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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q

QUARTERLY REPORT




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|[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2002

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 0-11350

INTERNATIONAL LEASE FINANCE CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                          |  |                                                
|------------------------------------------------------------------------- |  | -----------------------------------------------
|California
(State or other jurisdiction of
incorporation or organization) |  | 22-3059110
(I.R.S. Employer
Identification No.)

|                                                                                           |  |                 
|------------------------------------------------------------------------------------------ |  | ----------------
|1999 Avenue of the Stars, Los Angeles, California
(Address of principal executive offices) |  | 90067
(Zip Code)

Registrants telephone number, including area code: (310) 788-1999

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes   [X]     No   [   ]

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

As of August 2, 2002, there were 35,818,122 shares of Common Stock, no par value, outstanding.



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TABLE OF CONTENTS



|                             |                                                                                               |                                                                                                                        |  |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                             |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                 
|                             |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
|                             |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001  
|                             |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                       
|                             |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                                                  
|                             | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION  
|                             | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                  
|INDEX TO EXHIBITS           
|EXHIBIT 1                   
|EXHIBIT 4                   
|EXHIBIT 12                  



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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-Q QUARTERLY REPORT



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TABLE OF CONTENTS

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|---------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | - | ---- | -- | 
|                                                           |                                                                                                   |                                                                                                                     |   | Page
|                                                           |                                                                                                   |                                                                                                                     |   |     
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|                                                          
|Part I. Financial Information:                             |                                                                                                   |                                                                                                                     |   |     
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Item 1. Financial Statements (Unaudited)                                                          |                                                                                                                     |   |      |   
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                                   | Condensed Consolidated Balance Sheets
     June 30, 2002 and December 31, 2001                                      |   |      | 3  | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                                   | Condensed Consolidated Statements of Income and Comprehensive Income
     Three Months Ended June 30, 2002 and 2001 |   |      | 4  | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                                   | Condensed Consolidated Statements of Income and Comprehensive Income
     Six Months Ended June 30, 2002 and 2001   |   |      | 5  | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                                   | Condensed Consolidated Statements of Cash Flows
     Six Months Ended June 30, 2002 and 2001                        |   |      | 6  | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                                   | Notes to Condensed Consolidated Financial Statements                                                                |   |      | 8  | 
|                                                          
|                                                          
|                                                          
|                                                          
|Cautionary Statement Regarding Forward Looking Information |                                                                                                   |                                                                                                                     | 9 |     
|                                                          
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|                                                          
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|                                                           | Item 2. Managements Discussion and Analysis of the Financial Condition
and Results of Operations |                                                                                                                     |   | 10   |   
|                                                          
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|                                                          
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|                                                           | Item 3. Quantitative and Qualitative Disclosures about Market Risk                                |                                                                                                                     |   | 17   |   
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|Part II. Other Information                                 |                                                                                                   |                                                                                                                     |   |     
|                                                          
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|                                                           | Item 6. Exhibits and Reports on Form 8-K                                                          |                                                                                                                     |   | 18   |   
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                                                                                   | Signatures                                                                                                          |   |      | 19 | 

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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)

