2024 and 2023, there were no significant transfers into or out of Level 3.
Given variability in the condition of the engines at the end of the lease terms, which range from 2 to 7 years, the maximum potential amount of undiscounted future payments that could be required under the guarantees at December 31, 2025 was $ 43.0  million , which is not reasonably expected.
The Company measures the fair value of certain assets on a non-recurring basis when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. Assets subject to these measurements include intangible assets, property, plant and equipment and leasing equipment. The Company records such assets at fair value when it is determined the carrying value may not be recoverable. Fair value measurements for assets subject to impairment tests are based on an income approach which uses Level 3 inputs, which include the Company’s assumptions as to future cash flows from operation of the leasing and eventual sale of assets.

10. EQUITY-BASED COMPENSATION
The Company has a FTAI Aviation Ltd. 2025 Omnibus Incentive Plan (the “Incentive Plan”) which provides for the ability to award equity compensation awards in the form of stock options to eligible employees, consultants, directors, and other individuals who provide services to the Company, each as determined by the Compensation Committee of the Board of Directors.
As of December 31, 2025, the Incentive Plan provides for the issuance of up to 5.7  million shares. Equity-based compensation expense is reported within cost of sales and operating expenses.
Unvested equity-based awards are subject to forfeiture. The Company’s accounting policy is to record the impact of forfeitures when they occur.
Stock Options
In 2025, the Company did not issue any options to employees.
During the year ended December 31, 2024, in connection with the Company’s equity offerings (see Note 14 for details), the Company granted options to the Former Manager related to ordinary shares. The fair value of these options were recorded as an increase in equity with an offsetting reduction of capital proceeds received.
Additionally, the Company granted options to select employees related to 60,000 ordinary shares at an exercise price of $ 79.13 , which had a grant date fair value of $ 2.1  million. The assumptions used in valuing the options were: a 4.52 % risk-free rate, a 1.50 % dividend yield, a 43.00 % volatility and a 6.8 year term.
73

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

The following table presents information related to the options granted related to the Company’s shares:

Year Ended December 31,
2024 2023
Number of options 60,000 248,947
Fair value ($ millions) $ 2.1 $ 2.1
Ranges
Expected volatility The expected share volatility is based on an assessment of the volatility of the Company’s publicly traded ordinary shares
43.00   % - 43.00   % 37.88   % - 37.88   %
Risk free interest rate The risk-free rate is determined using the implied yield currently available on U.S. government bonds with a term consistent with the expected term on the date of grant. 4.52   % - 4.52   % 3.47   % - 3.47   %
Expected dividend yield The expected dividend yield is based on management’s current expected dividend rate. 1.50   % - 1.50   % 6.26   % - 6.26   %
Expected term Expected term used represents the period of time the options granted are expected to be outstanding. 6.8 years 10.0 years

Restricted Shares
During the year ended December 31, 2025, the Company issued the following restricted shares of the Company to select employees and officers of the Company:
In February 2025, the Company issued restricted shares to select officers and employees of the Company with a grant date fair value of $ 5.5  million, vesting over 3.0 years.
In November 2025, the Company issued restricted shares to select employees of the Company with a grant date fair value of $ 0.3  million, vesting over 4.0 years.
Additionally, the Company issued restricted shares to the directors of the Company with a grant date fair value of $ 0.8  million. These awards vest on the earlier of (i) the one-year anniversary of the grant date (May 29, 2026) or (ii) the date of the Company’s next annual general meeting of shareholders occurring after the grant date.
During the year ended December 31, 2024, the Company issued the following restricted shares of the Company to select employees and officers of the Company:
In May 2024, the Company issued restricted shares to (i) select officers with a grant date fair value of $ 5.5  million, vesting over 3.0 years and (ii) select employees with a grant date fair value of $ 5.7  million, vesting over 4.0 years.
In September 2024, the Company issued restricted shares to select employees with a grant date fair value of $ 0.8  million, vesting over 3.0 years.
All awards are subject to continued employment, with compensation expense recognized ratably over the vesting periods. The fair value was based on the closing price of the Company’s ordinary shares on the respective grant dates. The unrecognized compensation expense of restricted shares is expected to be recognized over a weighted-average period of 1.7 years.
Performance Shares
During the year ended December 31, 2025, the Company issued performance shares to select officers and employees of the Company with a grant date fair value of $ 4.4  million, vesting over a 3 year performance period based on the achievement of relative total shareholder return ( 50 %) and cumulative diluted EPS ( 50 %).
In November 2024, the Company granted up to 1,000,000 shares of performance shares to certain employees of the Company for which the ultimate number of units that will vest are determined based on the achievement of market conditions at the end of the stated performance period. The awards which are to be earned is based on the “Performance Level” of the Company’s Compound Annualized Total Shareholder Return (“CAGR”) for the Performance Period. The Performance Period is measured from November 5, 2024 through November 5, 2027. The number of shares earned could range from 0 % to a maximum of 100 %. The Earned Units from the Performance-based Awards become exercisable in three equal installments over a two-year period beginning with the completion of the Performance Period. The three equal installments of Earned Units vest on (i) November 5, 2027, (ii) November 5, 2028, and (iii) November 5, 2029. Compensation expense for the units is based on the estimated value of the awards on the grant date, and is recognized over the period from the grant date through the expected vest dates of each vesting condition.
The grant date fair value was $ 48.1  million and was determined using the Monte Carlo simulation, assuming a Geometric Brownian Motion (GBM) to model various simulation paths, which relies on highly subjective assumptions, including simulated share prices and simulated vesting percentages to simulate payoff paths. Key assumptions in this method include the historical and implied equity volatility, an implied volatility weight, and the risk-free rate of returns. The valuation model assumes dividends are immediately reinvested.
74

