Company: AYR
Filing Date: 2025-10-09
Form Type: 10-Q
Source: 0001628280-25-044676
Chunk: 105

Company: Aircastle LTD
Filing Date: 2025-10-09
Form: 10-Q
Item: Part I, Item 2
Chunk 105
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 to us by lessees in the future may be less than projected as a result of a number of factors, such as in the event of a lessee default.  Maintenance reserves may not cover the entire amount of actual maintenance expenses incurred and, where these expenses are not otherwise covered by the lessees, there can be no assurance that our operational cash flow and maintenance reserves will be sufficient to fund maintenance requirements, particularly as our aircraft age.  See Item 1A. “Risk Factors – Risks Related to Our Leases – If lessees are unable to fund their maintenance obligations on our aircraft, we may incur increased costs at the conclusion of the applicable lease” in our Annual Report on Form 10-K for the year ended February 28, 2025.

Off-Balance Sheet Arrangements

We have an unconsolidated equity method investment in an aircraft leasing entity with Mizuho Leasing in which we hold a 25% equity interest.  As of August 31, 2025, the Net Book Value of its 8 aircraft was $238.1 million.

The assets and liabilities of this entity are not included in our consolidated balance sheets, and we record our net investment under the equity method of accounting.  See Note 7 in the Notes to the Unaudited Consolidated Financial Statements.

Foreign Currency Risk and Foreign Operations

At August 31, 2025, approximately 99% of our leases were payable to us in U.S. dollars.  However, we incur Euro- and Singapore dollar-denominated expenses in connection with our subsidiaries in Ireland and Singapore.  For the six months ended August 31, 2025, expenses, such as payroll and office costs, denominated in currencies other than the U.S. dollar totaled $11.3 million in U.S. dollar equivalents and represented approximately 24% of total selling, general and administrative expenses.

Our international operations are a significant component of our business strategy and permit us to more effectively source new aircraft, service the aircraft we own and maintain contact with our lessees.  Therefore, our international operations and our exposure to foreign currency risk will likely increase over time.  Although we have not yet entered into foreign currency hedges, if our foreign currency exposure increases, we may enter into hedging transactions in the future to mitigate this risk.  For the six months ended August 31, 2025 and 2024, we incurred insignificant net gains and losses on foreign currency transactions.

Management’s Use