Company: AYR
Filing Date: 2025-04-23
Form Type: 10-K
Source: 0001628280-25-019189
Chunk: 48

Company: Aircastle LTD
Filing Date: 2025-04-23
Form: 10-K
Item: Item 16
Chunk 48
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 upon the initial recognition of the net investment in the lease based on the Company’s estimate of expected credit losses over the lease term.  The allowance reflects the Company’s estimate of lessee default probabilities and loss given default percentages.  When determining the credit loss allowance, we consider relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the net investment in the lease.  The allowance also considers potential losses due to non-credit risk related to unguaranteed residual values.  A provision for credit losses is recorded as a component of operating expenses to adjust the allowance for changes to management’s estimate of expected credit losses.Unconsolidated Equity Method InvestmentWe have an unconsolidated equity method investment in an aircraft leasing entity that is accounted for using the equity method as we do not exercise control over the entity.  Under the equity method, the investment is initially recorded at cost and the carrying amount is affected by our share of the unconsolidated equity method investment’s undistributed earnings and losses and distributions of dividends and capital.  The investment may also reflect an equity loss in the event that circumstances indicate an other-than-temporary impairment.Security DepositsMost of our operating leases require the lessee to pay Aircastle a security deposit or provide a letter of credit.  Security deposits represent cash received from the lessee that is held on deposit until lease expiration or termination.  If a lease is terminated, we recognize security deposits in excess of outstanding lease payments as other revenue.

F - 10

Aircastle Limited and SubsidiariesNotes to Consolidated Financial Statements(Dollars in thousands, except per share amounts)

Maintenance PaymentsTypically, the lessee will be responsible for performing maintenance on the aircraft and will be required to make payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft.  These maintenance payments are based on hours or cycles of utilization or on calendar time, depending upon the component, and would be made either monthly in arrears or at the end of the lease term.  Our determination of whether to require such payments to be made monthly or to permit a lessee to make a single maintenance payment at the end of the lease term depends on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be provided by the lessee and market conditions at the time we enter into the lease.  If a lessee is making monthly maintenance payments, we would typically be obligated to