|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |           |           |           | 
|---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----------------------------- | -------------------------- | --------- | ----------- | --------- | ------------ | --------- | --------- | --------- | 
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           | June 30,    |           | December 31,
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           | 2002        |           | 2001        
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |             
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           | (Unaudited) |           |              |           |          
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|ASSETS                                                                                        
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Cash, including interest bearing accounts
of $111,264 (2002) and $78,295 (2001)                |                                                                                                                                                                                                                                                                          | $                             | 113,897                    |           |             | $         | 79,383       |          
|Current income taxes receivable                                                                |                                                                                                                                                                                                                                                                          |                               | 101,064                    |           |             |           | 173,280      |          
|Notes receivable and net investment in finance leases                                          |                                                                                                                                                                                                                                                                          |                               | 395,719                    |           |             |           | 394,277      |          
|Flight equipment under operating leases                                                        |                                                                                                                                                                                                                                                                          |                               | 27,827,549                 |           |             |           | 24,400,217   |          
|                                                                                               |                                                                                                                                                                                                                                                                          | Less accumulated depreciation |                            |           | 3,868,402   |           |              |           | 3,417,020 |          
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |          
|                                                                                               |                                                                                                                                                                                                                                                                          |                               | 23,959,147                 |           |             |           | 20,983,197   |          
|Deposits on flight equipment purchases                                                         |                                                                                                                                                                                                                                                                          |                               | 1,224,565                  |           |             |           | 1,321,699    |          
|Accrued interest, other receivables and other assets                                           |                                                                                                                                                                                                                                                                          |                               | 279,525                    |           |             |           | 130,471      |          
|Investments                                                                                    |                                                                                                                                                                                                                                                                          |                               | 51,817                     |           |             |           | 56,236       |          
|Deferred debt issue costs  less accumulated
amortization of $67,712 (2002) and $59,056 (2001) |                                                                                                                                                                                                                                                                          |                               | 39,532                     |           |             |           | 28,747       |          
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |          
|                                                                                               |                                                                                                                                                                                                                                                                          | $                             | 26,165,266                 |           |             | $         | 23,167,290   |          
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |          
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|LIABILITIES AND SHAREHOLDERS EQUITY                                                          
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Accrued interest and other payables                                                            |                                                                                                                                                                                                                                                                          | $                             | 320,020                    |           |             | $         | 265,107      |          
|Debt financing, net of deferred debt discount of $36,373 (2002) and
$15,157 (2001)             |                                                                                                                                                                                                                                                                          |                               | 18,178,885                 |           |             |           | 15,368,877   |          
|Capital lease obligations                                                                      |                                                                                                                                                                                                                                                                          |                               | 313,759                    |           |             |           | 365,289      |          
|Security & other deposits on flight equipment                                                  |                                                                                                                                                                                                                                                                          |                               | 860,692                    |           |             |           | 966,213      |          
|Rentals received in advance                                                                    |                                                                                                                                                                                                                                                                          |                               | 129,414                    |           |             |           | 114,874      |          
|Deferred income taxes                                                                          |                                                                                                                                                                                                                                                                          |                               | 2,154,249                  |           |             |           | 1,937,396    |          
|Derivative instruments                                                                         |                                                                                                                                                                                                                                                                          |                               | 82,343                     |           |             |           | 185,859      |          
|SHAREHOLDERS EQUITY                                                                           |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |          
|                                                                                               | Preferred
stock no par value; 20,000,000 authorized shares
Series A Preferred Stock; $10,000,000 per share liquidation
value; 40 shares issued and outstanding                                                                                                          |                               |                            | 400,000   |             |           |              | 400,000   |          
|                                                                                               | Market Auction Preferred Stock, $100,000 per share
liquidation value; Series A, B, and E
(2002 and 2001) each having 500 shares
issued. Series A and B each having 500 (2002 and 2001) shares
outstanding and Series E having 0 (2002) and 500 (2001)
shares outstanding |                               |                            | 100,000   |             |           |              | 150,000   |          
|                                                                                               | Common stock no par value; 100,000,000 authorized shares,
35,818,122 (2002 and 2001) issued and outstanding                                                                                                                                                             |                               |                            | 3,582     |             |           |              | 3,582     |          
|                                                                                               | Additional paid-in capital                                                                                                                                                                                                                                               |                               |                            | 579,955   |             |           |              | 579,955   |          
|                                                                                               | Accumulated other comprehensive loss                                                                                                                                                                                                                                     |                               |                            | (57,382   | )           |           |              | (50,629   | )        
|                                                                                               | Retained earnings                                                                                                                                                                                                                                                        |                               |                            | 3,099,749 |             |           |              | 2,880,767 |          
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |          
|                                                                                               |                                                                                                                                                                                                                                                                          |                               | Total Shareholders Equity |           |             | 4,125,904 |              |           |           | 3,963,675 | 
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |          
|                                                                                               |                                                                                                                                                                                                                                                                          | $                             | 26,165,266                 |           |             | $         | 23,167,290   |          
|                                                                                               |                                                                                                                                                                                                                                                                          |                               |                            |           |             |           |              |          

