Company: AYR
Filing Date: 2025-04-23
Form Type: 10-K
Source: 0001628280-25-019189
Chunk: 95

Company: Aircastle LTD
Filing Date: 2025-04-23
Form: 10-K
Item: Item 1A
Chunk 95
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 ETS system such that ETS free emissions allowances will phase out for the aviation sector by 2026.  Although the ETS is likely to increase costs for airlines operating in Europe, it remains to be seen what effect, if any, this will have on our business.

ICAO adopted a global market-based measure to control CO2 emissions from international aviation called the Carbon Offsetting and Reduction Scheme for International Aviation (“CORSIA”).  CORSIA is currently in its first phase (2024-2026) wherein compliance applies only to routes between countries that have each volunteered to participate in the scheme. All airlines that operate routes between two volunteering countries will be subject to the offsetting requirements. From 2027 onwards, CORSIA compliance will be mandatory.

Sustainable Aviation Fuel has been identified by IATA as the primary means by which IATA’s NetZero 2050 goal is to be achieved.  Many governments, including the E.U., the United Kingdom, Brazil and Japan, have mandated aviation operators employ benchmarked percentages of SAF “drop in” blend on future commercial flights.  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.  Meeting mandated SAF blends could pose a significant operating cost to our customers.

Over time, it is possible that governments will adopt additional regulatory requirements and/or market-based policies to reduce emissions and noise levels from aircraft. Such initiatives may be based on concerns regarding climate change, energy security, public health, local impacts, or other factors, and may impact the global market for certain aircraft and cause behavioral shifts that result in decreased demand for air travel. These concerns could result in limitations on our customers’ operation of our fleet and our ability to lease or re-lease certain older aircraft, particularly aircraft equipped with older technology engines.

Compliance with current or future regulations could cause our lessees to incur higher costs and lead to higher ticket prices, which could mean lower demand for travel and adverse impacts on the financial condition of our lessees. Such compliance may also affect our lessees’ ability to make rental and other lease payments and limit the market for aircraft in our portfolio.

Corporate responsibility, specifically related to ESG matters, could expose us to additional risks and costs.

In recent years, there has been an increased expectation for industries to balance commercial interests with conscientious ESG performance focused on accountability to stakeholders.  In recognition of this trend, organizations are sometimes reviewed by rating agencies