African Reserves Loans

AIR LEASE CORP MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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

Insight

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

Second Quarter Overview

As of June 30, 2022, the net book value of our fleet was $23.5 billion, compared
to $22.9 billion as of December 31, 2021. During the three months ended June 30,
2022, we purchased and took delivery of 21 aircraft from our new order pipeline
and one new incremental aircraft, ending the period with a total of 392 aircraft
in our owned aircraft portfolio. The weighted average age of our fleet was 4.4
years and the weighted average lease term remaining was 7.1 years as of June 30,
2022. Our managed fleet was 89 aircraft as of June 30, 2022 as compared to a
managed fleet of 92 aircraft as of December 31, 2021. We have a globally
diversified customer base comprised of 116 airlines in 62 countries as of
June 30, 2022. As of August 4, 2022, all aircraft in our fleet, except for one
aircraft, were subject to lease agreements or letters of intent.

As of June 30, 2022, we had commitments to purchase 430 aircraft from Boeing and
Airbus for delivery through 2028, with an estimated aggregate commitment of
$27.6 billion. We have placed approximately 99% of our committed orderbook on
long-term leases for aircraft delivering through the end of 2023 and have placed
58% of our entire orderbook. We ended the second quarter of 2022 with
$31.3 billion in committed minimum future rental payments, consisting of
$15.0 billion in contracted minimum rental payments on the aircraft in our
existing fleet and $16.3 billion in minimum future rental payments related to
aircraft which will deliver between 2022 through 2027.

We typically finance the purchase of aircraft and our business with available
cash balances, internally generated funds, including through aircraft sales,
preferred stock issuances, and debt financings. We ended the second quarter of
2022 with an aggregate borrowing capacity under our revolving credit facility of
$6.6 billion and total liquidity of $7.6 billion. As of June 30, 2022, we had
total debt outstanding of $18.5 billion, of which 92.4% was at a fixed rate and
99.3% was unsecured. As of June 30, 2022, our composite cost of funds raised
through debt financings was 2.81%.

Our total revenues for the quarter ended June 30, 2022 increased by 13.4% to
$557.7 million, compared to the quarter ended June 30, 2021. The increase in
total revenues was primarily driven by the continued growth in our fleet and the
recognition of cash basis revenue of $8.7 million as compared to $41.6 million
of cash basis losses in three months ended June 30, 2021. This increase was
partially offset by the loss of rental revenue from the termination of our
leasing activities in Russia during the first quarter of 2022 and lower aircraft
sales, trading and other revenue. Lower aircraft sales, trading and other
revenue was driven by $34.0 million in revenue recognized in the prior year
related to the sale to a third party of certain unsecured claims related to
Aeromexico's insolvency proceedings.

During the second quarter of 2022, the industry continued to recover from the
impact of COVID-19. As of June 30, 2022, we had $182.1 million in outstanding
deferred rentals due to the impact of the COVID-19 pandemic as compared to
$203.2 million as of December 31, 2021. Our collection rate for the three and
six months ended June 30, 2022 were 94.7% and 96.0%, respectively. Our
collection rate is defined as the sum of cash collected from lease rentals and
maintenance reserves, including cash recovered from outstanding receivables from
previous periods, as a percentage of the total contracted receivables due during
the period and is calculated after giving effect to lease deferral arrangements
made as of June 30, 2022. Our lease utilization rate for the three and six
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months ended June 30, 2022 were 99.6% and 99.7%, respectively. Lease utilization
rate is calculated based on the number of days each aircraft was subject to a
lease or letter of intent during the period, weighted by the net book value of
the aircraft.

During the three months ended June 30, 2022, we recorded net income attributable
to shareholders of $105.9 million, or $0.95 per diluted share, as compared to
net income attributable to shareholders of $85.6 million, or $0.75 per diluted
share, in the prior period. The increase in our net income attributable to
shareholders is primarily due to the continued growth of our fleet and the
increase in revenues as discussed above.

We recorded adjusted net income before income taxes for the three months ended
June 30, 2022 of $154.5 million or $1.39 per diluted share. This increased by
approximately 22.7% over the prior period results of $125.9 million or $1.10 per
diluted share for the three months ended June 30, 2021. This was due to the
continued growth of our fleet and the increase in revenues as discussed above.
Adjusted net income before income taxes and adjusted diluted earnings per share
before income taxes are measures of financial and operational performance that
are not defined by U.S. Generally Accepted Accounting Principles ("GAAP"). See
"Results of Operations" below for a discussion of adjusted net income before
income taxes and adjusted diluted earnings per share before income taxes as
non-GAAP measures and a reconciliation of these measures to net income
attributable to common stockholders.

Impact of the Russian-Ukrainian conflict

In connection with the ongoing conflict between Russia and Ukraine, the United
States, European Union, United Kingdom and others have imposed, and may continue
to impose, economic sanctions and export controls against certain industry
sectors and parties in Russia. These sanctions include closures of airspace for
aircraft operated by Russian controlled entities, bans on the leasing or sale of
aircraft to Russian controlled entities, bans on the export and re-export of
aircraft and aircraft components to Russian controlled entities or for use in
Russia, and corresponding prohibitions on providing technical assistance,
brokering services, insurance and reinsurance, as well as financing or financial
assistance.

In response to the sanctions, in March 2022 we terminated all of our leasing
activities in Russia, consisting of 24 aircraft in our owned fleet, eight
aircraft in our managed fleet and the leasing activity relating to 29 aircraft
that have not yet delivered from our orderbook, for which the majority have been
subsequently placed. In the first quarter of 2022, we also canceled five
aircraft in our orderbook that were slated for delivery in Russia. As of
August 4, 2022, 21 aircraft previously included in our owned fleet and six
aircraft previously included in our managed fleet still remain in Russia. The
operators of these aircraft have continued to fly most of these aircraft
notwithstanding the termination of leasing activities and repeated demands for
the return of the assets. The 21 aircraft previously included in our owned fleet
provided approximately $18.0 million per quarter in rental revenue. Our future
revenues and cash flows have been impacted by the termination of our leasing
activities of the aircraft in Russia.

While we or the applicable managed platform maintain title to the aircraft, we
determined that it is unlikely we or they will regain possession of the aircraft
that have not been returned and that remain in Russia. As a result, we recorded
a write-off of our interests in our owned and managed aircraft that remain in
Russia, totaling approximately $802.4 million for the three months ended March
31, 2022. The 21 aircraft that remain in Russia were removed from our owned
fleet as of March 31, 2022. In June 2022, we submitted insurance claims to our
insurers to recover our losses relating to these aircraft and are vigorously
pursuing all available insurance claims. In addition, we intend to pursue all
available legal claims related to our aircraft that remain in Russia, but the
timing and amount of any recoveries under any insurance or legal claims are
uncertain at this time. During the second quarter of 2022, we renewed our
insurance policies which resulted in an annualized premium increase of
approximately $16.0 million. These policies apply worldwide with exclusions for
Russia, Ukraine and Belarus. Our leases require our lessees to carry
comprehensive liability insurance and aircraft all-risk insurance. As a result,
lessees operating in Russia, Ukraine or Belarus are required to have insurance
covering those regions or they are not permitted under the terms of their lease
to operate in such countries.

