AYR

Risks Related to Our Aviation Assets • Lease rates and aircraft values are subject to supply-demand dynamics and may decline due to excess capacity or the introduction of new aircraft and engine technology. • Climate-related regulations and preferences for more fuel-efficient aircraft could reduce demand for older aircraft types. • The concentration of our portfolio around a specific aircraft or engine type could have a material adverse effect on our business should the aircraft or engine type encounter disruptions, manufacturing and quality control issues, or other difficulties. • We operate in a highly competitive aircraft leasing market with low barriers to entry, which may make it difficult for us to take advantage of investment opportunities or make investments that are consistent with our investment objectives.
The ability of lessees to perform their obligations under the relevant lease depends on their financial condition, which may be affected by factors beyond our control, including: • passenger and air cargo demand, fare levels and air cargo rates; • operating costs, including the price and availability of jet fuel, labor costs and the cost, availability, and scope of insurance coverages; • manufacturer production levels and reliability of new aircraft and engine types resulting from production quality issues and technical or other difficulties; • restrictions in labor contracts and labor difficulties, including pilot shortages; • availability of financing, including covenants in financings, terms imposed by credit card issuers, collateral posting requirements contained in hedging contracts and the ability of airlines to make or refinance principal payments; • economic conditions, including economic downturns or recession, financial system distress and currency fluctuations; • aircraft accidents or other safety-related events; • the availability of government support through subsidies, loans, guarantees, equity investments; • changing political conditions, including risk of protectionism, travel restrictions, or trade barriers; • geopolitical events, including war, terrorism, epidemic or pandemic diseases and natural disasters; • the impact of climate change and related compliance costs on demand and supply of air travel; • cyber risk, including information hacking, viruses, ransomware and malware; and • governmental regulation of airlines, including noise regulations, emissions regulations, climate change initiatives, and aircraft age limitations.
Currency depreciation and currency controls could impact the ability of our customers to meet their contractual obligations in a timely manner.
Fuel costs represent a major expense to airlines and are subject to significant volatility.
Airlines may not be able to successfully manage their exposure to fuel prices through hedging or other risk management strategies, and significant increases could materially affect their operating results.
Airlines may not be able to pass on increases in fuel prices to their customers through higher fares, particularly in competitive markets or during periods of weakened demand.
Fuel price volatility may be exacerbated by geopolitical events, including armed conflicts, political instability or disruptions to global energy supply, which can result in sudden and sustained increases in fuel costs.
High fuel prices may also have a general impact on consumer spending and reduce demand for air transportation.
Investors should expect some lessees to experience payment difficulties, particularly in difficult economic, financial or operating environments.
As a result of their financial condition and constraints on liquidity, lessees may be significantly in arrears in their rental or maintenance payments.
Liquidity issues are more likely to lead to airline failures during periods of significant declines in air traffic, financial system distress, volatile fuel prices and broader economic slowdowns.
We may not correctly assess the credit risk of a lessee at the time of lease origination, or that risk could change over time.
We may not be able to charge or maintain risk-adjusted lease rates, and lessees may not be able to continue to perform their financial and other obligations under our leases in the future.
We may experience some level of delinquency under our leases, and levels of delinquencies and defaults may increase over time.
These difficulties may include failure to perform required aircraft maintenance and labor-management disagreements or disputes.
While we have the right to repossess aircraft and to exercise other remedies upon a lessee default, repossession of an aircraft may involve significant time and cost.
Such costs may include legal and other expenses of court or other governmental proceedings, particularly if the lessee is contesting the proceedings, and costs to obtain possession, deregistration of the aircraft and flight and export permissions.
Delays resulting from these proceedings would increase the period during which the aircraft is not generating revenue.
We may also incur maintenance, refurbishment or repair costs that a defaulting lessee has failed to undertake or pay and that are necessary to put the aircraft in suitable condition for re-lease or sale.
Our rights upon a lessee default vary significantly by jurisdiction and may include the need to obtain a court order for repossession of the aircraft and consents for deregistration or re-export of the aircraft.
When a lessee is late in making payments or fails to make payments in full, we may elect to or may be required to restructure the lease.
If requests for payment restructuring or rescheduling are granted, rental payments may be reduced, deferred or otherwise modified over all or some part of the remaining term of the lease, and the terms of payment may be less favorable or such payments may not be made.
As a result of adverse economic conditions, airlines may be forced to reorganize.
Bankruptcies and reduced demand may lead to the grounding of significant numbers of aircraft and negotiated reductions or deferrals of aircraft lease rental rates, with the effect of depressing aircraft market values.
In the normal course of business, liens that secure the payment of airport fees and taxes, custom duties, air navigation charges (including charges imposed by Eurocontrol), landing charges, crew wages, repairer’s charges, salvage or other liens, may, depending on the jurisdiction, attach to the aircraft.
