##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 QUARTERLY REPORT
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    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 001-31616
 INTERNATIONAL LEASE FINANCE CORPORATION
  California
(State or other jurisdiction of 
incorporation or organization)
    
    22-3059110
(I.R.S. Employer
Identification No.)10250 Constellation Blvd., Suite 3400
Los Angeles, California
(Address of principal executive offices)
    
    90067
(Zip Code)
 (310) 788-1999
  þ o
  o o þ
  o þ




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##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-Q QUARTERLY REPORT
 TABLE OF CONTENTS
 PagePart I. Financial InformationItem 1. Financial Statements (Unaudited except for December 31, 2006)Condensed Consolidated Balance Sheets
September 30, 2007 and December 31, 2006
    
    
    2Condensed Consolidated Statements of Income
Three months ended September 30, 2007 and 2006
    
    
    3Condensed Consolidated Statements of Income
Nine months ended September 30, 2007 and 2006
    
    
    3Condensed Consolidated Statements of Comprehensive Income
Three months ended September 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Comprehensive Income
Nine months ended September 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows
Nine months ended September 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial
Statements
    
    
    7Item 2. Managements Discussion and Analysis of the Financial
Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures about Market
Risk
    
    
    21Item 4T. Controls and Procedures
    
    
    22Part II. Other InformationItem 1A. Risk Factors
    
    
    23Item 6. Exhibits
    
    
    24Signatures
    
    
    25EXHIBIT 12EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)
 September 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCash, including interest bearing accounts of $172,316 ( 2007) and
$154,812 ( 2006)
    
    $
    182,547
    
    
    $
    157,120Current income taxes
    
    
    591,522
    
    
    
    448,343Notes receivable, net of allowance, and net investment in finance leases
    
    
    383,994
    
    
    
    431,944Flight equipment under operating leases
    
    
    51,600,373
    
    
    
    47,200,028Less accumulated depreciation
    
    
    9,984,988
    
    
    
    8,724,07941,615,385
    
    
    
    38,475,949Deposits on flight equipment purchases
    
    
    773,908
    
    
    
    1,077,444Lease receivables and other assets
    
    
    452,655
    
    
    
    476,670Derivative assets
    
    
    1,117,406
    
    
    
    738,620Variable interest entities assets
    
    
    115,643
    
    
    
    124,734Deferred debt issue costs, less accumulated amortization of $103,200
(2007) and $83,977 ( 2006)
    
    
    99,812
    
    
    
    104,704$
    45,332,872
    
    
    $
    42,035,528LIABILITIES AND SHAREHOLDERS EQUITYAccrued interest and other payables
    
    $
    575,703
    
    
    $
    417,424Tax benefit sharing payable to AIG
    
    
    245,000
    
    
    
    245,000Debt financing, net of deferred debt
discount of $33,138 (2007) and $33,104 (2006)
    
    
    29,876,252
    
    
    
    27,860,242Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Foreign currency adjustment related to foreign currency denominated debt
    
    
    1,044,406
    
    
    
    677,402Derivative liabilities
    
    
    11,080
    
    
    
    Security deposits on aircraft, overhauls and other
    
    
    1,347,531
    
    
    
    1,281,833Rentals received in advance
    
    
    235,789
    
    
    
    223,313Deferred income taxes
    
    
    4,058,480
    
    
    
    3,747,141Variable interest entities liabilities
    
    
    10,594
    
    
    
    8,175SHAREHOLDERS EQUITYMarket Auction Preferred Stock, $100,000 per share liquidation
value; Series A and B each having 500 shares issued
and outstanding
    
    
    100,000
    
    
    
    100,000Common stock  no par value; 100,000,000 authorized shares,
45,267,723 issued and outstanding
    
    
    1,053,582
    
    
    
    1,053,582Paid-in capital
    
    
    592,519
    
    
    
    591,757Accumulated other comprehensive (loss) income
    
    
    (44,915
    )
    
    
    2,718Retained earnings
    
    
    5,226,851
    
    
    
    4,826,941Total shareholders equity
    
    
    6,928,037
    
    
    
    6,574,998$
    45,332,872
    
    
    $
    42,035,528
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)REVENUESRental of flight equipment
    
    $
    1,195,054
    
    
    $
    1,038,297Flight equipment marketing
    
    
    16,450
    
    
    