For more information regarding the risks we face relating to the Russia-Ukraine
conflict, see "Part II - Item 1A. Risk Factors," in our Quarterly Report on Form
10-Q for the quarter ended March 31, 2022.
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Our Fleet

References throughout this Quarterly Report on Form 10-Q to "our fleet" refer to
the aircraft included in flight equipment subject to operating leases and do not
include aircraft in our managed fleet or aircraft classified as net investments
in sales-type leases unless the context indicates otherwise. Portfolio metrics
of our fleet as of June 30, 2022 and December 31, 2021 are as follows:

                                                                      June 30, 2022                  December 31, 2021

Net book value of flight equipment subject to an operating lease $23.5 billion $22.9 billion Weighted average age of the fleet(1)

                                                     4.4 years                      4.4 years
Weighted-average remaining lease term(1)                                          7.1 years                      7.2 years

Owned fleet                                                                             392                            382
Managed fleet                                                                            89                             92
Aircraft on order                                                                       430                            431
Total                                                                                   911                            905

Current fleet contracted rentals                              $         15.0        billion       $         14.8   billion
Committed fleet rentals                                       $         16.3        billion       $         16.1   billion
Total committed rentals                                       $         31.3        billion       $         30.9   billion

(1) Weighted average age of the fleet and remaining term of the leases calculated on the basis of the net book value of our flight equipment subject to an operating lease.



The following table sets forth the net book value and percentage of the net book
value of our flight equipment subject to operating leases in the indicated
regions based on each airline's principal place of business as of June 30, 2022
and December 31, 2021:

                                                   June 30, 2022                                     December 31, 2021
                                       Net Book                                             Net Book
Region                                   Value                 % of Total                    Value                    % of Total
                                                                    (in thousands, except percentages)
Europe                              $  7,339,480                        31.3  %       $       7,439,993                        32.5  %
Asia (excluding China)                 6,609,314                        28.2  %               5,952,981                        26.0  %
China                                  2,871,509                        12.2  %               2,934,224                        12.8  %
The Middle East and Africa             2,359,738                        10.1  %               2,447,919                        10.7  %
Central America, South America, and
Mexico                                 1,724,076                         7.3  %               1,566,133                         6.8  %
U.S. and Canada                        1,662,953                         7.1  %               1,638,450                         7.2  %
Pacific, Australia, and New Zealand      900,672                         3.8  %                 919,304                         4.0  %
Total                               $ 23,467,742                       100.0  %       $      22,899,004                       100.0  %



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Table of Contents The following table shows the number of aircraft in our fleet owned by aircraft type at June 30, 2022 and December 31, 2021:

                                                       June 30, 2022                                            December 31, 2021
                                           Number of                                                  Number of
Aircraft type                              Aircraft                      % of Total                   Aircraft                    % of Total
Airbus A319-100                                         1                          0.3  %                        1                          0.3  %
Airbus A320-200                                        28                          7.1  %                       31                          8.1  %
Airbus A320-200neo                                     26                          6.6  %                       23                          6.0  %
Airbus A321-200                                        24                          6.1  %                       26                          6.8  %
Airbus A321-200neo                                     70                         17.9  %                       69                         18.1  %
Airbus A330-200                                        13                          3.3  %                       13                          3.4  %
Airbus A330-300                                         5                          1.3  %                        8                          2.1  %
Airbus A330-900neo                                     11                          2.8  %                        9                          2.4  %
Airbus A350-900                                        13                          3.3  %                       12                          3.1  %
Airbus A350-1000                                        6                          1.5  %                        5                          1.3  %
Boeing 737-700                                          4                          1.0  %                        4                          1.0  %
Boeing 737-800                                         84                         21.4  %                       88                         23.0  %
Boeing 737-8 MAX                                       39                          9.9  %                       28                          7.3  %
Boeing 737-9 MAX                                       10                          2.7  %                           7                       1.8  %
Boeing 777-200ER                                        1                          0.3  %                        1                          0.3  %
Boeing 777-300ER                                       24                          6.1  %                       24                          6.3  %
Boeing 787-9                                           26                          6.6  %                       26                          6.8  %
Boeing 787-10                                           6                          1.5  %                        6                          1.6  %
Embraer E190                                            1                          0.3  %                        1                          0.3  %
Total (1)                                             392                        100.0  %                      382                        100.0  %

(1) From June 30, 2022, we had six aircraft classified as flight equipment for sale. From December 31, 2021we had no flight equipment classified as held for sale.



As of June 30, 2022, we had contractual commitments to acquire a total of 430
new aircraft, with an estimated aggregate purchase price (including adjustments
for anticipated inflation) of $27.6 billion, for delivery through 2028 as
follows:
                                                                           Estimated Delivery Years
Aircraft Type                           2022             2023             2024             2025             2026            Thereafter             Total
Airbus A220-100/300                        4               16               24               20               12                  -                  76
Airbus A320/321neo(1)                     17               23               23               24               35                 64                 186
Airbus A330-900neo                         6                6                4                -                -                  -                  16
Airbus A350-900/1000                       1                3                3                -                -                  -                   7
Airbus A350F                               -                -                -                -                2                  5                   7
Boeing 737-8/9 MAX                        14               31               34               19               16                  -                 114
Boeing 787-9/10                            3                7                8                6                -                  -                  24
Total(2)                                  45               86               96               69               65                 69                 430

(1) The Company’s Airbus A320/321neo orders include 26 long-range variants and 49 very long-range variants. (2) The table above reflects delays in delivery of Airbus and Boeing aircraft based on contractual documentation.

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Aircraft Delivery Delays

Pursuant to our purchase agreements with Boeing and Airbus, we agree to
contractual delivery dates for each aircraft ordered. These dates can change for
a variety of reasons, however for the last several years, manufacturing delays
have significantly impacted the planned purchases of our aircraft on order with
Boeing and Airbus. We are currently experiencing delivery delays with both
Boeing and Airbus aircraft. However, the most significant delivery delays
pertain to our aircraft orders for Boeing 787 aircraft.

During 2020, Boeing began to experience manufacturing issues on its 787
aircraft, which resulted in significant aircraft delivery delays. Boeing halted
787 deliveries in May 2021 and has not indicated when they will resume. We have
not received any 787s since the halting of the deliveries by Boeing. It is our
understanding that, in July 2022, the FAA approved Boeing's plan to inspect and
repair 787 aircraft, which will allow deliveries to resume. However, the pace
and the timing of deliveries of the aircraft for the remainder of this year and
potentially beyond still remains uncertain.

Our purchase agreements with Boeing and Airbus generally provide each of us and
the manufacturers with cancellation rights for delivery delays starting at one
year after the original contractual delivery date, regardless of cause. In
addition, our lease agreements generally provide each of us and the lessees with
cancellation rights related to certain aircraft delivery delays that typically
parallel the cancellation rights in our purchase agreements.

We believe that the majority of our 787 aircraft deliveries in our orderbook
will be delayed, which could give us, our airline customers and Boeing the right
to cancel these aircraft commitments.

As a result of continued manufacturing delays as discussed above, our aircraft
delivery schedule could continue to be subject to material changes and delivery
delays could extend beyond 2022.