See notes to condensed consolidated financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(Dollars in thousands)

|                                  |                                         |   |             |          |      |   |         |         | 
|--------------------------------- | --------------------------------------- | - | ----------- | -------- | ---- | - | ------- | ------- | 
|                                  |                                         |   | 2002        |          | 2001
|                                  |                                         |   |             |          |     
|                                  |                                         |   | (Unaudited)
|REVENUES                          |                                         |   |             |          |      |   |         |        
|                                  | Rental of flight equipment              |   | $           | 680,324  |      |   | $       | 623,619 | 
|                                  | Flight equipment marketing              |   |             | 6,380    |      |   |         | 20,653  | 
|                                  | Interest and other                      |   |             | 39,778   |      |   |         | 14,043  | 
|                                  |                                         |   |             |          |      |   |         |        
|                                  |                                         |   | 726,482     |          |      |   | 658,315 |        
|                                  |                                         |   |             |          |      |   |         |        
|EXPENSES                          |                                         |   |             |          |      |   |         |        
|                                  | Interest                                |   |             | 218,892  |      |   |         | 203,614 | 
|                                  | Depreciation of flight equipment        |   |             | 235,691  |      |   |         | 201,566 | 
|                                  | Flight equipment rent                   |   |             | 19,354   |      |   |         | 28,396  | 
|                                  | Provision for overhauls                 |   |             | 18,763   |      |   |         | 21,612  | 
|                                  | Selling, general and administrative     |   |             | 22,209   |      |   |         | 14,854  | 
|                                  |                                         |   |             |          |      |   |         |        
|                                  |                                         |   | 514,909     |          |      |   | 470,042 |        
|                                  |                                         |   |             |          |      |   |         |        
|INCOME BEFORE INCOME TAXES        |                                         |   | 211,573     |          |      |   | 188,273 |        
|                                  | Provision for income taxes              |   |             | 76,490   |      |   |         | 66,748  | 
|                                  |                                         |   |             |          |      |   |         |        
|NET INCOME                        |                                         |   | 135,083     |          |      |   | 121,525 |        
|                                  |                                         |   |             |          |      |   |         |        
|COMPREHENSIVE INCOME (NET OF TAX) |                                         |   |             |          |      |   |         |        
|                                  | Net changes in cash flow hedges         |   |             | 61,225   |      |   |         | 10,260  | 
|                                  | Foreign currency translation adjustment |   |             | (102,079 | )    |   |         | 2,556   | 
|                                  |                                         |   |             |          |      |   |         |        
|                                  |                                         |   | (40,854     | )        |      |   | 12,816  |        
|                                  |                                         |   |             |          |      |   |         |        
|COMPREHENSIVE INCOME              |                                         | $ | 94,229      |          |      | $ | 134,341 |        
|                                  |                                         |   |             |          |      |   |         |        

See notes to condensed consolidated financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Dollars in thousands)

|                                                                      |                                                                     |   |             |           |      |   |           |           |  
|--------------------------------------------------------------------- | ------------------------------------------------------------------- | - | ----------- | --------- | ---- | - | --------- | --------- | -
|                                                                      |                                                                     |   | 2002        |           | 2001
|                                                                      |                                                                     |   |             |           |     
|                                                                      |                                                                     |   | (Unaudited)
|REVENUES                                                              |                                                                     |   |             |           |      |   |           |          
|                                                                      | Rental of flight equipment                                          |   | $           | 1,289,333 |      |   | $         | 1,203,203 |  
|                                                                      | Flight equipment marketing                                          |   |             | 19,640    |      |   |           | 38,916    |  
|                                                                      | Interest and other                                                  |   |             | 60,043    |      |   |           | 37,859    |  
|                                                                      |                                                                     |   |             |           |      |   |           |          
|                                                                      |                                                                     |   | 1,369,016   |           |      |   | 1,279,978 |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|EXPENSES                                                              |                                                                     |   |             |           |      |   |           |          
|                                                                      | Interest                                                            |   |             | 407,078   |      |   |           | 405,638   |  
|                                                                      | Depreciation of flight equipment                                    |   |             | 452,458   |      |   |           | 382,718   |  
|                                                                      | Flight equipment rent                                               |   |             | 38,754    |      |   |           | 60,928    |  
|                                                                      | Provision for overhauls                                             |   |             | 40,057    |      |   |           | 46,090    |  
|                                                                      | Selling, general and administrative                                 |   |             | 43,732    |      |   |           | 34,796    |  
|                                                                      |                                                                     |   |             |           |      |   |           |          
|                                                                      |                                                                     |   | 982,079     |           |      |   | 930,170   |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING
CHANGE |                                                                     |   | 386,937     |           |      |   | 349,808   |          
|                                                                      | Provision for income taxes                                          |   |             | 138,549   |      |   |           | 124,340   |  
|                                                                      |                                                                     |   |             |           |      |   |           |          
|INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE                  |                                                                     |   | 248,388     |           |      |   | 225,468   |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|Cumulative effect of accounting change (net of taxes)                 |                                                                     |   |            |           |      |   | 15,191    |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|NET INCOME                                                            |                                                                     |   | 248,388     |           |      |   | 240,659   |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|COMPREHENSIVE INCOME (NET OF TAX)                                     |                                                                     |   |             |           |      |   |           |          
|                                                                      | Cumulative effect of accounting change                              |   |             |          |      |   |           | (20,473   | )
|                                                                      | Net changes in cash flow hedges                                     |   |             | 88,114    |      |   |           | (20,000   | )
|                                                                      | Foreign currency translation adjustment                             |   |             | (94,867   | )    |   |           | 15,068    |  
|                                                                      |                                                                     |   |             |           |      |   |           |          
|                                                                      |                                                                     |   | (6,753      | )         |      |   | (25,405   | )        
|                                                                      |                                                                     |   |             |           |      |   |           |          
|COMPREHENSIVE INCOME                                                  |                                                                     | $ | 241,635     |           |      | $ | 215,254   |          
|                                                                      |                                                                     |   |             |           |      |   |           |          
|SUPPLEMENTAL COMPREHENSIVE INCOME INFORMATION                         |                                                                     |   |             |           |      |   |           |          
|                                                                      | Cumulative foreign currency translation gain adjustment, net of tax |   | $           | (84,510   | )    |   | $         | 25,695    |  
|                                                                      | Cumulative cash flow hedge loss adjustment, net of tax              |   |             | 27,128    |      |   |           | (41,843   | )

