Air LeAse CorporAtion
Annual report 2011
1
We have arrived.
We took off in February 2010. in our first two years we have landed
in the forefront of the aircraft leasing business. Our vision is unique.
Our experience is extensive and our performance is remarkable.
We are air Lease Corporation and we have arrived.
two years of achievement have brought ALC to the forefront of the
aircraft leasing industry.
January
FIrSt NEw AIrCrAFt
DELIvEry From ALC’S
orDEr book
february
ALC IS LAUNCHED
July
FArNboroUgH AIr
SHow orDEr
CompLEtED A $1.3
bILLIoN prIvAtE
pLACEmENt oF EqUIty
may
FIrSt AIrCrAFt
DELIvEry
$1.3
billion
prIvAtE pLACEmENt
oF EqUIty
$923
Million
INItIAL pUbLIC oFFErINg
december
40 AIrCrAFt IN FLEEt oN
DECEmbEr 31, 2010
40
aPrIl
INItIAL pUbLIC
oFFErINg, LIStED
oN tHE NySE (AL)
rAISED $923 mILLIoN
groSS proCEEDS
december
102 AIrCrAFt IN FLEEt oN
DECEmbEr 31, 2011
102
JANUAry
FEbrUAry
mArCH
AprIL
mAy
JUNE
JULy
AUgUSt
SEptEmbEr
oCtobEr
NovEmbEr
DECEmbEr
JANUAry
FEbrUAry
mArCH
AprIL
mAy
JUNE
JULy
AUgUSt
SEptEmbEr
oCtobEr
NovEmbEr
DECEmbEr
2010
$1.5
billion
DEbt FACILIty
June
CLoSED A $1.5 bILLIoN
DEbt FACILIty
2011
July
pArIS AIr
SHow orDEr
2
3
We provide LeAsing
soLutions to the WorLd’s
AirLines.
We are also a strategic partner to our airline customers and assist them in modernizing,
our primary business is providing the world’s airlines with operating leases
on new aircraft from the major commercial aircraft manufacturers.
customizing, and maximizing the profitability of their fleets. We partner with the
manufacturers by not only purchasing their high quality aircraft but by offering
counsel on model specifications and configurations of future designs.
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Changing route networks. Market competition. Aircraft configurations.
environmental factors. Fleet commonality. Airplane performance.
Leasing is more than just a simple financial exercise – it takes a comprehensive
understanding of aircraft capabilities and the competitive landscape.
Airline requirements are constantly evolving, so ALC evaluates the mission
requirements of tomorrow and helps advise the manufacturers on those
future aircraft designs.
market comPetItIon
prEmIUm AND bUSINESS trAFFIC
Low CoSt provIDErS
rEgIoNAL opErA torS
FLAg CArrIErS
CoDE SHArES
ALLIANCES
LAbor CoNSIDErAtIoNS
LEISUrE AIrLINES
ImPactIng future
manufacturer desIgns
AIrbUS A320 NEo
boEINg 737 mAX
AIrbUS A350-Xwb
boEINg 787
aIrPort
factors
gAtE AvAILAbILIty
tAkEoFF AND LANDINg SLot
AvAILAbILIty
rUNwAy LENgtH AND wIDtH
tErmINAL SIzE AND StrUCtUrE
LANDINg wEIgHt FEES
current
aIrcraft choIces
mISSIoN rEqUIrEmENtS
LoAD FACtor
mAINtENANCE CoStS
FUEL bUrN
opErAtINg CoSt pEr SEAt mILE
CompEtItor’S AIrCrAFt
fleet
ratIonalIzatIon
AIrCrAFt CommoNALIty
ENgINE CommoNALIty
FLEEt SImpLIFICAtIoN
envIronmental
factors
EmISSIoNS tAXES
CArboN CrEDItS
AND trADINg
NoISE rEgULAtIoNS
oPeratIng
envIronment
roUtE LENgtH
tImE rEStrICtIoNS
wEAtHEr
ALtItUDE
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We hAve ALreAdy LAnded
in 33 Countries.
that the future of our industry expands beyond developed nations to evolving markets,
With the growing demand for aircraft in the world’s emerging markets, it’s clear
making it truly global. While we are based in the united states,
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we have built a network of strong and growing relationships with airlines in
every geographic region of the world.
diversification by region and country is critical to our portfolio strategy.
We continually monitor concentration as a key measure of our risk
management policy. in just our first full year of operation, we have
established strong relationships in every corner of the globe.
north
amerIca
10 AIrCrAFt
euroPe
34 AIrCrAFt
asIa PacIfIc
35 AIrCrAFt
latIn amerIca
16 AIrCrAFt
afrIca & mIddle east
7 AIrCrAFt
ChinA
indiA
sri LAnkA
JApAn
kAzAkhstAn
MongoLiA
neW zeALAnd
vietnAM
AustrALiA
MALAysiA
south koreA
thAiLAnd
itALy
FrAnCe
gerMAny
the netherLAnds
spAin
CzeCh repubLiC
ireLAnd
norWAy
russiA
turkey
united kingdoM
brAziL
MexiCo
trinidAd & tobAgo
CoLoMbiA
united stAtes
CAnAdA
ethiopiA
kenyA
united ArAb eMirAtes
south AFriCA
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10
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the number of airline relationships we have established in our
short history demonstrates our approach to fleet planning. in fact, no customer
accounted for more than 10% of our fleet by net book value. in the coming year,
we expect more and more airlines to look to us — and our pipeline of new
aircraft — as an important source for further fleet expansion and renewal.
We hAve
deLivered
AirCrAFt to 55
AirLines.
diversification is a key
component of our business
strategy, so no one airline
represents more than 10% of
our fleet by net book value.
AEr LINgUS
AEromEXICo
AIr ArAbIA
AIr AStANA
AIr AUStrAL
AIr CANADA
AIr CHINA
AIr FrANCE
NorwEgIAN AIr
SHUttLE
orIENt tHAI AIrLINES
SHANgHAI AIrLINES
SICHUAN AIrLINES
SkymArk AIrLINES
SoUtH AFrICAN
AIrwAyS
AIr mACAU
SoUtHwESt AIrLINES
AIr NEw zEALAND
SpICEJEt
AIrASIA
AIrbErLIN
ALItALIA
AvIANCA
SpIrIt AIrLINES
SprINg AIrLINES
SrILANkAN AIrLINES
SUN CoUNtry
CArIbbEAN AIrLINES
SUNEXprESS
CHINA SoUtHErN
SUNwINg AIrLINES
EtHIopIAN AIrLINES
tAm AIrLINES
EtIHAD
goAIr
tHomAS Cook
trANSAEro AIrLINES
goL AIrLINES
trANSAvIA.Com
HAINAN AIrLINES
trAvEL SErvICE
INtErJEt
JEJU AIr
trIp LINHAS AErEAS
UNItED CoNtINENtAL
kENyA AIrwAyS
vIEtNAm AIrLINES
kINgFISHEr AIrLINES
vIrgIN AUStrALIA
kLm
mIAt moNgoLIAN
AIrLINES
mIHIN LANkA
voLArIS
vUELINg
wEStJEt
XIAmEN AIrLINES
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WE hAvE onE of ThE WoRLd’s
mosT EffIcIEnT fLEETs.
Boeing. Airbus. Embraer. ATR. We’re providing many of the world’s
airlines with operationally and environmentally efficient aircraft.
It's one of the the world's most modern fleets — in fact, the average
age of an Air Lease aircraft is just 3.6 years.
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We do not intend to become the supermarket of
aircraft lessors. ALC has a very focused product
strategy to provide the most widely distributed
and in demand aircraft types.
narrowbodIes 79%
boEINg 737 ............................................. 37%
AIrbUS A320 FAmILy ............................ 30%
E JEtS ...................................................... 12%
wIdebodIes
AIrbUS A330-200 ................................... 11%
boEINg 777 ............................................. 5%
boEINg 767 ............................................. 3%
19%
turboProPs
Atr 72-600 ............................................... 2%
2%
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boeing 777-300er
twin aisle jetliner with range direct
from New york to Hong kong
Engine option....................gE90-115b
Standard Configuration ...365 passengers
range (Nm) .......................7,930
eMbrAer 190
Superior range in the 91-120 seat
regional jetliner category
Engine option....................CF34-10E
Standard Configuration ...114 passengers
range (Nm) .......................2,400
boeing 737-800
Single aisle jetliner with strong seat-cost benefits
Engine options..................CFm56-7b
Standard Configuration ...162 passengers
range (Nm) .......................3,115
Atr 72-600
New technology turboprob aircraft
in the 70-seat segment
Engine option....................pw 127m
Standard Configuration ...72 passengers
range (Nm) .......................825
Airbus A320-200
transatlantic performance capabillity brought
to short-haul routes
Engine options..................CFm56-5b, v2500-A5
Standard Configuration ...150 passengers
range (Nm) .......................3,300
Airbus A330-200
versatile mid-sized widebody built to
cover all-ranges
Engine options..................gE CF6-80E1,
pw4000,
rr trent 700
Standard Configuration ...253 passengers
range (Nm) .......................7,250
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2011 fInancIal hIghlIghts
(in thousands, except per share amounts)
Revenues
Pretax income
Pretax margin
Net income
Cash provided by operating activities
Adjusted net income 1
Adjusted EBITDA 1
Net income per share:
Basic
Diluted
Fy 2011
$ 336,741
$ 82,841
24.6%
$ 53,232
$ 267,166
$ 87,954
$ 290,168
$
0.59
$
0.59
(1) See notes 1 and 2 in “Selected Financial Data” for a discussion of the non-GAAP measures
adjusted net income and adjusted EBITDA.
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to our shArehoLders
Air Lease Corporation was launched in February 2010 with one simple idea: apply
everything we’ve learned from decades in this business and create the world’s premier
aircraft lessor from a clean sheet of paper, geared for shareholder returns and the future
of the airline industry.
in less than two years, we have built a fleet of 102 aircraft spread across 55 airline
customers in 33 countries, with an average fleet age of 3.6 years and average lease maturity
of 6.6 years. in 2011, we took our company public on the new york stock exchange under
the trading symbol ‘AL.’ our financial results and key metrics are laid out in the pages before
you, including our pretax profit margin of 24.6% and fully diluted eps of $.59 for 2011,
which is our first full year in business. We are satisfied with our results to date, yet we
believe those results will be further enhanced with the benefits of economies of scale and
our growing financial strength.
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ALC’s aircraft and fleet strategy has been clear from the beginning – to offer the
youngest, most fuel efficient, most environmentally friendly, most widely distributed aircraft
available now, and in the future. We believe that this is the main way by which the majority of
airlines will optimize their future. We think our view has been validated. During 2011 and early
2012 we’ve witnessed unprecedented orders for new aircraft as fuel prices remain the biggest
cost threat to airline prosperity, along with environmental pressures continuing to grow larger.
ALC is now well-positioned to meet the needs of our airline customers with our current fleet,
plus 217 new aircraft on order as of December 31, 2011 for delivery through 2020.
At the same time, much noise has been made about the airframe manufacturers’
record increases in production rates and the potential negative impact these increases might
have on the global aircraft supply and demand equation in the face of softening economic
conditions and airline profitability, particularly in some regions of the world such as Europe.
While we anticipate that regional economic factors and reduced airline financial performance
will have some negative impact on the order books of the airframe manufacturers, they
remain significantly oversold compared to their production capabilities. The overall supply of
new aircraft available to the marketplace for the next several years from the manufacturers
remains limited, helping to make ALC an attractive leasing solution for airlines looking to
procure the new aircraft they need to optimize their fleets, maximize their flexibility, and
reduce their own financing risk.
Volatility is nothing new in the airline industry. Our team has managed through many
cycles and industry conditions including aircraft oversupply and undersupply, high interest
rates, airline bankruptcies, catastrophic events, pandemic outbreaks, and more. Yet, air
transportation has become, and in our view will remain, the world’s form of long-distance
We beLieve our perForMAnCe WiLL
Further ACCeLerAte With our groWing FinAnCiAL strength
mass transportation and an important engine of global commerce. We believe ALC’s fleet,
aircraft strategy, and long-term order book strikes the right balance between growth and
conservatism. Moreover, our low leverage balance sheet positions us well to take advantage
of opportunities that may present themselves in the marketplace.
2011 also brought uncertainty and stress in the global capital markets, credit
downgrades of multiple European countries, and the USA losing its AAA rating. Financing
uncertainty reached a crescendo by the end of 2011, with banks in France, Spain, and Italy
exiting dollar-based lending (the currency of aircraft finance). However, during 2011, ALC
grew its banking group from 13 to 23 banks across the USA, Canada, Europe, and Asia, with
17 of those banks providing unsecured financing as of December 31, 2011. We concentrated
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on expanding our banking relationships in the Asia Pacific region, adding credit facilities
from banks headquartered in Singapore, Japan, and Australia. We tapped the unsecured
institutional private placement debt market in June 2011, and issued our first convertible
unsecured bond in November 2011. As of December 31, 2011, ALC achieved an overall
composite interest rate of 3.14% on our total debt portfolio, down from the previous year’s
composite rate of 3.32%, and ended the year with a debt to equity ratio of 1.2 to 1.
We are pleased with our results, and proud of our dedicated team of management
and employee shareholders, all of whom are consumed with a passion for this business.
It is their in-depth knowledge of our customers’ requirements, and the needs of the industry,
coupled with an entrepreneurial culture, the spark of a youthful company, the unbridled
enthusiasm of its people, the commitment to deliver superior results (to our investors,
and to our customers), and the unwavering belief in our business that form the core of
ALC’s success.
In addition to our loyal and professional staff, we wish to express our gratitude and
thanks to our Board of Directors for their outstanding guidance, to the many airline clients
worldwide who have entrusted us with their business, to our shareholders and financiers
whose confidence in ALC has been an essential ingredient to our success, and to our major
airframe, engine, and component suppliers, all of whom have supported and validated our
business growth trajectory.
Steven F. Udvar-HÁzy
ChAIrmAN AND ChIef exeCutIve OffICer
JoHn L. PLUeger
PreSIDeNt AND ChIef OPerAtINg OffICer
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 46
2011 REVIEW 28
CONSOLIDATED BALANCE SHEETS 47
CONSOLIDATED STATEMENTS OF OPERATIONS 48
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY 49
CONSOLIDATED STATEMENTS OF CASH FLOWS 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 51
SELECTED FINANCIAL DATA 63
2011 REVIEW
The following section of this Annual Report consists of an
overview of Air Lease Corporation (the ‘‘Company’’) and a
review of our business in 2011. The 2011 Review and the
Consolidated Financial Statements and the related notes that
follow are intended to provide perspective on, and an under-
standing of, the Company’s consolidated financial condition
and results of operations for 2011.
BUSINESS
OVERVIEW
Air Lease Corporation, a Delaware corporation (the ‘‘Com-
pany’’, ‘‘ALC’’, ‘‘we’’, ‘‘our’’ or ‘‘us’’), is an aircraft leasing
company that was launched in February 2010 by aircraft leas-
ing industry pioneer Steven F. Udvar-H´azy. We are principally
engaged in purchasing commercial aircraft which we, in turn,
lease to airlines around the world to generate attractive
returns on equity. As of December 31, 2011, we owned 102
aircraft of which 36 were new aircraft and 66 were used air-
craft and we managed two aircraft. Our fleet is principally
comprised of fuel-efficient and newer technology aircraft,
consisting of narrowbody (single-aisle) aircraft, such as the
Boeing 737-700/800,
Embraer E190, select widebody (twin-aisle) aircraft, such as
the Boeing 777-300ER and the Airbus A330-200/300, and the
ATR 72-600 turboprop aircraft. We manage lease revenues
and take advantage of changes in market conditions by
acquiring a balanced mix of aircraft types, both new and
used. Our used aircraft are generally less than five years old.
All of the aircraft we own were leased as of December 31,
2011. Additionally, as of December 31, 2011, we had entered
into binding and non-binding purchase commitments to
acquire an additional 217 new aircraft through 2020.
the Airbus A319/320/321,
We lease our aircraft to airlines pursuant to net operating
leases that require the lessee to pay for maintenance, insur-
ance, taxes and all other aircraft operating expenses during
the lease term, which includes fuel, crews, airport and naviga-
tion charges, and insurance. The cost of an aircraft typically is
not fully recovered over the term of the initial lease. There-
fore, upon expiration or early termination of a lease, we retain
the benefit and assume the risk of the rent at which we can
re-lease the aircraft and its equipment or the price at which
we can sell the aircraft and its equipment.
We operate our business on a global basis, providing aircraft
to airline customers in every major geographical region,
including emerging and high-growth markets such as Asia,
the Pacific Rim, Latin America, the Middle East and Eastern
Europe. As of December 31, 2011, we have entered into
leases and future lease commitments with airlines in Austra-
lia, Belarus, Brazil, Bulgaria, Canada, China, Colombia, the
Czech Republic, Ethiopia, France, Germany, India, Indonesia,
Ireland, Italy, Japan, Kazakhstan, Kenya, Malaysia, Mexico,
Mongolia, the Netherlands, New Zealand, Norway, Russia,
South Africa, South Korea, Spain, Sri Lanka, Thailand, Trini-
dad & Tobago, Turkey, United Arab Emirates, the United King-
dom, the United States and Vietnam.
the While our primary business is to own and lease aircraft, we
also provide fleet management services to third parties for a
fee. These services are similar to those we perform with
respect to our fleet, including leasing, re-leasing, lease man-
agement and sales services.
Our principal executive offices are located at 2000 Avenue of
the Stars, Suite 1000N, Los Angeles, California 90067. The
telephone number of our principal executive offices is
(310)
is
www.airleasecorp.com.
our website
553-0555
address
and
We manage lease expirations in our fleet portfolio over vary-
ing time periods in order to minimize periods of concentrated
lease expirations and mitigate the risks associated with cycli-
cal variations in the airline industry. As of December 31, 2011,
the weighted average lease term remaining on our current
leases was 6.6 years, and we leased the aircraft in our portfo-
lio to 55 airlines in 33 countries. As of December 31, 2010, the
weighted average lease term remaining on our current leases
was 5.6 years, and we leased the 40 aircraft in our portfolio to
25 airlines in 15 countries.
OPERATIONS TO DATE
Current Fleet
As of December 31, 2011, our fleet consisted of 102 aircraft,
comprised of 81 single-aisle jet aircraft, 19 twin-aisle
widebody aircraft and two turboprop aircraft, with a weighted
average age of 3.6 years.