    4,558Interest and other
    
    
    44,003
    
    
    
    21,8861,255,507
    
    
    
    1,064,741EXPENSESInterest
    
    
    417,570
    
    
    
    388,237Effect from derivatives, net of change
in hedged items due to changes in
foreign exchange rates
    
    
    (3,989
    )
    
    
    34,186Depreciation of flight equipment
    
    
    447,782
    
    
    
    405,265Flight equipment rent
    
    
    4,500
    
    
    
    4,500Provision for overhauls
    
    
    81,795
    
    
    
    66,638Selling, general and administrative
    
    
    33,281
    
    
    
    28,947980,939
    
    
    
    927,773INCOME BEFORE INCOME TAXES
    
    
    274,568
    
    
    
    136,968Provision for income taxes
    
    
    90,149
    
    
    
    41,545NET INCOME
    
    $
    184,419
    
    
    $
    95,423
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)REVENUESRental of flight equipment
    
    $
    3,397,566
    
    
    $
    2,955,251Flight equipment marketing
    
    
    21,268
    
    
    
    44,147Interest and other
    
    
    84,619
    
    
    
    64,0513,503,453
    
    
    
    3,063,449EXPENSESInterest
    
    
    1,210,398
    
    
    
    1,084,860Effect from derivatives, net of change in
hedged items due to changes in foreign
exchange rates
    
    
    8,588
    
    
    
    (39,672
    )Depreciation of flight equipment
    
    
    1,287,483
    
    
    
    1,154,511Flight equipment rent
    
    
    13,500
    
    
    
    14,468Provision for overhauls
    
    
    210,205
    
    
    
    187,744Selling, general and administrative
    
    
    116,656
    
    
    
    129,2722,846,830
    
    
    
    2,531,183INCOME BEFORE INCOME TAXES
    
    
    656,623
    
    
    
    532,266Provision for income taxes
    
    
    227,668
    
    
    
    169,122NET INCOME
    
    $
    428,955
    
    
    $
    363,144
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)NET INCOME
    
    $
    184,419
    
    
    $
    95,423OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in cash flow hedges, net of
taxes of $31,631 (2007) and $29,928 (2006)
    
    
    (58,744
    )
    
    
    (55,580
    )Change in unrealized appreciation on
securities available for sale, net of taxes
of $142 (2007) and $68 (2006) and net of
reclassifications of $465 (2007) and $0
(2006)
    
    
    263
    
    
    
    127(58,481
    )
    
    
    (55,453
    )COMPREHENSIVE INCOME
    
    $
    125,938
    
    
    $
    39,970
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)NET INCOME
    
    $
    428,955
    
    
    $
    363,144OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in cash flow hedges, net of
taxes of $25,755 (2007) and $23,075 (2006)
    
    
    (47,831
    )
    
    
    (42,853
    )Change in unrealized appreciation on
securities available for sale, net of taxes
of $106 (2007) and $735 (2006) and net of
reclassifications of $465 (2007) and $0
(2006)
    
    
    198
    
    
    
    (1,364
    )(47,633
    )
    
    
    (44,217
    )COMPREHENSIVE INCOME
    
    $
    381,322
    
    
    $
    318,927
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    428,955
    
    
    $
    363,144Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation of flight equipment
    
    
    1,287,483
    
    
    
    1,154,511Deferred income taxes
    
    
    336,988
    
    
    
    379,356Change in fair value of derivative instruments
    
    
    (441,291
    )
    
    
    (440,293
    )Foreign currency adjustment of non-US$ denominated debt
    
    
    371,145
    
    
    
    390,090Amortization of deferred debt issue costs
    
    
    23,247
    
    
    
    23,040Other, including foreign exchange adjustments on
foreign currency denominated cash
    
    
    (8,585
    )
    
    
    (8,377
    )Changes in operating assets and liabilities:Decrease (increase) in lease receivables and other assets
    
    
    60,127
    
    
    
    (51,359
    )Change in current income taxes
    
    
    (143,179
    )
    
    
    (213,971
    )Increase in accrued interest and other payables
    
    
    156,662
    
    
    
    104,436Increase in rentals received in advance
    
    
    12,476
    
    
    
    38,555Change in unamortized debt discount
    
    
    3,919
    
    
    