An adverse economic, political, or regulatory event or a deterioration in operating conditions in any region or country in which our lessees or our aircraft are concentrated could affect the ability of our lessees to meet their obligations to us or expose us to heightened legal or political risks associated with the affected jurisdictions, which could have a material adverse effect on our financial results.
Emerging markets may be more vulnerable to economic and political problems, such as significant fluctuations in gross domestic product, interest and currency exchange rates, government instability, nationalization and expropriation of private assets, less predictable or less developed legal and judicial systems, change in law regarding recognition of contracts or ownership rights, changes in governments or government policy and the imposition of taxes, tariffs or other charges by governments.
The occurrence of these events may adversely affect our ownership interests in aircraft, our ability to enforce our contractual rights, or the ability of our lessees to meet their lease obligations.
For the year ended February 28, 2026, 50 of our lessees, which operated 130 aircraft and generated 51% of our lease rental revenue, are domiciled or habitually based in emerging markets.
These and other factors may produce movements in aircraft values and lease rates, which could adversely affect the economics of aircraft acquisitions, result in lease defaults, or delay or prevent aircraft from being re-leased or sold on favorable terms.
Any decrease in the values of, or lease rates for, commercial aircraft which may result from the above factors or other unanticipated factors may have a material adverse effect on our financial results.
Changes in market dynamics, stakeholder and financier expectations, and local, national and international climate change policies and regulatory frameworks all have the potential to disrupt our business and operations.
Developing climate and environmental regulations may impact the types of aircraft we target for investment and the demand for certain aircraft and engine types, and could result in a significant increase in our costs and expenses, including compliance, reporting, operational and capital costs, and adversely affect future revenue, cash flows and financial performance.
Failure to address climate change or to adapt our business strategy to evolving climate-related expectations could result in greater exposure to economic and other risks and impact our ability to meet developing climate goals.
New aircraft types or variants, and higher production levels of new technology aircraft types that have already been launched, may cause certain aircraft in our existing aircraft portfolio to become less desirable to potential lessees or purchasers.
New technology aircraft may shorten the economic lives of certain aircraft in our portfolio or limit demand for those aircraft.
Certain new technology aircraft programs, including the Boeing 737 MAX and 787 and the Airbus A220, A320neo family, A330neo and A350, are currently in production.
The Boeing 777X is expected to enter service in 2027.
In addition, the Commercial Aircraft Corporation of China Ltd. has developed aircraft models intended to compete with certain narrow-body aircraft manufactured by Airbus and Boeing, as well as regional jet aircraft manufactured by Embraer.
These new technology aircraft types, and potential variants of these types, may reduce the desirability of, and have an adverse effect on the residual values and future lease rates of, older aircraft types and variants.

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Gone since FY2025

Risks Related to Our Aviation Assets • Lease rates and aircraft values are subject to supply-demand dynamics and may decline due to excess capacity or the introduction of new aircraft and engine technology. • Climate-related regulations and preferences for more fuel-efficient aircraft could reduce demand for older aircraft types. • The concentration of our portfolio around a specific aircraft or engine type could have a material adverse affect on our business should the aircraft or engine type encounter disruptions, manufacturing and quality control issues, or other difficulties. • We operate in a highly competitive aircraft leasing market with low barriers to entry, which may make it difficult for us to take advantage of investment opportunities or make investments that are consistent with our investment objectives.
The ability of lessees to perform their obligations under the relevant lease depends on their financial condition, which may be affected by factors beyond our control, including: • passenger and air cargo demand, fare levels and air cargo rates; • operating costs, including the price and availability of jet fuel, labor costs and insurance costs and coverages; • manufacturer production levels and reliability of new aircraft and engine types resulting from production quality issues and technical or other difficulties; • restrictions in labor contracts and labor difficulties, including pilot shortages; • availability of financing, including covenants in financings, terms imposed by credit card issuers, collateral posting requirements contained in hedging contracts and the ability of airlines to make or refinance principal payments; • economic conditions, including economic downturns or recession, financial system distress and currency fluctuations; • aircraft accidents; • the continuing availability of government support through subsidies, loans, guarantees, equity investments; • changing political conditions, including risk of protectionism, travel restrictions, or trade barriers; • geopolitical events, including war, terrorism, epidemic or pandemic diseases and natural disasters; • impact of climate change and emissions on demand and supply of air travel; • cyber risk, including information hacking, viruses, ransomware and malware; and • governmental regulation of, including noise regulations, emissions regulations, climate change initiatives, and aircraft age limitations.
Currency depreciation and currency controls could impact the ability of customers to meet their contractual obligations in a timely manner.
Fuel costs represent a major expense to airlines and fluctuate widely.
Airlines may not be able to successfully manage their exposure to fuel prices and significant changes could materially affect their operating results.
Airlines may not be able to pass on increases in fuel prices to their customers by increasing fares.