Geographic Diversification
Over 90% of our aircraft are operated internationally based
on net book value. The following table sets forth the net book
value and percentage of the net book value of our aircraft
Country
($ in thousands)
France
China
Germany
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portfolio operating in the indicated regions as of Decem-
equipment revenue for the year ended December 31, 2011
ber 31, 2011 and December 31, 2010:
and the period from inception to December 31, 2010, based
on each airline’s principal place of business.
Region
($ in thousands)
Europe
Asia/Pacific
Latin America
North America
Africa and Middle East
December 31, 2011
December 31, 2010
Net book
Net book
value % of total
value % of total
$ 1,782,949
42.1% $
1,355,432
515,145
386,101
197,789
32.0
12.2
9.1
4.6
688,607
425,670
163,622
254,201
97,709
42.3%
26.1
10.0
15.6
6.0
Customer(1)
($ in thousands)
Air France
Air Berlin
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
Amount of
Amount of
rental revenue % of total
rental revenue % of total
$ 45,444
$ 29,642
13.7%
8.9%
$ 8,598
$ 15,153
15.1%
26.5%
Total
$ 4,237,416
100.0% $ 1,629,809
100.0%
(1)A customer is an airline with its own operating certificate.
At December 31, 2011 and 2010, we leased aircraft to cus-
AIRCRAFT ACQUISITION STRATEGY
tomers in the following regions:
Our long term aircraft asset acquisition strategy is focused on
December 31, 2011
December 31, 2010
Number of
Number of
customers(1) % of total
customers(1) % of total
acquiring the highest demand and most widely distributed
modern technology, fuel efficient single-aisle jet aircraft,
Region
Europe
Asia/Pacific
Latin America
North America
Africa and Middle East
13
22
8
7
5
23.6%
40.0
14.6
12.7
9.1
6
8
4
4
3
24.0%
32.0
16.0
16.0
12.0
Total
55
100.0%
25
100.0%
(1)A customer is an airline with its own operating certificate.
The following table sets forth the dollar amount and percent-
age of our rental of flight equipment revenues attributable to
the indicated regions based on each airline’s principal place
of business:
Region
($ in thousands)
Europe
Asia/Pacific
Latin America
North America
Africa and Middle East
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
Amount of
Amount of
rental revenue % of total rental revenue % of total
$ 151,566
45.6%
$ 31,157
54.6%
93,237
30,714
39,350
17,852
28.0
9.2
11.8
5.4
11,933
4,953
6,309
2,723
20.9
8.7
11.0
4.8
twin-aisle widebody aircraft and turboprop aircraft. This
includes
the Boeing 737-800, 777-300ER,
the Airbus
A320/321, A330-200/300 the Embraer E190 and the ATR
72-600 aircraft. Our business model is based on ordering
these or similar types of aircraft directly from the manufactur-
ers and directly leasing these new aircraft to our customers.
We will opportunistically supplement our fleet with second-
ary purchases from other owners of aircraft and participate in
sale-leaseback transactions with airlines; however, our pri-
mary strategy
is
to acquire new aircraft
from
the
manufacturers.
In determining the needs of our lessees or prospective airline
customers, we evaluate each potential new and used aircraft
acquisition to determine if it supports our primary objective
of generating profits while maintaining desired fleet charac-
teristics. Our due diligence process takes into account:
(cid:2) the needs of our airline customers at the time of acquisition
and their anticipated needs at the end of typical leasing
Total
$ 332,719
100.0%
$ 57,075
100.0%
As our aircraft portfolio grows, we anticipate that a growing
percentage of our aircraft will be located in the Asia/Pacific,
cycles;
the Latin America, and the Africa and Middle East regions.
(cid:2) an aircraft’s fit within our focused fleet based on its type,
The following table sets forth the revenue attributable to indi-
vidual countries representing at least 10% of our rental of
flight equipment revenue for the year ended December 31,
2011 and the period from inception to December 31, 2010,
based on each airline’s principal place of business.
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
Amount of
Amount of
rental revenue % of total
rental revenue % of total
$ 62,240
$ 39,603
$ 29,642
18.7%
11.9%
8.9%
$ 8,598
$ 6,091
$ 15,153
15.1%
10.7%
26.5%
The following table sets forth the revenue attributable to indi-
vidual airlines representing at least 10% of our rental of flight
price, age, market value, specifications and configuration,
condition and maintenance history, operating efficiency
and potential for future redeployment; and
(cid:2) an aircraft model’s reliability, long-term utility for airline
customers, and appeal to a large segment of the industry.
For used aircraft, we perform detailed technical reviews of
both the physical aircraft and its maintenance history to mini-
mize our risk of acquiring an aircraft with defects or other
service issues. In the case of new aircraft, we work directly
with the manufacturers to outfit and configure the aircraft
with our airline customers’ needs in mind. Our inspection of
new aircraft is focused on ensuring that our customers’
required specifications and modifications have been met.
We pursue acquisitions of additional aircraft through our rela- We may, in connection with the lease of used aircraft, agree to
contribute specific additional amounts to the cost of certain
tionships with aircraft operators, manufacturers, financial
first major overhauls or modifications, which usually reflect
institutions, private investors and third-party lessors. We may
the usage of the aircraft prior to the commencement of the
also acquire aircraft for lease directly from manufacturers in
lease, and which are covered by the prior operator’s usage
the secondary market or pursuant to sale-leaseback transac-
fees. We may be obligated under the leases to make reim-
tions with aircraft operators. For new aircraft deliveries, we
bursements of maintenance reserves previously received to
will often separately source many components, including
lessees for expenses incurred for certain planned major
seats, safety equipment, avionics, galleys, cabin finishes,
maintenance. We also, on occasion, may contribute towards
engines and other equipment, from the same providers used
aircraft modifications (e.g., winglets and new interiors) and
by aircraft manufacturers at a lower cost. Manufacturers such
recover any such costs over the life of the lease.
as The Boeing Company (‘‘Boeing’’) and Airbus S.A.S.
(‘‘Airbus’’) will install this buyer furnished equipment in our
aircraft during the final assembly process at their facilities.
Through this use of our purchasing strategy, we are better
able to modify the aircraft to meet our customer’s configura-
tion requirements and enhance lease and residual values.
LEASING PROCESS
Our management team identifies prospective lessees based
upon industry knowledge and long-standing industry rela-
tionships. We seek to meet the specific needs of our airline
customers by working closely with potential lessees and,
where appropriate, developing innovative lease structures
specifically tailored to address those needs. While we struc-
ture aircraft leases with our airline customers’ needs in mind,
we, nevertheless, anticipate that most of our leases will share
some common characteristics, including the following:
(cid:2) most of our leases will be for fixed terms, although, where
mutually beneficial, we may provide for purchase options
or termination or extension rights;
(cid:2) most of our leases will require advance monthly payments;
(cid:2) most of our leases will generally provide that the lessee’s
payment obligations are absolute and unconditional;
(cid:2) our lessees will typically be required to make lease pay-
ments without deducting any amounts that we may owe to
the lessee or any claims that the lessee may have against
us;
(cid:2) most of our leases will also require lessees to gross up
lease payments to cover tax withholdings or other tax obli-
gations, other than withholdings that arise out of transfers
of the aircraft to or by us or due to our corporate structure;
and
(cid:2) our leases will also generally require that our lessees
indemnify us for certain other tax liabilities relating to the
leases and the aircraft, including, in most cases, value-
added tax and stamp duties.
The lessee is responsible for compliance with applicable laws
and regulations with respect to the aircraft. We require our
lessees to comply with the standards of either the U.S. Fed-
eral Aviation Administration (‘‘FAA’’) or its equivalent in for-
eign jurisdictions. Generally, we receive a cash deposit as
security for the lessee’s performance of obligations under the
lease and the condition of the aircraft upon return. In addition,
most leases contain extensive provisions regarding our rem-
edies and rights in the event of a default by a lessee. The
lessee generally is required to continue to make lease pay-
ments under all circumstances, including periods during
which the aircraft is not in operation due to maintenance or
grounding.
Some foreign countries have currency and exchange laws
regulating the international transfer of currencies. When nec-
essary, we require, as a condition to any foreign transaction,
that the lessee or purchaser in a foreign country obtains the
necessary approvals of the appropriate government agency,
finance ministry or central bank for the remittance of all funds
contractually owed in U.S. dollars. We attempt to minimize
our currency and exchange risks by negotiating the desig-
nated payment currency in our leases to be U.S. dollars;
although, where appropriate, we may agree to leases with
payments denominated in other currencies. All guarantees
obtained to support various lease agreements are denomi-
nated for payment in the same currency as the lease. To meet
the needs of certain of our airline customers, a relatively small
number of our leases may designate the payment currency to
be Euros. As the Euro to U.S. dollar exchange rate fluctuates,
airlines’ interest in entering into Euro-denominated lease
agreements will change. After we agree to the rental payment
currency with an airline, the negotiated currency typically
remains for the term of the lease. We occasionally may enter
into contracts to mitigate our foreign currency risk, but we
expect that the economic risk arising from foreign currency
denominated leases will be immaterial to us.
Management obtains and reviews relevant business materi-
time to consider a broad set of alternatives with respect to the
als from all prospective lessees and purchasers before enter-
aircraft, including assessing general market and competitive
ing
into a
lease or extending credit. Under certain
conditions and preparing to re-lease or sell the aircraft. If a
circumstances, the lessee may be required to obtain guaran-
lessee fails to provide us with notice, the lease will automati-
tees or other financial support from an acceptable financial
cally expire at the end of the term, and the lessee will be
institution or other third parties. During the life of the lease,
required to return the aircraft pursuant to the conditions in
situations may lead us to restructure leases with our lessees.
the lease. Our leases contain detailed provisions regarding
When we repossess an aircraft leased in a foreign country, we
the required condition of the aircraft and its components
generally expect to export the aircraft from the lessee’s juris-
upon redelivery at the end of the lease term.
diction. In some very limited situations, the lessees may not
fully cooperate in returning the aircraft. In those cases, we will
INSURANCE
take legal action in the appropriate jurisdictions, a process
We require our lessees to carry those types of insurance that
that we expect would ultimately delay the return and export
are customary in the air transportation industry, including
of the aircraft. In addition, in connection with the reposses-
comprehensive liability insurance, aircraft all-risk hull insur-
sion of an aircraft, we may be required to pay outstanding
ance and war-risk insurance covering risks such as hijacking,
mechanics’ liens, airport charges, and navigation fees and
terrorism (but excluding coverage for weapons of mass
other amounts secured by liens on the repossessed aircraft.
destruction and nuclear events), confiscation, expropriation,
These charges could relate to other aircraft that we do not
seizure and nationalization. We generally require a certificate
own but were operated by the lessee.
MONITORING
of insurance from the lessee’s insurance broker prior to deliv-
ery of an aircraft. Generally, all certificates of insurance con-
tain a breach of warranty endorsement so that our interests
During the term of a lease, we monitor the operating perform-
are not prejudiced by any act or omission of the lessee. Lease
ance and the financial health of the lessee. Our net operating
agreements generally require hull and liability limits to be in
leases generally require the lessee to pay for maintenance,
U.S. dollars, which are shown on the certificate of insurance.
insurance, taxes and all other aircraft operating expenses
during the lease term.
Insurance premiums are to be paid by the lessee, with cover-
age acknowledged by the broker or carrier. The territorial
We also closely follow the operating and financial perform-
coverage, in each case, should be suitable for the lessee’s
ance of our lessees so that we can identify early on those
area of operations. We generally require that the certificates
lessees that may be experiencing operating and financial dif-
of insurance contain, among other provisions, a provision
ficulties. This assists us in assessing the lessee’s ability to
prohibiting cancellation or material change without at least
fulfill its obligations under the lease for the remainder of the
30 days’ advance written notice to the insurance broker (who
term and, where appropriate, restructure the lease prior to
would be obligated to give us prompt notice), except in the
the lessee’s insolvency or the initiation of bankruptcy or simi-
case of hull war insurance policies, which customarily only
lar proceedings, at which time we would have less control
provide seven days’ advance written notice for cancellation
over, and would most likely incur greater costs in connection
and may be subject to shorter notice under certain market
with, the restructuring of the lease or the repossession of the
conditions. Furthermore, the insurance is primary and not
aircraft. To accomplish this objective, we maintain a high level
contributory, and we require that all insurance carriers be
of communication with the lessee and frequently evaluate the
required to waive rights of subrogation against us.
state of the market in which the lessee operates, including the
impact of changes in passenger air travel and preferences,
new government regulations, regional catastrophes and
other unforeseen shocks to the relevant market.
RE-LEASING OR DISPOSITION OF AIRCRAFT
Our lease agreements are generally structured to require les-
sees to notify us nine to 12 months in advance of the lease’s
expiration if a lessee desires to renew or extend the lease.
Requiring lessees to provide us with such advance notice
provides our management team with an extended period of
The stipulated loss value schedule under aircraft hull insur-
ance policies is on an agreed-value basis acceptable to us
and usually exceeds the book value of the aircraft. In cases
where we believe that the agreed value stated in the lease is
not sufficient, we make arrangements to cover such defi-
ciency, which would include the purchase of additional ‘‘Total
Loss Only’’ coverage for the deficiency.
Aircraft hull policies generally contain standard clauses cov-
ering aircraft engines. The lessee is required to pay all
30
31
The U.S. Patriot Act of 2001 (the ‘‘Patriot Act’’) prohibits finan-
EMPLOYEES
cial transactions by U.S. persons, including U.S. individuals,
As of December 31, 2011, we had 47 full-time employees.
entities and charitable organizations, with individuals and
None of our employees are represented by a union or collec-
organizations designated as terrorists and terrorist support-
tive bargaining agreements. We believe our relationship with
ers by the U.S. Secretary of State or the U.S. Secretary of the
our employees to be positive, which is a key component of
Treasury. We comply with the provisions of the Patriot Act
our operating strategy. We strive to maintain excellent
and closely monitor our activities with foreign entities.
employee relations. We provide certain employee benefits,
The U.S. Customs and Border Protection, a law enforcement
agency of the U.S. Department of Homeland Security,
enforces regulations related to the import of aircraft into the
United States for maintenance or lease and the importation of
parts into the U.S. for installation. We monitor our imports for
compliance with U.S. Customs and Border Protection
regulations.
The U.S. Bureau of Export Enforcement enforces regulations
related to the export of aircraft to other jurisdictions and the
export of parts for installation in other jurisdictions. We moni-
tor our exports for compliance with the U.S. Bureau of Export
Enforcement regulations.
Jurisdictions in which aircraft are registered as well as juris-
dictions in which they operate may impose regulations relat-
ing to noise and emission standards. In addition, most
countries’ aviation laws require aircraft to be maintained
under an approved maintenance program with defined pro-
cedures and intervals for inspection, maintenance and repair.
To the extent that aircraft are not subject to a lease or a lessee
is not in compliance, we are required to comply with such
requirements, possibly at our own expense.
We believe we are in compliance in all material respects with
all applicable governmental regulations.
including retirement, health, life, disability and accident insur-
ance plans.
ACCESS TO OUR INFORMATION
We file annual, quarterly and current reports, proxy state-
ments and other information with the Securities and
Exchange Commission (the ‘‘SEC’’). We make our public SEC
filings available, at no cost, through our website at
www.airleasecorp.com as soon as reasonably practicable
after the report is electronically filed with, or furnished to, the
SEC. We will also provide these reports in electronic or paper
format free of charge upon written request made to our
investor relations department at 2000 Avenue of the Stars,
Suite 1000N, Los Angeles, California 90067. Our SEC filings
are also available to the public over the Internet at the SEC’s
website at www.sec.gov. The public may also read and copy
any document we file with the SEC at the SEC’s public refer-
ence room located at 100 F Street NE, Washington, DC 20549.
Please call the SEC at 1-800-SEC-0330 for further information
on the operation of the public reference room.
deductibles. Furthermore, the hull war policies generally con-
tain full war risk endorsements, including, but not limited to,
confiscation (where available), seizure, hijacking and similar
forms of retention or terrorist acts.
The comprehensive liability insurance listed on certificates of
insurance generally include provisions for bodily injury, prop-
erty damage, passenger liability, cargo liability and such other
provisions reasonably necessary in commercial passenger
and cargo airline operations. We expect that such certificates
of insurance list combined comprehensive single liability lim-
its of not less than $500.0 million for Airbus and Boeing air-
craft and $200.0 million for Embraer S.A. (‘‘Embraer’’) and
Avions de Transport R´egional (‘‘ATR’’) aircraft. As a standard
in the industry, airline operator’s policies contain a sublimit
for third-party war risk liability in the amount of $50.0 million.
We require each lessee to purchase higher limits of third-
party war risk liability or obtain an indemnity from its respec-
tive government.
In late 2005, the international aviation insurance market uni-
laterally introduced exclusions for physical damage to aircraft
hulls caused by dirty bombs, bio-hazardous materials and
electromagnetic pulsing. Exclusions for the same type of per-
ils could be introduced into liability policies.
Separately, we purchase contingent liability insurance and
contingent hull insurance on all aircraft in our fleet and main-
tain other insurance covering the specific needs of our busi-
ness operations. We believe our insurance is adequate both
as to coverages and amounts.
We cannot assure stockholders that our lessees will be ade-
quately insured against all risks, that lessees will at all times
comply with their obligations to maintain insurance, that any
particular claim will be paid, or that lessees will be able to
obtain adequate insurance coverage at commercially reason-
able rates in the future.
We maintain key man life insurance policies on our Chairman
and CEO and our President and Chief Operating Officer. Each
policy is in the amount of $2.0 million, with the proceeds
payable to us and permitted to be used for general corporate
purposes.
COMPETITION
The leasing, remarketing and sale of aircraft is highly compet-
itive. We face competition from aircraft manufacturers,
banks, financial institutions, other leasing companies, aircraft
brokers and airlines. Competition for leasing transactions is
based on a number of factors, including delivery dates, lease
rates, terms of lease, other lease provisions, aircraft condition
and the availability in the marketplace of the types of aircraft
required to meet the needs of airline customers. We believe
we are a strong competitor in all of these areas.
GOVERNMENT REGULATION
The air transportation industry is highly regulated. We do not
operate commercial aircraft, and thus may not be directly
subject to many industry laws and regulations, such as regu-
lations of the U.S. Department of State (the ‘‘DOS’’), the U.S.
Department of Transportation, or their counterpart organiza-
tions in foreign countries regarding the operation of aircraft
for public transportation of passengers and property. As dis-
cussed below, however, we are subject to government regu-
lation in a number of respects. In addition, our lessees are
subject to extensive regulation under the laws of the jurisdic-
tions in which they are registered or operate. These laws
govern, among other things, the registration, operation,
maintenance and condition of the aircraft.
