##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C. 20549
    FORM 10-K
 ANNUAL REPORT
    (Mark One)
 x
    ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
  For the fiscal year ended December 31, 2006
  OR
  TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
  For the transition period from _______________ to
    _______________
 Commission file number 1-316161
  INTERNATIONAL LEASE FINANCE
    CORPORATION
 (Exact name of registrant as
    specified in its charter)
  California

22-3059110(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)10250 Constellation Blvd.,
    Suite 3400
    Los Angeles, California(Address of principal
    executive offices)

90067(Zip Code)       Title of each class

Name of each exchange on which registered6.375% Notes due March 15,
    2009

New York Stock Exchange      x o
  o x
  x o
  Regulation S-K Form 10-K Form 10-K. x
  12b-2
 Large accelerated
    filer o  Accelerated
    filer o  Non-accelerated
    filer x
  o x
    Form 10-K




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##### 



INTERNATIONAL
    LEASE FINANCE CORPORATION
  2006
    FORM 10-K
    ANNUAL REPORT
    TABLE OF CONTENTS
  PagePART
    IItem 1.

Business


1Item 1A.

Risk
    Factors


7Item 1B.

Unresolved Staff
    Comments


9Item 2.

Properties


9Item 3.

Legal
    Proceedings


11PART
    IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


12Item 6.

Selected Financial
    Data


12Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


13Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


23Item 8.

Financial
    Statements and Supplementary Data


24Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


24Item 9A.

Controls and
    Procedures


24Item 9B.

Other
    Information


26PART
    IIIItem 14.

Principal
    Accountant Fees and Services


26PART
    IVItem 15.

Exhibits and
    Financial Statement Schedules


26EXHIBIT 12EXHIBIT 23EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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##### Table of Contents



PART
    I  Item
    1.  Business  General
    Properties 
    Commitments.
      Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.
  (310) 788-1999, (310) 788-1990,
    Aircraft
    Leasing
   1




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##### Table of Contents



Properties  Flight Equipment
             2




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##### Table of Contents



Flight
    Equipment Marketing
  Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Results of
    Operations
      Fleet
    Management Services
    Financing/Source
    of Funds
  Managements Discussion and Analysis
    of Financial Condition and Results of Operations.
 3




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##### Table of Contents



Customers
    Customers by Region2006


2005


2004Number





Number





Numberof





of





ofRegion

Customers (a)


%


Customers (a)


%


Customers (a)


%Europe


76



48.4
%


66



45.2
%


66



47.2
%Asia and the Pacific


32



20.4



33



22.6



31



22.1United States and Canada


23



14.7



24



16.5



19



13.6Africa and Middle East


17



10.8



13



8.9



14



10.0Central and South America and
    Mexico


9



5.7



10



6.8



10



7.1157



100
%


146



100
%


140



100
%    (a)
    A customer is an airline with its own operating certificate.    Notes to Consolidated Financial
    Statements
    2006


2005


2004Amount


%


Amount


%


Amount


%(Dollars in thousands)Europe

$
1,837,454



46.1
%

$
1,693,235



48.5
%

$
1,432,441



48.5
%Asia and the Pacific


1,011,655



25.4



761,673



21.9



689,201



23.3United States and Canada


496,225



12.4



479,219



13.8



382,090



12.9Africa and the Middle East


388,750



9.8



294,416



8.5



243,170



8.2Central and South America and
    Mexico


250,864



6.3



253,667



7.3



208,622



7.1$
3,984,948



100
%

$
3,482,210



100
%

$
2,955,524



100
%     2006


2005


2004Amount


%


Amount


%


Amount


%(Dollars in thousands)China

$
563,299



14.1
%

$
410,310



11.8
%

$
357,512



12.1
%France


456,674



11.5



442,272



12.7



351,394



11.9United States


380,453



9.5



386,598



11.1



236,353



8.0   Competition
   4




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##### Table of Contents



Government
    Regulation
                  Employees
    Insurance
   5




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##### Table of Contents



co-insurance
        Code of
    Ethics and Conduct
  www.aigcorporate.com
  Forward-Looking
    Statements
  Form 10-K Form 10-K
 6




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##### Table of Contents



Risk Factors
 Item
    1A.  Risk Factors  Risk
    Factors Affecting International Lease Finance
    Corporation
  Quantitative and Qualitative Disclosures about Market
    Risk
  Overall
    Airline Industry Risk
    
    Demand for air travel
    Competition between carriers
    Fuel prices and availability
    Labor costs and stoppages
    Maintenance costs
    Employee labor contracts
    Air traffic control infrastructure constraints
    Airport access
    Insurance costs and coverage
    Security, terrorism and war
    Worldwide health concerns
    Equity and borrowing capacity
    Environmental concerns
    Government regulation
    Interest rates
    Overcapacity    
    a downward pressure on demand for the aircraft in our fleet and
    reduced market lease rates and lease margins;
    a higher incident of lessee defaults, lease restructurings and
    repossessions affecting net income due to maintenance,
    consulting and legal costs associated with the repossession, as
    well as lost revenue for the time the aircraft are off lease and
    possibly lower lease rates from the new lessees;
    a higher incident of situations where we engage in restructuring
    lease rates for our troubled customers which reduces overall
    lease revenue;
    an inability to immediately place new and used aircraft when
    they become available through our purchase commitments and
    regular lease terminations on commercially acceptable terms,
    resulting in lower lease margins due to aircraft not earning
    revenue and resulting in payments of storage, insurance and
    maintenance costs; and
    a loss if our aircraft is damaged or destroyed by an event
    specifically excluded from the insurance policy such as dirty
    bombs, bio-hazardous materials and electromagnetic pulsing.  Airframe,
    Engine and Other Manufacturer Risks
   7




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##### Table of Contents




    missed or late delivery of aircraft ordered by us and an
    inability to meet our contractual obligations to our customers,
    resulting in lost or delayed revenues, lower growth rates and
    strained customer relationships;
    an inability to acquire aircraft and related components on terms
    which will allow us to lease those aircraft to customers at a
    profit, resulting in lower growth rates or a contraction in our
    fleet;
    a market place with too many aircraft available, creating
    downward pressure on demand for the aircraft in our fleet and
    reduced market lease rates;
    poor customer support from the manufacturers of aircraft and
    components resulting in reduced demand for a particular
    manufacturers product, creating downward pressure on
    demand for those aircraft in our fleet and reduced market lease
    rates for those aircraft; and
    reduction in our competitiveness due to deep discounting by the
    manufacturers, which may lead to reduced market lease rates and
    may impact our ability to remarket or sell some of the aircraft
    in our fleet.  Borrowing
    Risks
  Liquidity
  
    an inability to acquire aircraft, for which we have signed
    contracts, resulting in lower growth, lost revenue and strained
    manufacturer and customer relationships; and
    an inability to meet our debt maturities as they become due,
    resulting in payment defaults, non-compliance with debt
    covenants, reduced credit ratings and an inability to access
    certain debt markets.  Interest Rate Risks
  Other
    Risks
  Failure to Remedy Material Weakness Controls and
    Procedures
  Residual Value Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Critical Accounting Polices and
    Estimates  Flight Equipment.
  Obsolescence Risk long-lived
 8




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##### Table of Contents



Key Personnel
  Foreign currency exchange rate risk
  Relationship with AIG  A-1+, (A1/Stable/P-1)
  Accounting Pronouncements
 Item
    1B.  Unresolved Staff Comments   Item
    2.  Properties  Flight
    Equipment
     9