The following table, which is subject to change based on Airbus and Boeing
delivery delays, shows the number of new aircraft scheduled to be delivered as
of June 30, 2022, along with the lease placements of such aircraft as of
August 4, 2022. As noted above, we expect delivery delays for all aircraft
deliveries in our orderbook. We remain in discussions with Boeing and Airbus to
determine the extent and duration of delivery delays, but we are not yet able to
determine the full impact of these delays.

                   Number      Number of
Delivery Year      Leased      Aircraft       % Leased
2022                    45        45           100.0  %
2023                    85        86            98.8  %
2024                    58        96            60.4  %
2025                    35        69            50.7  %
2026                    16        65            24.6  %
Thereafter               9        69            13.0  %
Total                  248            430


Aviation industry and sources of income

Our revenues are principally derived from operating leases with airlines
throughout the world. As of June 30, 2022, we had a globally diversified
customer base of 116 airlines in 62 different countries, with over 95% of our
business revenues from airlines domiciled outside of the U.S., and we anticipate
that most of our revenues in the future will be generated from foreign
customers.

Performance of the commercial airline industry is linked to global economic
health and development. Despite the disruption caused to the commercial airline
industry by the COVID-19 pandemic since early 2020, global air travel continues
to recover and has accelerated in most markets. The International Air Transport
Association ("IATA") reported that passenger traffic was up 76% in the month of
June 2022 relative to the same month in the prior year, benefiting from a
significant acceleration in international traffic and strong continued expansion
of domestic traffic in most markets. International traffic in June of 2022 rose
230% relative to the prior year, though it remains 35% lower than the same month
in 2019. Global domestic passenger traffic in June 2022 rose 5% relative to the
prior year, with all major markets rising except China domestic given residual
impact of COVID-related travel constraints, and
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was 19% lower than the same month in 2019. According to IATA, several
international routes are now exceeding 2019 traffic levels or are expected to
exceed those levels near-term, several other domestic markets are quickly
approaching 2019 levels. China domestic traffic is also recently showing signs
of stabilization. We believe COVID-19 vaccination progress, therapeutic
treatments and the easing of travel restrictions will continue to support the
recovery of air passenger traffic and the commercial airline industry.

Currently, we are experiencing increased demand for our aircraft as global air
traffic recovers from the pandemic. We believe supply chain challenges will
further exacerbate what was already shaping up to be a shortage of commercial
aircraft. The increased demand for our aircraft, when combined with rising
interest rates and inflation, is providing a catalyst for rising lease rates.
Lease rates can be influenced by several factors including impacts of changes in
the competitive landscape of the aircraft leasing industry, supply chain
disruptions, evolving international trade matters, epidemic diseases and
geopolitical events and therefore, are difficult to project or forecast.

Our airline customers are facing higher operating costs as a result of rising
fuel costs, interest rates and inflation, ongoing labor shortages and disputes,
as well as delays and cancellations caused by the global air traffic control
system and airports, although the magnitude of underlying pre-pandemic demand
returning and still-to-return to the market is offering a strong counterbalance
to these increased costs. Many of these customers are also exposed to currency
risk related to the appreciation of the U.S. dollar because they earn revenues
in their local currencies while a significant portion of their liabilities and
expenses are denominated in U.S. dollars, including their lease payments to us.
If our airline customers are not able to effectively manage their operating
costs and currency risk, it could impact our financial results and cash flows.

We continue to expect more airline reorganizations, liquidations, or other forms
of bankruptcies, which may include some of our aircraft customers and result in
the early return of aircraft or changes in our lease terms. As of the date of
this filing, we had eight aircraft across three airlines which were subject to
various forms of insolvency proceedings.

We believe the aircraft leasing industry has remained resilient over time in various global economic conditions and remain optimistic about the long-term fundamentals of our business. We expect the aviation industry to continue to recover from the impact of COVID-19.

Cash and capital resources

Insight

We ended the second quarter of 2022 with available liquidity of $7.6 billion
which is comprised of unrestricted cash of $1.0 billion and undrawn balances
under our unsecured revolving credit facility of $6.6 billion. We finance the
purchase of aircraft and our business operations using available cash balances,
internally generated funds, including through aircraft sales and trading
activity, and an array of financing products. We aim to maintain
investment-grade credit metrics and focus our debt financing strategy on funding
our business on an unsecured basis with primarily fixed-rate debt from public
bond offerings. Unsecured financing provides us with operational flexibility
when selling or transitioning aircraft from one airline to another. We also have
the ability to seek debt financing secured by our assets, as well as financings
supported through the Export-Import Bank of the United States and other export
credit agencies for future aircraft deliveries. We have also issued preferred
stock with a total aggregate stated value of $850.0 million. Our access to a
variety of financing alternatives including unsecured public bonds, private
capital, bank debt, secured financings and preferred stock issuances serves as a
key advantage in managing our liquidity. Aircraft delivery delays as a product
of manufacturer delays are expected to further reduce our aircraft investment
and debt financing needs for the next six to twelve months and potentially
beyond.

We have a balanced approach to capital allocation based on the following
priorities, ranked in order of importance: first, investing in modern, in-demand
aircraft to profitably grow our core aircraft leasing business while maintaining
strong fleet metrics and creating sustainable long-term shareholder value;
second, maintaining our investment grade balance sheet utilizing unsecured debt
as our primary form of financing; and finally, in lockstep with the
aforementioned priorities, returning excess cash to shareholders through our
dividend policy as well as regular evaluation of share repurchases, as
appropriate.

We ended the second quarter of 2022 with total debt outstanding of $18.5 billion
compared to $17.2 billion as of December 31, 2021. Our unsecured debt
outstanding increased to $18.4 billion as of June 30, 2022 from $17.1 billion as
of December 31, 2021. Our unsecured debt as a percentage of total debt was 99.3%
and 99.2% as of June 30, 2022 and December 31, 2021, respectively.

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Significant cash sources and needs

We believe that we have sufficient liquidity from available cash balances, cash
generated from ongoing operations, available borrowings under our unsecured
revolving credit facility and general ability to access the capital markets for
opportunistic public bond offerings to satisfy the operating requirements of our
business through at least the next 12 months. Our long-term debt financing
strategy is focused on continuing to raise unsecured debt in the global bank and
investment grade capital markets. Our material cash sources include:

• Unrestricted cash: We ended the second quarter of 2022 with $1.0 billion in cash without restriction.

•Lease cash flows: We ended the second quarter of 2022 with $31.3 billion in
committed minimum future rental payments comprised of $15.0 billion in
contracted minimum rental payments on the aircraft in our existing fleet and
$16.3 billion in minimum future rental payments related to aircraft which will
deliver between 2022 through 2027. These rental payments are a primary driver of
our short and long-term operating-cash-flow. As of June 30, 2022, our minimum
future rentals on non-cancellable operating leases for the next 12 months was
$2.2 billion. For further detail on our minimum future rentals for the remainder
of 2022 and thereafter, see "Notes to Consolidated Financial Statements" under
"Item 1. Financial Statements" in this Quarterly Report on Form 10-Q.

•Unsecured revolving credit facility: As of August 4, 2022, our $7.1 billion
revolving credit facility is syndicated across 53 financial institutions from
various regions of the world, diversifying our reliance on any individual
lending institution. The final maturity for the facility is May 2026. The
facility contains standard investment grade covenants and does not condition our
ability to borrow on the lack of a material adverse effect to us or the general
economy.