We are required to register, and have registered, the aircraft
which we acquire and lease to U.S. carriers and to a number
of foreign carriers where, by agreement, the aircraft are to be
registered in the United States, with the FAA, or in other
countries, with such countries’ aviation authorities as applica-
ble. Each aircraft registered to fly must have a Certificate of
Airworthiness, which is a certificate demonstrating the air-
craft’s compliance with applicable government rules and reg-
ulations and that the aircraft is considered airworthy, or a
ferry flight permit, which is an authorization to operate an
aircraft on a specific route. Our lessees are obligated to main-
tain the Certificates of Airworthiness for the aircraft they lease
and, to our knowledge, all of our lessees have complied with
this requirement. When an aircraft is not on lease, we main-
tain the certificate or obtain a certificate in a new jurisdiction.
Our involvement with the civil aviation authorities of foreign
jurisdictions consists largely of requests to register and dere-
gister our aircraft on those countries’ registries.
We are also subject to the regulatory authority of the DOS and
the U.S. Department of Commerce (the ‘‘DOC’’) to the extent
such authority relates to the export of aircraft for lease and
sale to foreign entities and the export of parts to be installed
on our aircraft. In some cases, we are required to obtain
export licenses for parts installed in aircraft exported to for-
eign countries.
The DOC and the U.S. Department of the Treasury (through its
Office of Foreign Assets Control) impose restrictions on the
operation of U.S.-made goods, such as aircraft and engines,
in sanctioned countries, as well as on the ability of U.S. com-
panies to conduct business with entities in those countries.
32
33
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is the current position of each of our executive officers as of March 9, 2012.
Name
Company Position
Steven F. Udvar-H´azy
Chairman and Chief Executive Officer (since February 2010)
John L. Plueger
President, Chief Operating Officer and Director (since March 2010)
Grant A. Levy
Marc H. Baer
Executive Vice President, General Counsel and Secretary (since April 2010)
Executive Vice President, Marketing (since April 2010)
Alex A. Khatibi
Executive Vice President (since April 2010)
Jie Chen
Executive Vice President and Managing Director of Asia (since August 2010)
Gregory B. Willis
Senior Vice President and Chief Financial Officer (since March 2012)
John D. Poerschke
Senior Vice President of Aircraft Procurement and Specifications (since March 2010)
DIRECTORS OF THE COMPANY
Set forth below is the principal occupation or employment of each of our directors as of March 9, 2012.
Name
Steven F. Udvar-H´azy
John L. Plueger
Robert A. Milton
Matthew J. Hart
Dr. Ronald D. Sugar
Wilbur L. Ross, Jr.
Antony P. Ressler
John G. Danhakl
Ian M. Saines
Principal Occupation or Employment
Air Lease Corporation
Chairman and Chief Executive Officer
Air Lease Corporation
President, Chief Operating Officer and Director
ACE Aviation Holdings, Inc., a holding company for Air Canada and other aviation interests
Chairman and Chief Executive Officer
Hilton Hotels Corporation, a global hospitality company
Former President and Chief Operating Officer
Northrop Grumman Corporation, a global security company
Former Chairman and Chief Executive Officer
WL Ross & Co. LLC, a merchant banking firm
Chairman and Chief Executive Officer
Ares Management LLC, a global alternative asset manager
A Founding Member and Chairman of the Executive Committee
Leonard Green & Partners, L.P., a private equity firm
Managing Partner
Commonwealth Bank of Australia, a provider of integrated financial services
Group Executive, Institutional Banking and Markets
MARKET FOR REGISTRANT’S
COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
table below sets forth for the indicated periods the high and
low sales prices for our Class A Common Stock as reported
on the NYSE. Our Class B Non-Voting Common Stock is not
currently listed on any national exchange or market system.
MARKET INFORMATION
Our Class A Common Stock has been quoted on the New
York Stock Exchange (the ‘‘NYSE’’) under the symbol ‘‘AL’’
since April 19, 2011. Prior to that time, there was no public
market for our stock. As of September 30, 2011, there were
98,885,131 shares of Class A Common Stock outstanding
held by approximately 148 holders of record, and 1,829,339
shares of Class B Non-Voting Common Stock outstanding
held by one stockholder of record.
On March 8, 2012 the closing price of our Class A Common
Stock was $23.85 per share as reported by the NYSE. The
PERFORMANCE GRAPH
Fiscal Year 2011 Quarters Ended:
June 30, 2011
September 30, 2011
December 31, 2011
DIVIDENDS
High
Low
$ 29.94
$ 23.02
25.36
23.95
18.32
17.24
The Company did not declare or pay any dividends during
2011. The Board of Directors does not expect that the Com-
pany will pay any dividends or other distributions in the fore-
seeable future.
The graph below compares the cumulative return since April 19, 2011 of the Company’s Class A Common Stock, the S&P
Midcap Index and a customized peer group. The peer group consists of three companies: Aircastle Limited (NYSE: AYR),
AerCap Holdings NV (NYSE: AER) and FLY Leasing Limited (NYSE: FLY). The peer group investment is weighted by market
capitalization as of April 19, 2011, and is adjusted monthly. An investment of $100, with reinvestment of all dividends, is
assumed to have been made in our Class A Common Stock, in the peer group and in the S&P Midcap Index on April 19, 2011,
and the relative performance of each is tracked through December 31, 2011. The stock price performance shown in the graph is
not necessarily indicative of future stock price performance.
Comparison of 9 Month Cumulative Total Return
Assumes Initial Investment of $100
December 31, 2011
$120
$100
$80
$60
$40
$20
$0
4/19/11
4/30/11
5/31/11
6/30/11
7/31/11
8/31/11
9/30/11
10/31/11
11/30/11
12/31/11
Air Lease Corporation
S&P Midcap 400 Index
Peer Group
15MAR201217272765
34
35
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Our primary business is to acquire new and used popular and
fuel-efficient commercial aircraft from aircraft manufacturers
and other parties and to lease those aircraft to airlines around
the world. We supplement our leasing revenues by providing
management services to investors and/or owners of aircraft
portfolios, for which we will receive fee-based revenue.
These services include leasing, re-leasing, and lease manage-
ment and sales services, with the goal of helping our clients
maximize lease and sale revenues. In addition to our leasing
activities and management services, and depending on mar-
ket conditions, we expect to sell aircraft from our fleet to
other leasing companies, financial services companies and
airlines.
On April 25, 2011, we completed an initial public offering of
our Class A Common Stock and listing of our Class A Com-
mon Stock on the New York Stock Exchange under the sym-
bol ‘‘AL.’’ The offering was upsized by 20% and the
underwriters exercised their over-allotment option in full,
resulting in the sale of an aggregate of 34,825,470 shares of
Class A Common Stock. We received gross proceeds of
approximately $922.9 million.
During 2011, the Company raised an incremental $1.2 billion
in debt financing. This balance was comprised of $587.6 mil-
lion in unsecured financing, which included $120.0 million in
senior unsecured notes issued in a private placement to insti-
tutional investors and $200.0 million in convertible senior
notes. We ended the year with total unsecured debt outstand-
ing of $826.2 million. The Company’s unsecured debt as a
percentage of total debt increased from 14.6% as of Decem-
ber 31, 2010 to 31.7% as of December 31, 2011. As part of our
2012 financing strategy, the Company will continue to focus
on raising unsecured financing, of which we have already
raised $522.0 million during the first quarter of 2012.
During the year ended December 31, 2011, we entered into
binding and non-binding commitments to acquire up to 83
additional aircraft from Airbus, Boeing and Embraer for an
estimated aggregate purchase price (including adjustment
for anticipated inflation) of approximately $5.0 billion. Deliv-
eries of the additional aircraft are scheduled to commence in
2012 and to continue through 2020. From Airbus, we agreed
to purchase one additional Airbus A321 aircraft and entered
into a non-binding memorandum of understanding for the
purchase of 50 Airbus A320/321 NEO aircraft and we have
cancellation rights with respect to 14 of the 50 Airbus
A320/321 NEO aircraft. From Boeing, we agreed to purchase
an additional 18 Boeing 737-800 aircraft, five Boeing
777-300ER aircraft and entered into a memorandum of under-
standing for the purchase of four Boeing 787-9 aircraft. From
Embraer, we agreed to purchase an additional five Embraer
E190 aircraft.
We continued successful lease placements of new aircraft
from our order book throughout 2011 ending the year with
contracts for the lease of 100% of the aircraft delivering in
2012, 90.3% of the aircraft delivering in 2013 and 84.6% of
the aircraft delivering in 2014.
OUR FLEET
We have continued to build one of the world’s youngest,
most fuel-efficient aircraft operating lease portfolios. During
the year ended December 31, 2011, we acquired an addi-
tional 62 aircraft ending the year with a total of 102 aircraft (of
which 36 were new aircraft and 66 were used aircraft). We
also managed two aircraft as of December 31, 2011. Our
weighted average fleet age as of December 31, 2011 was
3.6 years.
Portfolio metrics of our fleet as of December 31, 2011 and
2010 are as follows:
($ in thousands)
Fleet size
Weighted average fleet age
Weighted average remaining lease term
Aggregate fleet cost
December 31,
2011(1)
December 31,
2010
102
3.6 years
6.6 years
$ 4,368,985
40
3.8 years
5.6 years
$ 1,649,071
(1)We acquired our existing fleet of 102 aircraft from 24 separate owners and
operators of aircraft, 51 of which were subject to existing operating leases
originated by 12 different aircraft lessors. The individual transactions
ranged in size from one to eight aircraft, and from $22.3 million to
$330.2 million, respectively. The 51 existing operating leases were with 39
different airline customers. Of the 51 aircraft that we acquired from other
aircraft lessors, none of the aircraft represented an entire portfolio (i.e., a
group of aircraft characterized by risk, geography or other common fea-
tures) of the respective seller lessor, and none of the seller lessors sold
their aircraft as part of a plan to exit their respective aircraft leasing
businesses. With respect to these transactions, we did not acquire any
information technology systems, infrastructure, employees, other assets,
services, financing or any other activities indicative of a business.
The following table sets forth the net book value and percent-
Our lease placements are progressing in line with expecta-
age of the net book value of our aircraft portfolio operating in
tions. As of December 31, 2011 we have entered into con-
the indicated regions as of December 31, 2011 and 2010:
tracts for the lease of new aircraft scheduled to be delivered
Region
($ in thousands)
Europe
Asia/Pacific
Latin America
North America
Africa and Middle East
December 31, 2011
December 31, 2010
Net book
Net book
value % of total
value % of total
$ 1,782,949
42.1% $
1,355,432
515,145
386,101
197,789
32.0
12.2
9.1
4.6
688,607
425,670
163,622
254,201
97,709
42.3%
26.1
10.0
15.6
6.0
Total
$ 4,237,416
100.0% $ 1,629,809
100.0%
The following table sets forth the number of aircraft we
leased by aircraft type as of December 31, 2011 and 2010:
as follows:
Delivery year
2012
2013
2014
2015
2016
Thereafter
Total
Number of Number
Aircraft
Leased % Leased
45
31
26
24
20
71
45
28
22
5
—
—
100.0%
90.3
84.6
20.8
—
—
217
100
46.1%
102
100.0%
100.0%
petitive pressures, labor actions, pilot shortages, insurance
Aircraft Type
2012 2013 2014 2015 2016 Thereafter Total
affect our revenues and income.
Aircraft Type
Airbus A319-100
Airbus A320-200
Airbus A321-200
Airbus A330-200
Boeing 737-700
Boeing 737-800
Boeing 767-300ER
Boeing 777-200ER
Boeing 777-300ER
Embraer E175
Embraer E190
ATR 72-600
Total
December 31, 2011
December 31, 2010
Number of
Number of
aircraft % of total
aircraft % of total
6.9%
17.5%
7
21
11
30
3
8
3
1
4
2
2
10
20.6
2.9
10.8
7.8
29.4
2.9
1.0
3.9
2.0
9.8
2.0
7
8
2
2
5
14
—
—
2
—
—
—
40
20.0
5.0
5.0
12.5
35.0
—
—
5.0
—
—
—
As of December 31, 2011, we had contracted to buy 217 new
aircraft for delivery through 2020, with an estimated aggre-
gate purchase price (including adjustments for inflation) of
$11.0 billion for delivery as follows:
Airbus A320/321-200
Airbus A320/321 NEO(1)(2)
Airbus A330-200/300
Boeing 737-800
Boeing 777-300ER
Boeing 787-9(1)
Embraer E175/190
ATR 72-600
Total
10
13
12
7
3
17
12
2
14
3
6
4
3
12
1
2
17
8
45
47
20
4
42
50
79
9
5
4
18
10
(1)As of December 31, 2011, the Airbus A320/321 NEO aircraft and the
Boeing 787-9 aircraft were subject to non-binding memoranda of under-
standing for the purchase of these aircraft.
31
26
24
20
71
217
AIRCRAFT INDUSTRY AND SOURCES OF REVENUES
Our revenues are principally derived from operating leases
with scheduled and charter airlines. As of December 31, 2011
and December 31, 2010, we derived more than 90% of our
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 lessees. The airline industry is cycli-
cal, economically sensitive, and highly competitive. Airlines
and related companies are affected by fuel price volatility and
fuel shortages, political and economic instability, natural
disasters, terrorist activities, changes in national policy, com-
costs, recessions, health concerns and other political or eco-
nomic events adversely affecting world or regional trading
markets. Our airline customers’ ability to react to, and cope
with, the volatile competitive environment in which they
operate, as well as our own competitive environment, will
Demand for air travel has consistently grown in terms of both
the number of aircraft and passenger traffic over the last
40 years. The industry has remained resilient over time, while
enduring the effects of both business cycle downturns and
external events. Today, air travel has penetrated most world
regions, with the highest growth now coming from emerging
markets and economies. The long-term outlook for an
increasing number of aircraft remains robust due primarily to
casts that there will be almost 24,000 aircraft in service by
2015, an increase of almost 5,000 over the level at the begin-
ning of 2011.
The airline industry is cyclical and generally grows along with
the economy. Historically, there has been a strong positive
correlation between changes in world Gross Domestic Prod-
uct, measured in U.S. dollars, and changes in passenger traf-
fic (as indicated by revenue passenger kilometers (‘‘RPK’’), an
industry-standard measure of passengers flown where each
(2)We have cancellation rights with respect to 14 of the Airbus A320/321 NEO
increased passenger traffic. AVITAS, Inc. (‘‘AVITAS’’) fore-
aircraft.
36
37
RPK represents one kilometer traveled by a paying
customer).
fleet transactions necessary to facilitate growth of commer-
cial air transport.
The business cycle effects are such that RPK declines or
softens within recessionary periods. However, aircraft inven-
tory has trended upward consistently, regardless of the eco-
nomic cycle, as many aircraft are delivered during downturns
despite reduced passenger travel.
Long-term passenger traffic growth is expected to be under-
pinned by projected growth in demand from emerging mar-
kets. Travel growth remains concentrated in the emerging
markets of the Asia/Pacific region, Latin America and the Mid-
dle East while the more mature markets in the U.S. and
Europe have slower growth rates overall. According to
AVITAS, the percentage of world traffic attributable to emerg-
ing markets has been continuously increasing since the early
1990s. For example, in 1990, the Asia/Pacific region repre-
sented about 17% of the world’s passenger traffic, and its
share was estimated to be approximately 29% in 2010. Since
1990, China’s passenger traffic has grown approximately
15% annually on average to 403 billion RPKs in 2010. Cur-
rently, China’s passenger traffic is the second highest in the
world.
AVITAS expects to see considerably higher growth in 2011
through 2015 in the Asia/Pacific region, the Middle East and
Latin America, as compared to North America and Europe. In
fact, AVITAS forecasts that by 2015 passenger traffic in the
Asia/Pacific region will surpass passenger traffic in North
America.
International Air Transport Association (‘‘IATA’’) projects
some profit weakening in 2012 as a result of relatively high
fuel costs and softening of passenger traffic and yields. In
addition, IATA believes the most significant risk currently fac-
ing airline profitability for 2012 is the economic turmoil that
would result from a failure of governments to resolve the
Eurozone sovereign debt crisis. While IATA is projecting air-
line industry profits of approximately $3.5 billion in 2012, it is
also indicating that there is a significant risk that the debt
crisis in the Eurozone, if unresolved, could lead to a banking
crisis and cause more widespread economic weakness. IATA
projects that a scenario of this nature could cause the world-
wide airline industry to experience losses of as much as
$8.3 billion.
Despite industry cyclicality and current stress, we remain
optimistic about the long-term future of air transportation
and, more specifically, the growing role that the aircraft leas-
ing industry, and ALC specifically, provides in facilitating the
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
As we grow our business, we envision funding our aircraft
purchases through multiple sources, including cash raised in
our prior equity offerings, cash flow from operations, the
Warehouse Facility, additional unsecured debt financing
through banks and the capital markets, credit facilities, and
government-sponsored export guaranty and
lending
programs.
We have substantial cash requirements as we continue to
expand our fleet through our purchase commitments. How-
ever, we believe that we will have sufficient liquidity to satisfy
the operating requirements of our business through the next
twelve months.
Our liquidity plans are subject to a number of risks and uncer-
tainties, including those described in ‘‘Item 1A. Risk Factors’’
in our Annual Report on Form 10-K, filed with the Securities
and Exchange Commission on March 9, 2012. Macro-eco-
nomic conditions could hinder our business plans, which
could, in turn, adversely affect our financing strategy.
DEBT
Our debt financing was comprised of the following at Decem-
ber 31, 2011 and 2010:
($ in thousands)
Secured
Term financings
Warehouse facility
Unsecured
Term financings
Convertible senior notes
Revolving credit facilities
December 31,
2011
December 31,
2010
$ 735,285
1,048,222
$ 223,981
554,915
1,783,507
778,896
268,209
200,000
358,000
826,209
13,085
—
120,000
133,085
911,981
—
Total secured and unsecured debt financing
Less: Debt discount
2,609,716
(6,917)
Total debt
$2,602,799
$ 911,981
Selected interest rates and ratios:
Composite interest rate(1)
Composite interest rate on fixed debt(1)
Percentage of total debt at fixed rate
3.14%
4.28%
24.3%
3.32%
3.83%
1.40%
(1)This rate does not include the effect of upfront fees, undrawn fees or
issuance cost amortization.