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##### Table of Contents



Aircraft Type

2007


2008


2009


2010


2011


2012


2013


2014


2015


2016


2017


2018


2019


Total737-300/
    400/500


6



23



9



5



6



4



1



1























55737-600/
    700/800


8



26



9



12



29



21



15



9



7



16







9



2



163757-200


13



8



13



14



4



9



2







1



















64767-200






2











1



































3767-300


5



16



8



6



9



8































52777-200






4



7



3



6



9



4











3















36777-300






1







5



6



1



















4



5







22747-300










1



1







































2747-400






1



5



1



6



3



1



























17MD-83














1







































1MD-11






1







1











3



3























8A300-600R






2



2



1



























1











6A310






6







1







































7A319






16



14



4



7



7



9



7



8



12



10



10







104A320


4



20



23



14



11



23



9



4



1



11







2







122A321






7



17



10



10



2



4



4







7



2











63A330-200


2



8



15



5



1



7



7



2







1















48A330-300






5



3



2



6



3



3



1























23A340-300


5



4



3







1



2































15A340-600






3



















1







2



2



2



2







12Total


43



153



129



86



103



99



59



31



19



52



19



28



2



823      Commitments
    Aircraft Type

2007


2008


2009


2010


2011


2012


2013


2014


2015


Total737-600/700/800(a)


24



21



6



























51777-200ER


3



































3777-300ER


7



3



3



























13787-800(b)














10



10



4















24A319-100(a)


16



15



10



























41A320-200(a)


17



22



13



























52A321-200(a)


6



9



5



























20A330-200/300(a)


9



8



6



























23A340-600


1



































1A350-800(c)






















2



6



4



4



16A380-800(d)


























5



3



2



10Total


83



78



43



10



10



6



11



7



6



254    (a)
    We have the right to designate the size of the aircraft within
    the specific model type at specific dates prior to contractual
    delivery.  (b)
    Two 787-800 delivering in 2012 were options at December 31,
    2006. We exercised the options in January 2007.  (c)
    Airbus has informed us the A350-800 will be delayed to 2014. We
    are still in negotiations with Airbus to reposition our orders.  (d)
    Subject to cancellation option by no later than June 30,
    2010, which would reduce the total future purchase commitments. 10




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##### Table of Contents



Managements Discussion and Analysis of Financial
    Condition and Results of Operations.
  non-refundable
      Number of


NumberDelivery Year

Aircraft


Leased


% Leased2007


83



83



100
%2008


78



49



63
%2009


43



6



14
%2010


10



9



90
%2011


10



1



10
%Thereafter


30



0



0
%     Facilities
    Item 3.
    Legal
    Proceedings  737-300
 11




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##### Table of Contents



PART II  Item
    5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities   Item 6. Selected
    Financial Data  Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations
  Years Ended December 31,2006


2005


2004


2003


2002(Dollar amounts in thousands)Operating Data:Rentals of flight equipment

$
3,984,948


$
3,482,210


$
2,955,524


$
2,807,211


$
2,546,142Flight equipment marketing


71,445



66,737



77,664



28,988



48,454Flight equipment
    marketing  securitization










32,854



23,245



Interest and other income


86,304



61,426



93,844



17,907



64,655Total revenues


4,142,697



3,610,373



3,159,886



2,877,351



2,659,251Expenses


3,426,590



2,936,190



2,491,779



2,236,545



2,037,784Income before income taxes


716,107



674,183



668,107



640,806



621,467Net income


499,267



438,349



462,006



435,481



417,406Ratio of Earnings to Fixed
    Charges and Preferred Stock Dividends(a):


1.45x



1.52x



1.61x



1.58x



1.55xBalance Sheet Data:Flight equipment under operating
    leases (net of accumulated depreciation)

$
38,475,949


$
34,748,932


$
30,505,422


$
28,190,689


$
24,864,055Net investment in finance and
    sales-type
    leases


283,386



308,471



307,466



303,373



150,611Total assets


42,035,528



37,530,327



34,007,900



31,291,562



27,148,615Total debt(b)


28,860,242



26,104,165



23,175,596



21,852,743



18,977,268Shareholders equity


6,574,998



6,172,562



5,329,937



4,856,504



4,414,071Other Data:Aircraft lease portfolio at period
    end(c):Owned


824



746



667



611



543Leased in


2















13Subject to finance and sales-type
    leases


10



17



9



9



5Aircraft sold or remarketed during
    the period


21



29



49



39



8        (b)
    Includes subordinated debt, capital lease obligations and
    synthetic lease obligations when applicable and does not include
    foreign currency adjustment related to foreign currency
    denominated debt swapped into $US.  Properties 
    Flight Equipment.
 12




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##### Table of Contents



Item
    7.  Managements Discussion and Analysis of
    Financial Condition and Results of Operations  Overview
    and Industry Condition
               13




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##### Table of Contents



Critical
    Accounting Policies and Estimates
      Lease Revenue Past-due take-off
    Flight Equipment Marketing
  Flight Equipment
   14




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##### Table of Contents



Accounting for the Impairment or Disposal
    of Long-Lived Assets Risk Factors
  Provision for Overhauls
    Derivative Financial Instruments: Accounting for Derivative
    Instruments and Hedging Activities,
 15




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##### Table of Contents



Income Taxes: Accounting for Income Taxes.
  Financial
    Condition
  Properties 
    Commitments
  December 31,


December 31,


December 31,2006


2005


2004(Dollars in thousands)Public bonds and medium-term notes

$
21,317,011


$
18,503,065


$
17,516,746Capital lease obligations










39,580Bank term debt


3,818,688



4,014,573



2,973,525Junior subordinated debentures


1,000,000



1,000,000



Commercial paper


2,757,647



2,625,409



2,675,247Less: Deferred debt discount


(33,104
)


(38,882
)


(29,502
)Total debt financing

$
28,860,242


$
26,104,165


$
23,175,596Composite interest rate


5.24%



5.00%



4.34%Percentage of total debt at fixed
    rate


78.88%



79.03%



66.21%Composite interest rate on fixed
    debt


5.12%



5.03%



5.07%Bank prime rate


8.25%



7.25%



5.25%    16




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##### Table of Contents



Public
    Debt
    Maximum


Issued as of


Issued as ofOffering


December 31, 2006


March 1, 2007(Dollars in millions)Registration statement dated
    August 16, 2006 (including $5.0 billion Medium-Term
    Note Program)


Unlimited
(a)

$
1,900


$
2,500Registration statement dated
    December 20, 2002 (including $2.88 billion Medium-Term
    Note Program and $1.0 billion Retail Medium-Term Note
    Program)

$
6,080
(b)


5,782



5,816Euro Medium-Term Note Programme
    dated September 2006(c)(d)


7,000



4,276



4,276    (a)
    Includes $645 million, which was incorporated into the
    registration statement from a prior registration statement. As a
    result of our Well Known Seasoned Issuer (WKSI)
    status, we have an unlimited amount of debt securities
    registered for sale.  (b)
    Includes $1.08 billion, which was incorporated into the
    registration statement from a prior registration statement,
    increasing the maximum offering from $5.0 billion to
    $6.08 billion.  (c)
    We have economically hedged the foreign currency risk of the
    notes through derivatives or through the offset provided by
    operating lease payments denominated in the related currency.  (d)
    This is a perpetual program. As a bond issue matures, the
    principal amount of that bond becomes available for new
    issuances under the program.  Bank Term
    Debt
        Junior
    Subordinated Debt
   17