•Senior unsecured bonds: We are a frequent issuer in the investment grade
capital markets, opportunistically issuing unsecured bonds, primarily through
our Medium-Term Note Program at attractive cost of funds. In 2022, we have
issued $1.5 billion of Medium-Term Notes with a weighted average interest rate
of 2.54% and we expect to have continued access to the investment grade bond
market in the future, although we anticipate interest rates for issuances in the
near term will increase from those available in recent years.

•Aircraft sales: Proceeds from the sale of aircraft help supplement our
liquidity position. We are targeting to sell up to $750.0 million in aircraft
for 2022, subject to any further significant delivery delays we might experience
during the second half of this year.

•Other sources: In addition to the above, we generate liquidity through other
sources of debt financing (including unsecured and secured bank term loans),
issuances of preferred stock and cash received from security deposits and
maintenance reserves from our lease agreements.

Our material cash requirements are primarily for the purchase of aircraft and
debt service payments, along with our general operating expenses. The amount of
our cash requirements depends on a variety of factors, including, the ability of
aircraft manufacturers to meet their contractual delivery obligations to us, the
ability of our lessees to meet their contractual obligations with us, the timing
of aircraft sales from our fleet, the timing and amount of our debt service
obligations, potential acquisitions, and the general economic environment in
which we operate.

While we have experienced a low interest rate environment for many years,
substantial improvement in the labor markets, higher inflation and geopolitical
events have led to an increase in borrowing rates. We expect short-term interest
rates to continue to rise. A higher interest rate environment may adversely
affect our businesses through increased borrowing costs, although this impact
may be offset in whole or in part if increased interest rates lead to an
increase in leasing activity by our airline customers.

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Our material cash requirements as of June 30, 2022, are as follows:
                                               2022                 2023                 2024                 2025                 2026              Thereafter               Total
Long-term debt obligations                $ 1,291,611          $ 2,566,329          $ 2,885,280          $ 2,404,761          $ 3,963,094          $  5,420,177          $ 18,531,252
Interest payments on debt
outstanding(1)                                265,327              488,339              412,246              339,308              235,360               432,636             2,173,216
Purchase commitments(2)                     3,082,573            6,057,223            6,223,538            4,186,938            3,641,767             4,433,109            27,625,148
Total                                     $ 4,639,511          $ 9,111,891  

$9,521,064 $6,931,007 $7,840,221 $10,285,922 $48,329,616

(1) Future interest payments on variable rate debt are estimated using the variable rates in effect at the June 30, 2022. (2) Purchase commitments reflect future deliveries of Boeing and Airbus aircraft based on information currently available to us based on contractual documentation.



The above table does not include any tax payments we may pay nor any dividends
we may pay on our preferred stock or common stock. Based on our expected cash
sources and requirements for the remainder of 2022, we believe that we have
sufficient liquidity to meet our cash requirements for aircraft deliveries and
debt service obligations. We expect that we will continue to access the capital
markets for public bond offerings over the next 12 months.

The actual delivery dates of the aircraft in our commitments table and expected
time for payment of such aircraft may differ from our estimates and could be
further impacted by the pace at which Boeing and Airbus can deliver aircraft,
among other factors. We expect to make approximately $3.5 billion to $4.5
billion in aircraft investments in 2022, which reflects a high degree of
uncertainty around the Boeing 787 program as well as other potential production
delays.

As of June 30, 2022, we were in compliance in all material respects with the
covenants contained in our debt agreements. While a ratings downgrade would not
result in a default under any of our debt agreements, it could adversely affect
our ability to issue debt and obtain new financings, or renew existing
financings, and it would increase the costs of certain financings. Our liquidity
plans are subject to a number of risks and uncertainties, including those
described in our Annual Report on Form 10-K for the year ended December 31,
2021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and
other SEC filings.

Cash Flows

Our cash flows provided by operating activities increased by 14.3% or
$86.2 million, to $688.8 million for the six months ended June 30, 2022 as
compared to $602.7 million for the six months ended June 30, 2021. Our cash flow
provided by operating activities during the six months ended June 30, 2022
increased due to the continued growth of our fleet and an increase in our cash
collections as compared to the six months ended June 30, 2021. Our cash flow
used in investing activities was $2.0 billion for the six months ended June 30,
2022 and $1.4 billion for the six months ended June 30, 2021, which resulted
primarily from the purchase of aircraft. Our cash flow provided by financing
activities was $1.3 billion for the six months ended June 30, 2022 as compared
to $273.7 million for the six months ended June 30, 2021. The increase is
primarily due to the issuance of debt, net of debt repayments, related in part
to the acquisition of aircraft investments.

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Debt

Our debt financing at June 30, 2022 and December 31, 2021 is summarized below:

                                                          June 30, 2022              December 31, 2021
                                                             ( in thousands, except percentages)
Unsecured
Senior notes                                         $       17,685,728             $      16,892,058
Term financings                                                 190,325                       167,000
Revolving credit facility                                       520,000                             -
    Total unsecured debt financing                           18,396,053    
               17,059,058
Secured
Term financings                                                 120,226                       126,660
Export credit financing                                          14,973                        18,301
    Total secured debt financing                                135,199                       144,961

Total debt financing                                         18,531,252                    17,204,019
Less: Debt discounts and issuance costs                        (195,177)                     (181,539)

Debt financing, net of haircuts and issue costs $18,336,075

         $      17,022,480
Selected interest rates and ratios:
Composite interest rate(1)                                         2.81     %                    2.79  %
Composite interest rate on fixed-rate debt(1)                      2.85     %                    2.90  %
Percentage of total debt at a fixed-rate                           92.4     %                    94.8  %

(1) This rate does not include the effect of initial fees, facility fees, undrawn fees or the amortization of debt discounts and issue costs.

Senior unsecured notes (including medium term note program)

From June 30, 2022we have had $17.7 billion in senior unsecured notes outstanding. From December 31, 2021we have had $16.9 billion in senior unsecured notes outstanding.

During the six months ended June 30, 2022, we issued $1.5 billion in aggregate
principal amount of senior unsecured notes comprised of (i) $750.0 million in
aggregate principal amount of 2.20% Medium-Term Notes due 2027, and (ii)
$750.0 million in aggregate principal amount of 2.875% Medium-Term Notes due
2032.

For more information regarding our senior unsecured notes outstanding, see Note
2 of Notes to Consolidated Financial Statements included in Part III, Item 15 of
our Annual Report on Form 10-K for the year ended December 31, 2021.

Unsecured revolving credit facility

As of June 30, 2022, we had $520.0 million outstanding under our unsecured
revolving credit facility (the "Revolving Credit Facility"). As of December 31,
2021, we did not have any amounts outstanding under our Revolving Credit
Facility. Borrowings under the Revolving Credit Facility are used to finance our
working capital needs in the ordinary course of business and for other general
corporate purposes.