    (2,723
    )Other
    
    
    16,143
    
    
    
    13,342Net cash provided by operating activities
    
    
    2,104,090
    
    
    
    1,749,751INVESTING ACTIVITIESAcquisition of flight equipment for operating leases
    
    
    (3,943,322
    )
    
    
    (5,064,756
    )(Increase) decrease in deposits and progress payments
    
    
    (408,267
    )
    
    
    199,290Proceeds from disposal of flight equipment, net of gain
    
    
    87,103
    
    
    
    373,646Advances on notes receivable
    
    
    
    
    
    
    (48,616
    )Collections on notes receivable and finance leases
    
    
    28,577
    
    
    
    41,010Other
    
    
    1,729
    
    
    
    4,189Net cash used in investing activities
    
    
    (4,234,180
    )
    
    
    (4,495,237
    )FINANCING ACTIVITIESNet change in commercial paper
    
    
    1,074,978
    
    
    
    535,495Proceeds from debt financing
    
    
    3,748,168
    
    
    
    5,216,655Payments in reduction of debt financing
    
    
    (2,811,244
    )
    
    
    (3,036,805
    )Debt issue costs
    
    
    (22,307
    )
    
    
    (29,199
    )Increase in customer and other deposits
    
    
    185,588
    
    
    
    53,748Payment of common and preferred dividends
    
    
    (29,045
    )
    
    
    (29,108
    )Net cash provided by financing activities
    
    
    2,146,138
    
    
    
    2,710,786Net increase in cash
    
    
    16,048
    
    
    
    (34,700
    )Effect of exchange rate changes on cash
    
    
    9,379
    
    
    
    5,605Cash at beginning of period
    
    
    157,120
    
    
    
    157,960Cash at end of period
    
    $
    182,547
    
    
    $
    128,865
 (Table continued on following page)
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(Dollars in thousands)
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 2007
    
    
    2006(Unaudited)Cash paid during the period for:Interest, excluding interest
capitalized of $27,672 (2007) and
$36,715 (2006)
    
    $
    1,135,790
    
    
    $
    957,022Income taxes, net
    
    
    33,859
    
    
    
    3,725
 Non-Cash Investing and Financing Activities
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2007
(Unaudited)
 Basis of Preparation
  Derivative Activities
  Nine months Ended
    
    
    Three Months EndedSeptember 30
    
    
    September 30(Dollars in thousands)2007
    
    
    2006
    
    
    2007
    
    
    2006(Income) loss related to derivative instruments:Change in fair value of derivative
instruments with no hedge accounting
treatment under SFAS 133 (a)
    
    $
    (17,546
    )
    
    $
    (193,211
    )
    
    $
    
    
    
    $
    44,913Offsetting change in value of foreign
denominated debt related to contracts that
did not qualify for hedge accounting
treatment under SFAS 133
    
    
    33,572
    
    
    
    151,776
    
    
    
    
    
    
    
    (12,488
    )Change in fair value of derivative
instruments accounted for as fair value
hedges
    
    
    
    
    
    
    (47,731
    )
    
    
    
    
    
    
    5,096Offsetting change in value of foreign
denominated debt related to fair value
hedges
    
    
    
    
    
    
    47,289
    
    
    
    
    
    
    
    (7,091
    )Ineffectiveness related to cash flow hedges
    
    
    (4,249
    )
    
    
    3,526
    
    
    
    (4,547
    )
    
    
    5,077Reclassification of Other Comprehensive
Income related to derivative instruments
de-designated from hedges
    
    
    (3,189
    )
    
    
    (1,321
    )
    
    
    558
    
    
    
    (1,321
    )Loss (income) related to derivative
instruments and related economically
hedged items
    
    $
    8,588
    
    
    $
    (39,672
    )
    
    $
    (3,989
    )
    
    $
    34,186
 
 (a)
    
    In the second quarter of 2007, we redesignated four swaps for hedge accounting under SFAS 133
that were previously outstanding but did not qualify for hedge accounting treatment under SFAS
133. Subsequent to the redesignation, all derivatives qualified as hedges under SFAS 133.  -7-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2007
(Unaudited)
  Nine months Ended
    