Secured Term Financing
compared to $554.9 million as of December 31, 2010. As of
During the year ended December 31, 2011, ten of our wholly-
December 31, 2011, the Company had pledged 38 aircraft as
owned subsidiaries entered into separate secured term facili-
collateral with a net book value of $1.6 billion. As of Decem-
ties, with recourse to the Company, aggregating $548.8 mil-
ber 31, 2010, the Company had pledged 23 aircraft as collat-
lion and one of our wholly-owned subsidiaries entered into a
eral with a net book value of $930.0 million. The Company
$14.5 million, non-recourse, secured term facility.
had pledged cash collateral and lessee deposits of $86.9 mil-
The outstanding balance on our secured term facilities was
$735.3 million and $224.0 million at December 31, 2011 and
December 31, 2010, respectively. In connection with these
facilities, the Company pledged $1.1 billion and $336.8 mil-
lion in aircraft collateral as of December 31, 2011 and 2010,
respectively.
Warehouse Facility
On May 26, 2010, ALC Warehouse Borrower, LLC, one of our
wholly-owned subsidiaries, entered into the Warehouse
Facility, which is a non-recourse, revolving credit facility to
finance the acquisition of aircraft. On April 1, 2011, the Com-
pany executed an amendment to the Warehouse Facility that
took effect on April 21, 2011. This facility, as amended, pro-
lion and $48.3 million at December 31, 2011 and Decem-
ber 31, 2010, respectively. We intend to continue to utilize the
Warehouse Facility to finance aircraft acquisitions through
2012, as this facility provides us with ample liquidity to make
opportunistic acquisitions of aircraft on short notice.
Unsecured Term Financings
During the year ended December 31, 2011, the Company
entered
into 14 unsecured term facilities aggregating
$141.6 million. We ended 2011 with a total of 16 unsecured
term facilities. The total amount outstanding under our
unsecured term facilities was $148.2 million and $13.1 million
as of December 31, 2011 and December 31, 2010,
respectively.
vides us with financing of up to $1.25 billion, modified from
In June 2011, the Company issued $120.0 million in senior
the original facility size of $1.5 billion. We are able to draw on
unsecured notes in a private placement to institutional inves-
this facility, as amended, during an availability period that
tors. The notes have a five-year term and a coupon of 5.0%.
ends in June 2013. Prior to the amendment of the Warehouse
Facility, the Warehouse Facility accrued interest during the
Convertible Senior Notes
availability period based on LIBOR plus 3.25% on drawn bal-
In November 2011, the Company issued $200.0 million in
ances and at a fixed rate of 1.00% on undrawn balances.
aggregate principal amount of 3.875% convertible senior
Following the amendment, the Warehouse Facility accrues
notes due 2018 (the ‘‘Convertible Notes’’) in an offering
interest during the availability period based on LIBOR plus
exempt from registration under the Securities Act. The Con-
2.50% on drawn balances and at a fixed rate of 0.75% on
vertible Notes bear interest at a rate of 3.875% per annum
undrawn balances. Pursuant to the amendment, the advance
and are convertible at the option of the holder into shares of
level under the facility was increased from 65% of the
our Class A Common Stock at a price of $30.23 per share.
appraised value of the aircraft pledged and 50% of the cash
pledged to the Warehouse Facility to 70% of the appraised
value of the aircraft pledged and 50% of the cash pledged to
the Warehouse Facility. The outstanding drawn balance at the
end of the availability period may be converted at our option
to an amortizing, four-year term loan with an interest rate of
LIBOR plus 3.25% for the initial three years of the term and
margin step-ups during the remaining year that increase the
interest to LIBOR plus 4.75%. As a result of amending the
Warehouse Facility, we recorded an extinguishment of debt
charge of $3.3 million from the write-off of deferred debt
issue costs when the amendment became effective on
April 21, 2011.
Unsecured Revolving Credit Facilities
The Company ended 2011 with a total of 13 revolving
unsecured credit facilities aggregating $358.0 million, each
with a borrowing rate of LIBOR plus 2.00%. The total amount
outstanding under our revolving credit
facilities was
$358.0 million and $120.0 million as of December 31, 2011
and December 31, 2010, respectively.
LIQUIDITY
We finance the acquisition of our aircraft through available
cash balances, internally generated funds and debt financ-
ings. As of December 31, 2011, we had available liquidity of
$483.6 million comprised of unrestricted cash of $281.8 mil-
During 2011, the Company drew a net $493.3 million under
lion and undrawn balances under our Warehouse Facility of
the Warehouse Facility and incrementally pledged $660.7 mil-
$201.8 million.
lion in aircraft collateral. As of December 31, 2011, the Com-
pany had borrowed $1.0 billion under the Warehouse Facility
38
39
Our financing plan for 2012 is focused on continuing to raise
unsecured debt in the global bank market and through inter-
national and domestic capital markets transactions, reinvest-
ing cash flow from operations and through government
guaranteed loan programs from the ECAs in support of our
new Airbus aircraft deliveries and Ex-Im Bank in support of
our new Boeing aircraft deliveries and direct financing from
BNDES/SBCE in support of our new Embraer deliveries.
In the first quarter of 2012, the Company entered into debt
facilities and obtained financing commitments for $855.0 mil-
lion. This included eight unsecured debt facilities totaling
$522.0 million, comprised of: $155.0 million in senior
unsecured notes issued in a private placement to institutional
investors; $200.0 million in short-term unsecured bridge
financing from two members of our banking group in connec-
tion with the closing of four ECA supported aircraft deliveries;
$105.0 million in unsecured term financing and $62.0 million
of seller financing.
As of March 9, 2012, we had obtained long-term funding
commitments from the ECAs and a banking group to provide
export guaranteed financing for eight of our Airbus deliveries
in 2012, aggregating to approximately $340.0 million in sov-
ereign guaranteed financing. Additionally, we approached
Ex-Im Bank for support related to three aircraft and BNDES for
12 aircraft, aggregating $410.0 million in government sup-
ported export financing.
Lastly, during the first quarter of 2012, a wholly-owned sub-
sidiary of the Company entered into a secured term facility to
finance the acquisition of aircraft. This facility provided the
Company with $192.8 million, which we will use to refinance
eight aircraft previously financed through the Warehouse
Facility creating additional availability under our Warehouse
Facility.
We will continue to focus our financing efforts throughout
2012 on expanding our unsecured borrowing base supple-
mented by internally generated funds and government sup-
ported export financing.
CONTRACTUAL OBLIGATIONS
Our contractual obligations as of December 31, 2011 are as follows:
($ in thousands)
Long-term debt obligations(1)(2)
Interest payments on debt outstanding(3)
Purchase commitments
Operating leases
2012
2013
2014
2015
2016
Thereafter
Total
$
196,374 $
50,467
1,926,515
1,441
480,852 $
44,674
1,525,660
2,325
457,816 $
34,848
1,417,023
2,395
330,520 $
29,056
1,381,288
2,467
671,009 $
21,222
950,515
2,541
473,145 $ 2,609,716
209,582
11,125,311
31,869
29,315
3,924,310
20,700
Total
$ 2,174,797 $ 2,053,511 $ 1,912,082 $ 1,743,331 $ 1,645,287 $ 4,447,470 $ 13,976,478
(2)Adjusted EBITDA is a measure of financial and operational performance
(1)As of December 31, 2011, the Company had $1.0 billion of debt outstanding under the Warehouse Facility which will come due beginning in June 2013. The
outstanding drawn balance at the end of the availability period may be converted at the Company’s option to an amortizing, four-year term loan and has
been presented as if such option were exercised in the contractual obligation schedule above.
(2)As of December 31, 2011, the Company had $358.0 million of debt outstanding under our revolving unsecured credit facilities. The outstanding drawn
balances may be rolled until the maturity date of each respective facility and have been presented as such in the contractual obligation schedule above.
(3)Future interest payments on floating rate debt are estimated using floating rates in effect at December 31, 2011.
RESULTS OF OPERATIONS
had entered into a binding lease commitment but for which
delivery occurred during February 2011.
Year Ended
from Inception to
December 31, 2011 December 31, 2010
For the period
Interest and other income
Interest and other income totaled $4.0 million for the year
$ 332,719
$ 57,075
ended December 31, 2011 compared to $1.3 million for the
4,022
336,741
1,291
58,366
period from inception to December 31, 2010. During 2011,
the Company provided short-term bridge financing for the
44,862
11,062
fee and interest income. In addition, the Company earned
acquisition of an aircraft for which we earned $1.9 million in
$0.5 million in servicing fee revenue with respect to the two
(in thousands, except share data)
Revenues
Rental of flight equipment
Interest and other
Total revenues
Expenses
Interest
Amortization of discounts and
deferred debt issue costs
Extinguishment of debt
Amortization of convertible debt
discounts
Interest expense
Depreciation of flight equipment
Selling, general and administrative
Stock-based compensation
Total expenses
Income (loss) before taxes
Income tax (expense) benefit
9,481
3,349
—
57,692
112,307
44,559
39,342
253,900
82,841
(29,609)
4,883
—
35,798
51,743
19,262
24,232
24,044
119,281
(60,915)
8,875
Net income (loss)
$ 53,232
$ (52,040)
Other Financial Data:
Adjusted net income(1)
Adjusted EBITDA(2)
$ 87,954
$ 290,168
$
2,520
$ 32,973
(1)Adjusted net income is a measure of financial and operational perform-
ance that is not defined by GAAP. See note 1 in ‘‘Selected Financial Data’’
elsewhere in this Annual Report for a discussion of adjusted net income
as a non-GAAP measure and a reconciliation of this measure to net
income (loss) and cash flows from operations.
that is not defined by GAAP. See note 2 in ‘‘Selected Financial Data’’
elsewhere in this Annual Report for a discussion of adjusted EBITDA as a
non-GAAP measure and a reconciliation of this measure to net income
(loss) and cash flows from operations.
2011 Compared to 2010
Rental revenue
As of December 31, 2011, we had acquired 102 aircraft at a
total cost of $4.4 billion and recorded $332.7 million in rental
revenue for the year then ended, which included overhaul
revenue of $11.0 million. In the prior year, as of December 31,
2010, we had acquired 40 aircraft at a total cost of $1.6 billion
and recorded $57.1 million in rental revenue for the period
from inception to December 31, 2010, which included over-
haul revenue of $3.6 million. The increase in rental revenue
aircraft we manage.
Interest expense
Interest expense totaled $57.7 million for the year ended
December 31, 2011 compared to $51.7 million for the period
from inception to December 31, 2010. The change was pri-
marily due to an increase in our outstanding debt balances
resulting in a $33.8 million increase in interest, an increase of
$4.6 million in amortization of our deferred debt issue costs
and a $3.3 million charge for the extinguishment of debt
associated with the modification of the Warehouse Facility,
offset by a one-time $35.8 million charge for the amortization
of convertible debt discounts recorded during 2010.
The $35.8 million charge in 2010 was a one-time, equity-
neutral charge. This charge was a result of our issuance of
$60.0 million of convertible notes at 6.0%, on May 7, 2010, to
funds managed by Ares Management LLC and Leonard
Green & Partners, L.P. and members of our management and
board of directors (and their family members or affiliates) and
simultaneously entering into a forward purchase arrange-
ment with such funds managed by Ares Management LLC
and Leonard Green & Partners, L.P. to purchase shares at a
discounted price.
We expect that our interest expense will increase as our aver-
age debt balance outstanding continues to increase.
Our overall composite interest rate decreased from the prior
year as a result of our credit spreads on new debt issuances
continuing to tighten, combined with a low, short-term inter-
est rate environment.
was attributable to the acquisition and lease of additional
Depreciation expense
aircraft. The full impact on rental revenue for aircraft acquired We recorded $112.3 million in depreciation expense of flight
during the period will be reflected in subsequent periods.
All of the aircraft in our fleet were leased as of December 31,
2011. All of the aircraft in our fleet were leased as of Decem-
ber 31, 2010, except for one aircraft with respect to which we
equipment for the year ended December 31, 2011 compared
to $19.3 million for the period from inception to December 31,
2010. The increase in depreciation expense for 2011, com-
pared to 2010, was attributable to the acquisition of additional
aircraft.
40
41
The full impact on depreciation expense for aircraft added
during the year will be reflected in subsequent periods.
Selling, general and administrative expenses
We recorded selling, general and administrative expenses of
$44.6 million for the year ended December 31, 2011 com-
pared to $24.2 million for the period from inception to
December 31, 2010. Selling, general and administrative
expense represents a disproportionately higher percentage
of revenues during our initial years of operation. As we con-
tinue to add new aircraft to our portfolio, we expect selling,
general and administrative expense to continue decreasing
as a percentage of our revenue.
adjusted net income for 2011, compared to 2010, was primar-
ily attributable to the acquisition and lease of additional
aircraft.
Adjusted net income is a measure of financial and operational
performance that is not defined by GAAP. See note 1 in
‘‘Selected Financial Data’’ elsewhere in this Annual Report for
a discussion of adjusted net income as a non-GAAP measure
and a reconciliation of this measure to net income (loss) and
cash flows from operations.
Adjusted EBITDA
We recorded adjusted EBITDA of $290.2 million for the year
ended December 31, 2011 compared to $33.0 million for the
period from inception to December 31, 2010. The change in
adjusted EBITDA for 2011, compared to 2010, was primarily
attributable to the acquisition and lease of additional aircraft.
Stock-based compensation expense
Stock-based compensation expense totaled $39.3 million for
the year ended December 31, 2011 compared to $24.0 million
for the period from inception to December 31, 2010. This
increase is primarily a result of timing as the full impact on
stock-based compensation expense for grants made during
the second quarter of 2010, partially offset by the effects of
the expense recognition pattern related to our restricted
stock unit grants, which are front end loaded. We determine
the fair value of our grants on the grant date and will recog-
nize the value of the grants as expense over the vesting OFF-BALANCE SHEET
period, with an offsetting increase to equity.
Adjusted EBITDA is a measure of financial and operational
performance that is not defined by GAAP. See note 2 in
‘‘Selected Financial Data’’ elsewhere in this Annual Report for
a discussion of adjusted EBITDA as a non-GAAP measure and
a reconciliation of this measure to net income (loss) and cash
flows from operations.
ARRANGEMENTS
Taxes
The effective tax rate for the year ended December 31, 2011
was 35.7% compared to 14.6% for the period from inception
to December 31, 2010. The change in effective tax rate for the
respective periods is primarily a result of a one-time
$35.8 million charge for the amortization of convertible debt
discounts recorded in 2010 which is not deductible for tax
purposes.
Net income (loss)
For the year ended December 31, 2011, the Company
reported consolidated net income of $53.2 million, or $0.59
per diluted share, compared to a consolidated net loss of
$52.0 million, or $1.32 per diluted share, for the period from
inception to December 31, 2010. The increase in net income
for 2011, compared to 2010, was primarily attributable to the
acquisition and lease of additional aircraft.
Adjusted net income
We recorded adjusted net income of $88.0 million for the year
ended December 31, 2011 compared to $2.5 million for the
period from inception to December 31, 2010. The change in
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 and cre-
ated partnership arrangements or trusts for the purpose of
leasing aircraft or facilitating borrowing arrangements.
CRITICAL ACCOUNTING POLICIES
We believe the following critical accounting policies can have
a significant impact on our results of operations, financial
position and financial statement disclosures, and may require
subjective and complex estimates and judgments.
Lease revenue
We lease flight equipment principally under operating leases
and report rental income ratably over the life of each lease.
Rentals received, but unearned, under the lease agreements
are recorded in ‘‘Rentals received in advance’’ on our Consol-
idated Balance Sheet until earned. The difference between
the rental income recorded and the cash received under the
provisions of the lease is included in ‘‘Lease receivables,’’ as a
component of ‘‘Other assets’’ on our Consolidated Balance
42
43
Sheet. An allowance for doubtful accounts will be recognized
Estimating when we are virtually certain that Contingent
for past-due rentals based on management’s assessment of
Rental payments will not be reimbursed requires judgments
collectability. Our management team monitors all lessees
to be made as to the timing and cost of future maintenance
with past due lease payments (if any) and discusses relevant
events. In order to determine virtual certainty with respect to
operational and financial issues facing those lessees with our
this contingency, our Technical Asset Management depart-
marketing executives in order to determine an appropriate
ment analyzes the terms of the lease, utilizes available cost
allowance for doubtful accounts. In addition, if collection is
estimates published by the equipment manufacturers, and
not reasonably assured, we will not recognize rental income
thoroughly evaluates an airline’s Maintenance Planning Doc-
for amounts due under our lease contracts and will recognize
ument (‘‘MPD’’). The MPD describes the required inspections
revenue for such lessees on a cash basis. Should a lessee’s
and the frequency of those inspections. Our Technical Asset
credit quality deteriorate, we may be required to record an
Management department utilizes this information, combined
allowance for doubtful accounts and/or stop recognizing rev-
with their cumulative industry experience, to determine when
enue until cash is received, both of which could have a mate-
major Qualifying Events are expected to occur for each rele-
rial impact on our results of operations and financial
vant component of the aircraft, and translates this informa-
condition.
Our aircraft lease agreements typically contain provisions
which require the lessee to make additional rental payments
based on either the usage of the aircraft, measured on the
basis of hours or cycles flown per month (a cycle is one
take-off and landing), or calendar-based time (‘‘Contingent
Rentals’’). These payments represent contributions to the
tion into a determination of how much we will ultimately be
required to reimburse to the lessee. We record Contingent
Rental revenue as the aircraft is operated when we determine
that a Qualifying Event will occur outside the non-cancellable
lease term or after we have collected Contingent Rentals
equal to the amount that we expect to reimburse to the lessee
as the aircraft is operated.
cost of major future maintenance events (‘‘Qualifying
Should such estimates be inaccurate, we may be required to
Events’’) associated with the aircraft and typically cover
reverse revenue previously recognized. In addition, if we can
major airframe structural checks, engine overhauls, the
no longer make accurate estimates with respect to a particu-
replacement of life limited parts contained in each engine,
lar lease, we will stop recognizing any Contingent Rental rev-
landing gear overhauls and overhauls of the auxiliary power
enue until the end of such lease.
unit. These Contingent Rentals are generally collected
monthly based on reports of usage by the lessee or collected
as fixed monthly rates.
All of our lease agreements are triple net leases whereby the
lessee is responsible for all taxes, insurance, and aircraft
maintenance. In the future, we may incur repair and mainte-
In accordance with our lease agreements, Contingent Rentals
nance expenses for off-lease aircraft. We recognize overhaul
are subject to reimbursement to the lessee upon the occur-
expense in our Consolidated Statement of Operations for all
rence of a Qualifying Event. The reimbursable amount is
such expenditures.
capped by the amount of Contingent Rentals received by the
Company, net of previous reimbursements. The Company is
only required to reimburse for Qualifying Events during the
lease term. The Company is not required to reimburse for
routine maintenance or additional maintenance costs
incurred during a Qualifying Event. All amounts of Contingent
Rentals unclaimed by the lessee at the end of the lease term
are retained by the Company.