In April 2022, we amended and extended our Revolving Credit Facility through an
amendment that, among other things, extended the final maturity date from May 5,
2025 to May 5, 2026, increased the total revolving commitments to approximately
$7.0 billion as of May 5, 2022 and replaced LIBOR with Term SOFR as the
benchmark interest rate and made certain conforming changes related thereto. As
of June 30, 2022, borrowings under the Revolving Credit Facility accrued
interest at Adjusted Term SOFR (as defined in the Revolving Credit Facility),
plus a margin of 1.05% per year. We are required to pay a facility fee of 0.20%
per year
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in respect of total commitments under the Revolving Credit Facility. Interest
rate and facility fees are subject to increases or decreases based on declines
or improvements in the credit ratings for our debt.

In June 2022, we increased the aggregate facility capacity by an additional
$122.5 million and also extended the maturity of $125.0 million in commitments
to May 5, 2026. As of August 4, 2022, we had total revolving commitments of
approximately $7.1 billion. Lenders held revolving commitments totaling
approximately $6.7 billion that mature on May 5, 2026, commitments totaling
$32.5 million that mature on May 5, 2025 and commitments totaling $375.0 million
that mature on May 5, 2023.

The Revolving Credit Facility provides for certain covenants, including
covenants that limit our subsidiaries' ability to incur, create, or assume
certain unsecured indebtedness, and our subsidiaries' abilities to engage in
certain mergers, consolidations, and asset sales. The Revolving Credit Facility
also requires us to comply with certain financial maintenance covenants
including minimum consolidated shareholders' equity, minimum consolidated
unencumbered assets, and an interest coverage test. In addition, the Revolving
Credit Facility contains customary events of default. In the case of an event of
default, the lenders may terminate the commitments under the Revolving Credit
Facility and require immediate repayment of all outstanding borrowings.

Other debt financing

From time to time, we enter into other debt financings such as unsecured term
financings and secured term financings, including export credit. As of June 30,
2022, the outstanding balance on other debt financings was $325.5 million and we
had pledged three aircraft as collateral with a net book value of
$217.1 million. As of December 31, 2021, the outstanding balance on other debt
financings was $312.0 million and we had pledged three aircraft as collateral
with a net book value of $222.2 million.

Preferred shares

The following table summarizes our issued and outstanding preferred shares as of
June 30, 2022 (in thousands, except unit amounts and percentages):

                            Shares Issued and              Carrying Value                                  Dividend Rate in
                            Outstanding as of              as of June 30,                                   Effect at June        Next dividend rate        Dividend rate after
                              June 30, 2022                     2022                 Issue Date                30, 2022               reset date                 reset date
Series A                      10,000,000                   $   250,000          March 5, 2019                      6.150  %       March 15, 2024           3M LIBOR plus 3.65%
                                                                                                                                                           5 Yr U.S. Treasury
Series B                         300,000                       300,000          March 2, 2021                      4.650  %       June 15, 2026            plus 4.076%
                                                                                                                                                           5 Yr U.S. Treasury
Series C                         300,000                       300,000          October 13, 2021                   4.125  %       December 15, 2026        plus 3.149%
Total Preferred Stock         10,600,000                   $   850,000



For more information regarding our preferred stock issued and outstanding, see
Note 4 of Notes to Consolidated Financial Statements included in Part III, Item
15 of our Annual Report on Form 10-K for the year ended December 31, 2021.

The following table summarizes the cash dividends that we paid during the six
months ended June 30, 2022 on our outstanding Series A, Series B and Series C
Preferred Stock:

   Title of each class         March 15, 2022        June 15, 2022
                                          (in thousands)
Series A Preferred Stock                 $3,844               $3,844
Series B Preferred Stock                 $3,487               $3,487
Series C Preferred Stock                 $3,094               $3,094





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Off­balance Sheet Arrangements

We have not established any unconsolidated entities for the purpose of
facilitating off-balance sheet arrangements or for other contractually narrow or
limited purposes. We have, however, from time to time established subsidiaries
or trusts for the purpose of leasing aircraft or facilitating borrowing
arrangements which are consolidated.

We have non-controlling interests in two investment funds in which we own 9.5%
of the equity of each fund. We account for our interest in these funds under the
equity method of accounting due to our level of influence and involvement in the
funds. Also, we manage aircraft that we have sold through our Thunderbolt
platform. In connection with the sale of certain aircraft portfolios through our
Thunderbolt platform, we hold non-controlling interests of approximately 5.0% in
two entities. These investments are accounted for under the cost method of
accounting.

Impact of the LIBOR transition

On March 5, 2021, the Chief Executive of the U.K. Financial Conduct Authority,
which regulates LIBOR, publicly announced that no new contracts using U.S.
dollar LIBOR should be entered into after December 31, 2021, and that
publication of certain tenors of U.S. dollar LIBOR (including overnight and one,
three, six and 12 months) will permanently cease after June 30, 2023. In the
United States, efforts to identify a set of alternative U.S. dollar reference
interest rates are ongoing, and the Alternative Reference Rate Committee
("ARRC") has recommended the use of a Secured Overnight Funding Rate ("SOFR").
SOFR is different from LIBOR in that it is a backward-looking secured rate
rather than a forward-looking unsecured rate. For cash products and loans, the
ARRC has also recommended Term SOFR, which is a forward-looking SOFR based on
SOFR futures and may in part reduce differences between SOFR and LIBOR.

As of June 30, 2022, we had approximately $0.8 billion of floating rate debt
outstanding that used either one or three-month LIBOR as the applicable
reference rate to calculate the interest on such debt, of which $155.5 million
is set to mature after June 30, 2023. Additionally, our perpetual Series A
Preferred Stock is set to accrue dividends at a floating rate determined by
reference to three-month LIBOR, if available, beginning March 15, 2024. While
all of our agreements governing LIBOR-linked debt obligations and Series A
Preferred Stock obligations that are set to mature after June 30, 2023 contain
LIBOR transition fallback provisions, the lack of a standard market practice and
inconsistency in fallback provisions in recent years is reflected across the
agreements governing our floating rate debt and Series A Preferred Stock. For
our Series A Preferred Stock, if we determine there is no such alternative
reference rate as of March 15, 2024, then we must select an independent
financial advisor to determine a substitute rate for LIBOR, and if an
independent financial advisor cannot determine an alternative reference rate,
the dividend rate, business day convention and manner of calculating dividends
applicable during the fixed-rate period of the Series A Preferred Stock will be
in effect.

In April 2022, we amended and extended our Revolving Credit Facility through an
amendment that, among other things, replaced LIBOR with Term SOFR as the
benchmark interest rate. After that amendment, borrowings under the amended
Revolving Credit Facility accrue interest at Adjusted Term SOFR (as defined in
the Revolving Credit Facility), plus a margin of 1.05% per year subject to
increases or decreases based on declines or improvements in the credit ratings
for our debt.

The implementation of a substitute reference rate for the calculation of
interest rates under our LIBOR linked debt and Series A Preferred Stock
obligations may cause us to incur expenses in effecting the transition and may
result in disputes with our lenders or holders of Series A Preferred Stock over
the appropriateness or comparability to LIBOR of the substitute reference rate
selected. However, we do not expect the LIBOR transition impact will have a
material effect on our financial results based on our anticipated LIBOR linked
outstanding debt and Series A Preferred Stock at June 30, 2023.