    
    Three Months EndedIncome
    
    September 30
    
    
    September 30(Dollars in thousands)2007
    
    
    2006
    
    
    2007
    
    
    2006$
    2,182
    
    
    $
    9,943
    
    
    $
    90
    
    
    $
    2,423
  Related Party Transactions
   September 30,
    
    
    December 31,2007
    
    
    2006
    
    
    2006(Dollars in thousands)Expense (income):Allocation of corporate costs from AIG
    
    $
    9,574
    
    
    $
    7,923Management services paid to AIG
    
    
    20
    
    
    
    24Management fees received
    
    
    (7,334
    )
    
    
    (7,233
    )Asset (liability):Taxes benefit sharing payable to AIG
    
    $
    (245,000
    )
    
    
    
    
    
    $
    (245,000
    )Accrued corporate costs payable to AIG
    
    
    (1,529
    )
    
    
    
    
    
    
    (1,805
    )Income taxes receivable from AIG
    
    
    591,522
    
    
    
    
    
    
    
    448,343Medium term notes
    
    
    (200,000
    )
    
    
    
    
    
    
    (200,000
    )Management fees receivable
    
    
    2,183
    
    
    
    
    
    
    
    444
 Note B  Derivative Activities
 Recent Accounting Pronouncements
 Fin 48
  -8-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2007
(Unaudited)
     SFAS 157
  SFAS 159
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ITEM
2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
 Forward-Looking Statements
 Managements Discussion and Analysis of Financial Condition
and Results of Operations  Overview and Industry Condition, Quantitative and Qualitative
Disclosures about Market Risk Part II  Item 1A. Risk Factors, Part I  Item 1A. Risk Factors
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Overview and Industry Condition
     Year
    
    Profit (Loss)(dollars in billions)2005 Actual
    
    $
    (4.1
    )2006 Actual
    
    
    (0.5
    )2007 Forecast (a)
    
    
    5.62008 Forecast (a)
    
    
    7.8
 
 (a)
    
    The 2007 forecast was revised upward from its original estimate of $5.1
billion stating that high oil prices were more than offset by stronger than expected
demand for passenger traffic and a general improvement in airline financial
performance. Further, the 2008 forecast was revised downward from its original
estimate of $9.6 billion due to concerns over the continued rise in oil prices.  -11-




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
      Critical Accounting Policies and Estimates
   
    
    Lease Revenue
    
    Flight Equipment Marketing
    
    Flight Equipment
    
    Provision for Overhauls
    
    Derivative Financial Instruments
    
    Income Taxes
 Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Financial Condition
   September 30,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Public bonds and medium-term notes
    
    $
    22,262,519
    
    
    $
    21,317,011Bank and other term debt
    
    
    3,814,246
    
    
    
    3,818,688Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Total public debt, bank debt and subordinated debt
    
    
    27,076,765
    
    
    
    26,135,699Commercial paper
    
    
    3,832,625
    
    
    
    2,757,647Deferred debt discount
    
    
    (33,138
    )
    
    
    (33,104
    )Total debt financing
    
    $
    30,876,252
    
    
    $
    28,860,242Selected interest rates and ratio:Composite
interest rate including the effect of all derivative instruments
    
    
    5.28
    %
    
    
    5.24
    %Composite interest rate excluding the effect of
derivative instruments that did not qualify for
hedge accounting treatment under SFAS 133 (a)
    
    
    5.28
    %
    
    
    5.00
    %Percentage of total debt at fixed rates
    
    
    76.11
    %
    
    
    78.88
    %Composite interest rate on fixed rate debt
    
    
    5.19
    %
    
    
    5.12
    %Bank prime rate
    
    
    7.75
    %
    
    
    8.25
    %
 
 (a)
    
    At September 30, 2007, all derivatives qualified for, and were designated as, hedges under
SFAS 133.  -13-




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Public Debt ( Exclusive of the Commercial Paper Program )
  Maximum
    
    Sold as of
    
    Sold as of
    
    Sold as ofOffering
    
    December 31, 2006
    
    September 30, 2007
    
    October 31, 2007(Dollars in millions)Registration
statement
dated August
16, 2006
(including
$10.0
billion
Medium-Term
Note
Program)
    
    Unlimited(a)
    
    $
    1,900
    
    
    $
    4,650
    
    
    $
    4,650Registration
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
    
    
    
    5,887
    
    
    