We record as rental revenue the portion of Contingent Rent-
als that we are virtually certain we will not reimburse to the
lessee as a component of ‘‘Rental of flight equipment’’ in our
Consolidated Statement of Operations. Contingent Rentals
which we may be required to reimburse to the lessee are
reflected in our overhaul reserve liability, as a component of
‘‘Security deposits and maintenance reserves on flight equip-
ment leases’’ in our Consolidated Balance Sheet.
Lessee-specific modifications such as those related to modifi-
cations of the aircraft cabin are expected to be capitalized as
initial direct costs and amortized over the term of the lease
into rental revenue in our Consolidated Statement of
Operations.
Flight equipment
Flight equipment under operating lease is stated at cost less
accumulated depreciation. Purchases, major additions and
modifications, and interest on deposits during the construc-
tion phase are capitalized. We generally depreciate passen-
ger aircraft on a straight-line basis over a 25-year life from the
date of manufacture to a 15% residual value. Changes in the
assumption of useful lives or residual values for aircraft could
have a significant impact on our results of operations and
financial condition. At the time flight equipment is retired or
on audit, based on the technical merits of the position. Recog-
whereas we have used floating-rate debt to finance a signifi-
nized income tax positions are measured at the largest
cant portion of our aircraft acquisitions. As of December 31,
amount that has a probability of more than 50% of being
2011, we had $2.0 billion in floating-rate debt. As of Decem-
realized. Changes
in recognition or measurement are
ber 31, 2010, we had $898.9 million in floating-rate debt. If
reflected in the period in which the change in judgment
interest rates increase, we would be obligated to make higher
occurs. As our business develops, we may take tax positions
interest payments to our lenders. If we incur significant
that have a probability of less than 50% of being sustained on
fixed-rate debt in the future, increased interest rates prevail-
audit which will require us to reserve for such positions. If
ing in the market at the time of the incurrence of such debt
these tax positions are audited by a taxing authority, there
would also increase our interest expense. If our composite
can be no assurance that the ultimate resolution of such tax
rate were to increase by 1.0%, we would expect to incur
positions will not result in further losses. Such losses could
additional interest expense on our existing indebtedness as
have a significant impact on our results of operations and
of December 31, 2011 and December 31, 2010, of approxi-
financial condition.
mately $20.0 million and $9.0 million, each on an annualized
basis, which would put downward pressure on our operating
QUANTITATIVE AND QUALITATIVE
margins.
DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in value of a finan-
cial 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
The nature of our business exposes us to market risk arising
from changes in interest rates. Changes, both increases and
decreases, in our cost of borrowing, as reflected in our com-
posite interest rate, directly impact our net income. Our lease
rental stream is generally fixed over the life of our leases,
FOREIGN EXCHANGE RATE RISK
The Company attempts to minimize currency and exchange
risks by entering into aircraft purchase agreements and a
majority of lease agreements and debt agreements with U.S.
dollars as the designated payment currency. Thus, most of
our revenue and expenses are denominated in U.S. dollars.
As of December 31, 2011 and December 31, 2010, 3.5% and
3.7%, respectively, of our lease revenues were denominated
in Euros. As our principal currency is the U.S. dollar, a contin-
uing weakness in the U.S. dollar as compared to other major
currencies should not have a significant impact on our future
operating results.
sold, the cost and accumulated depreciation are removed
from the related accounts and the difference, net of proceeds,
is recorded as a gain or loss.
share-based payment awards granted have been equity clas-
sified awards. We account for such awards by estimating the
grant date fair value of the award as calculated by the Black-
Scholes-Merton (‘‘BSM’’) option pricing model and amortiz-
ing that value on a straight-line basis over the requisite ser-
vice period less any anticipated forfeitures. The estimation of
the fair value of share-based awards requires considerable
judgment, particularly since we were a private company until
April 2011, with a short history of operations. Key estimates
we make in determining the fair value of an award include the
fair value of our Common Stock, the expected term of the
award and the volatility of our Common Stock. To date, we
have principally used transaction prices from sales of our
Common Stock to determine the fair value of our Common
Stock. As we have a limited history, we have used the simpli-
fied averaging approach to estimating the expected term of
the award. We have estimated the volatility of our Common
Stock by using the average historic volatility of a peer group
of companies. For future awards, we will be required to con-
tinue to make such subjective judgments, and while we
intend to continue to use the approach discussed above to
make key estimates, there can be no assurance that changes
in such estimates will not have a significant impact to our
results of operations in the future.
Our management team evaluates on a quarterly basis the
need to perform an impairment test whenever facts or cir-
cumstances indicate a potential impairment has occurred. An
assessment is performed whenever events or changes in
circumstances indicate that the carrying amount of an aircraft
may not be recoverable. Recoverability of an aircraft’s carry-
ing amount is measured by comparing the carrying amount
of the aircraft to future undiscounted net cash flows expected
to be generated by the aircraft. The undiscounted cash flows
consist of cash flows from currently contracted leases, future
projected lease rates and estimated residual or scrap values
for each aircraft. We develop assumptions used in the
recoverability analysis based on our knowledge of active
lease contracts, current and future expectations of the global
demand for a particular aircraft type, and historical experi-
ence in the aircraft leasing market and aviation industry, as
well as information received from third-party industry
sources. The factors considered in estimating the undis-
counted cash flows are affected by changes in future periods
due to changes in contracted lease rates, economic condi-
tions, technology and airline demand for a particular aircraft
type. In the event that an aircraft does not meet the recover-
ability test, the aircraft will be recorded at fair value in accor- We use the asset and liability method of accounting for
dance with our Fair Value Policy, resulting in an impairment
income taxes. Under the asset and liability method, deferred
charge. Deterioration of future lease rates and the residual
income taxes are recognized for the tax consequences of
values of our aircraft could result in impairment charges
‘‘temporary differences’’ by applying enacted statutory tax
which could have a significant impact on our results of opera-
rates applicable to future years to differences between the
tions and financial condition. To date, we have not recorded
financial statement carrying amounts and the tax basis of
any impairment charges.
existing assets and liabilities. The effect on deferred taxes of a
change in the tax rates is recognized in income in the period
that includes the enactment date. We record a valuation
allowance for deferred tax assets when the probability of
realization of the full value of the asset is less than 50%.
Based on the timing of reversal of deferred tax liabilities,
future anticipated taxable income based on lease and debt
arrangements in place at the balance sheet date and tax plan-
ning strategies available to us, our management considers
the deferred tax asset recoverable. Should events occur in
the future that make the likelihood of recovery of deferred tax
assets less than 50%, a deferred tax valuation allowance will
be required that could have a significant impact on our results
of operations and financial condition.
We record flight equipment at fair value if we determine the
carrying value may not be recoverable. We principally use the
income approach to measure the fair value of aircraft. The
income approach is based on the present value of cash flows
from contractual lease agreements and projected future lease
payments, including contingent rentals, net of expenses,
which extend to the end of the aircraft’s economic life in its
highest and best use configuration, as well as a disposition
value based on expectations of market participants. These
valuations are considered Level 3 valuations, as the valua-
tions contain significant non-observable inputs.
Income taxes
Stock-based compensation
To compensate and incentivize our employees and directors,
we grant stock-based compensation awards. To date, we
have granted stock options and restricted stock units. All
We recognize the impact of a tax position, if that position has
a probability of greater than 50% that it would be sustained
44
45
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders
Air Lease Corporation:
We have audited the accompanying consolidated balance sheets of Air Lease Corporation and subsidiaries as of December 31,
2011 and 2010, and the related consolidated statements of operations, shareholders’ equity and cash flows for the year ended
December 31, 2011 and the period from inception to December 31, 2010. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Air Lease Corporation and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and
their cash flows for the year ended December 31, 2011 and the period from inception to December 31, 2010, in conformity with
U.S. generally accepted accounting principles.
7JAN201013030300
San Francisco, California
March 9, 2012
CONSOLIDATED BALANCE SHEETS
($ in thousands, except share data)
Assets
Cash and cash equivalents
Restricted cash
Flight equipment subject to operating leases
Less accumulated depreciation
Deposits on flight equipment purchases
Deferred debt issue costs — less accumulated amortization of $17,500 and $4,754 as of
December 31, 2011 and December 31, 2010, respectively
Deferred tax asset
Other assets
Total assets
Liabilities and Shareholders’ Equity
Accrued interest and other payables
Debt financing
Rentals received in advance
Deferred tax liability
Security deposits and maintenance reserves on flight equipment leases
Total liabilities
Shareholders’ Equity
outstanding
2010, respectively
Preferred Stock, $0.01 par value; 50,000,000 shares authorized; no shares issued or
Class A Common Stock, $0.01 par value; authorized 500,000,000 shares; issued and
outstanding 98,885,131 and 63,563,810 shares at December 31, 2011 and December 31,
Class B Non-Voting Common Stock, $0.01 par value; authorized 10,000,000 shares; issued
and outstanding 1,829,339 shares
Paid-in capital
Retained earnings (accumulated deficit)
Total shareholders’ equity
Total liabilities and shareholders’ equity
(See Notes to Consolidated Financial Statements)
December 31, 2011
December 31, 2010
$
281,805
$
328,821
96,157
4,368,985
(131,569)
4,237,416
405,549
47,609
—
96,057
48,676
1,649,071
(19,262)
1,629,809
183,367
46,422
8,875
30,312
$ 5,164,593
$ 2,276,282
$
54,648
2,602,799
284,154
26,017
20,692
$
22,054
911,981
109,274
8,038
—
$ 2,988,310
1,051,347
—
984
18
2,174,089
1,192
2,176,283
—
636
18
1,276,321
(52,040)
1,224,935
$ 5,164,593
$ 2,276,282
46
47
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
($ in thousands, except share data)
Revenues
Rental of flight equipment
Interest and other
Total revenues
Expenses
Interest
Amortization of discounts and deferred debt issue costs
Extinguishment of debt
Amortization of convertible debt discounts
Interest expense
Depreciation of flight equipment
Selling, general and administrative
Stock-based compensation
Total expenses
Income (loss) before taxes
Income tax (expense) benefit
Net income (loss)
Net income (loss) per share of Class A and Class B Common Stock:
Basic
Diluted
Weighted-average shares outstanding:
Basic
Diluted
(See Notes to Consolidated Financial Statements)
($ in thousands, except share data)
Balance at inception
Class A Common Stock issuance
Class B conversion to Class A
Issuance of warrants
Conversion of convertible notes
Convertible debt discounts
Stock based compensation
Net (loss)
Balance at December 31, 2010
Class A Common Stock issuance
Issuance of restricted stock units
Stock based compensation
Net income
Balance at December 31, 2011
Tax withholdings on stock based compensation
(See Notes to Consolidated Financial Statements)
Preferred Stock
Common Stock
Class A
Class B Non-Voting
Common Stock
Shares
Amount
Shares
Amount
Shares
Amount
Paid-in
Capital
Retained
Earnings
$ —
— $ —
— 55,750,972
558
$ — $
— $
— $
— 1,026,082
— 1,026,640
— 6,308,844
45 (4,479,505)
63
(45)
— 4,479,505
— 3,333,333
—
—
—
—
—
—
—
—
33
—
—
—
—
—
—
—
— 34,825,470
348
843,975
— (348,124)
—
—
—
—
—
—
—
—
124,852
—
5,578
59,967
35,798
24,044
866,882
—
(8,456)
39,342
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$ — 98,885,131
$ 984
1,829,339
$ 18 $ 2,174,089 $
1,192 $ 2,176,283
—
53,232
$ — 63,563,810
$ 636
1,829,339
$ 18 $ 1,276,321 $ (52,040) $ 1,224,935
— (52,040)
(52,040)
Total
—
124,915
—
5,578
60,000
35,798
24,044
867,230
—
(8,456)
39,342
53,232
—
—
—
—
—
—
—
—
—
—
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
$
332,719
$
57,075
Class B Non-Voting Common Stock issuance
4,022
336,741
44,862
9,481
3,349
—
57,692
112,307
44,559
39,342
253,900
82,841
(29,609)
53,232
0.59
0.59
$
$
$
1,291
58,366
11,062
4,883
—
35,798
51,743
19,262
24,232
24,044
119,281
(60,915)
8,875
(52,040)
(1.32)
(1.32)
$
$
$
89,592,945
90,416,346
39,511,045
39,511,045
48
49
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Operating Activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of flight equipment
Stock-based compensation
Deferred taxes
Amortization of discounts and deferred debt issue costs
Extinguishment of debt
Amortization of convertible debt discounts
Changes in operating assets and liabilities:
Other assets
Accrued interest and other payables
Rentals received in advance
Net cash provided by operating activities
Investing Activities
Acquisition of flight equipment under operating lease
Payments for deposits on flight equipment purchases
Acquisition of furnishings, equipment and other assets
Net cash used in investing activities
Financing Activities
Issuance of common stock and warrants
Tax withholdings on stock based compensation
Issuance of convertible notes
Net change in unsecured revolving facilities
Proceeds from debt financings
Payments in reduction of debt financings
Restricted cash
Debt issue costs
Security deposits and maintenance reserve receipts
Security deposits and maintenance reserve disbursements
Net cash provided by financing activities
Net increase (decrease) in cash
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest, including capitalized interest of $10,390 at
December 31, 2011 and capitalized interest of $1,769 at December 31, 2010
Supplemental Disclosure of Noncash Activities
Buyer furnished equipment, capitalized interest and deposits on flight equipment
purchases applied to acquisition of flight equipment under operating leases
Conversion of convertible notes to Class A Common Stock
(See Notes to Consolidated Financial Statements)
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
$
53,232
$
(52,040)
112,307
39,342
29,567
9,481
3,349
—
(17,438)
19,347
17,979
267,166
(2,529,901)
(360,587)
(86,668)
(2,977,156)
867,230
(8,456)
193,000
238,000
1,344,530
(84,796)
(47,481)
(13,933)
180,862
(5,982)
2,662,974
(47,016)
328,821
281,805
51,986
190,013
—
$
$
$
$
19,262
24,044
(8,875)
4,883
—
35,798
(8,040)
18,864
8,038
41,934
(1,649,071)
(183,367)
(19,082)
(1,851,520)
1,157,133
—
60,000
120,000
796,921
(4,940)
(48,676)
(51,305)
109,274
—
2,138,407
328,821
—
328,821
12,723
—
60,000
$
$
$
$
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
POLICIES
ORGANIZATION
the Company had no such allowance, and no leases were on
a cash basis.
All of the Company’s lease agreements are triple net leases
aircraft maintenance. In the future, we may incur repair and
maintenance expenses for off-lease aircraft. We recognize
overhaul expense in our Consolidated Statement of Opera-
NOTE 1.
SUMMARY OF SIGNIFICANT ACCOUNTING
whereby the lessee is responsible for all taxes, insurance, and
Air Lease Corporation (the ‘‘Company’’, ‘‘ALC’’, ‘‘we’’, ‘‘our’’
tions for all such expenditures. In many operating lease con-
or ‘‘us’’) was incorporated in the State of Delaware and
tracts, the lessee is obligated to make periodic payments of
licensed to operate in the State of California. We commenced
supplemental maintenance rent, which is calculated with ref-
operations in February 2010 and elected a fiscal year end of
erence to the utilization of the airframe, engines and other
December 31. The Company is principally engaged in the
major life-limited components during the lease. In these
leasing of commercial aircraft to airlines throughout the
leases, we will make a payment to the lessee to compensate
world. We supplement our leasing revenues by providing
the lessee for the cost of the actual major maintenance
fleet management and remarketing services to third parties.
incurred, up to the maximum of the amount of supplemental
We typically provide many of the same services that we per-
maintenance rental payments made by the lessee during the
form for our fleet, including leasing, releasing, lease manage-
lease term. These payments are made upon the lessee’s
ment and sales services for which we charge a fee, with the
presentation of invoices evidencing the completion of such
objective of assisting our clients to maximize lease or sale
qualifying major maintenance. The Company records as
revenues.
PRINCIPLES OF CONSOLIDATION
rental revenue, the portion of supplemental maintenance rent
that is virtually certain will not be reimbursed to the lessee.
Supplemental maintenance rental payments which we may
The Company consolidates financial statements of all entities
be required to reimburse to the lessee are reflected in our
in which we have a controlling financial interest, including the
overhaul reserve liability, as a component of Security depos-
account of any Variable Interest Entity in which we have a
its and overhaul reserves on flight equipment leases in our
controlling financial interest and for which we are thus the
Consolidated Balance Sheet.
primary beneficiary. All material intercompany balances are
eliminated in consolidation.
Lessee-specific modifications are expected to be capitalized
as initial direct costs and amortized over the term of the lease
into rental revenue in our Consolidated Statement of
RENTAL OF FLIGHT EQUIPMENT
The Company leases flight equipment principally under oper-
Operations.
ating leases and reports rental income ratably over the life of
each lease. Rentals received, but unearned, under the lease
agreements are recorded in Rentals received in advance on
the Company’s Consolidated Balance Sheet until earned. The
difference between the rental income recorded and the cash
received under the provisions of the lease is included in
Lease receivables, as a component of Other assets on the
Company’s Consolidated Balance Sheet. An allowance for
doubtful accounts will be recognized for past-due rentals
based on management’s assessment of collectability. Man-
agement monitors all lessees with past due lease payments
and discuss relevant operational and financial issues facing
those lessees with its marketing executives in order to deter-
mine an appropriate allowance for doubtful accounts. In addi-
tion, if collection is not reasonably assured, the Company will
not recognize rental income for amounts due under the Com-
pany’s lease contracts and will recognize revenue for such
lessees on a cash basis. As of December 31, 2011 and 2010,
INITIAL DIRECT COSTS
The Company records as period costs those internal and
other costs incurred in connection with identifying, negotiat-
ing and delivering aircraft to the Company’s lessees.
Amounts paid by us to lessees, or other parties, in connection
with the lease transactions are capitalized and amortized as a
reduction to lease revenue over the lease term.
CASH AND CASH EQUIVALENTS
The Company considers cash and cash equivalents to be
cash on hand and highly liquid investments with original
maturity dates of 90 days or less.
RESTRICTED CASH
Restricted cash consists of pledged security deposits, main-
tenance reserves, and rental payments related to secured
aircraft financing arrangements.