See notes to condensed consolidated financial statements.

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##### Table of Contents






INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Dollars in thousands)

|                                          |                                                                                   |                                                                  |            |             |         |      |            |            |         |  
|----------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ---------- | ----------- | ------- | ---- | ---------- | ---------- | ------- | -
|                                          |                                                                                   |                                                                  |            | 2002        |         | 2001
|                                          |                                                                                   |                                                                  |            |             |         |     
|                                          |                                                                                   |                                                                  |            | (Unaudited)
|OPERATING ACTIVITIES                      |                                                                                   |                                                                  |            |             |         |      |            |           
|                                          | Net income                                                                        |                                                                  | $          | 248,388     |         |      | $          | 240,659    |        
|                                          | Adjustments to reconcile net income to net cash provided by
operating activities: |                                                                  |            |             |         |      |            |            |        
|                                          |                                                                                   | Depreciation of flight equipment                                 |            |             | 452,458 |      |            |            | 382,718 |  
|                                          |                                                                                   | Deferred income taxes                                            |            |             | 220,489 |      |            |            | 191,901 |  
|                                          |                                                                                   | Foreign exchange adjustment of Euro denominated debt             |            |             | 20,627  |      |            |            | (83,069 | )
|                                          |                                                                                   | Change in derivative instruments                                 |            |             | (20,020 | )    |            |            | 95,449  |  
|                                          |                                                                                   | Amortization of deferred debt issue costs                        |            |             | 3,726   |      |            |            | 6,175   |  
|                                          |                                                                                   | Equity in net income of affiliates                               |            |             | 3,837   |      |            |            | (1,425  | )
|                                          |                                                                                   | Change in unamortized debt discount                              |            |             | (21,216 | )    |            |            | 19,250  |  
|                                          | Changes in operating assets and liabilities:                                      |                                                                  |            |             |         |      |            |            |        
|                                          |                                                                                   | Increase in notes receivable                                     |            |             | (18,208 | )    |            |            | (21,297 | )
|                                          |                                                                                   | Increase in accrued interest, other receivables and other assets |            |             | (47,670 | )    |            |            | (10,853 | )
|                                          |                                                                                   | Decrease (increase) in current income taxes receivable           |            |             | 72,216  |      |            |            | (65,546 | )
|                                          |                                                                                   | Increase (decrease) in accrued interest and other payables       |            |             | 54,913  |      |            |            | (9,386  | )
|                                          |                                                                                   | Increase in rentals received in advance                          |            |             | 14,540  |      |            |            | 5,387   |  
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           
|Net cash provided by operating activities |                                                                                   |                                                                  | 984,080    |             |         |      | 749,963    |           
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           
|INVESTING ACTIVITIES                      |                                                                                   |                                                                  |            |             |         |      |            |           
|                                          | Acquisition of flight equipment for operating leases                              |                                                                  |            | (3,464,404  | )       |      |            | (2,653,168 | )      
|                                          | Acquisition of flight equipment for finance leases                                |                                                                  |            |            |         |      |            | (39,207    | )      
|                                          | Decrease (increase) in deposits and progress payments                             |                                                                  |            | 97,134      |         |      |            | (93,247    | )      
|                                          | Proceeds from disposal of flight equipment  net of gain                          |                                                                  |            | 36,215      |         |      |            | 48,602     |        
|                                          | Collections on notes receivable and sales-type leases                             |                                                                  |            | 16,766      |         |      |            | 24,732     |        
|                                          | Other                                                                             |                                                                  |            | 364         |         |      |            | 26         |        
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           
|Net cash used in investing activities     |                                                                                   |                                                                  | (3,313,925 | )           |         |      | (2,712,262 | )         
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           
|FINANCING ACTIVITIES                      |                                                                                   |                                                                  |            |             |         |      |            |           
|                                          | Repurchase of preferred stock                                                     |                                                                  |            | (50,000     | )       |      |            |           |        
|                                          | Proceeds from debt financing                                                      |                                                                  |            | 9,685,739   |         |      |            | 6,271,292  |        
|                                          | Payments in reduction of debt financing                                           |                                                                  |            | (7,121,942  | )       |      |            | (4,351,950 | )      
|                                          | Debt issue costs                                                                  |                                                                  |            | (14,511     | )       |      |            | (9,102     | )      
|                                          | (Decrease) increase in customer deposits                                          |                                                                  |            | (105,521    | )       |      |            | 124,149    |        
|                                          | Payment of common and preferred dividends                                         |                                                                  |            | (29,406     | )       |      |            | (74,441    | )      
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           
|Net cash provided by financing activities |                                                                                   |                                                                  | 2,364,359  |             |         |      | 1,959,948  |           
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           
|Increase (decrease) in cash               |                                                                                   |                                                                  | 34,514     |             |         |      | (2,351     | )         
|Cash at beginning of period               |                                                                                   |                                                                  | 79,383     |             |         |      | 134,653    |           
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           
|                                          | Cash at end of period                                                             |                                                                  | $          | 113,897     |         |      | $          | 132,302    |        
|                                          |                                                                                   |                                                                  |            |             |         |      |            |           