If the rate used to calculate interest on our outstanding floating rate debt
that as of June 30, 2022, used LIBOR and our Series A Preferred Stock were to
increase by 1.0% either as a result of an increase in LIBOR or the result of the
use of an alternative reference rate determined under the fallback provisions in
the applicable financial instrument when LIBOR is discontinued, we would expect
to incur additional interest expense and preferred dividends of $8.4 million and
$2.5 million, respectively on such indebtedness and our Series A Preferred Stock
as of June 30, 2022 on an annualized basis.

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Credit Ratings

In June 2022, Fitch Ratings reaffirmed our corporate rating, long-term debt
credit rating and outlook. Our investment-grade corporate and long-term debt
credit ratings help us to lower our cost of funds and broaden our access to
attractively priced capital. The following table summarizes our current credit
ratings:

Rating Agency                               Long-term Debt                Corporate Rating                  Outlook                Date of Last Ratings Action
Kroll Bond Ratings                                A-                             A-                         Stable                                 March 25, 2022
Standard and Poor's                               BBB                            BBB                        Stable                                 April 21, 2022
Fitch Ratings                                     BBB                            BBB                        Stable                                  June 28, 2022



While a ratings downgrade would not result in a default under any of our debt
agreements, it could adversely affect our ability to issue debt and obtain new
financings, or renew existing financings, and it would increase the cost of our
financings.

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Results of Operations

The following table presents our historical operating results for the three and
six months ended June 30, 2022 and 2021 (in thousands, except per share amounts
and percentages):
                                                              Three Months Ended                               Six Months Ended
                                                                   June 30,                                        June 30,
                                                          2022                   2021                     2022                     2021
                                                                                          (unaudited)
Revenues
Rental of flight equipment                         $          545,271       $       452,044       $           1,111,825       $       920,139
Aircraft sales, trading and other                              12,425                39,833                      42,533                46,565
Total revenues                                                557,696               491,877                   1,154,358               966,704

Expenses
Interest                                                      118,997               113,598                     236,274               231,584
Amortization of debt discounts and issuance
costs                                                          13,413                12,513                      26,610                24,538
Interest expense                                              132,410               126,111                     262,884               256,122
Depreciation of flight equipment                              235,284               217,817                     470,591               426,782
Write-off of Russian fleet                                          -                     -                     802,352                     -
Selling, general and administrative                            38,512                26,687                      71,277                53,601
Stock-based compensation expense                                6,558                 6,700                       4,035                12,108
Total expenses                                                412,764               377,315                   1,611,139               748,613
Income/(loss) before taxes                                    144,932               114,562                   (456,781)               218,091
Income tax (expense)/benefit                                 (28,655)              (21,140)                     104,065              (40,577)
Net income/(loss)                                  $          116,277       $        93,422       $           (352,716)       $       177,514
Preferred stock dividends                                    (10,425)               (7,835)                    (20,850)              (11,679)
Net income/(loss) attributable to common
stockholders                                       $          105,852       $        85,587       $           (373,566)       $       165,835

Earnings/(Loss) per share of common stock:
Basic                                              $             0.95       $          0.75       $              (3.32)       $          1.45
Diluted                                            $             0.95       $          0.75       $              (3.32)       $          1.45

Other financial data
Pre-tax margin                                              26.0    %             23.3    %                  (39.6)   %             22.6    %
Pre-tax return on common equity (trailing
twelve months)                                              (3.0)   %              8.5    %                   (3.0)   %              8.5    %

Adjusted net earnings before income taxes(1) $154,478 $125,940 $

             355,366       $       243,058
Adjusted diluted earnings per share before
income taxes(1)                                    $             1.39       $          1.10       $                3.15       $          2.13
Adjusted pre-tax margin(1)                                  27.7    %             25.6    %                   30.8    %             25.1    %
Adjusted pre-tax return on common equity
(trailing twelve months)(1)                                 12.2    %              9.6    %                   12.2    %              9.6    %


__________________________________________

(1)Adjusted net income before income taxes (defined as net income/(loss)
attributable to common stockholders excluding the effects of certain non-cash
items, one-time or non-recurring items, such as write-offs of our Russian fleet,
that are not expected to continue in the future and certain other items),
adjusted pre-tax margin (defined as adjusted net income before income taxes
divided by total revenues), adjusted diluted earnings per share before income
taxes (defined as adjusted net income before income taxes divided by the
weighted average diluted common shares outstanding) and adjusted pre-tax return
on common equity (defined as adjusted net income before income taxes divided by
average common shareholders' equity) are measures of operating performance that
are not defined by GAAP and should not be considered as an alternative to net
income/(loss) attributable to common stockholders, pre-tax margin,
earnings/(loss) per share, diluted
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earnings/(loss) per share and pre-tax return on common equity, or any other
performance measures derived in accordance with GAAP. Adjusted net income before
income taxes, adjusted pre-tax margin, adjusted diluted earnings per share
before income taxes and adjusted pre-tax return on common equity are presented
as supplemental disclosure because management believes they provide useful
information on our earnings from ongoing operations.

Management and our board of directors use adjusted net income before income
taxes, adjusted pre-tax margin, adjusted diluted earnings per share before
income taxes and adjusted pre-tax return on common equity to assess our
consolidated financial and operating performance. Management believes these
measures are helpful in evaluating the operating performance of our ongoing
operations and identifying trends in our performance, because they remove the
effects of certain non-cash items, one-time or non-recurring items that are not
expected to continue in the future and certain other items from our operating
results. Adjusted net income before income taxes, adjusted pre-tax margin,
adjusted diluted earnings per share before income taxes and adjusted pre-tax
return on common equity, however, should not be considered in isolation or as a
substitute for analysis of our operating results or cash flows as reported under
GAAP. Adjusted net income before income taxes, adjusted pre-tax margin, adjusted
diluted earnings per share before income taxes and adjusted pre-tax return on
common equity do not reflect our cash expenditures or changes in our cash
requirements for our working capital needs. In addition, our calculation of
adjusted net income before income taxes, adjusted pre-tax margin, adjusted
diluted earnings per share before income taxes and adjusted pre-tax return on
common equity may differ from the adjusted net income before income taxes,
adjusted pre-tax margin, adjusted diluted earnings per share before income taxes
and adjusted pre-tax return on common equity, or analogous calculations of other
companies in our industry, limiting their usefulness as a comparative measure.

The following table presents the reconciliation of the adjusted pre-tax profit margin numerator (in thousands, except percentages):

                                                          Three Months Ended                              Six Months Ended
                                                               June 30,                                       June 30,
                                                       2022                  2021                    2022                     2021
                                                                                      (unaudited)
Reconciliation of the numerator for adjusted
pre-tax margin (net income/(loss) attributable
to common stockholders to adjusted net income
before income taxes):
Net income/(loss) attributable to common
stockholders                                     $         105,852       $      85,587       $           (373,566)       $      165,835
Amortization of debt discounts and issuance
costs                                                       13,413              12,513                      26,610               24,538
Write-off of Russian fleet                                       -                   -                     802,352                    -
Stock-based compensation expense                             6,558               6,700                       4,035               12,108
Income tax expense/(benefit)                                28,655              21,140                   (104,065)               40,577

Adjusted net earnings before income taxes $154,478

    125,940       $             355,366       $      243,058

Denominator for adjusted pre-tax margin:
Total revenues                                   $         557,696       $     491,877       $           1,154,358       $      966,704
Adjusted pre-tax margin(a)                               27.7    %            25.6   %                   30.8    %            25.1    %