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

As of December 31, 2025, there was $ 36.8  million in unrecognized compensation cost related to unvested performance shares. This cost is expected to be recognized over a weighted-average period of 2.8 years.
The Consolidated Statements of Operations includes the following expense related to the Company’s equity-based compensation arrangements which are recorded in Operating expenses:

December 31, Remaining Expense To Be Recognized, If All Vesting Conditions Are Met Weighted Average Remaining Contractual Term
(in years)
2025 2024 2023
Stock options $ 508   $ 296   $ —   $ 1,270   7.7 years
Restricted shares 7,448   3,756   1,638   14,012   1.7 years
Performance shares 13,777   1,954   —   36,752   2.8 years
Total $ 21,733   $ 6,006   $ 1,638   $ 52,034  

The tables below provide details on the Company’s stock options, performance shares, and restricted shares:

Stock Options Performance Shares Restricted Shares
Options Weighted Average Exercise/Issuance Price Shares Weighted Average Grant date fair value Shares Weighted Average Issuance Price
Outstanding as of December 31, 2024
112,343   $ 52.70   1,000,000   $ 48.11   481,138   $ 41.90  
Granted —   —   28,441   153.80   51,898   128.98  
Less: exercised / vested 10,000   14.77   —   —   23,712   88.54  
Less: forfeited and canceled —   —   —   —   —   —  
Outstanding as of December 31, 2025
102,343   1,028,441   509,324  
                                                                

Stock Options Performance Shares Restricted Shares
As of December 31, 2025:

Weighted average exercise / issuance price (per share) $ 56.37   $ 51.03   $ 48.60  
Aggregate intrinsic value (in thousands) 14,377   N/A 24,753  
Weighted average remaining contractual term (in years) 7.7 2.8 1.7

11. INCOME TAXES
The Company is incorporated in the Cayman Islands where income taxes are not imposed. Taxable income or loss generated by the Company’s corporate subsidiaries is subject to income tax in jurisdictions where they conduct business.
For the year ended December 31, 2025, for purposes of this income tax disclosure, the Company has determined that based on the increased significance of its operations, by location, that Ireland is its domestic country of tax domicile. As a result, for 2025, the Ireland statutory income tax rate of 12.5% has been used for purposes of presenting the tax rate reconciliation.
During 2025, the Company adopted ASU 2023-09 “Improvements to Income Tax Disclosures” on a prospective basis. The 2025 tables below are presented on a prospective basis, both in adoption of ASU 2023-09 and for the presentation of Ireland as the country of domicile beginning in 2025 for purposes of the income taxes note to the consolidated financial statements. Thus, the year ended December 31, 2025 is presented separately from its comparative periods ending December 31, 2024 and 2023, which remain presented consistently with prior reporting.
75

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

The domestic and foreign components of the Company’s pre-tax income (loss) are as follows:

Year Ended December 31,
2025
Pre-tax book income (loss)
Domestic (Ireland)
$ 410,329  
Foreign 196,355  
Total $ 606,684  

Year Ended December 31,
2024 2023
Pre-tax book income (loss)
Domestic (Cayman Islands)
$ ( 259 ) $ ( 282 )
Foreign 14,428   184,299  
Total $ 14,169   $ 184,017  

The current and deferred components of the provision for (benefit from) income taxes are as follows:

Year Ended December 31,
2025
Current:
Ireland
$ 13,534  
Cayman Islands —  
Bermuda 4,800  
United States:
Federal 1,353  
State and local 4,949  
Other Non-Ireland including Pillar II Tax
7,028  
Total current provision 31,664  
Deferred:
Ireland
34,920  
Cayman Islands —  
Bermuda 10,643  
United States:
Federal 25,436  
State and local 2,379  
Other Non-Ireland
578  
Total deferred provision (benefit)
73,956  

Total $ 105,620  

76

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

Year Ended December 31,
2024 2023
Current:
Cayman Islands $ —   $ —  
Bermuda —   —  
United States:
Federal 847   935  
State and local 1,158   1,176  
Other Non-U.S. 1,604   1,715  
Total current provision 3,609   3,826  
Deferred:
Cayman Islands —   —  
Bermuda 2,320   ( 72,185 )
United States:
Federal 6,020   3,943  
State and local ( 616 ) ( 2 )
Other Non-U.S. ( 5,846 ) 4,618  
Total deferred provision (benefit)
1,878   ( 63,626 )

Total $ 5,487   $ ( 59,800 )

Historically, the Company’s Bermuda operations have not been subject to Bermuda income tax. However, on December 27, 2023, the Government of Bermuda enac ted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025. As a result of the Bermuda CIT, the exemption of certain of the Company’s Bermuda subsidiaries from Bermuda corporate income taxes ceased in 2025. The Company recorded the impact of this enactment in their provision for the year ended December 31, 2023.
The difference between the Company’s reported income tax rate and the Irish statutory rate is as follows:

Year Ended December 31, 2025
Amount Percent
Ireland statutory rate
$ 75,836   12.50   %
Foreign tax effects
24,946   4.11   %

United States

Statutory tax rate difference between the US and Ireland
9,092   1.50   %
Nondeductible expenses
6,601   1.09   %
US State and local taxes (1)
5,053   0.83   %

Bermuda

Statutory tax rate difference between Bermuda and Ireland
3,109   0.51   %
Other foreign jurisdictions
1,091   0.18   %

Ireland alternative minimum tax (2)
5,798   0.96   %

Changes in valuation allowance
( 4,460 ) ( 0.74 ) %

Other
3,500   0.58   %
Income tax rate
$ 105,620   17.41   %

(1) State taxes in Arizona, California, and Florida made up the majority (greater than 50%) of the tax effect in this category.
(2) Represents top-up tax in Ireland driven by Pillar Two given Ireland statutory tax rate of 12.5 %.
Note: As of January 1, 2025, the Company adopted ASU 2023-09 related to income tax disclosures in connection with 2025 only (as presented above). The effective tax rate reconciliation for pre-2025 years are presented consistently with historical presentation below.
77

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)

The difference between the Company’s reported income tax rate and the Cayman Islands st atutory rate of 0 % is as f ollows:
 
Year Ended December 31,
2024 2023

Income subject to tax in the United States 53.0   % 3.3   %
Foreign taxes 80.1   % ( 30.9 ) %
Change in valuation allowance ( 94.4 ) % ( 4.9 ) %

Income tax rate 38.7   % ( 32.5 ) %

For the year ended December 31, 2025, the Company paid income taxes, net of refunds, by jurisdiction as follows:

Year Ended December 31,
2025
Ireland
$ 1,238  

US Federal
8,777  

Florida (US State)
2,735  

Other 2,911  
Total
$ 15,661  

Note: The table above also is a result of the adoption of ASU 2023-09 for the year ended December 31, 2025. Historically, any cash taxes paid disclosure was disclosed in the Statement of Cash Flows. Cash paid for taxes was $ 5,655 and $ 1,393 in the years ended December 31, 2024 and 2023, respectively.
Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,
2025 2024
Deferred tax assets:
Net operating loss carryforwards $ 6,985   $ 34,097  
Interest expense —   2,187  

Inventory 2,089   2,704  
Customer relationship intangibles 25,650   28,500  
Other 9,399   4,250  
Total deferred tax assets 44,123   71,738  
Less valuation allowance —   ( 5,228 )
Net deferred tax assets 44,123   66,510  
Deferred tax liabilities:

Fixed assets and goodwill ( 51,480 ) ( 32,545 )
Equity method investments
( 12,223 ) ( 163 )
Other ( 1,896 ) ( 2,214 )
Total deferred tax liabilities
( 65,599 ) ( 34,922 )
Net deferred tax (liabilities) assets
$ ( 21,476 ) $ 31,588  

Deferred tax assets and liabilities are reported net in Other non-current assets or Other non-current liabilities. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible.
78

FTAI AVIATION LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in tables in thousands, unless otherwise noted)