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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(Dollars in thousands)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

|                                 |                                                                           |  |             |          |      |  |   |         | 
|-------------------------------- | ------------------------------------------------------------------------- |  | ----------- | -------- | ---- |  | - | ------- | 
|                                 |                                                                           |  | 2002        |          | 2001
|                                 |                                                                           |  |             |          |     
|                                 |                                                                           |  | (Unaudited)
|Cash paid during the period for: |                                                                           |  |             |          |      |  |   |        
|                                 | Interest (net of amount capitalized of $30,446
(2002) and $28,373 (2001)) |  | $           | 379,869  |      |  | $ | 384,395 | 
|                                 | Income taxes (net of refunds)                                             |  |             | (154,157 | )    |  |   | 6,165   | 



|2001: |  |  |                                                                                                                                                                        
|----- |  |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |  | One aircraft was received in exchange for notes receivable in the amount of
$18,136 and one aircraft with net book value of $11,372 was contributed to
a joint venture.

See notes to condensed consolidated financial statements.

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##### Table of Contents






INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
(Dollars in thousands)
(Unaudited)

A. Basis of Preparation

The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and in
accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered
necessary for a fair presentation have been included. Certain
reclassifications have been made to the 2001 unaudited condensed
consolidated financial statements to conform to the 2002 presentation.
Operating results for the six months ended June 30, 2002 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2002. These statements should be read in conjunction
with the consolidated financial statements and footnotes thereto
included in the Companys annual report on Form 10-K for the year ended
December 31, 2001.