(a) Adjusted pre-tax margin is adjusted net profit before income taxes divided by total revenue

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The following table shows the reconciliation of the numerator for adjusted
diluted earnings per share before income taxes (in thousands, except share and
per share amounts):
                                                           Three Months Ended                             Six Months Ended
                                                                June 30,                                      June 30,
                                                       2022                   2021                   2022                   2021
                                                                                      (unaudited)
Reconciliation of the numerator for adjusted
diluted earnings per share (net income/(loss)
attributable to common stockholders to adjusted
net income before income taxes):
Net income/(loss) attributable to common
stockholders                                     $     105,852          $   

85,587 ($373,566) $165,835
Amortization of debt discounts and issue costs

                                                   13,413                 12,513                 26,610                 24,538
Write-off of Russian fleet                                   -                      -                802,352                      -
Stock-based compensation expense                         6,558                  6,700                  4,035                 12,108
Income tax expense/(benefit)                            28,655                 21,140               (104,065)                40,577

Adjusted net profit before income taxes $154,478 $

125,940 $355,366 $243,058

Denominator for adjusted diluted earnings per
share:
Weighted-average diluted common shares
outstanding                                        111,043,836            114,377,965            112,373,092            114,373,576
Potentially dilutive securities, whose effect
would have been anti-dilutive                                -                      -                301,279                      -
Adjusted weighted-average diluted common shares
outstanding                                        111,043,836            114,377,965            112,674,371            114,373,576
Adjusted diluted earnings per share before
income taxes(b)                                  $        1.39          $   

1.10 $3.15 $2.13

(b) Adjusted diluted earnings per share before income taxes is adjusted net income before income taxes divided by adjusted weighted average diluted ordinary shares outstanding

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The following table shows the reconciliation of pre-tax return on common equity
to adjusted pre-tax return on common equity (in thousands, except percentages):
                                                                         Trailing Twelve Months
                                                                                June 30,
                                                                     2022                       2021
                                                                               (unaudited)

Reconciliation of numerator of adjusted pre-tax return on common equity ((net loss)/income attributable to common shareholders to adjusted net income before income taxes): (net loss)/income attributable to common shareholders $ (131,242) $

           389,636
Amortization of debt discounts and issuance costs                           52,693                    46,802
Write-off of Russian fleet                                                 802,352                         -
Stock-based compensation expense                                            18,443                    21,415
Income tax (benefit)/expense                                              (40,258)                   100,165
Adjusted net income before income taxes                      $             701,988       $           558,018

Reconciliation of denominator for pre-tax return on common
equity to adjusted pre-tax return on common equity:
Common shareholders' equity as of beginning of the period    $           5,951,715       $         5,619,801
Common shareholders' equity as of end of the period          $           5,589,634       $         5,951,715
Average common shareholders' equity                          $           

$5,770,675 5,785,758

Adjusted pre-tax return on common equity(c)                                12.2  %                  9.6    %

(c) Adjusted pre-tax return on common equity is adjusted net income before income taxes divided by average common shareholders’ equity

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Three months ended June 30, 2022, compared to the three months ended June 30,
2021

Rental revenue

During the three months ended June 30, 2022, we recorded $545.3 million in
rental revenue, which included overhaul revenue, net of amortization expense
related to initial direct costs of $2.4 million, as compared to $452.0 million,
which included amortization expense related to initial direct costs, net of
overhaul revenue of $9.9 million for the three months ended June 30, 2021. Our
owned fleet increased to 392 aircraft with a net book value of $23.5 billion as
of June 30, 2022 from 354 aircraft with a net book value of $21.5 billion as of
June 30, 2021. The increase in rental revenues was primarily driven by the
growth in our fleet and the recognition of cash basis revenue of $8.7 million as
compared to $41.6 million of cash basis losses in the three months ended June
30, 2021. This increase was partially offset by the loss of revenues from the
termination of our leasing activities in Russia during the first quarter of
2022.

Aircraft sales, trading and other income

Aircraft sales, trading and other revenue totaled $12.4 million for the three
months ended June 30, 2022 compared to $39.8 million for the three months ended
June 30, 2021. The decrease in our aircraft sales, trading and other revenue is
primarily attributable to $34.0 million in revenue recognized from the sale to a
third party of certain unsecured claims related to Aeromexico's insolvency
proceedings during the quarter ended June 30, 2021. We did not sell any aircraft
during the three months ended June 30, 2022 and June 30, 2021.

Interest expense

Interest expense totaled $132.4 million for the three months ended June 30, 2022
compared to $126.1 million for the three months ended June 30, 2021. Our
interest expense increased due to an increase in our average debt balance, which
was offset by a decline in our composite cost of funds as compared to the prior
year. Due to the rising interest rate environment, we expect our interest
expense will increase as our average debt balance outstanding and our composite
cost of funds each increase in the future.

Depreciation expense

We recorded $235.3 million in depreciation expense of flight equipment for the
three months ended June 30, 2022 compared to $217.8 million for the three months
ended June 30, 2021. The increase in depreciation expense for the three months
ended June 30, 2022, compared to the three months ended June 30, 2021, is
primarily attributable to the growth of our fleet during the last twelve months.
We expect our depreciation expense to increase as we continue to add aircraft to
our fleet.

Selling, general and administrative expenses

We recorded selling, general and administrative expenses of $38.5 million for
the three months ended June 30, 2022 compared to $26.7 million for the three
months ended June 30, 2021. The increase in selling, general and administrative
expenses was primarily due to the increase in business activity, increased
expenses related to insurance premiums and the transition of aircraft. During
the three months ended June 30, 2022, we renewed our insurance which resulted in
an annualized increase in our insurance premiums of approximately $16.0 million
that we anticipate will increase our selling, general and administrative
expenses in future periods. We expect an increase in operating costs due to
higher inflation, increased insurance premiums, and certain geopolitical events,
such as the Russia-Ukraine conflict. Selling, general and administrative
expenses as a percentage of total revenue increased to 6.9% for the three months
ended June 30, 2022 compared to 5.4% for the three months ended June 30, 2021.

Taxes

Our effective tax rate for the quarter increased to 19.8% from 18.5% in the prior year. The effective tax rate increased due to changes in permanent items.

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Net income attributable to common stockholders

For the three months ended June 30, 2022, we reported consolidated net income
attributable to common stockholders of $105.9 million, or $0.95 per diluted
share, compared to a consolidated net income attributable to common stockholders
of $85.6 million, or $0.75 per diluted share, for the three months ended
June 30, 2021. Our net income attributable to common stockholders and diluted
earnings per share increased due to the continued growth of our fleet, partially
offset by the loss of revenues from the termination of our leasing activities in
Russia and the $34.0 million recognized from the sale to a third party of
certain unsecured claims related to Aeromexico's insolvency proceedings during
the quarter ended June 30, 2021.

Adjusted net profit before income taxes

For the three months ended June 30, 2022, we recorded adjusted net income before
income taxes of $154.5 million, or $1.39 per adjusted diluted share, compared to
an adjusted net income before income taxes of $125.9 million, or $1.10 per
adjusted diluted share, for the three months ended June 30, 2021. Our adjusted
net income before income taxes and adjusted diluted earnings per share before
income taxes increased for the three months ended June 30, 2022 as compared to
2021, primarily due to the continued growth of our fleet and the increase in
revenues as discussed above.