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##### Table of Contents



(ii) 10-year (iii) 30-year
  Commercial
    Paper
  Bank Commitments
  Bank
    Commitments
    Other
    Variable Interest Entities
        Derivatives
    
    Two foreign currency swaps economically hedging our interest
    rate risk and currency risk of our Euro denominated debt, which
    do not qualify because we had chosen an incorrect method to
    calculate ineffectiveness.
    A foreign currency swap failed the assessment of hedge
    effectiveness test, as defined by SFAS 133, in the fourth
    quarter of 2006. Ineffectiveness was created due to large swings
    in the Sterling exchange rate and the inclusion of cash flows in
    the retrospective effectiveness assessment. SFAS 133 allows
    the exclusion of cash flows and we will evaluate the derivative
    for effectiveness as of April 1, 2007, and if the
    derivative meets the test, we intend to redesignate it as a
    FAS 133 hedge.   18




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##### Table of Contents



Notes to Consolidated Financial Statements
      Common
    Stock
    Market
    Liquidity Risks
        Existing
    Commitments
  Commitments Due by YearTotal


2007


2008


2009


2010


2011


Thereafter(Dollars in thousands)Medium Term and Long Term Debt

$
26,135,699


$
4,104,151


$
4,371,948


$
4,046,133


$
3,884,550


$
3,875,090


$
5,853,827Commercial Paper


2,757,647



2,757,647



















Interest Payments on Debt
    Outstanding(a)(b)


7,806,914



1,277,448



1,071,605



853,818



629,696



420,121



3,554,226Operating Leases


85,396



8,956



9,303



9,594



9,969



10,367



37,207Pension Obligations(c)


4,226



637



658



678



712



753



788Tax Benefit Sharing Agreement Due
    to AIG


245,000



160,000







85,000











Purchase Commitments(d)


19,042,400



5,442,300



4,324,200



2,754,700



1,064,000



1,091,000



4,366,200Total

$
56,077,282


$
13,751,139


$
9,777,714


$
7,749,923


$
5,588,927



5,397,331


$
13,812,248  19




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##### Table of Contents



Contingent
    Commitments
  Contingency Expiration by YearTotal


2007


2008


2009


2010


2011


Thereafter(Dollars in thousands)Put Options(e)

$
343,550


$



$



$



$



$



$
343,550Asset Value Guarantees(e)


125,596



250



35,452



16,150











73,744Loan Guarantees(e)


35,517























35,517Lines of Credit


50,000























50,000Total

$
554,663


$
250


$
35,452


$
16,150


$



$



$
502,811    (a)
    Future interest payments on floating rate debt are estimated
    using floating interest rates in effect at December 31,
    2006.  (b)
    Includes the effect of interest rate and foreign currency
    derivative instruments.  (c)
    Our pension obligations are a part of intercompany expenses,
    which AIG allocates to us on an annual basis. The amount is an
    estimate of such allocation. The column Thereafter
    consists of the 2012 estimated allocation. The amount allocated
    has not been material to date.  (d)
    Includes two options that were exercised in 2007.  (e)
    From time to time we participate with airlines, banks, and other
    financial institutions to assist in financing aircraft by
    providing asset value guarantees, put options or loan guarantees
    collateralized by aircraft. As a result, should we be called
    upon to fulfill our obligations, we would have recourse to the
    value of the underlying aircraft. To the extent that the value
    of the underlying aircraft is less than the guarantee, we would
    record a loss. Guarantees entered into after December 31,
    2002, are recorded at fair value in accordance with FIN
    No. 45 Guarantors Accounting and Disclosure
    Requirements for Guarantees, Including Indirect Guarantees at
    Indebtedness of Others. See Note A of Notes to
    Consolidated Financial Statements.  Results
    of Operations
  2006
    Compared to 2005
         20




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##### Table of Contents



ILFC
    Composite Interest Rates and Prime Rates
  
  Notes to Consolidated Financial Statements
      Notes
    to the Consolidated Financial Statements
    
    (2006) $20.1 million related to a notes receivable
    write-down related to a lessee under bankruptcy protection
    (2005) $38.3 million related to the restructuring of
    ownership of aircraft in certain lease transactions in Australia
    (see Note J of Notes to Consolidated Financial
    Statements), and $11.7 million related to a write-down
    of notes receivable in 2005. 21




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##### Table of Contents



Notes to the Consolidated
    Financial Statements
    2005
    Compared to 2004
  and/or
    Notes to Consolidated Financial
    Statements
       22




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##### Table of Contents



Notes to Consolidated Financial Statements
          
    (2005) $38.3 million related to the restructuring of
    ownership of aircraft in certain lease transactions in
    Australia. See Note J of Notes to Consolidated Financial
    Statements and $11.7 million related to a write-down of
    notes receivable.
    (2004) In connection with a global aircraft lease transaction
    entered into in 2000 for a total of 14 aircraft, we acquired
    certain securities and assumed certain obligations of ATA. On
    October 26, 2004, ATA filed for bankruptcy protection and we
    recorded impairment losses in the amount of $28.9 million on our
    investment in ATA non-voting preferred stock and a $25.0 million
    charge for the assumed liabilities.    New
    Accounting Pronouncements
  Fair Value Measurements
 Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109
 Accounting for Planned Major Maintenance
    Activities
 FIN 46(R)-6, Determining the Variability to be Considered in Applying FASB
    Interpretation No. 46(R)
 Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans, an amendment of FASB Statements
    No. 87, 88, 106 and 132(R)
 The
    Fair Value Option for Financial Assets and Financial
    Liabilities
 Notes to
    Consolidated Financial Statements
 Item
    7A. Quantitative and Qualitative Disclosures About
    Market Risk   23




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##### Table of Contents



re-pricing re-priced.
  ILFC
    Market Risk
  December 31, 2006


December 31, 2005Average


High


Low


Average


High


Low(Dollars in millions)Combined

$
151.5


$
208.7


$
102.3


$
135.0


$
238.7


$
84.2Interest Rate


151.3



208.0



102.2



135.4



240.3



83.9Currency


0.9



1.6



0.3



2.1



4.2



0.5    Item
    8.  Financial Statements and Supplementary
    Data    Item
    9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   Item 9A.  Controls
    and Procedures  (A) Evaluation
    of Disclosure Controls and Procedures
   24




---



##### Table of Contents



Variable
    Interest Entities
    (B) Changes
    in Internal Control Over Financial Reporting
     (C) Remediation
    of Material Weaknesses in Internal Control Over Financial
    Reporting
   25




---



##### Table of Contents



Form 10-K
 Item
    9B. Other Information    PART
    III  Item
    14.  Principal Accountant Fees and
    Services    2006


2005Audit Fees(a)

$
2,423,000


$
1,892,500Audit-Related Fees






Tax Fees(b)


319,306



362,309Total Fees

$
2,742,306


$
2,254,809      (a)
    
    Audit Fees consist of fees for professional services provided in
    connection with the audits of our financial statements, services
    rendered in connection with our registration statements filed
    with the Securities and Exchange Commission, the delivery of
    consents and the issuance of comfort letters. This also includes
    Sarbanes-Oxley Section 404 work performed at ILFC for
    AIGs 2006 and 2005 assessment.(b)
    
    Tax Fees consist of the aggregate fees for services rendered for
    tax compliance, tax planning and tax advice.   PART
    IV  Item
    15.  Exhibits and Financial Statement
    Schedules     26