50
51
FLIGHT EQUIPMENT
Flight equipment under operating lease is stated at cost less
accumulated depreciation. Purchases, major additions and
modifications, and interest on deposits during the construc-
tion phase are capitalized. The Company generally depreci-
ates passenger aircraft on a straight-line basis over a 25-year
life from the date of manufacture to a 15% residual value.
Changes in the assumption of useful lives or residual values
for aircraft could have a significant impact on the Company’s
results of operations and financial condition.
FAIR VALUE MEASUREMENTS
Fair value is the amount that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The
Company measures the fair value of certain assets on a
non-recurring basis, principally our flight equipment, when
Generally Accepted Accounting Principles (‘‘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.
At the time flight equipment is retired or sold, the cost and
accumulated depreciation are removed from the related
accounts and the difference, net of proceeds, is recorded as a
gain or loss on our Consolidated Statement of Operations.
Management evaluates on a quarterly basis the need to per-
form an impairment test whenever facts or circumstances
indicate a potential impairment has occurred. An assessment
is performed whenever events or changes in circumstances
indicate that the carrying amount of an aircraft may not be
recoverable. Recoverability of an aircraft’s carrying amount is
measured by comparing the carrying amount of the aircraft to
future undiscounted net cash flows expected to be generated
by the aircraft. The undiscounted cash flows consist of cash
flows from currently contracted leases, future projected lease
rates and estimated residual or scrap values for each aircraft.
We develop assumptions used in the recoverability analysis
based on our knowledge of active lease contracts, current
and future expectations of the global demand for a particular
aircraft type, and historical experience in the aircraft leasing
market and aviation industry, as well as information received
from third-party industry sources. The factors considered in
estimating the undiscounted cash flows are affected by
changes in future periods due to changes in contracted lease
rates, economic conditions, technology and airline demand
for a particular aircraft type. In the event that an aircraft does
not meet the recoverability test, the aircraft will be recorded
at fair value in accordance with the Company’s Fair Value
Policy, resulting in an impairment charge. Our Fair Value Pol-
icy is described below under ‘‘Fair Value Measurements’’. As
of December 31, 2011 and 2010, no impairment charges have
been incurred to date.
CAPITALIZED INTEREST
The Company may borrow funds to finance deposits on new
flight equipment purchases. The Company capitalizes inter-
est expense on such borrowings. The capitalized amount is
calculated using our composite borrowing rate and is
recorded as an increase to the cost of the flight equipment on
our Consolidated Balance Sheet.
The Company records flight equipment at fair value when we
determine the carrying value may not be recoverable. The
Company principally uses the income approach to measure
the fair value of flight equipment. The income approach is
based on the present value of cash flows from contractual
lease agreements and projected future lease payments,
including contingent rentals, net of expenses, which extend
to the end of the aircraft’s economic life in its highest and best
use configuration, as well as a disposition value based on
expectations of market participants. These valuations are
considered Level 3 valuations, as the valuations contain sig-
nificant non-observable inputs.
INCOME TAXES
The Company uses the asset and liability method of account-
ing for income taxes. Under the asset and liability method,
deferred income taxes are recognized for the tax conse-
quences of ‘‘temporary differences’’ by applying enacted
statutory tax rates applicable to future years to differences
between the financial statement carrying amounts and the
tax basis of existing assets and liabilities. The effect on
deferred taxes of a change in the tax rates is recognized in
income in the period that includes the enactment date. The
Company records a valuation allowance for deferred tax
assets when the probability of realization of the full value of
the asset is less than 50%. The Company recognizes the
impact of a tax position, if that position is more than 50%
likely to be sustained on audit, based on the technical merits
of the position. Recognized income tax positions are mea-
sured at the largest amount that is greater than 50% likely to
be realized. Changes in recognition or measurement are
reflected in the period in which the change in judgment
occurs.
The Company recognizes interest and penalties for uncertain
tax positions in income tax expense.
DEFERRED COSTS
The Company incurs debt issue costs in connection with debt
financings. Those costs are deferred and amortized over the
life of the specific loan using the effective interest method
The Company’s secured obligations as of December 31, 2011
and charged to interest expense. The Company also incurs
and 2010 are summarized below:
costs in connection with equity offerings. Such costs are
($ in thousands)
deferred until the equity offering is completed and either
Nonrecourse
netted against the equity raised, or expensed if the equity
offering is abandoned.
STOCK-BASED COMPENSATION
Stock-based compensation cost is measured at the grant date
based on the fair value of the award. The Company recog-
nizes compensation costs for shares that are expected to
vest, on a straight-line basis, over the requisite service period
of the award.
USE OF ESTIMATES
from those estimates.
RECLASSIFICATION
The preparation of financial statements in conformity with
GAAP requires management to make estimates and assump-
tions that affect the amounts reported in the financial state-
ments and accompanying notes. Actual results could differ
Certain amounts have been reclassified in the 2010 financial
statements to conform to 2011 presentation.
NOTE 2.
DEBT FINANCING
The Company’s consolidated debt as of December 31, 2011
and 2010 are summarized below:
($ in thousands)
Secured
Term financings
Warehouse facility
Unsecured
Term financings
Convertible senior notes
Revolving credit facilities
Total unsecured debt financing
Total secured and unsecured
debt financing
Less: Debt discount
268,209
200,000
358,000
826,209
2,609,716
(6,917)
13,085
—
120,000
133,085
911,981
—
Total debt
$ 2,602,799
$ 911,981
At December 31, 2011, we were in compliance in all material
respects with the covenants in our debt agreements, includ-
and 2010, respectively.
ing our financial covenants concerning debt-to-equity, tangi-
ble net equity and interest coverage ratios.
WAREHOUSE FACILITY
Recourse
Total
Number of aircraft pledged as
collateral
Net book value of aircraft
pledged as collateral
December 31, 2011
December 31, 2010
$ 1,076,965
706,542
$ 1,783,507
$
$
573,222
205,674
778,896
54
29
$ 2,692,652
$ 1,266,762
SECURED TERM FINANCINGS
The Company funds some aircraft purchases through
secured term financings. Wholly-owned subsidiaries of the
Company will borrow through secured bank facilities to pur-
chase an aircraft. The aircraft are then leased by the wholly-
owned subsidiaries to airlines. The Company may guarantee
the obligations of the wholly-owned subsidiaries under the
loan agreements. The loans may be secured by a pledge of
the shares of the subsidiary, the aircraft, the lease receiv-
ables, security deposits, maintenance reserves or a combina-
tion thereof.
During the year ended December 31, 2011, ten of our wholly-
owned subsidiaries entered into separate secured term facili-
ties, with recourse to the Company, aggregating $548.8 mil-
lion and one of our wholly-owned subsidiaries entered into a
$14.5 million, non-recourse, secured term facility. In connec-
tion with these facilities, the Company pledged $816.6 million
under our secured term facilities as of December 31, 2011
was comprised of $184.3 million fixed rate debt and
$550.9 million floating rate debt, with interest rates ranging
from 4.28% to 5.36% and LIBOR plus 1.5% to LIBOR plus
3.6%, respectively. The outstanding balance under our
secured term facilities as of December 31, 2010 was com-
prised entirely of floating rate debt with interest rates ranging
from LIBOR plus 2.6% to LIBOR plus 3.0%. In connection with
these facilities, the Company pledged $1.1 billion and
$336.8 million in aircraft collateral as of December 31, 2011
On May 26, 2010, ALC Warehouse Borrower, LLC, one of our
wholly-owned subsidiaries, entered into the Warehouse
Facility, which is a non-recourse, revolving credit facility to
finance the acquisition of aircraft. On April 1, 2011, the Com-
pany executed an amendment to the Warehouse Facility that
December 31, 2011 December 31, 2010
in aircraft collateral.
Total secured debt financing
1,783,507
778,896
December 31, 2010, respectively. The outstanding balance
$
735,285
1,048,222
$ 223,981
554,915
The outstanding balance on our secured term facilities was
$735.3 million and $224.0 million at December 31, 2011 and
52
53
took effect on April 21, 2011. This facility, as amended, pro-
vides us with financing of up to $1.25 billion, modified from
the original facility size of $1.5 billion. We are able to draw on
this facility, as amended, during an availability period that
ends in June 2013. Prior to the amendment of the Warehouse
Facility, the Warehouse Facility accrued interest during the
availability period based on LIBOR plus 3.25% on drawn bal-
ances and at a fixed rate of 1.00% on undrawn balances.
Following the amendment, the Warehouse Facility accrues
interest during the availability period based on LIBOR plus
2.50% on drawn balances and at a fixed rate of 0.75% on
undrawn balances. Pursuant to the amendment, the advance
level under the facility was increased from 65% of the
appraised value of the aircraft pledged and 50% of the cash
pledged to the Warehouse Facility to 70% of the appraised
value of the aircraft pledged and 50% of the cash pledged to
the Warehouse Facility. The outstanding drawn balance at the
end of the availability period may be converted at our option
to an amortizing, four-year term loan with an interest rate of
LIBOR plus 3.25% for the initial three years of the term and
margin step-ups during the remaining year that increase the
interest to LIBOR plus 4.75%. As a result of amending the
Warehouse Facility, we recorded an extinguishment of debt
charge of $3.3 million from the write-off of deferred debt
issue costs when the amendment became effective on
April 21, 2011.
During 2011, the Company drew a net $493.3 million under
the Warehouse Facility and incrementally pledged $660.7 mil-
lion in aircraft collateral. As of December 31, 2011, the Com-
pany had borrowed $1.0 billion under the Warehouse Facility
compared to $554.9 million as of December 31, 2010. As of
December 31, 2011, the Company had pledged 38 aircraft as
collateral with a net book value of $1.6 billion. As of Decem-
ber 31, 2010, the Company had pledged 23 aircraft as collat-
eral with a net book value of $930.0 million. The Company
had pledged cash collateral and lessee deposits of $86.9 mil-
lion and $48.3 million at December 31, 2011 and Decem-
ber 31, 2010, respectively. We intend to continue to utilize the
Warehouse Facility to finance aircraft acquisitions through
2012, as this facility provides us with ample liquidity to make
opportunistic acquisitions of aircraft on short notice.
UNSECURED TERM FINANCINGS
The Company funds some aircraft purchases through
unsecured term financings.
In June 2011, the Company issued $120.0 million in senior
unsecured notes in a private placement to institutional inves-
tors. The notes have a five-year term and a coupon of 5.0%.
During the year ended December 31, 2011, the Company
entered into 13 additional unsecured term facilities aggregat-
ing $121.6 million with terms ranging from one to five years
with fixed interest rates ranging from 3.0% to 4.3% and a
three-year $20.0 million unsecured term facility at a floating
rate of LIBOR plus 3.95%. We ended 2011 with a total of 16
unsecured term facilities all of which bear interest at a rate of
LIBOR plus 2.0%. The total amount outstanding under our
unsecured term facilities was $148.2 million and $13.1 million
as of December 31, 2011 and December 31, 2010,
respectively.
In April 2010, the Company borrowed $2.0 million under a
promissory note agreement with an entity controlled by the
Company’s Chairman and CEO. Interest due under the prom-
issory note was based on LIBOR plus 3.50%, compounded
annually. This note matured on June 4, 2010, upon the suc-
cessful offering of the Company’s common stock pursuant to
Rule 144A, Regulation S, and Regulation D of the Securities
Act of 1933, as amended.
In February 2010, the Company borrowed $250,000 under a
promissory note agreement with an entity controlled by the
Company’s Chairman and CEO. Interest due under the prom-
issory note was at an annual rate of 3.00%, compounded
quarterly. This note matured on June 4, 2010, upon the suc-
cessful offering of the Company’s common stock pursuant to
Rule 144A, Regulation S, and Regulation D of the Securities
Act of 1933, as amended.
CONVERTIBLE SENIOR NOTES
During the year ended December 31, 2011, the Company
issued $200.0 million in aggregate principal amount of
3.875% convertible senior notes due 2018 (the ‘‘Convertible
Notes’’) in an offering exempt from registration under the
Securities Act. The Convertible Notes were sold to Qualified
Institutional Buyers in reliance upon Rule 144A under the
Securities Act. The Convertible Notes are senior unsecured
obligations of the Company and bear interest at a rate of
3.875% per annum, payable semi-annually in arrears on
June 1 and December 1 of each year, commencing on June 1,
2012. The Convertible Notes are convertible at the option of
the holder into shares of our Class A Common Stock at a price
of $30.23 per share.
On May 7, 2010, two investors (the ‘‘Early Investors’’) agreed
to lend the Company $50.0 million, and certain members of
the Company’s management (and their respective families or
affiliates) and Board of Directors agreed to lend the Company
$10.0 million, pursuant to convertible promissory note agree-
ments. Interest accrued under the notes at an annual rate of
6.00% and was payable quarterly in cash. The notes were
offsetting increase to Paid-in capital on the Company’s Con-
automatically converted on June 4, 2010, in satisfaction of the
solidated Balance Sheet. The Company fully amortized this
lenders’ obligations to purchase shares of the Company’s
debt discount into Interest expense on the Consolidated
common stock at a price equal to $18.00 per share, in connec-
Statement of Operations upon the conversion of the notes.
tion with the successful offering of the Company’s common
stock pursuant to Rule 144A, Regulation S, and Regulation D
UNSECURED REVOLVING CREDIT FACILITIES
of the Securities Act of 1933, as amended.
The Company funds some aircraft purchases through revolv-
to December 31, 2010, including $50.0 million of the Com-
and December 31, 2010, respectively.
On May 7, 2010, the Early Investors contingently committed
to purchase $250.0 million of the Company’s common stock
at the lesser of (i) $18.00 per share and (ii) 90% of the offering
price per share upon the completion of the Company’s com-
mon stock offering pursuant to Rule 144A, Regulation S, and
Regulation D of the Securities Act of 1933, as amended, prior
pany’s common stock that would be acquired upon conver-
sion of the convertible promissory notes. On June 4, 2010,
the Early Investors purchased $250.0 million of the Com-
pany’s common stock at a price equal to $18.00 per share
upon the completion of the Company’s common stock offer-
ing, including $50.0 million of the Company’s common stock
that was acquired upon conversion of the convertible promis-
sory notes.
ing unsecured credit facilities.
The Company ended 2011 with a total of 13 revolving
unsecured credit facilities aggregating $358.0 million, each
with a borrowing rate of LIBOR plus 2.00%. The total amount
outstanding under our revolving credit
facilities was
$358.0 million and $120.0 million as of December 31, 2011
Maturities of debt outstanding as of December 31, 2011 are
MATURITIES
as follows:
($ in thousands)
2012
2013
2014
2015
2016
Years ending December 31,
$
196,374
480,852
457,816
330,520
671,009
473,145
$ 2,609,716
The Early Investors simultaneously entered into a convertible
note agreement and a contingent stock purchase agreement.
The Company allocated the proceeds received between the
Thereafter
Total(1)(2)
convertible note and the stock purchase agreement based on
their relative fair value at issuance. An independent appraiser
determined that the relative aggregate fair value of the con-
vertible notes and stock purchase agreement was $35.4 mil-
lion and $14.6 million, respectively. Consequently the
Company recorded a $14.6 million discount at the issuance of
the convertible notes, with an offsetting increase to Paid-in
capital on the Company’s Consolidated Balance Sheet. The
Company fully amortized this debt discount into Interest
expense on the Consolidated Statement of Operations upon
the conversion of the notes.
The Company evaluated the conversion option within the
convertible notes to determine whether the conversion price
was beneficial to the note holders. For the convertible notes
issued to the Early Investors, management measured the
intrinsic value in the conversion option based on the pro-
ceeds allocated to the convertible debt after proceeds were
allocated to the contingent stock purchase agreement. As a
result, the Company determined that the beneficial conver-
sion features within the convertible notes was $21.2 million.
The Company recorded the beneficial conversion feature as a
discount at the issuance of the convertible notes, with an
(1) As of December 31, 2011, the Company had $1.0 billion of debt outstanding
under the Warehouse Facility which will come due beginning in June 2013. The
outstanding drawn balance at the end of the availability period may be con-
verted at the Company’s option to an amortizing, four-year term loan and has
been presented as such in the maturity schedule, above.
(2) As of December 31, 2011, the Company had $358.0 million of debt outstanding
under our revolving unsecured credit facilities. The outstanding drawn bal-
ances may be rolled until the maturity date of each respective facility and have
been presented as such in the maturity schedule, above.
NOTE 3.
INTEREST EXPENSE
The following table shows the components of interest for the
year ended December 31, 2011 and the period from inception
to December 31, 2010:
($ in thousands)
Interest on borrowings
Less capitalized interest
Interest
Amortization of discounts and deferred
debt issue costs
Extinguishment of debt
Amortization of convertible debt
discounts
Interest expense
Year ended from inception to
December 31, 2011 December 31, 2010
For the period
$
55,252
$ 12,831
(10,390)
44,862
9,481
3,349
(1,769)
11,062
4,883
—
—
35,798
$
57,692
$ 51,743
54
55
SHAREHOLDERS’ EQUITY
NOTE 4.
In 2010, the Company authorized 500,000,000 shares of
Class A Common Stock, $0.01 par value per share, of which
98,885,131 and 63,563,810 shares were issued and outstand-
ing as of December 31, 2011 and 2010, respectively. As of
December 31, 2011 and 2010, the Company had authorized
10,000,000 shares of Class B Non-Voting Common Stock,
$0.01 par value per share, of which 1,829,339 shares were
issued and outstanding. The rights and obligations of the
holders of Class A and Class B Non-Voting Common Stock are
identical, except with respect to voting rights and conversion
rights. The holders of Class A Common Stock possess all
voting power, and are not convertible into Class B Non-Voting
Common Stock.
Each share of Class B Non-Voting Common Stock is converti-
ble into one share of Class A Common Stock at the option of
the holder, and is automatically converted at the time it is
transferred to a third party unaffiliated with such initial holder,
subject to the transfer restrictions.
As of December 31, 2011 and 2010 the Company had autho-
rized 50,000,000 shares of preferred stock, $0.01 par value
per share, of which no shares were issued or outstanding.
On June 4, 2010, the Company issued 482,625 warrants to
two institutional investors (the ‘‘Committed Investors’’). The
warrants have a seven-year term and an exercise price of $20
per share. The Company uses the BSM option pricing model
to determine the fair value of warrants. The fair value of war-
rants was calculated on the date of grant by an option-pricing
model using a number of complex and subjective variables.