B. Hedging Activities

The Company uses derivatives to manage exposures to interest rate and
foreign currency risks. During the six months ended June 30, 2002, the
Company recorded the following in earnings in accordance with Statement of
Financial Accounting Standards No. 133  Accounting for Certain Derivative
Instruments and Certain Hedging Activities, as amended by Statement of
Financial Accounting Standards No. 138 and related implementation guidance.

|                                                                 |                                                  |   |       |         |  
|---------------------------------------------------------------- | ------------------------------------------------ | - | ----- | ------- | -
|Related to non-hedging instruments:                              |                                                  |   |       |        
|                                                                 | Fair value of hedging instruments                |   | $     | 3,121   |  
|Related to previous designated fair value hedging relationships: |                                                  |   |       |        
|                                                                 | Fair value of hedging instruments                |   |       | (25,623 | )
|                                                                 | Offsetting changes in fair value of hedged items |   |       | 25,340  |  
|                                                                 | Ineffectiveness related to cash flow hedges      |   |       | (187    | )
|                                                                 |                                                  |   |       |        
|Total effect on earnings                                         |                                                  | $ | 2,651 |        
|                                                                 |                                                  |   |       |        

During the six months ended June 30, 2002, $50,438 (net) was reclassified
from accumulated other comprehensive income to interest expense under cash
flow hedge accounting in connection with the Companys program to convert
debt from floating to fixed rates. The Company expects that within the next
twelve months it will reclassify as earnings approximately $100,000 of the
balance recorded plus quarterly cash flow hedge adjustments to accumulated
other comprehensive income.

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##### Table of Contents



CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

Forward Looking Statements

Certain of the statements in this discussion, as well as other
statements within this document, contain estimates and assumptions regarding
cash flows and debt financing to support future capital requirements. While
these statements are made in good faith, future operating, market,
competitive, economic and other conditions and events could cause actual
results to differ materially from those in the statements. The Company
undertakes no obligation to release publicly any revisions to these
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of anticipated or unanticipated events.

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##### Table of Contents








|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Financial Condition

The Company borrows funds for the purchase of flight equipment,
including funds for progress payments during the construction phase,
principally on an unsecured basis from various sources. As of June 30, 2002,
the Company had committed to purchase 510 aircraft from Airbus and Boeing at
an estimated aggregated purchase price of $29.9 billion for delivery through
2010 and options to purchase 49 additional aircraft at an estimated
aggregate purchase price of approximately $3.0 billion. The Company
currently expects to fund expenditures for capital requirements as well as
liquidity needs from a combination of available cash balances, internally
generated funds and proceeds from financing arrangements. The Companys debt
financing and capital lease obligations were comprised of the following at
the following dates:

|                                                 |                                                           |   |                        |            |              |   |           |            |  
|------------------------------------------------ | --------------------------------------------------------- | - | ---------------------- | ---------- | ------------ | - | --------- | ---------- | -
|                                                 |                                                           |   | June 30,               |            | December 31,
|                                                 |                                                           |   | 2002                   |            | 2001        
|                                                 |                                                           |   |                        |            |             
|                                                 |                                                           |   | (Dollars in thousands)
|Public term debt with single maturities          |                                                           | $ | 7,663,655              |            |              | $ | 4,796,330 |           
|Foreign Currency Adjustment                      |                                                           |   | 123,768                |            |              |   | (92,129   | )         
|Public medium-term notes with varying maturities |                                                           |   | 4,947,600              |            |              |   | 4,809,000 |           
|Capital lease obligations                        |                                                           |   | 313,759                |            |              |   | 365,289   |           
|Bank and other term debt                         |                                                           |   | 2,226,881              |            |              |   | 2,368,968 |           
|                                                 |                                                           |   |                        |            |              |   |           |           
|                                                 | Total term debt, bank debt, and capital lease obligations |   |                        | 15,275,663 |              |   |           | 12,247,458 |  
|Commercial paper                                 |                                                           |   | 3,253,354              |            |              |   | 3,501,865 |           
|Deferred debt discount                           |                                                           |   | (36,373                | )          |              |   | (15,157   | )         
|                                                 |                                                           |   |                        |            |              |   |           |           
|                                                 | Total debt financing and capital lease obligations        |   | $                      | 18,492,644 |              |   | $         | 15,734,166 |  
|                                                 |                                                           |   |                        |            |              |   |           |           
|Selected Interest Rates and Ratio:               |                                                           |   |                        |            |              |   |           |           
|                                                 | Composite interest rate                                   |   |                        | 5.03       | %            |   |           | 5.07       | %
|                                                 | Percentage of total debt at fixed rates                   |   |                        | 80.51      | %            |   |           | 78.81      | %
|                                                 | Composite interest rate on fixed rate debt                |   |                        | 5.76       | %            |   |           | 5.78       | %
|                                                 | Bank prime rate                                           |   |                        | 4.75       | %            |   |           | 4.75       | %