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  FORM 10-K
 Items 8, 15(a), and 15(b)
  INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
    PageReport of Independent Registered
    Public Accounting Firm


30Consolidated Financial Statements:Balance Sheets at
    December 31, 2006 and 2005


31Statements of Income for the years
    ended December 31, 2006, 2005 and 2004


32Statements of Shareholders
    Equity for the years ended December 31, 2006, 2005 and 2004


33Statements of Cash Flows for the
    years ended December 31, 2006, 2005 and 2004


34Notes to Consolidated Financial
    Statements


36     Report of Independent Registered
    Public Accounting Firm on Financial Statements Schedule


56   Schedule Number


Description

PageII


Valuation
    and Qualifying Accounts


57       ExhibitNumber


Description3.1


Restated Articles of Incorporation
    of the Company, as amended through December 9, 1992, filed
    November 3, 1993 (filed as an exhibit to Registration
    Statement
    No. 33-50913
    and incorporated herein by reference).3.2


Certificate of Determination of
    Preferences of Series A Market Auction Preferred Stock
    (filed December 9, 1992 as an exhibit to Registration
    Statement
    No. 33-54294
    and incorporated herein by reference).3.3


Certificate of Determination of
    Preferences of Series B Market Auction Preferred Stock
    (filed December 9, 1992 as an exhibit to Registration
    Statement
    33-54294 and
    incorporated herein by reference).3.4


Certificate of Determination of
    Preferences of Series C Market Auction Preferred Stock
    (filed as an exhibit to
    Form 10-K
    for the year ended December 31, 1994 and incorporated
    herein by reference).3.5


Certificate of Determination of
    Preferences of Series D Market Auction Preferred Stock
    (filed as an exhibit to
    Form 10-K
    for the year ended December 31, 1994 and incorporated
    herein by reference).3.6


Certificate of Determination of
    Preferences of Series E Market Auction Preferred Stock
    (filed as an exhibit to
    Form 10-K
    for the year ended December 31, 1994 and incorporated
    herein by reference).3.7


Certificate of Determination of
    Preferences of Series F Market Auction Preferred Stock
    (filed as an exhibit to
    Form 10-K
    for the year ended December 31, 1994 and incorporated
    herein by reference).3.8


Certificate of Determination of
    Preferences of Series G Market Auction Preferred Stock
    (filed as an exhibit to
    Form 10-K
    for the year ended December 31, 1995 and incorporated
    herein by reference).3.9


Certificate of Determination of
    Preferences of Series H Market Auction Preferred Stock
    (filed as an exhibit to
    Form 10-K
    for the year ended December 31, 1995 and incorporated
    herein by reference).3.10


Certificate of Determination of
    Preferences of Preferred Stock of the Company (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2001 and incorporated
    herein by reference).3.11


By-Laws of the Company, including
    amendment thereto dated August 31, 1990 (filed as an
    exhibit to Registration Statement
    No. 33-37600
    and incorporated herein by reference). 27




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##### Table of Contents



ExhibitNumber


Description3.12


Unanimous Written Consent of Sole
    Stockholder of the Company, dated January 2, 2002, amending
    the By-Laws
    of the Company (filed as an exhibit to Form 10-Q for the
    quarter ended June 30, 2003 and incorporated herein by
    reference).4.1


Indenture dated as of November 1,
    1991, between the Company and U.S. Bank Trust National
    Association (successor to Continental Bank, National
    Association), as Trustee (filed as an exhibit to Registration
    Statement
    No. 33-43698
    and incorporated herein by reference).4.2


First supplemental indenture,
    dated as of November 1, 2000, to the Indenture between the
    Company and U.S. Bank Trust National Association (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2000 and incorporated
    herein by reference).4.3


Second Supplemental Indenture,
    dated as of February 28, 2001, to the Indenture between the
    Company and U.S. Bank Trust National Association (filed as
    an exhibit to
    Form 10-Q
    for the quarter ended March 31, 2001 and incorporated
    herein by reference).4.4


Third Supplemental Indenture,
    dated as of September 26, 2001, to the Indenture between
    the Company and U.S. Bank Trust National Association (filed
    as an exhibit to
    Form 10-Q
    for the quarter ended September 30, 2000 and incorporated
    herein by reference).4.5


Indenture dated as of
    November 1, 2000, between the Company and the Bank of New
    York, as Trustee (filed as an exhibit to Registration
    No. 33-49566
    and incorporated herein by reference).4.6


The Company agrees to furnish to
    the Commission upon request a copy of each instrument with
    respect to issues of long-term debt of the Company and its
    subsidiaries, the authorized principal amount of which does not
    exceed 10% of the consolidated assets of the Company and its
    subsidiaries.4.7


First Supplemental Indenture,
    dated as of August 16, 2002 to the indenture between the
    Company and the Bank of New York (filed as Exhibit 4.2 to
    Registration Statement
    No. 333-100340
    and incorporated herein by reference).4.8


Fourth Supplemental Indenture,
    dated as of November 6, 2002, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2002 and incorporated
    herein by reference).4.9


Fifth Supplemental Indenture,
    dated as of December 27, 2002, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to
    Form 10-K
    for the year ended December 31, 2002 and incorporated
    herein by reference).4.10


Sixth Supplemental Indenture,
    dated as of June 2, 2003, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to Form 10-Q for the quarter ended
    September 30, 2003 and incorporated herein by reference).4.12


Seventh Supplemental Indenture,
    dated as of October 8, 2004, to the indenture between the
    Company and U.S. Bank National Association (filed as an
    exhibit to
    Form 8-K
    dated October 14, 2004 and incorporated herein by
    reference).4.13


Eighth Supplemental Indenture,
    dated as of October 5, 2005, to the indenture between the
    Company and U.S. Bank National Association.4.14


Agency Agreement (amended and
    restated), dated as of September 15, 2005, among the
    Company, Citibank, N.A., and Dexia Banque Internationale A
    Luxembourg, Societe Anonyme (filed as an exhibit to
    Form 8-K, event date September 15, 2005, and
    incorporated herein by reference).10.1


Aircraft Facility Agreement, dated
    as of January 19, 1999, among the Company, Halifax PLC and
    the other banks listed therein providing up to $4,327,260,000
    for the financing of approximately
    seventy-five
    Airbus aircraft (filed as an exhibit to Form 10-K for the
    year ended December 31, 1998 and incorporated herein by
    reference).10.2


Aircraft Facility Agreement, dated
    as of May 18, 2004, among Whitney Leasing Limited, as
    borrower, the Company, as guarantor and the Bank of Scotland and
    the other banks listed therein providing up to $2,643,660,000
    (plus related premiums) for the financing of aircraft (filed as
    an exhibit to
    Form 10-Q
    for the quarter ended June 30, 2004 and incorporated herein
    by reference) and, as most recently amended, as of May 30,
    2006, to increase the size of the facility to $3,643,660,000 and
    extend the termination until May 2007. 28




---



##### Table of Contents



ExhibitNumber


Description10.3


$2,000,000,000 Five-Year Revolving
    Credit Agreement, dated as of October 13, 2006, among the
    Company, CitiCorp USA, Inc., as Administrative Agent, and the
    other financial institutions listed therein (filed as an exhibit
    to
    Form 10-K
    for the year ended December 31, 2004 and incorporated
    herein by reference).10.4


$2,000,000,000 Five-Year Revolving
    Credit Agreement dated as of October 13, 2006, among the
    Company, CitiCorp USA, Inc as Administrative Agent, and the
    other financial institutions listed therein (filed as an exhibit
    to Form 8-K, event date October 14, 2005, and
    incorporated herein by reference).10.5