These variables include expected stock price volatility over
the term of the warrant, projected exercise behavior, a
risk-free interest rate and expected dividends. The warrants
have a fair value at the grant date of $5.6 million. The warrants
are classified as an equity instrument and the proceeds from
the issuance of common stock to the Committed Investors
was split between the warrants and the stock based on fair
value of the warrants and recorded as an increase to Paid-in
capital on the Consolidated Balance Sheet.
On April 25, 2011, we completed an initial public offering of
our Class A Common Stock and listing of our Class A Com-
mon Stock on the New York Stock Exchange under the sym-
bol ‘‘AL.’’ The offering was upsized by 20% and the
underwriters exercised their over-allotment option in full,
resulting in the sale of an aggregate of 34,825,470 shares of
Class A Common Stock. We received gross proceeds of
approximately $922.9 million.
RENTAL INCOME
NOTE 5.
At December 31, 2011 minimum
future rentals on
non-cancelable operating leases of flight equipment, which
have been delivered as of December 31, 2011, are as follows:
($ in thousands)
Years ending December 31,
2012
2013
2014
2015
2016
Thereafter
Total
$
481,636
453,889
415,206
374,257
323,270
267,123
$ 2,315,381
The Company earned $ 11.0 million and $3.6 million in contin-
gent rentals based on our lessees’ usage of the aircraft for the
year ended December 31, 2011 and the period from inception
to December 31, 2010, respectively.
The following table shows the scheduled lease terminations (for the minimum noncancelable period which does not include
contracted unexercised lease extension options) by aircraft type for our operating lease portfolio as of December 31, 2011:
Aircraft type
Airbus A319-100
Airbus A320-200
Airbus A321-200
Airbus A330-200
Boeing 737-700
Boeing 737-800
Boeing 767-300ER
Boeing 777-200ER
Boeing 777-300ER
Embraer E175-200
Embraer E190-100
ATR 72-600
Total
56
2012
2013
2014
2015
2016
Thereafter
Total
2
1
1
3
3
1
3
2
2
7
1
1
2
9
1
2
2
1
2
3
1
4
12
10
12
12
2
12
1
9
3
7
4
2
10
2
52
7
21
3
11
8
30
3
1
4
2
10
2
102
NOTE 6.
CONCENTRATION OF RISK
GEOGRAPHICAL AND CREDIT RISKS
As of December 31, 2011, all of the Company’s revenues
were generated by leasing flight equipment to foreign and
domestic airlines, and currently the Company leases aircraft
to 55 lessees in 33 countries compared to 25 lessees in 15
countries as of December 31, 2010.
Over 90% of our aircraft are operated internationally based
on net book value. The following table sets forth the net book
value and percentage of the net book value of our aircraft
portfolio operating in the indicated regions as of Decem-
ber 31, 2011 and December 31, 2010:
Region
($ in thousands)
Europe
Asia/Pacific
Latin America
North America
Africa and Middle East
December 31, 2011
December 31, 2010
Net book
Net book
value % of total
value % of total
$ 1,782,949
42.1% $
1,355,432
515,145
386,101
197,789
32.0
12.2
9.1
4.6
688,607
425,670
163,622
254,201
97,709
42.3%
26.1
10.0
15.6
6.0
Total
$ 4,237,416
100.0% $ 1,629,809
100.0%
At December 31, 2011 and 2010, we leased aircraft to cus-
tomers in the following regions:
Region
Europe
Asia/Pacific
Latin America
North America
Africa and Middle East
Total
December 31, 2011
December 31, 2010
Number of
Number of
customers(1) % of total
customers(1) % of total
13
22
8
7
5
23.6%
40.0
14.6
12.7
9.1
6
8
4
4
3
24.0%
32.0
16.0
16.0
12.0
As our aircraft portfolio grows, we anticipate that a growing
percentage of our aircraft will be located in the Asia/Pacific,
the Latin America, and the Africa and Middle East regions.
The following table sets forth the revenue attributable to indi-
vidual countries representing at least 10% of our rental of
flight equipment revenue for the year ended December 31,
2011 and the period from inception to December 31, 2010,
based on each airline’s principal place of business.
Country
($ in thousands)
France
China
Germany
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
Amount of
Amount of
rental revenue % of total
rental revenue % of total
$ 62,240
$ 39,603
$ 29,642
18.7%
11.9%
8.9%
$ 8,598
$ 6,091
$ 15,153
15.1%
10.7%
26.5%
The following table sets forth the revenue attributable to indi-
vidual airlines representing at least 10% of our rental of flight
equipment revenue for the year ended December 31, 2011
and the period from inception to December 31, 2010, based
on each airline’s principal place of business.
Customer(1)
($ in thousands)
Air France
Air Berlin
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
Amount of
Amount of
rental revenue % of total
rental revenue % of total
$ 45,444
$ 29,642
13.7%
8.9%
$ 8,598
$ 15,153
15.1%
26.5%
(1)A customer is an airline with its own operating certificate.
CURRENCY RISK
The Company attempts to minimize currency and exchange
risks by entering into aircraft purchase agreements and a
(1)A customer is an airline with its own operating certificate.
dollars as the designated payment currency.
55
100.0%
25
100.0%
majority of lease agreements and debt agreements with U.S.
The following table sets forth the dollar amount and percent-
age of our rental of flight equipment revenues attributable to
the indicated regions based on each airline’s principal place
NOTE 7.
INCOME TAXES
The provision for income taxes consists of the following:
of business:
Region
($ in thousands)
Europe
Asia/Pacific
Latin America
North America
Africa and Middle East
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
Amount of
Amount of
rental revenue % of total rental revenue % of total
$ 151,566
45.6%
$ 31,157
54.6%
93,237
30,714
39,350
17,852
28.0
9.2
11.8
5.4
11,933
4,953
6,309
2,723
20.9
8.7
11.0
4.8
($ in thousands)
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
Total
$ 332,719
100.0%
$ 57,075
100.0%
Year Ended
December 31, 2011
For the Period
from Inception to
December 31, 2010
$
$
—
—
49
29,102
458
—
—
—
—
(8,547)
(328)
—
Income tax (expense) benefit
$ 29,609
$ (8,875)
57
Differences between the provision for income taxes and
income taxes at the statutory federal income tax rate are as
follows:
Year Ended
December 31, 2011
For the Period
from Inception to
December 31, 2010
($ in thousands)
Amount Percent
Amount
Percent
Income taxes at statutory federal rate
State income taxes, net of federal
$ 28,997 35.0% $ (21,320) (35.0)%
income tax effect
298
0.3
(213)
(0.4)
Nondeductible interest — convertible
note
Other
— —
0.4
314
12,529
129
20.6
0.2
$ 29,609 35.7% $
(8,875) (14.6)%
The Company’s net deferred tax assets (liabilities) are as
follows:
($ in thousands)
Assets (Liabilities)
Equity compensation
Net operating losses
Rents received in advance
Accrued bonus
Other
Aircraft depreciation
Year Ended
December 31, 2011
For the Period
from Inception to
December 31, 2010
$
16,057
12,000
9,163
3,043
3,730
(64,685)
$
8,616
5,726
2,920
2,575
489
(11,451)
Total (liabilities) assets
$ (20,692)
$
8,875
At December 31, 2011 and 2010, the Company has net oper-
ating loss carry-forwards (NOLs) for federal and state income
tax purposes of $37.8 million and $17.8 million, respectively,
which are available to offset future taxable income in future
periods and begin to expire in 2030. The Company recog-
nizes tax benefits associated with stock-based compensation
directly to stockholders’ equity only when realized. Accord-
ingly, deferred tax assets are not recognized for net operating
NOTE 8.
COMMITMENTS AND CONTINGENCIES
loss carryforwards resulting from windfall tax benefits. A
windfall tax benefit occurs when the actual tax benefit real-
ized upon an employee’s disposition of a share-based award
exceeds the cumulative book compensation charge associ-
ated with the award. As of December 31, 2011 and 2010, the
Company has windfall tax benefits of $3.7 million and zero,
respectively, included in its U.S. net operating loss carryfor-
ward, but not reflected in deferred tax assets. The Company
uses a with-and-without approach to determine if the excess
tax deductions associated compensation costs have reduced
income taxes payable.
The Company has not recorded a deferred tax valuation
allowance as of December 31, 2010 as realization of the
deferred tax asset is considered more likely than not. In
assessing the realizability of the deferred tax assets manage-
ment considered whether future taxable income will be suffi-
cient during the periods in which those temporary differences
are deductible or before NOLs expire. Management consid-
ers the scheduled reversal of deferred tax liabilities, projected
taxable income and tax planning strategies in making this
assessment. Management anticipates the timing differences
on aircraft depreciation will reverse and be available for off-
setting the reversal of deferred tax assets. As of Decem-
ber 31, 2011 and 2010 the Company has not recorded any
liability for unrecognized tax benefits.
The Company files income tax returns in the U.S. and various
state and foreign jurisdictions. The Company is subject to
examinations by the major tax jurisdictions for the 2010 tax
year and forward.
AIRCRAFT ACQUISITION
As of December 31, 2011, we had contracted to buy 217 new aircraft for delivery through 2020 as follows:
Aircraft Type
Airbus A320/321-200
Airbus A320/321 NEO(1)(2)
Airbus A330-200/300
Boeing 737-800
Boeing 777-300ER
Boeing 787-9(1)
Embraer E175/190
ATR 72-600
Total
2012
2013
2014
2015
2016
Thereafter
Total
lease term at December 31, 2011 are as follows:
10
6
4
17
8
45
13
3
12
1
2
31
12
7
12
2
14
3
3
17
47
20
4
42
50
9
79
5
4
18
10
26
24
20
71
217
(1)As of December 31, 2011, the Airbus A320/321 NEO aircraft and the Boeing 787-9 aircraft were subject to non-binding memoranda of understanding for the
purchase of these aircraft.
(2)We have cancellation rights with respect to 14 of the Airbus A320/321 NEO aircraft.
Commitments for the acquisition of these aircraft and other
reflects the potential dilution that would occur if securities or
equipment at an estimated aggregate purchase price (includ-
other contracts to issue common stock were exercised or
ing adjustments for inflation) of approximately $11.0 billion at
converted into common stock; however, potential common
December 31, 2011 are as follows:
($ in thousands)
Years ending December 31,
2012
2013
2014
2015
2016
Thereafter
Total
1,525,660
1,417,023
1,381,288
950,515
3,924,310
$ 11,125,311
We have made non-refundable deposits on the aircraft for
which we have commitments to purchase of $405.5 million
and $183.4 million as of December 31, 2011 and Decem-
ber 31, 2010, respectively, which are subject to manufacturer
performance commitments. If we are unable to satisfy our
purchase commitments, we may be forced to forfeit our
deposits. Further, we would be exposed to breach of contract
claims by our lessees and manufacturers.
OFFICE LEASE
equivalent shares are excluded if the effect of including these
shares would be anti-dilutive. The Company’s two classes of
common stock, Class A and Class B Non-Voting, have equal
$ 1,926,515
rights to dividends and income, and therefore, basic and
diluted earnings per share are the same for each class of
common stock.
Diluted net earnings per share takes into account the poten-
tial conversion of stock options, restricted stock units, and
warrants using the treasury stock method and convertible
notes using the if-converted method. For the year ended
December 31, 2011, the Company excluded 3,375,908 shares
related to stock options which are potentially dilutive securi-
ties from the computation of diluted earnings per share
because including these shares would be anti-dilutive. For
the period from inception to December 31, 2010, the Com-
pany excluded 206,749 shares related to these potentially
dilutive securities from the computation of diluted earnings
per share because they were anti-dilutive. In addition, the
Company excluded 2,613,539 and 3,225,907 shares related to
The Company’s lease for office space provides for step rent-
restricted stock units for which the performance metric had
als over the term of the lease. Those rentals are considered in
yet to be achieved as of December 31, 2011 and 2010,
the evaluation of recording rent expense on a straight-line
respectively.
basis over the term of the lease. Tenant improvement
allowances received from the lessor are deferred and amor-
tized in selling, general and administrative expenses against
rent expense. The Company recorded office lease expense of
$2.1 million and $0.5 million for the year ended December 31,
($ in thousands, except share data)
2011 and the period from inception to December 31, 2010,
Basic net income per share:
The following table sets forth the reconciliation of basic and
diluted net income (loss) per share:
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
$
53,232
$
(52,040)
Numerator
Net income (loss)
Denominator
Commitments for minimum rentals under the non-cancelable
Weighted-average common
($ in thousands)
Years ending December 31,
respectively.
2012
2013
2014
2015
2016
Thereafter
Total
NOTE 9.
NET EARNINGS PER SHARE
Basic net earnings per share is computed by dividing net
income (loss) by the weighted average number of common
shares outstanding for the period. Diluted earnings per share
shares outstanding
Basic net income per share
89,592,945
$
0.59
39,511,045
$
(1.32)
$ 1,441
2,325
2,395
2,467
2,541
20,700
$ 31,869
Diluted net income per share:
Numerator
Net income (loss)
Interest on convertible senior
notes
Net income (loss) plus
assumed conversions
Denominator
Number of shares used in basic
computation
Weighted-average effect of
dilutive securities
Number of shares used in per
$
53,232
$
(52,040)
560
—
$
53,792
$
(52,040)
89,592,945
39,511,045
823,401
—
share computation
Diluted net income per share
90,416,346
$
0.59
39,511,045
$
(1.32)
58
59
NOTE 10.
FAIR VALUE MEASUREMENTS
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A
RECURRING AND NON-RECURRING BASIS
The Company had no assets or liabilities which are measured
at fair value on a recurring or non-recurring basis as of
December 31, 2011 or 2010.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value reported on the balance sheet for cash
and cash equivalents, restricted cash and other payables
approximates their fair value.
The fair value of debt financing is estimated based on the
quoted market prices for the same or similar issues, or on the
current rates offered to the Company for debt of the same
remaining maturities. The estimated fair value of debt financ-
ing as of December 31, 2011 was $2,591.0 million compared
to a book value of $2,602.8 million. The estimated fair value of
debt financing as of December 31, 2010 was $931.2 million
compared to a book value of $912.0 million.
STOCK-BASED COMPENSATION
NOTE 11.
In accordance with the Amended and Restated Air Lease
Corporation 2010 Equity Incentive Plan (‘‘Plan’’), the number
of stock options (‘‘Stock Options’’) and restricted stock units
(‘‘RSUs’’) authorized under the Plan
is approximately
8,193,088 as of December 31, 2011. Options are generally
granted for a term of 10 years. As of December 31, 2011, the
Company granted 3,375,908 Stock Options and 3,457,964
RSUs.
The Company recorded $39.3 million and $24.0 million of
stock-based compensation expense for the year ended
December 31, 2011 and the period from inception to Decem-
ber 31, 2010, respectively.
STOCK OPTIONS
The Company uses the BSM option pricing model to deter-
mine the fair value of stock options. The fair value of stock-
based payment awards on the date of grant is determined by
an option-pricing model using a number of complex and sub-
jective variables. These variables include expected stock
price volatility over the term of the awards, a risk-free interest
rate and expected dividends.
Estimated volatility of the Company’s common stock for new
grants is determined by using historical volatility of the Com-
pany’s peer group. Due to our limited operating history, there
is no historical exercise data to provide a reasonable basis
which the Company can use to estimate expected terms.
Accordingly, the Company uses the ‘‘simplified method’’ as
permitted under Staff Accounting Bulletin No. 110. The
risk-free interest rate used in the option valuation model is
derived from U.S. Treasury zero-coupon issues with remain-
ing terms similar to the expected term on the options. The
Company does not anticipate paying any cash dividends in
the foreseeable future and therefore uses an assumed divi-
dend yield of zero in the option valuation model. In accor-
dance with ASC Topic 718, Compensation — Stock
Compensation, the Company estimates forfeitures at the time
of grant and revises those estimates in subsequent periods if
actual forfeitures differ from those estimates. During the year
ended December 31, 2011, the Company granted 150,000
Stock Options. The average assumptions used to value stock-
based payments are as follows:
Dividend yield
Expected term
Risk-free interest rate
Volatility
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
None
5.9 years
2.4%
50.2%
None
6.0 years
2.3%
52.7%
A summary of stock option activity in accordance with the
Company’s stock option plan as of December 31, 2011 and
2010, and changes for the year and the period from inception
then ended follows:
Shares
Exercise
price
Remaining
contractual
term
(in years)
Aggregate
intrinsic value
(in thousands)(1)
Balance at
December 31,
2010
Granted
Exercised
Forfeited/
canceled
Balance at
December 31,
2011
Vested and
exercisable
as of
December 31,
2011
Vested and
exercisable
as of
December 31,
2011 and
expected to
vest
thereafter(2)
$ 20.00
$ 28.80
9.5
9.3
$
$
—
—
3,225,908
150,000
—
—
3,375,908
$ 20.39
8.5
$ 11,968
1,125,292
$ 20.00
8.5
$
4,175
3,365,818
$ 20.39
8.5
$ 11,931
(1)The aggregate intrinsic value is calculated as the difference between the
exercise price of the underlying awards and the closing stock price of
$23.71 of our Class A Common Stock on December 31, 2011.
(2)Options expected to vest reflect an estimated forfeiture rate.
Stock-based compensation expense related to employee
stock options for the year ended December 31, 2011 and the
period from inception to December 31, 2010, totaled
expected to be recognized over a weighted average remain-
$12.0 million and $6.1 million, respectively.
ing period of 1.03 years.
The following table summarizes additional information
regarding outstanding and exercisable and vested at Decem-
ber 31, 2011:
Options outstanding
Options exercisable
and vested
Weighted-
average
remaining
Range of exercise prices
Number of
life Number of
shares
(in years)
shares
(in years)
$20.00
$28.80
3,225,908
150,000
8.5 1,125,292
9.3
—
$20.00 - $28.80
3,375,908
8.5 1,125,292
Weighted-
average
remaining
life
8.5
—
8.5
NOTE 12.
RELATED PARTY TRANSACTIONS
In March 2011, we entered into a Servicing Agreement with
Commonwealth Bank of Australia and one of its subsidiaries.
Commonwealth Bank beneficially owns more than 5% of our
Class A Common Stock, and one of our directors, Ian M.
Saines, is Group Executive of the Institutional Banking and
Markets division of Commonwealth Bank. Pursuant to the
Servicing Agreement, we agreed to arrange the acquisition of
an Airbus A320 aircraft on behalf of the subsidiary, to manage
the lease of the aircraft to a third party and subsequent les-
As of December 31, 2011, there was $17.2 million of unrecog-
sees, and if requested by the subsidiary, to remarket the air-
nized compensation cost related to outstanding employee
craft for subsequent leases or for sale. In connection with this
stock options. This amount is expected to be recognized over
transaction, Commonwealth Bank paid us fees for acquiring
a weighted-average period of 1.4 years. To the extent the
the aircraft and for collecting the first rent payment under the
actual forfeiture rate is different from what we have esti-
lease, and will pay us a percentage of the contracted rent and
mated, stock-based compensation related to these awards
the rent actually paid by the lessee each month. We may earn
Unvested at December 31, 2010
Granted
Vested
Forfeited/canceled
will be different from our expectations.