High fuel prices may also have a general impact on consumer spending and adversely impact demand for air transportation.
Investors should expect some lessees to experience payment difficulties, particularly in difficult economic or operating environments.
As a result of their financial condition and lack of liquidity, lessees may be significantly in arrears in their rental or maintenance payments.
Liquidity issues are more likely to lead to airline failures in the periods of large air traffic declines, financial system distress, volatile fuel prices, and economic slowdown.
We may not correctly assess the credit risk of a lessee or that risk could change over time.
We may not be able to charge risk-adjusted lease rates, and lessees may not be able to continue to perform their financial and other obligations under our leases in the future.
We may experience some level of delinquency under our leases and default levels may increase over time.
These difficulties may include the failure to perform required aircraft maintenance and labor-management disagreements or disputes.
While we have the right to repossess the aircraft and to exercise other remedies upon a lessee default, repossession of an aircraft could lead to significant costs for us.
Those costs include legal and other expenses of court or other governmental proceedings, particularly if the lessee is contesting the proceedings, and costs to obtain possession, deregistration of the aircraft and flight and export permissions.
Delays resulting from these proceedings would increase the period of time during which the aircraft is not generating revenue.
We may incur maintenance, refurbishment or repair costs that a defaulting lessee has failed to undertake or pay and that are necessary to put the aircraft in suitable condition for re-lease or sale.
Our rights upon a lessee default vary significantly depending upon the jurisdiction and may include the need to obtain a court order for repossession of the aircraft and consents for deregistration or re-export of the aircraft.
When a lessee is late in making payments or fails to make payments in full, we may elect to or be required to restructure the lease.
If requests for payment restructuring or rescheduling are granted, reduced or deferred rental payments may be payable over all or some part of the remaining term of the lease, and the terms of any revised payment schedules may be unfavorable or such payments may not be made.
As a result of economic conditions, airlines may be forced to reorganize.
Bankruptcies and reduced demand may lead to the grounding of significant numbers of aircraft and negotiated reductions in aircraft lease rental rates, with the effect of depressing aircraft market values.
In the normal course of business, liens that secure the payment of airport fees and taxes, custom duties, air navigation charges (including charges imposed by Eurocontrol), landing charges, crew wages, repairer’s charges, salvage or other liens, are likely, depending on the jurisdiction, to attach to the aircraft.
An adverse economic or political event in any region or country in which our lessees or our aircraft are concentrated could affect the ability of our lessees to meet their obligations to us or expose us to various legal or political risks associated with the affected jurisdictions, which could have a material adverse effect on our financial results.
Emerging markets may be more vulnerable to economic and political problems, such as significant fluctuations in gross domestic product, interest and currency exchange rates, government instability, nationalization and expropriation of private assets, unfavorable legal systems, change in law regarding recognition of contracts or ownership rights, changes in governments or government policy and the imposition of taxes, tariffs or other charges by governments.
The occurrence of these events may adversely affect our ownership interest in an aircraft or the ability of our lessees to meet their lease obligations.
For the year ended February 28, 2025, 50 of our lessees, which operated 126 aircraft and generated 54% of our lease rental revenue, are domiciled or habitually based in emerging markets.
These and other factors may produce movements in aircraft values and lease rates, which would impact our cost of acquiring aircraft, or which may result in lease defaults or prevent aircraft from being re-leased or sold on favorable terms.
Any decrease in the values of and lease rates for commercial aircraft which may result from the above factors or other unanticipated factors may have a material adverse effect on our financial results.
Changes in market dynamics, stakeholder and financier expectations, and local, national and international climate change policies, all have the potential to disrupt our business and operations.
Developing climate and environmental regulations may impact the types of aircraft we target for investment and the demand for certain aircraft and engine types, and could result in a significant increase in our costs and expenses and adversely affect future revenue, cash flows and financial performance.
Failure to address climate change could result in greater exposure to economic and other risks and impact our ability to adhere to developing climate goals.
New aircraft types that are introduced to the market, and higher production levels of new technology aircraft types that have already been launched, may cause certain aircraft in our existing aircraft portfolio to become less desirable to potential lessees or purchasers.
The Boeing 737 MAX and 787 and the Airbus A220, A320neo family, A330neo and A350 are all currently in production.
The Boeing 777X is expected to enter service in 2026.
The Commercial Aircraft Corporation of China Ltd. has developed aircraft models that will compete with the Airbus A320 family aircraft, the Boeing 737 and the Embraer E-Jet.
These new technology aircraft types, and potential variants of these types, may reduce the desirability of, and have an adverse effect on residual value and future lease rates of, older aircraft types and variants.
A significant increase in SAF production will be required to make these benchmarks attainable, and at present, the cost of SAF is almost three times the cost of fossil jet fuel.
In recent years, there has been an increased expectation for industries to balance commercial interests with conscientious ESG performance focused on accountability to stakeholders.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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