$2,500,000,000
    364-Day
    Revolving Credit Agreement, dated as of October 13, 2006,
    among the Company, CitiCorp USA, Inc., as Administrative Agent,
    and the other financial institutions listed therein (filed as an
    exhibit to
    Form 8-K
    event date October 18, 2006 and incorporated herein by
    reference).12


Computation of Ratio of Earnings
    to Fixed Charges and Preferred Stock Dividends.23


Consent of PricewaterhouseCoopers
    LLP.31.1


Rule 13a-14(a)/15d-14(a)
    Certification of Chairman of the Board and Chief Executive
    Officer.31.2


Rule 13a-14(a)/15d-14(a)
    Certification of Vice Chairman, Chief Financial Officer and
    Chief Accounting Officer.32.1


Certification under
    18 U.S.C., Section 1350.  29




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  To The
    Shareholders and Board of Directors
         30




---



##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands, except share and per share amounts)
  December 31,2006


2005ASSETSCash, including interest bearing
    accounts of
    $154,812 (2006) and $155,953 (2005)

$
157,120


$
157,960Current income taxes


448,343



148,399Notes receivable, net of allowance


148,558



181,951Net investment in finance and
    sales-type leases


283,386



308,471Flight equipment under operating
    leases


47,200,028



42,067,504Less accumulated depreciation


8,724,079



7,318,57238,475,949



34,748,932Deposits on flight equipment
    purchases


1,077,444



1,148,462Lease receivables and other assets


476,670



310,748Derivative assets


738,620



293,576Variable interest entities assets


124,734



138,277Deferred debt issue costs 
    less accumulated amortization of
    $83,977 (2006) and $65,377 (2005)


104,704



93,551$
42,035,528


$
37,530,327LIABILITIES AND SHAREHOLDERS
    EQUITYAccrued interest and other payables

$
417,424


$
366,845Tax benefit sharing payable to AIG


245,000



245,000Debt financing, net of deferred
    debt discount of
    $33,105 (2006) and $38,882 (2005)


27,860,242



25,104,165Subordinated debt


1,000,000



1,000,000Foreign currency adjustment


677,402



197,074Derivative liabilities






49,549Security deposits on aircraft,
    overhauls and other


1,281,833



1,071,676Rentals received in advance


223,313



187,957Deferred income taxes


3,747,141



3,070,302Variable interest entities
    liabilities


8,175



65,197Commitments and contingencies
     Note JSHAREHOLDERS EQUITYMarket Auction Preferred Stock,
    $100,000 per share liquidation value; Series A and  B (2006
    and 2005), each series having 500 shares issued and
    outstanding


100,000



100,000Common stock  no par value;
    100,000,000 authorized shares, 45,267,723 shares issued and
    outstanding


1,053,582



1,053,582Paid-in capital


591,757



587,484Accumulated other comprehensive
    income (loss)


2,718



66,401Retained earnings


4,826,941



4,365,095Total shareholders equity


6,574,998



6,172,562$
42,035,528


$
37,530,327    31




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
 (Dollars in thousands)
  Years Ended December 31,2006


2005


2004REVENUES:Rental of flight equipment

$
3,984,948


$
3,482,210


$
2,955,524Flight equipment marketing


71,445



66,737



77,664Flight equipment
    marketing  securitization










32,854Interest and other


86,304



61,426



93,8444,142,697



3,610,373



3,159,886EXPENSES:Interest


1,469,650



1,164,432



936,517Income effect from derivatives,
    net of change in hedged items due to changes in foreign exchange
    rates


(49,709
)


(46,095
)


6,010Depreciation of flight equipment


1,570,296



1,372,103



1,214,048Provision for overhauls


249,181



260,008



164,322Flight equipment rent


18,968







Selling, general and administrative


148,097



135,757



116,956Other expenses


20,107



49,985



53,9263,426,590



2,936,190



2,491,779INCOME BEFORE INCOME TAXES


716,107



674,183



668,107Provision for income taxes


216,840



235,834



206,101NET INCOME

$
499,267


$
438,349


$
462,006    32




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (Dollars in thousands)
  Market Auction











AccumulatedPreferred Stock


Common Stock





OtherNumber





Number








Comprehensiveof





of





Paid-in


Income


RetainedShares


Amount


Shares


Amount


Capital


(Loss)


Earnings


TotalBalance at December 31, 2003


1,000


$
100,000



42,198,119


$
653,582


$
579,955


$
(27,928
)

$
3,550,895


$
4,856,504Common stock dividends


























(35,500
)


(35,500
)Preferred stock dividends


























(3,826
)


(3,826
)Comprehensive Income:Net income


























462,006



462,006Other comprehensive income:Cash flow derivative transactions
    (net of tax of $25,786)






















47,887







47,887Change in unrealized appreciation
    securities available-for-sale (net of tax of $1,543)






















2,866







2,866Comprehensive Income






























512,759Balance at December 31, 2004


1,000



100,000



42,198,119



653,582



579,955



22,825



3,973,575



5,329,937Issuance of common stock










3,069,604



400,000















400,000Common stock dividends


























(37,000
)


(37,000
)Preferred stock dividends


























(4,650
)


(4,650
)Comprehensive income:Net income


























438,349



438,349Other comprehensive incomeCash flow derivative transactions
    (net of tax of $24,323)






















45,172







45,172Change in unrealized appreciation
    securities available-for-sale (net of tax of ($859))






















(1,596
)






(1,596
)Comprehensive income:






























481,925Other(a)


















7,529







(5,179
)


2,350Balance at December 31, 2005


1,000



100,000



45,267,723



1,053,582



587,484



66,401



4,365,095



6,172,562Common stock dividends


























(32,000
)


(32,000
)Preferred stock dividends


























(5,421
)


(5,421
)Comprehensive income:Net income


























499,267



499,267Other comprehensive incomeCash flow derivative transactions
    (net of tax of ($33,858))






















(62,879
)






(62,879
)Change in unrealized appreciation
    securities available-for-sale (net of tax of ($433))






















(804
)






(804
)Comprehensive income






























435,584Other(a)


















4,273











4,273Balance at December 31, 2006


1,000


$
100,000



45,267,723


$
1,053,582


$
591,757


$
2,718


$
4,826,941


$
6,574,998     (a)
    In March 2005, we adjusted Retained Earnings and Paid-in Capital
    by $5,179 for certain prior period compensation costs related to
    an incentive plan of AIG. See Note B of Notes to
    Consolidated Financial Statements. We recorded an additional
    $2,350 in Paid-in Capital during 2005 and $673 during 2006 for
    compensation expenses related to the same incentive plan. In
    2006 we recorded an additional $3,600 related to expenses paid
    by AIG on behalf of us.   33




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
  Years Ended December 31,2006


2005


2004OPERATING ACTIVITIES:Net income

$
499,267


$
438,349


$
462,006Adjustments to reconcile net
    income to net cash provided by operating activities:Depreciation of flight equipment


1,570,296



1,372,103



1,214,048Deferred income taxes


711,129



416,721



249,331Change in fair value of derivative
    instruments


(591,331
)


683,004



(443,174
)Foreign currency adjustment of
    cash and non-US$ denominated debt


577,431



(692,981
)


393,902Amortization of deferred debt
    issue costs


30,558



22,692



26,162Losses related to customer
    bankruptcy










53,926Other


(9,114
)