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##### Table of Contents





|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|------- | -------------------------------------------------------------------------------------------------

Public Debt

The interest on substantially all of the public debt (exclusive of the
Commercial Paper Program) is fixed for the terms of the notes. The Company
has the ability to borrow under various public debt financing arrangements
as follows (d):

|                                                                                                |  |                       |       |                       |  |                   |       |                   |  |   |       |     |  |   |       |    
|----------------------------------------------------------------------------------------------- |  | --------------------- | ----- | --------------------- |  | ----------------- | ----- | ----------------- |  | - | ----- | --- |  | - | ----- | ---
|                                                                                                |  | Maximum               |       | Sold as of            |  | Sold as of        |       | Sold as of       
|                                                                                                |  | Offering              |       | December 31, 2001 (a) |  | June 30, 2002 (a) |       | July 31, 2002 (a)
|                                                                                                |  |                       |       |                       |  |                   |       |                  
|                                                                                                |  | (Dollars in millions)
|Registration statement
dated May 10, 2001
(including $2.350
billion Medium-Term Note
program)   |  | $                     | 4,000 |                       |  | $                 | 3,100 |                   |  | $ | 4,000 |     |  | $ | 4,000 |    
|Registration statement
dated January 28, 2002
(including $1.0 billion
Medium-Term Note
program) |  |                       | 4,000 |                       |  |                   |      |                   |  |   | 2,745 |     |  |   | 2,770 |    
|Euro Medium-Term Note
Programme
dated June 2001                                                 |  |                       | 4,000 | (b)                   |  |                   | 771   | (c)               |  |   | 2,314 | (c) |  |   | 2,314 | (c)



---

|(a) |  | Includes amounts outstanding under Medium-Term Note programs
implemented under each of the registration statements.                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | The Company increased its Euro Medium-Term Note Programme during
the second quarter in 2002 from $2.0 billion to $4.0 billion under
which an additional 1.25 billion and £300 million in notes were sold
as of July 31, 2002.
|   
|   
|   
|   
|(c) |  | The Company has hedged the foreign currency risk of the notes
through operating lease payments or derivatives.                                                                                                                
|   
|   
|   
|   
|(d) |  | Totals do not include shelf registrations for which the maximum
offering had been sold as of December 31, 2001.                                                                                                               

Capital Lease Obligations

The Company has Export Credit Lease financings which provide ten year,
amortizing loans in the form of capital lease obligations. The interest rate
on 62.5% of the original financed amount is 6.55% and the interest rate on
22.5% of the original financed amount is fixed at rates varying between
6.18% and 6.89%. These two tranches are guaranteed by various European
Export Credit Agencies. The remaining 15% of the original financed amount
provides for LIBOR based pricing. This 15% tranche was prepaid in 2000. The
remaining obligations mature through 2005.

Bank Term Debt

In January 1999, the Company entered into an Export Credit Facility, up
to a maximum of $4.3 billion, for approximately 75 aircraft to be delivered
from 1999 through 2001. The Company had the right, but was not required, to
use the facility to fund 85% of each aircrafts purchase price. This
facility is guaranteed by various European Export Credit Agencies. The
interest rate varies from 5.753% to 5.898% on the 75 aircraft depending on
the delivery date of the aircraft. The Company financed 62 aircraft with
$2.8 billion under this facility. The debt is collaterized by a pledge of
the shares of a subsidiary of the Company which holds title to the aircraft
financed under the facility.

Commercial Paper

The Company has a $4.8 billion Commercial Paper Program. Under this
program, the Company may borrow in minimum increments of $100,000 for a
period from one day to 270 days. It is the Companys intention to sell
commercial paper not to exceed one and one half times the aggregate amount
of the backup facilities available (see Bank Commitments). The weighted
average interest rate of the Companys Commercial Paper Program was 1.86%
for the six months ended June 30, 2002 and 4.10% for the year ended December
31, 2001. The composite commercial paper interest rate was 1.84% and 2.24%
at June 30, 2002 and December 31, 2001, respectively.