    5,903Euro
Medium-Term
Note
Programme
dated
September
2005 (c)(d)
    
    
    7,000
    
    
    
    4,276
    
    
    
    4,276
    
    
    
    3,965
 
 (a)
    
    Includes $645 million, which was incorporated into the registration statement from
a prior registration statement. As a result of the Companys 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 matures, the principal amount becomes
available for new issuances under the program. Bank Term Debt
    Subordinated Debt
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED
 (i) (ii) (iii)
 Commercial Paper
 Bank Commitments
 Bank Commitments
  Other Variable Interest Entities
   Derivatives
 Accounting for Derivative Instruments and Hedging
Activities,
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   Market Liquidity Risk
    Existing Commitments
 Commitments Due by Fiscal YearTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter(Dollars in thousands)Public and Bank
Term Debt
    
    $
    26,076,765
    
    
    $
    1,126,367
    
    
    $
    4,611,134
    
    
    $
    4,116,808
    
    
    $
    4,262,291
    
    
    $
    4,438,266
    
    
    $
    7,521,899Commercial Paper
    
    
    3,832,625
    
    
    
    3,749,616
    
    
    
    83,009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subordinated Debt
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Interest Payments
on Debt Outstanding
(a)(b)
    
    
    7,901,092
    
    
    
    390,388
    
    
    
    1,283,153
    
    
    
    1,061,153
    
    
    
    827,916
    
    
    
    585,970
    
    
    
    3,752,512Operating Leases
(c)
    
    
    89,583
    
    
    
    2,261
    
    
    
    9,303
    
    
    
    10,717
    
    
    
    11,422
    
    
    
    11,886
    
    
    
    43,994Pension Obligations
(d)
    
    
    4,226
    
    
    
    637
    
    
    
    658
    
    
    
    678
    
    
    
    712
    
    
    
    753
    
    
    
    788Tax Benefit Sharing
Agreement Due to
AIG
    
    
    245,000
    
    
    
    160,000
    
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    Purchase
Commitments
    
    
    20,995,200
    
    
    
    840,300
    
    
    
    4,115,000
    
    
    
    2,649,700
    
    
    
    1,286,000
    
    
    
    1,404,400
    
    
    
    10,699,800Total
    
    $
    60,144,491
    
    
    $
    6,269,569
    
    
    $
    10,102,257
    
    
    $
    7,924,056
    
    
    $
    6,388,341
    
    
    $
    6,441,275
    
    
    $
    23,018,993
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Contingent Commitments
 Contingency Expiration by Fiscal YearTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter(Dollars in thousands)Put Options (e)
    
    
    343,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343,550Asset Value
Guarantees (e)
    
    
    166,818
    
    
    
    
    
    
    
    35,452
    
    
    
    16,150
    
    
    
    
    
    
    
    27,841
    
    
    
    87,375Loan Guarantees (e)
    
    
    32,730
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,730Lines of Credit
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    Total (f)
    
    $
    593,098
    
    
    $
    
    
    
    $
    35,452
    
    
    $
    16,150
    
    
    $
    
    
    
    $
    77,841
    
    
    $
    463,655
 
 (a)
    
    Future interest payments on floating rate debt are estimated using floating
interest rate in effect at September 30, 2007.(b)
    
    Includes the effect of interest rate and foreign currency derivative instruments.(c)
    
    Excludes fully defeased aircraft sale-lease back transactions.(d)
    
    Our pension obligations are part of intercompany expenses, which AIG allocates to
us on an annual basis. The amount is an estimate of such allocation. The column 2007
consists of total estimated allocations for 2007 and the column Thereafter consists of
the 2012 estimated allocation. The amount allocated has not been material to date.(e)
    
    From time to time, we participate with airlines, banks and other financial
institutions to assist in financing aircraft by providing asset 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.(f)
    
    Excluded from total contingent commitments are $32.9 million of uncertain tax
liabilities. The amounts are included in Current taxes on our 2007 Condensed Consolidated
Balance Sheet. The future cash flows to these liabilities are uncertain and we are unable
to make reasonable estimates of the outflows. Also see Note D of Notes to Condensed
Consolidated Financial Statements. Results of Operations
 (i) (ii) (iii)
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Note B. Notes to Condensed Consolidated Financial Statements
 2007
    