6,118



(10,724
)Changes in operating assets and
    liabilities:Decrease (increase) in notes
    receivable


35,032



20,585



(32,104
)(Increase) decrease in lease
    receivables and other assets


(8,921
)


112,022



253,852(Decrease) increase in accrued
    interest and other payables


(2,323
)


96,880



11,961Increase in current income taxes


(299,944
)


(141,892
)


(24,474
)Increase in tax benefit sharing
    payable to AIG










245,000Increase in rentals received in
    advance


35,356



27,079



14,007Change in unamortized debt discount


5,777



(9,380
)


(5,181
)Net cash provided by operating
    activities


2,553,213



2,351,300



2,408,538INVESTING ACTIVITIES:Acquisition of flight equipment
    for operating leases


(6,093,934
)


(6,276,420
)


(5,007,201
)Acquisition of flight equipment
    for finance leases










(43,247
)Decrease in deposits and progress
    payments


71,018



101,706



4,906Proceeds from disposal of flight
    equipment  net of gain


690,086



454,512



1,355,422Advance on notes receivable


(48,616
)


(39,100
)


(80,750
)Collections on notes receivable


63,890



25,035



46,793Collections on finance and
    sales-type leases (net of income amortized)


25,085



29,163



14,393Other


(12,464
)


7,709



1,188Net cash used in investing
    activities


(5,304,935
)


(5,697,395
)


(3,708,496
)FINANCING ACTIVITIES:Issuance of common stock






400,000



Net change in commercial paper


132,238



(49,839
)


1,099,290Proceeds from debt financing


6,406,169



7,421,098



4,311,742Payments in reduction of debt
    financing


(3,896,007
)


(4,451,706
)


(4,082,998
)Debt issue costs


(41,711
)


(56,577
)


(33,964
)Payment of common and preferred
    dividends


(37,421
)


(41,650
)


(39,326
)Increase in customer deposits


176,816



195,086



32,676Net cash provided by financing
    activities


2,740,084



3,416,412



1,287,420Net (decrease) increase in cash


(11,638
)


70,317



(12,538
)Effect of exchange rate changes on
    cash


10,798



(12,104
)


10,044Cash at beginning of year


157,960



99,747



102,241Cash at end of year

$
157,120


$
157,960


$
99,747  34




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
   Years Ended December 31,2006


2005


2004SUPPLEMENTAL DISCLOSURE OF CASH
    FLOW  INFORMATION:Cash paid (received) during the
    year for:Interest (net of amount
    capitalized $48,038 (2006), $54,097 (2005) and $48,390 (2004))

$
1,370,472


$
1,101,409


$
945,991Income taxes, net


(194,346
)


(38,994
)


(263,757
)   2006:Notes in the amount of $6,000 were
    received as partial payment for flight equipment sold with a net
    book value of $63,665.Certain payments from aircraft and
    engine manufacturers in the amount of $100,535 reduced the basis
    of Flight equipment and increased Lease receivables and other
    assets.2005Accounts receivable in the amount
    of $29,706 were received as a payment for flight equipment sold.
    Full cash payment was subsequently received.Notes receivable in the amount of
    $23,802 were used as payment for the acquisition of aircraft
    ($19,765) and investments ($4,037).Aircraft previously accounted for
    as operating leases were converted into finance and sales-type
    leases in the amount of $30,168.$5,179 was adjusted in Retained
    earnings and Paid-in capital as a result of an adjustment for
    certain prior period compensation costs related to an incentive
    plan of ILFCs parent, AIG.Certain payments from aircraft and
    engine manufacturers in the amount of $161,648 reduced the basis
    of Flight equipment under operating leases and increased Lease
    receivables and other assets.2004:One aircraft was received for
    investment in finance leases and notes receivables in the amount
    of $23,456.Notes in the amount of $2,700 were
    received as partial payment in exchange for flight equipment
    sold with a net book value of $30,000.A note in the amount of $4,500 was
    used towards a purchase of an aircraft.Certain payments from aircraft and
    engine manufacturers in the amount of $147,065 reduced the basis
    of Flight equipment for operating leases and increased Lease
    receivables and other assets.    35




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  Note A
     Summary of Significant Accounting Policies
  Organization:
  Parent Company:
  Principles of Consolidation:
  Intercompany Allocations and Fees:
    2006


2005


2004Allocation of corporate costs from
    AIG

$
7,507


$
8,050


$
3,029Management services paid to AIG


643



587



550Management fees received from
    trusts consolidated by AIG


(9,618
)


(9,833
)


(10,209
)     Lease Revenue:
     36




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
     Initial Direct Costs:
  Flight Equipment Marketing:
  Provision for Overhauls:
    Cash:
  Foreign Currency:
  Flight Equipment:
         37




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
     Capitalized Interest:
  Deferred Debt Issue Costs:
  Derivative Financial Instruments:
        Variable Interest Entities:
 38




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
     Other Comprehensive Income (Loss):
  Guarantees:
  Income Taxes:
    Accounting for Income Taxes
  Stock-based Compensation: Stock-Based share-based
 39




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note A  Summary of Significant Accounting Policies
    (Continued)
   Notes to Consolidated Financial Statements
  Use of Estimates:
  Reclassifications:
  New Accounting Pronouncements: Fair Value
    Measurements
  Accounting for Uncertainty in Income Taxes  An
    Interpretation of FASB Statement No. 109 Accounting for Income Taxes
  Accounting for Planned Major
    Maintenance Activities. Audits of Airlines Interim Financial Reporting accrue-in-advance
  Determining the Variability to be Considered in Applying FASB
    Interpretation No. 46(R)
  Employers Accounting for Defined Benefit Pension and Other
    Postretirement Plans, an amendment of FASB Statements
    No. 87, 88, 106, and 132(R)
 40




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
      Note
    B  Notes Receivable
    2006


2005Fixed rate notes receivable due in
    varying installments to 2025:Below 6.00%

$
24,773


$
34,8666% to 7.99%


1,737



9708% to 9.99%


2,269



919LIBOR based notes with spreads
    ranging from .5% to 3.3%


119,779



145,196$
148,558


$
181,951       2007

$
16,0542008


17,5502009


23,6672010(a)


58,3502011


19,211Thereafter


13,726$
148,558     (a)
    Includes a balloon payment for a note related to a sale of
    flight equipment. 41




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note
    C  Net Investment in Finance and Sales-type
    Leases
    December 31,


December 31,2006


2005Total lease payments to be received

$
369,624


$
414,283Estimated residual values of
    leased flight equipment (unguaranteed)


135,039



135,039Less: Unearned income


(221,277
)


(240,851
)Net investment in finance and
    sales-type leases

$
283,386


$
308,471     2007

$
34,7592008


35,3522009


31,9042010


30,4042011


29,904Thereafter


207,301Total minimum lease payments to be
    received

$
369,624   Note
    D  Debt Financing
    2006


2005Commercial Paper

$
2,757,647


$
2,625,409Public Bonds and Medium-Term Notes


21,317,011



18,503,065Bank Term Debt


3,818,688



4,014,573Junior Subordinated Debt


1,000,000



1,000,000Less: Deferred Debt Discount


(33,104
)


(38,882
)$
28,860,242


$
26,104,165     Commercial
    Paper
    Bank
    Commitments
   42




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note D  Debt Financing (Continued)
     Public
    Bonds and Medium-Term Notes
    Maximum


Issued as ofOffering


December 31, 2006Registration statement dated
    August 16, 2006 (including $5.0 billion Medium-Term
    Note Program)


