Company: AYR
Filing Date: 2025-07-10
Form Type: 10-Q
Source: 0001628280-25-034715
Chunk: 98

Company: Aircastle LTD
Filing Date: 2025-07-10
Form: 10-Q
Item: Part I, Item 2
Chunk 98
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 higher aircraft purchase commitments, outstanding debt and interest obligations.

Capital Expenditures

From time to time, we make capital expenditures to maintain or improve our aircraft.  These expenditures include the cost of major overhauls necessary to place an aircraft in service and modifications made at the request of lessees.  For the three months ended May 31, 2025 and 2024, we incurred a total of $13.7 million and $9.0 million, respectively, of capital expenditures, including lease incentives, related to the improvement of aircraft.

As of May 31, 2025, the weighted average age by Net Book Value of our aircraft was approximately 8.9 years.  In general, the costs of operating an aircraft, including maintenance expenditures, increase with the age of the aircraft.  Our lease agreements call for the lessee to be primarily responsible for maintaining the aircraft.  Our leases may require the lessee to make periodic payments to us during the lease term to provide reserves for future major maintenance events.  Provided a lessee performs scheduled maintenance of the aircraft, we are required to reimburse the lessee for scheduled maintenance payments.  In certain cases, we are also required to make lessor contributions, in excess of amounts a lessee may have paid, towards the costs of maintenance events performed by or on behalf of the lessee.  We may incur 

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additional maintenance and modification costs in the future in the event we are required to remarket an aircraft, or a lessee fails to meet its maintenance obligations under the lease agreement.

Actual maintenance payments 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.