Adjusted net income before income taxes and adjusted diluted earnings per share
before income taxes are measures of financial and operational performance that
are not defined by GAAP. See Note 1 under the "Results of Operations" table
above for a discussion of adjusted net income before income taxes and adjusted
diluted earnings per share before income taxes as non-GAAP measures and
reconciliation of these measures to net income available to common stockholders.

Six months ended June 30, 2022compared to the half-year ended June 30, 2021

Rental income

During the six months ended June 30, 2022, we recorded $1.1 billion in rental
revenue, which included overhaul revenue, net of amortization expense related to
initial direct costs of $42.1 million, as compared to $920.1 million, which
included amortization expense related to initial direct costs, net of overhaul
revenue of $12.3 million for the six months ended June 30, 2021. Our owned fleet
increased to 392 aircraft with a net book value of $23.5 billion as of June 30,
2022 from 354 aircraft with a net book value of $21.5 billion as of June 30,
2021. The increase in rental revenues was primarily driven by the growth in our
fleet and the recognition of cash basis revenue of $5.6 million as compared to
$90.3 million of cash basis losses in the six months ended June 30, 2021. This
increase was partially offset by the loss of revenues from the termination of
our leasing activities in Russia during the first quarter of 2022.

Aircraft sales, trading and other income

Aircraft sales, trading and other revenue totaled $42.5 million for the six
months ended June 30, 2022 compared to $46.6 million for the six months ended
June 30, 2021. During the six months ended June 30, 2022, we had approximately
$17.9 million in forfeiture of security deposit income from the termination of
our leasing activities in Russia and $7.2 million in gains from four sales-type
lease transactions in the current year period. Despite the revenue items
discussed above, Aircraft sales, trading and other revenue decreased due to
$34.0 million in revenue recognized from the sale to a third party of certain
unsecured claims related to Aeromexico's insolvency proceedings during the six
months ended June 30, 2021. We did not sell any aircraft during the six months
ended June 30, 2022 and June 30, 2021.

Interest expense

Interest expense totaled $262.9 million for the six months ended June 30, 2022
compared to $256.1 million for the six months ended June 30, 2021. Our interest
expense increased due to the increase in our average debt balance, which was
offset by a decline in our composite cost of funds as compared to the prior
year. Due to the rising interest rate environment, we expect our interest
expense will increase as our average debt balance outstanding and our composite
cost of funds each increase in the future.
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Depreciation expense

We recorded $470.6 million in depreciation expense of flight equipment for the
six months ended June 30, 2022 compared to $426.8 million for the six months
ended June 30, 2021. The increase in depreciation expense for the six months
ended June 30, 2022, compared to the six months ended June 30, 2021, is
primarily attributable to the growth of our fleet during the last twelve months.
We expect our depreciation expense to increase as we continue to add aircraft to
our fleet.

Write-off of Russian fleet

As further described above under "Impact of Russia-Ukraine Conflict", in
response to the sanctions against certain industry sectors and parties in
Russia, in March 2022 we terminated all of our leasing activities in Russia,
including 24 aircraft in our owned fleet and eight aircraft in our managed
fleet. As of August 4, 2022, 21 aircraft in our owned fleet and six aircraft in
our managed fleet remain in Russia. The operators of these aircraft have
continued to fly most of the aircraft notwithstanding the termination of leasing
activities and our repeated demands for the return of the assets. While we or
the applicable managed platform maintain title to the 21 aircraft, we determined
that it is unlikely we or they will regain possession of the aircraft that have
not been returned and that remain in Russia. As such, during the six months
ended June 30, 2022, we recorded a write-off of our interests in our owned and
managed fleet that remain in Russia, totaling approximately $802.4 million. We
did not have any losses from asset write-offs for the three months ended June
30, 2022. In June 2022, we submitted insurance claims to our insurers to recover
our losses relating to these aircraft and are vigorously pursuing all available
insurance claims.

Stock-based compensation

We recorded stock-based compensation expense of $4.0 million for the six months
ended June 30, 2022 compared to stock-based compensation expense of
$12.1 million for the six months ended June 30, 2021. The decrease in
stock-based compensation relates to reductions in the underlying vesting
estimates of certain book value RSUs as the performance criteria are no longer
considered probable of being achieved.

Selling, general and administrative expenses

We recorded selling, general and administrative expenses of $71.3 million for
the six months ended June 30, 2022 compared to $53.6 million for the six months
ended June 30, 2021. The increase in selling, general and administrative
expenses was primarily due to the increase in business activity, increased
expenses related to insurance premiums and the transition of aircraft. During
the six months ended June 30, 2022, we renewed our insurance which resulted in
an annualized increase in our insurance premiums of approximately $16.0 million
that we anticipate will increase our selling, general and administrative
expenses in future periods. We expect an increase in operating costs due to
higher inflation, increased insurance premiums, and certain geopolitical events,
such as the Russia-Ukraine conflict. Selling, general and administrative
expenses as a percentage of total revenue increased to 6.2% for the six months
ended June 30, 2022 compared to 5.5% for the six months ended June 30, 2021.

Taxes

For the six months ended June 30, 2022 and June 30, 2021, we reported an effective tax rate excluding discrete items of 19.8% and 18.6%, respectively. Due to discrete items related to the write-off of our Russian fleet, we reported an overall effective tax rate of 22.8% for the six months ended June 30, 2022.

Net income attributable to ordinary shareholders

For the six months ended June 30, 2022, we reported a net loss attributable to
common stockholders of $373.6 million, or loss of $3.32 per diluted share,
compared to a net income attributable to common stockholders of $165.8 million,
or $1.45 per diluted share, for the six months ended June 30, 2021. Despite the
growth of our fleet, our net income attributable to common stockholders and
diluted earnings per share decreased due to the impact of the write-off of our
Russian fleet.

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Adjusted net income before income taxes

For the six months ended June 30, 2022, we recorded adjusted net income before
income taxes of $355.4 million, or $3.15 per adjusted diluted share, compared to
an adjusted net income before income taxes of $243.1 million, or $2.13 per
adjusted diluted share, for the six ended June 30, 2021. Our adjusted net income
before income taxes and adjusted diluted earnings per share before income taxes
increased for the six months ended June 30, 2022 as compared to 2021, primarily
due to the continued growth of our fleet and the increase in revenues as
discussed above.

Adjusted net income before income taxes and adjusted diluted earnings per share
before income taxes are measures of financial and operational performance that
are not defined by GAAP. See Note 1 under the "Results of Operations" table
above for a discussion of adjusted net income before income taxes and adjusted
diluted earnings per share before income taxes as non-GAAP measures and
reconciliation of these measures to net income available to common stockholders.

Critical accounting estimates

Our critical accounting estimates reflecting management's estimates and
judgments are described in our Annual Report on Form 10-K for the year ended
December 31, 2021. We have reviewed recently adopted accounting pronouncements
and determined that the adoption of such pronouncements is not expected to have
a material impact, if any, on our Consolidated Financial Statements.
Accordingly, there have been no material changes to critical accounting
estimates in the six months ended June 30, 2022.

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