Unlimited


$
1,900,000Registration statement dated
    December 20, 2002 (including $2.88 billion Medium-Term
    Note program and $1.0 billion Retail Medium-Term Note
    Program)

$
6,080,000



5,782,000Euro Medium-Term Note Programme
    dated September 2006(a)


7,000,000



4,276,000    (a)
    This is a perpetual program. As a bond issue matures, the
    principal amount of that bond becomes available for new
    issuances under the program.      Bank
    Term Debt
   43




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note D  Debt Financing (Continued)
         Junior
    Subordinated Debt
  (ii) 10-year (iii) 30-year
    2007

$
4,104,1512008


4,371,9482009


4,046,1332010


3,884,5502011


3,875,090Thereafter


5,853,827$
26,135,699   Other
     44




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note
    E  Shareholders Equity
  Market
    Auction Preferred Stock
    Common
    Stock
    Accumulated
    Other Comprehensive Income
  broker-dealer.
    2006


2005Cumulative unrealized gain related
    to cash flow hedges, net of tax

$
2,252


$
65,131Cumulative unrealized gain related
    to securities available for sale, net of tax


466



1,270Total accumulated other
    comprehensive income (loss)

$
2,718


$
66,401   Note
    F  Rental Income
   Year Ended2007


3,663,0222008


3,219,8622009


2,681,6902010


2,271,5112011


1,799,676Thereafter


4,011,380$
17,647,141    45




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note
    G  Income Taxes
   2006


2005


2004Current:Federal(a)

$
(491,664
)

$
(180,243
)

$
(43,912
)State


(3,472
)


(1,461
)


7Foreign


847



818



675(494,289
)


(180,886
)


(43,230
)Deferred(b):Federal


700,614



417,344



244,212State(c)


10,515



(624
)


5,119711,129



416,720



249,331$
216,840


$
235,834


$
206,101    (a)
    Including U.S. tax on foreign income.  (b)
    Deferred taxes were also provided (charged) to other
    comprehensive income of $34,291, $(23,464), and $(27,329) for
    the years ended December 31, 2006, 2005, and 2004,
    respectively.  (c)
    Includes a charge of $1,275 in 2006 and a benefit of $6,027 in
    2005 for revaluation of state deferred taxes as a result of a
    change in our California apportionment factor.    2006


2005Deferred Tax LiabilitiesAccelerated depreciation on flight
    equipment

$
3,943,544


$
3,207,552Indirect payment from manufacturers






30,107Straight line rents


19,598



20,474Other comprehensive income


1,464



35,755Investments


4,805



Total Deferred Tax Liabilities

$
3,969,411


$
3,293,888Deferred Tax AssetsExcess of state income taxes not
    currently deductible

$
(13,870
)

$
(11,419
)Provision for overhauls


(86,967
)


(50,326
)Capitalized overhauls


(28,295
)


(32,615
)Rent received in advance


(40,679
)


(74,334
)Investments






(5,316
)Derivatives


(267
)


(11,272
)Accruals and reserves


(39,761
)


(31,792
)Other


(12,431
)


(6,512
)Total Deferred Tax Assets


(222,270
)


(223,586
)Net Deferred Tax Liability

$
3,747,141


$
3,070,302  46




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note G  Income Taxes (Continued)
       2006


2005


2004Computed expected provision @ 35%

$
250,638


$
235,964


$
233,838State income tax, net of Federal


4,578



(1,355
)


3,332FSC and ETI benefit


(46,744
)


(36,338
)


(30,979
)Foreign Taxes


849



976



721Audit Adjustments (a)


6,502



24,770



Other


1,017



11,817



(811
)Provision for Income Taxes

$
216,840


$
235,834


$
206,101    (a)
    During the fourth quarter of 2005, we were advised of certain
    IRS and other adjustments identified in the U.S. Consolidated
    AIG tax return which were attributable to our operations. Under
    our tax sharing arrangement, we were charged for the effect of
    the adjustments and the related interest attributable to our
    operations.        Note
    H  Other Information
  Concentration
    of Credit Risk
   47




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note H  Other Information (Continued)
     Segment
    Information
        2006


2005


2004Amount


%


Amount


%


Amount


%Europe

$
1,837,454



46.1
%

$
1,693,235



48.5
%

$
1,432,441



48.5
%Asia/Pacific


1,011,655



25.4



761,673



21.9



689,201



23.3United States and Canada


496,225



12.4



479,219



13.8



382,090



12.9Africa and the Middle East


388,750



9.8



294,416



8.5



243,170



8.2Central, South America and Mexico


250,864



6.3



253,667



7.3



208,622



7.1$
3,984,948



100
%

$
3,482,210



100
%

$
2,955,524



100
%     2006


2005


2004Amount


%


Amount


%


Amount


%China

$
563,299



14.1
%

$
410,310



11.8
%

$
357,512



12.1
%France


456,674



11.5



442,272



12.7



351,394



11.9United States


380,453



9.5



386,598



11.1



236,353



8.0   Currency
    Risk
    Transaction
    with Affiliate
   48




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note I  Employee
    Benefit Plans
    Pension
    Plans
      Stock-Based
    and Other Compensation Plans
    
    AIG 1999 Stock Option Plan Certain key employees of AIG and its subsidiaries and members of
    the AIG Board of Directors can be granted options to purchase a
    maximum of 45,000,000 shares of AIG common stock in the
    aggregate at prices not less than fair market value at the grant
    date. The maximum number of shares that may be granted to any
    one grantee is limited to 900,000 in any one year. Options
    generally vest over four years (25 percent vesting per
    year) and expire 10 years from the date of grant.  
    AIG 2002 Stock Incentive Plan Equity-based or equity-related awards with respect to shares of
    AIG common stock can be issued to employees of AIG and its
    subsidiaries in any year up to a maximum of that number of
    shares equal to (a) 1,000,000 shares plus (b) the
    number of shares available but not issued in the prior calendar
    year. The maximum award that a grantee may receive under the
    plan per year is rights with respect to 250,000 shares.  
    AIG 1996 Employee Stock Purchase Plan Eligible employees (those employed at least one year) of AIG and
    its subsidiaries may be granted the right to purchase up to an
    aggregate of 10,000,000 shares of AIG common stock at a
    price equal to 85 percent of the fair market value on the
    date of the grant of the purchase privilege. Purchase privileges
    are granted quarterly and are limited to the number of whole
    shares that can be purchased on an annual basis by an amount
    equal to the lesser of 10 percent of an employees annual
    salary or $10,000.  
    SICO Deferred Compensation Profit Participating Plans Starr International Company, Inc. (SICO) has
    provided a series of two-year Deferred Compensation Profit
    Participation Plans to certain employees of AIG and its
    subsidiaries (SICO Plans). The SICO Plans provide
    that shares of AIG common stock currently held by SICO are set
    aside for the benefit of the participant and distributed upon
    retirement. The SICO Board of Directors currently may permit an
    early payout of units under certain circumstances.  
    AIG
    2005-2006
    Deferred Compensation Profit Participation Plan (AIG
    DCPPP) The AIG DCPPP provides equity-based compensation to key
    employees of AIG and its subsidiaries. The AIG DCPPP is modeled
    on the SICO Plans. 49