RESTRICTED STOCK UNIT PLAN
The following table summarizes the activities for our
unvested RSUs for the year ended December 31, 2011:
up to an aggregate of approximately $650,000 in fees under
the Servicing Agreement in connection with the acquisition
of the aircraft and management of the current lease.
In March 2011, Commonwealth Bank of Australia provided
the Company with a three-year unsecured revolving loan of
$25.0 million at a rate of LIBOR plus 2.0%.
In March 2011, Commonwealth Bank of Australia provided
the Company with a five-year unsecured term loan of
$12.0 million at a rate of 4.1%.
In October 2011, Commonwealth Bank of Australia provided
the Company with a five-year unsecured term loan of
Unvested Restricted
Stock Units
Number of
shares
3,225,907
232,057
(843,975)
(450)
Weighted-
Average
grant-date
fair value
$ 20.00
$ 28.80
$ 20.00
$ 20.00
Unvested at December 31, 2011
2,613,539
$ 20.78
Expected to vest after December 31, 2011(1)
2,602,154
$ 20.78
$13.0 million at a rate of 3.5%.
(1)RSUs expected to vest reflect an estimated forfeiture rate.
At December 31, 2011, the outstanding RSUs are expected to
In December 2011, the Company, through a limited liability
company of which it is the sole member, entered into a pur-
vest as follows: 2012 — 895,327; 2013 — 874,380; 2014 — chase agreement to acquire a corporate aircraft in 2012. The
843,832. The Company recorded $27.4 million and $17.9 mil-
lion of stock-based compensation expense related to RSUs
for the year ended December 31, 2011 and the period from
inception to December 31, 2010, respectively.
As of December 31, 2011, there was $42.9 million of unrecog-
nized compensation cost, adjusted for estimated forfeitures,
related to unvested stock-based payments granted to
employees. Total unrecognized compensation cost will be
adjusted for future changes in estimated forfeitures and is
right to purchase the corporate aircraft was formerly held by
an unrelated entity controlled by Mr. Udvar-H´azy, our Chair-
man and CEO. The parties conducted this transaction on an
arm’s-length basis. The Company believes, based on inde-
pendent expert advice, that at the time the Company entered
into the purchase agreement, the purchase price of the air-
craft was significantly below the then-current fair market
value for such aircraft. No financial payment was made, and
no financial benefit was received, by Mr. Udvar-H´azy.
60
61
NOTE 13.
The following table presents our unaudited quarterly results of operations for the period from inception to December 31, 2011.
QUARTERLY FINANCIAL DATA (UNAUDITED)
SELECTED FINANCIAL DATA
($ in thousands, except share data)
Revenues
Income (loss) before taxes
Net income (loss)
Net income (loss) per share:
Basic
Diluted
Quarter Ended
Mar 31,
2010
Jun 30,
2010
Sep 30,
2010
Dec 31,
2010
Mar 31,
2011
Jun 30,
2011
Sep 30,
2011
Dec 31,
2011
$ — $
(477)
(477)
1,709
(45,143)
(41,141)
$ 19,752
(11,237)
(7,747)
$ 36,905
(4,058)
(2,675)
$ 55,215
4,924
3,176
$ 74,344
10,888
7,023
$ 92,125
28,341
18,271
$ 115,057
38,688
24,762
$ (1.06)
$ (1.06)
$
$
(2.37)
(2.37)
$
$
(0.12)
(0.12)
$
$
(0.04)
(0.04)
$
$
0.05
0.05
$
$
0.08
0.08
$
$
0.18
0.18
$
$
0.25
0.24
The sum of quarterly earnings (loss) per share amounts may not equal the annual amount reported since per share amounts are
computed independently for each period presented.
SUBSEQUENT EVENTS
NOTE 14.
In the first quarter of 2012 the Company entered into eight
unsecured debt facilities totaling $522.0 million, which
included: $155.0 million in senior unsecured notes issued in a
private placement to institutional investors; $200.0 million in
short-term unsecured bridge financing from two members of
our banking group in connection with the closing of four ECA
supported aircraft deliveries; $105.0 million in unsecured
term financing and $62.0 million of seller financing. We will
continue to place an emphasis on raising additional
unsecured financing through the balance of 2012.
As of March 9, 2012 we had obtained credit approvals from
the ECAs and arranged a bank group to provide export guar-
anteed financing for eight of our Airbus deliveries in 2012
aggregating to approximately $340.0 million in sovereign
guarantees.
Additionally, during the first quarter of 2012, a wholly-owned
subsidiary of the Company entered into a secured term facil-
ity to finance the acquisition of aircraft. This facility provided
the Company $192.8 million, which we will use to refinance
eight aircraft previously financed through the Warehouse
Facility creating additional availability under our Warehouse
Facility.
You should read the following selected consolidated financial data in conjunction with ‘‘Management’s Discussion and Analysis
of Financial Condition and Results of Operations’’ and our consolidated financial statements and the related notes appearing
elsewhere in this Annual Report.
The consolidated statements of operations data for the year ended December 31, 2011 and the period from inception to
December 31, 2010 and the consolidated balance sheet data at December 31, 2011 and 2010 are derived from our audited
consolidated financial statements appearing elsewhere in this Annual Report. The historical results are not necessarily indica-
tive of the results to be expected in any future period.
($ in thousands, except share and aircraft data)
Operating data:
Rentals of flight equipment
Interest and other
Total revenues
Expenses
Income (loss) before taxes
Income tax (expense) benefit
Net income (loss)
Net income (loss) per share:
Weighted average shares outstanding:
Basic
Diluted
Basic
Diluted
Other financial data:
Adjusted net income(1)
Adjusted EBITDA(2)
Cash flow data:
Net cash flows from:
Operating activities
Investing activities
Financing activities
Balance sheet data:
Total assets
Total debt
Total liabilities
Shareholders’ equity
Other operating data:
Owned(3)
Managed(4)
Aircraft lease portfolio at period end:
($ in thousands, except share and aircraft data)
Flight equipment subject to operating leases (net of accumulated depreciation)
Year Ended
December 31, 2011
For the period
from Inception to
December 31, 2010
$
$
$
$
$
$
$
332,719
$
4,022
336,741
253,900
82,841
(29,609)
53,232
0.59
0.59
$
$
$
57,075
1,291
58,366
119,281
(60,915)
8,875
(52,040)
(1.32)
(1.32)
89,592,945
90,416,346
39,511,045
39,511,045
$
$
87,954
290,168
2,520
32,973
$
267,166
(2,977,156)
2,662,974
41,934
(1,851,520)
2,138,407
As of December 31,
2011
2010
$ 4,237,416
$ 1,629,809
5,164,593
2,602,799
2,988,310
2,176,283
2,276,282
911,981
1,051,347
1,224,935
102
2
40
—
(1)Adjusted net income (defined as net income before stock-based compensation expense and non-cash interest expense, which includes the amortization of
debt issuance costs, extinguishment of debt and convertible debt discounts) is a measure of both operating performance and liquidity that is not defined by
United States generally accepted accounting principles (‘‘GAAP’’) and should not be considered as an alternative to net income, income from operations or
any other performance measures derived in accordance with GAAP. Adjusted net income is presented as a supplemental disclosure because management
believes that it may be a useful performance measure that is used within our industry. We believe adjusted net income provides useful information on our
earnings from ongoing operations, our ability to service our long-term debt and other fixed obligations, and our ability to fund our expected growth with
internally generated funds. Set forth below is additional detail as to how we use adjusted net income as a measure of both operating performance and
liquidity, as well as a discussion of the limitations of adjusted net income as an analytical tool and a reconciliation of adjusted net income to our GAAP net
loss and cash flow from operating activities.
62
63
Operating Performance: Management and our board of directors use adjusted net income in a number of ways to assess our consolidated financial and
operating performance, and we believe this measure is helpful in identifying trends in our performance. We use adjusted net income as a measure of our
consolidated operating performance exclusive of income and expenses that relate to the financing, income taxes, and capitalization of the business. Also,
adjusted net income assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily
one-time amortization of convertible debt discounts) and stock-based compensation expense from our operating results. In addition, adjusted net income
helps management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial
performance. Accordingly, we believe this metric measures our financial performance based on operational factors that we can influence in the short term,
namely the cost structure and expenses of the organization.
Liquidity:
flow we have available to service our debt obligations, and we believe this measure can serve the same purpose for our investors.
In addition to the uses described above, management and our board of directors use adjusted net income as an indicator of the amount of cash
the cost structure and expenses of the organization.
Limitations: Adjusted net income has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our
operating results or cash flows as reported under GAAP. Some of these limitations are as follows:
Liquidity:
In addition to the uses described above, management and our board of directors use adjusted EBITDA as an indicator of the amount of cash flow
we have available to service our debt obligations, and we believe this measure can serve the same purpose for our investors.
(cid:2) adjusted net income does not reflect (i) our cash expenditures or future requirements for capital expenditures or contractual commitments, or (ii) changes
in or cash requirements for our working capital needs; and
Limitations: Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating
results or cash flows as reported under GAAP. Some of these limitations are as follows:
(cid:2) our calculation of adjusted net income may differ from the adjusted net income or analogous calculations of other companies in our industry, limiting its
usefulness as a comparative measure.
The following tables show the reconciliation of net income (loss) and cash flows from operating activities, the most directly comparable GAAP measures of
performance and liquidity, to adjusted net income.
(cid:2) adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
(cid:2) adjusted EBITDA does not reflect changes in or cash requirements for our working capital needs;
(cid:2) adjusted EBITDA does not reflect interest expense or cash requirements necessary to service interest or principal payments on our debt; and
($ in thousands)
Reconciliation of cash flows from operating activities to adjusted net income:
Year Ended
December 31, 2011
For the period
From Inception to
December 31, 2010
comparative measures.
(cid:2) other companies in our industry may calculate these measures differently from how we calculate these measures, limiting their usefulness as
EBITDA as a measure of both operating performance and liquidity, as well as a discussion of the limitations of adjusted EBITDA as an analytical tool and a
reconciliation of adjusted EBITDA to our GAAP net loss and cash flow from operating activities.
Operating Performance: Management and our board of directors use adjusted EBITDA in a number of ways to assess our consolidated financial and
operating performance, and we believe this measure is helpful in identifying trends in our performance. We use adjusted EBITDA as a measure of our
consolidated operating performance exclusive of income and expenses that relate to the financing, income taxes, and capitalization of the business. Also,
adjusted EBITDA assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily
one-time amortization of convertible debt discounts) and stock-based compensation expense from our operating results. In addition, adjusted EBITDA helps
management identify controllable expenses and make decisions designed to help us meet our current financial goals and optimize our financial perform-
ance. Accordingly, we believe this metric measures our financial performance based on operational factors that we can influence in the short term, namely
Net cash provided by operating activities
Depreciation of flight equipment
Stock-based compensation
Deferred taxes
Amortization of discounts and deferred debt issue costs
Extinguishment of debt
Amortization of convertible debt discounts
Changes in operating assets and liabilities:
Other assets
Accrued interest and other payables
Rentals received in advance
Net income (loss)
Amortization of discounts and deferred debt issue costs
Extinguishment of debt
Amortization of convertible debt discounts
Stock-based compensation
Tax effect
Adjusted net income
($ in thousands)
Reconciliation of net income (loss) to adjusted net income:
Net income (loss)
Amortization of discounts and deferred debt issue costs
Extinguishment of debt
Amortization of convertible debt discounts
Stock-based compensation
Tax effect
Adjusted net income
$ 267,166
(112,307)
(39,342)
(29,567)
(9,481)
(3,349)
—
17,438
(19,347)
(17,979)
53,232
9,481
3,349
—
39,342
(17,450)
$ 41,934
(19,262)
(24,044)
8,875
(4,883)
—
(35,798)
8,040
(18,864)
(8,038)
(52,040)
4,883
—
35,798
24,044
(10,165)
$
87,954
$
2,520
Year Ended
December 31, 2011
For the period
From Inception to
December 31, 2010
$ 53,232
9,481
3,349
—
39,342
(17,450)
$ (52,040)
4,883
—
35,798
24,044
(10,165)
$ 87,954
$
2,520
(2)Adjusted EBITDA (defined as net income (loss) before net interest expense, stock-based compensation expense, income tax expense (benefit), and
depreciation and amortization expense) is a measure of both operating performance and liquidity that is not defined by GAAP and should not be considered
as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP. Adjusted EBITDA is
presented as a supplemental disclosure because management believes that it may be a useful performance measure that is used within our industry. We
believe adjusted EBITDA provides useful information on our earnings from ongoing operations, our ability to service our long-term debt and other fixed
obligations, and our ability to fund our expected growth with internally generated funds. Set forth below is additional detail as to how we use adjusted
(3)As of December 31, 2011, we owned 102 aircraft (of which 36 were new aircraft and 66 were used aircraft). As of December 31, 2010, we owned 40 aircraft of
which four were new aircraft and 36 were used aircraft.
(4)As of December 31, 2011, we managed two aircraft. As of December 31, 2010, we did not manage any aircraft.
64
65
The following tables show the reconciliation of net income (loss) and cash flows from operating activities, the most directly comparable GAAP measures of
performance and liquidity, to adjusted EBITDA.
($ in thousands)
Reconciliation of cash flows from operating activities to adjusted EBITDA:
Amortization of discounts and deferred debt issue costs
Net cash provided by operating activities
Depreciation of flight equipment
Stock-based compensation
Deferred taxes
Extinguishment of debt
Amortization of convertible debt discounts
Changes in operating assets and liabilities:
Other assets
Accrued interest and other payables
Rentals received in advance
Net income (loss)
Net interest expense
Income taxes
Depreciation
Stock-based compensation
Adjusted EBITDA
Net income (loss)
Net interest expense
Income taxes
Depreciation
Stock-based compensation
Adjusted EBITDA
($ in thousands)
Reconciliation of net income (loss) to adjusted EBITDA:
Year Ended
December 31, 2011
For the period
From Inception to
December 31, 2010
$ 267,166
(112,307)
$ 41,934
(39,342)
(29,567)
(9,481)
(3,349)
—
17,438
(19,347)
(17,979)
53,232
55,678
29,609
112,307
39,342
(19,262)
(24,044)
8,875
(4,883)
—
(35,798)
8,040
(18,864)
(8,038)
(52,040)
50,582
(8,875)
19,262
24,044
$ 290,168
$ 32,973
Year Ended
December 31, 2011
For the period
From Inception to
December 31, 2010
$
$
53,232
55,678
29,609
112,307
39,342
(52,040)
50,582
(8,875)
19,262
24,044
$
290,168
$
32,973
FroM LeFt to right: robert milton, ronald d. sugar, John danhakl, matthew J. hart, Ian m. saines, antony P. ressler, steven f. udvar-házy, John l. Plueger.
not pictured: wilbur ross.
boArd oF direCtors
steven F. udvAr-hÁzy
CHAIrMAN AND
CHIEF ExECUTIVE OFFICEr
John L. pLueger
PrESIDENT AND
CHIEF OPErATINg OFFICEr
robert MiLton
LEAD INDEPENDENT DIrECTOr
Chairman: Nominating and Corporate
Governance Committee
Member: Audit Committee
MAttheW J. hArt
WiLbur ross
Chairman: Audit Committee
Member: Nominating and Corporate
Governance Committee
ronALd d. sugAr
Chairman: Compensation Committee
Member: Nominating and Corporate
Governance Committee
Member: Audit Committee
Antony p. ressLer
Member: Compensation Committee
John dAnhAkL
Member: Compensation Committee
iAn M. sAines
LeAdership teAM
steven F. udvar-házy
Chairman and Chief
Executive Officer
John L. plueger
President and Chief
Operating Officer
Marc baer
Executive Vice President
Jie Chen
Executive Vice President
Alex A. khatibi
Executive Vice President
grant Levy
Executive Vice President,
General Counsel and
Secretary
kishore korde
Senior Vice President
toby MacCary
Senior Vice President and
Corporate Counsel
robert C. Mcnitt, Jr.
Senior Vice President and
Corporate Counsel
John poerschke
Senior Vice President
gregory b. Willis
Senior Vice President and
Chief Financial Officer
Michael bai
Vice President, Marketing
pierce Chang
Vice President, Technical
Asset Management
ozzie Chraibi
Vice President of Aircraft
Specifications and Aircraft,
Engine, Materiel Procurement
Jennifer s. Munro
Vice President and
Controller
Jenny van Le
Vice President and
Corporate Counsel
Czar vigil
Vice President and
Corporate Counsel
Chi yan
Vice President, Marketing
sara evans
Assistant Vice President,
Commercial Contracts
Ardy ghanbar
Assistant Vice President,
Finance
eric hoogenkamp
Assistant Vice President,
Technical Asset Management
ryan Mckenna
Assistant Vice President,
Strategic Planning and
Investor Relations
Lance pekala
Assistant Vice President
of Aircraft Specifications
and Aircraft, Engine, Materiel
Procurement
CorporAte
inForMAtion
transfer Agent:
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206.682.0811
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independent registered
public Accounting Firm:
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415.963.5100
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Annual Meeting:
may 10, 2012
7:30 am – 10:00 am Pdt
century Plaza towers
2029 century Park east
los angeles, california 90067
concourse level,
conference room a
Please visit
www.airleasecorp.com
to view or download a
Pdf of this annual report.
Corporate headquarters:
air lease corporation
2000 avenue of the stars,
suite 1000n
los angeles, california 90067
310.553.0555
stock exchange Listing:
new york stock exchange
(symbol: al)
Form 10-k and
other reports:
shareholders may receive a
copy of the 2011 form 10-k
and other reports we file with
the securities and exchange
commission, without charge
by writing to:
air lease corporation
2000 avenue of the stars
suite 1000n
los angeles, california 90067
or by e-mail to:
investors@airleasecorp.com
this document is a publication of air lease
corporation. a multimedia version of this report is
available online at www.airleasecorp.com.
this annual report is printed on fsc®-certified paper
from mixed sources.
2000 Avenue of the stars, suite 1000n
Los Angeles, CA 90067 usA
www.airleasecorp.com
info@airleasecorp.com