    2006
    
    IncreaseBeginning of Quarter
    
    
    5.27
    %
    
    
    5.24
    %
    
    
    0.03
    %End of Quarter
    
    
    5.28
    %
    
    
    5.26
    %
    
    
    0.02
    %Average
    
    
    5.28
    %
    
    
    5.25
    %
    
    
    0.03
    %
    (i) (ii) (iii)
    Results of Operations
  -18-




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 (i) (ii) (iii)
     Note B. Notes to Condensed Consolidated Financial Statements
  2007
    
    2006
    
    IncreaseBeginning of Nine months
    
    
    5.24
    %
    
    
    5.00
    %
    
    
    0.24
    %End of Nine months
    
    
    5.28
    %
    
    
    5.26
    %
    
    
    0.02
    %Average
    
    
    5.26
    %
    
    
    5.13
    %
    
    
    0.13
    %
    (i) (ii) (i) (ii)
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 (iii) (iv)
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Value at Risk
     ILFC Market Risk
 Nine months Ended
    
    Year EndedSeptember 30, 2007
    
    December 31, 2006(Dollars in millions)Average
    
    High
    
    Low
    
    Average
    
    High
    
    LowCombined
    
    $
    77.9
    
    
    $
    102.3
    
    
    $
    57.2
    
    
    $
    151.5
    
    
    $
    208.7
    
    
    $
    102.3Interest Rate
    
    
    77.7
    
    
    
    102.2
    
    
    
    57.0
    
    
    
    151.3
    
    
    
    208.0
    
    
    
    102.2Currency
    
    
    0.9
    
    
    
    1.2
    
    
    
    0.7
    
    
    
    0.9
    
    
    
    1.6
    
    
    
    0.3
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ITEM 4T. CONTROLS AND PROCEDURES
 (A) Evaluation of Disclosure Controls and Procedures
     (B) Changes in Internal Control Over Financial Reporting
  -22-




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PART II. OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
 Managements Discussion and Analysis of Financial
Condition and Results of Operations  Overview and Industry Condition Quantitative and Qualitative Disclosures about Market Risk.
    Overall Airline Industry RiskØDemand for air travel
    
    ØInsurance costs and coverageØ Competition between carriers
    
    Ø Security, terrorism and warØ Fuel prices and availability
    
    ØWorldwide health concernsØLabor costs and stoppages
    
    ØEquity and borrowing capacityØMaintenance costs
    
    ØEnvironmental concernsØEmployee labor contracts
    
    ØGovernment regulationØAir traffic control infrastructure constraints
    
    ØInterest ratesØAirport access
    
    ØOvercapacity Airframe, Engine and Other Manufacturer Risk Borrowing RisksØLiquidityØInterest rate risk Other RisksØResidual valueØObsolescenceØKey personnelØForeign currency exchange rate riskØRelationship with AIGØAccounting pronouncements
 Item 1A. Risk
Factors
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PART II. OTHER INFORMATION (CONTINUED)
 
 ITEM 6. EXHIBITS
  3.1
    
    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 Form 10-K for the year
ended December 31, 2003 and incorporated herein by reference).3.12
    
    Unanimous Written Consent of Sole Stockholder of
the Company, dated January 2, 2002, amending the Bylaws of the Company
(filed as an exhibit to Form 10-Q for the quarter ended September 30,
2003 and incorporated herein by reference).12.
    
    Computation of Ratios of Earnings to Fixed Charges
and Preferred Stock Dividends31.1
    
    Certification of Chairman of the Board and Chief Executive Officer31.2
    
    Certification of Vice Chairman and Chief Financial Officer32.1
    
    Certification under 18 U.S.C., Section 1350
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SIGNATURES
   November 8, 2007
    
    /S/ Steven F. Udvar-HazySTEVEN F. UDVAR-HAZYChairman of the Board and

Chief Executive Officer November 8, 2007
    
    /S/ Alan H. LundALAN H. LUNDVice Chairman and
Chief Financial Officer -25-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
   12.
    
    Computation of Ratios of Earnings to Fixed Charges
and Preferred Stock Dividends31.1
    
    Certification of Chairman of the Board and Chief Executive Officer31.2
    
    Certification of Vice Chairman and Chief Financial Officer32.1
    
    Certification under 18 U.S.C., Section 1350
 -26-