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  
    AIG Partners Plan Certain key employees of AIG and its subsidiaries can be granted
    compensation by the Compensation Committee of the Board of
    Directors under the Partners Plan. On June 26, 2006, the
    Compensation Committee approved two grants for performance based
    Restricted Stock Units for performance periods January 1,
    2006 to December 31, 2007 and January 1, 2007 to
    December 31, 2008. Both grants vest 50 percent on the
    fourth and ninth anniversaries of the first day of the related
    performance period. In addition, the Compensation Committee
    approved the performance metrics for the two grants prior to the
    date of grant.  
    ILFC Deferred Compensation Plan ILFC employees participate in the ILFC deferred compensation
    plan, which is a plan independent of AIG. At the time of the
    grant, the employees choose to receive AIG stock or cash at the
    vesting date. The vesting period is three years after the grant
    date. The grant is forfeited at termination of employment.  
    ILFC Long-Term Incentive Plan Senior ILFC employees participate in the ILFC Long-Term
    Incentive Plan, which is a plan independent of AIG. At the time
    of the grant employees receive a cash award. The pay-out of the
    cash award will vary depending on the performance of ILFC during
    the vesting period. The performance period is three years. The
    grant is forfeited at termination of employment.    Note
    J  Commitments and Contingencies
  Aircraft
    Orders
       50




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note J  Commitments and Contingencies
    (Continued)
   Asset
    Value Guarantees
    Other
    Guarantees
      Stand
    by Lines of Credit
    Leases
    2007

$
8,9562008


9,3032009


9,5942010


9,9692011


10,367Thereafter


37,207Total

$
85,396  51




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note J  Commitments and Contingencies
    (Continued)
   Contingencies
          Note K
     Derivative Financial Instruments
      52




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note K  Derivative Financial Instruments
    (Continued)
     Currency

2006


2005(in thousands)USD($)

$
1,504,899


$
1,897,241EUR()


3,310,000



3,910,000GBP(£)

£
300,000


£
300,000JPY(¥)

¥



¥
48,298,000     Notional Amount(in thousands)USD


EUR


GPB2007

$




460,000


£
2008






1,250,000



2009










300,0002010


300,000



600,000



2011






1,000,000



Thereafter


1,204,899







Total

$
1,504,899



3,310,000


£
300,000     2006


2005


2004Changes in fair value of
    derivative instruments with no hedge accounting treatment under
    SFAS 133

$
(284,027
)

$
191,631


$
(369,371
)Offsetting changes in fair value
    of foreign denominated debt related to contracts with no hedge
    accounting treatment under SFAS 133


247,264



(240,344
)


374,866Changes in fair value of
    derivative instruments accounted for as fair value hedges


(47,731
)


174,427



Offsetting changes in value of
    foreign denominated debt related to fair value hedges


47,288



(172,203
)


Change in value of foreign
    denominated debt related to cash flow hedges


288,070



(285,166
)


338,403Offsetting reclassification to
    Accumulated Other Comprehensive Income of the change in value of
    foreign denominated debt related to cash flow hedges


(288,070
)


285,166



(338,403
)Ineffectiveness of cash flow hedges


(8,534
)


394



515Amortization of Other
    Comprehensive Income and other adjustments related to derivative
    instruments de-designated from cash flow hedges


(3,969
)






Total effect on earnings

$
(49,709
)

$
(46,095
)

$
6,010    53




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note K  Derivative Financial Instruments
    (Continued)
         Note
    L  Fair Value Disclosures
    Cash:
  Notes receivable:
  Debt Financing: long-term fixed-rate year-end.
  Derivatives:
  Guarantees:
 54




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note L  Fair Value Disclosures (Continued)
     2006


2005Carrying Amount


Fair Value


Carrying Amount


Fair Valueof Asset


of Asset


of Asset


of Asset(Liability)


(Liability)


(Liability)


(Liability)Cash

$
157,120


$
157,120


$
157,960


$
157,960Notes receivable


148,558



138,776



181,951



153,829Debt financing (including foreign
    currency adjustment and subordinated debt and excluding debt
    discount)


(29,570,748
)


(29,849,212
)


(26,340,121
)


(26,650,800
)Derivative assets


738,620



738,620



293,576



293,576Derivative liabilities










(49,549
)


(49,549
)Guarantees


(11,041
)


(11,041
)


(10,037
)


(10,037
)    Note
    M  Flight Equipment Marketing 
    Securitization
        Note
    N  Flight Equipment Rent
   55




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (Dollars in thousands)
  Note
    O  Quarterly Financial Information
    (Unaudited)
    QuarterFirst


Second


Third


Fourth


TotalYear Ended December 31,
    2006Total Revenues

$
953,072


$
1,045,635


$
1,064,741


$
1,079,249


$
4,142,697Pre-tax Income


218,909



176,388



136,968



183,842



716,107Net Income


148,076



119,644



95,423



136,124



499,267Year Ended December 31,
    2005Total Revenues

$
839,778


$
902,527


$
959,145


$
908,923


$
3,610,373Pre-tax Income


222,611



141,098



220,869



89,605
(a)


674,183Net Income


150,664



95,845



151,104



40,736
(b)


438,349     (a)
    As discussed in Note J, in the fourth quarter of 2005, we
    recorded a charge of $38,275 to settle the Australian Tax Office
    assessment.  (b)
    As discussed in Note G, in the fourth quarter we recorded
    additional tax expense of $36,587 related to tax examinations
    and other adjustments.  56




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
    on
    Financial Statement Schedule
  To the
    Shareholders and Board of Directors
    of International Lease Finance Corporation:
  Form 10-K Form 10-K.
      57




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##### Table of Contents



INTERNATIONAL
    LEASE FINANCE CORPORATION AND SUBSIDIARIES
  SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
  COL. A

COL. B


COL. C


COL. D


COL. EADDITIONSCharged toBalance at


Charged to


OtherBeginning of


Costs and


Accounts 


Deductions 


Balance atDescription

Period


Expenses


Describe


Describe(a)


End of Period(Dollars in thousands)Reserve for overhaul:Year ended December 31, 2006

$
142,053


$
249,180






$
145,864


$
245,369Year ended December 31, 2005

$
67,849


$
260,008






$
185,804


$
142,053Year ended December 31, 2004

$
68,900


$
164,322






$
165,373


$
67,849     (a)
    Reimbursements to lessees for overhauls performed and amounts
    transferred to buyers for aircraft sold. 58




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##### Table of Contents



SIGNATURES
      INTERNATIONAL LEASE FINANCE CORPORATION
  By
    /s/ALAN
    H. LUND        Signature

Title

Date/s/  STEVEN
    F.
    UDVAR-HAZYSteven
    F. Udvar-Hazy

Chairman of the Board and Chief
    Executive Officer

March 9, 2007/s/  LESLIE
    L. GONDALeslie
    L. Gonda

Director, Chairman of the
    Executive Committee

March 9, 2007/s/  JOHN
    L. PLUEGERJohn
    L. Plueger

Director, President and Chief
    Operating Officer

March 9, 2007/s/  LOUIS
    L. GONDALouis
    L. Gonda

Director

March 9, 2007/s/  MARTIN
    J. SULLIVANMartin
    J. Sullivan

Director

March 9, 2007/s/  WILLIAM
    N. DOOLEYWilliam
    N. Dooley

Director

March 9, 2007/s/  STEVEN
    J.
    BENSINGERSteven
    J. Bensinger

Director

March 9, 2007/s/  ALAN
    H. LUNDAlan
    H. Lund

Director, Vice Chairman
    and Chief Financial Officer

March 9, 2007  59




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##### Table of Contents



SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
    PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH
    HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF
    THE ACT.
   60