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##### Table of Contents





|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|------- | -------------------------------------------------------------------------------------------------

Bank Commitments

As of June 30, 2002, the Company had committed revolving loans and
lines of credit with 20 commercial banks aggregating $2.85 billion. These
revolving loans and lines of credit principally provide for interest rates
that vary according to the pricing option in effect at the time of
borrowing. Pricing options include prime, a range from .25% over LIBOR to .35% over LIBOR based upon utilization, or a rate determined by a
competitive bid process with the banks. The revolving loans and lines of
credit are subject to facility fees of up to .10% of amounts available. This
financing is used primarily as backup for the Companys Commercial Paper
Program.

Other

In 1995, 1996 and 1997, the Company, through subsidiaries, entered into
sale-leaseback transactions providing proceeds to the Company in the amounts
of $413.0 million, $507.6 million and $601.9 million, respectively, each
relating to seven aircraft. The transactions resulted in the sale and
leaseback of these aircraft under one year operating leases, each with six
one year extension options for a total of seven years for each aircraft. The
Company has not recorded any gains related to the transactions. The Company
has the option to either buy back the aircraft or redeliver the aircraft for
a fee to the lessor at the end of any lease period. The lease rates equate
to fixed principal amortization and floating interest payments based on
LIBOR or commercial paper pricing. As of June 30, 2002, the Company had
repurchased three aircraft which were sold to third parties. If the Company
decides not to negotiate extensions of the one year operating lease options
as they terminate in December 2002 and September 2003 and 2004, it will be
required to borrow additional funds to reacquire the assets. The estimated
remaining minimum lease payments (exclusive of the interest component of
rent) and buy-back amounts, assuming the transactions mature as scheduled,
are $279.6 million (2002), $390.8 million (2003) and $462.4 million (2004).

The Company does not have any other relationships with unconsolidated
entities, which would have been established for the purpose of facilitating
off-balance sheet arrangements or for other contractually narrow or limited
purposes. The Company may, however, from time to time enter into joint
ventures or other partnership arrangements with the limited purpose to lease
aircraft.

In the normal course of business, the Company employs a variety of
derivative products to manage its exposure to interest rates and the
resulting impact of changes in interest rates on earnings, with the
objective to lower its overall borrowing cost and to maintain an optimal mix
of variable and fixed rate interest obligations. The Company only enters
into derivative transactions to hedge interest rate risk and currency risk
and not to speculate on interest rates or currency fluctuations. These
derivative products include interest rate swap agreements, currency swap
agreements, and interest rate floor agreements.

The counterparty to the Companys derivative instruments is AIG
Financial Products Corp., a related party with the highest ratings available
from the credit rating agencies, who enters into identical transactions with
independent third parties. The derivatives are subject to a bilateral
security agreement, which, in certain circumstances, may allow one party to
the agreement to require the second party to the agreement to provide
collateral. It is managements belief that any failure of the instruments or
counterparty to perform under the derivative contracts would have an
immaterial impact on the Companys financial condition and results of
operations.

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##### Table of Contents





|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|------- | -------------------------------------------------------------------------------------------------

The Company is in compliance with all covenants and other requirements
set forth in its credit agreements. Further, the Company does not have any
rating downgrade triggers that would automatically accelerate the maturity
dates of its debt. However, a downgrade in the Companys credit rating could
adversely affect the Companys ability to borrow on, renew existing, or
obtain access to new financing arrangements and would increase the cost of
such financing arrangements. For example, a downgrade in credit rating could
preclude the Company from issuing commercial paper under its current
program. Should this occur the Company would seek alternative sources of
funding, including issuance of bonds under its existing shelf registrations.
In addition, the Company has the ability, at its option, to draw upon its
revolving loans and lines of credit. The Company may also, from time to
time, enter into additional short term borrowings.

The Company repurchased $50.0 million of its Market Auction Preferred
Stock during the six months ended June 30, 2002.

The following summarizes the Companys contractual obligations at June
30, 2002, and the possible effect of such obligations on the Companys
liquidity and cash flows in future periods.

Existing Commitments (Exclusive of Interest)

|                                                     |  |                                |            |      |  |      |           |      |  |      |           |      |  |            |           |  |  |   |           |  |  |   |           |  |  |   |            | 
|---------------------------------------------------- |  | ------------------------------ | ---------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---------- | --------- |  |  | - | --------- |  |  | - | --------- |  |  | - | ---------- | 
|                                                     |  | Commitments Due by Fiscal Year
|                                                     |  |                               
|                                                     |  | Total                          |            | 2002 |  | 2003 |           | 2004 |  | 2005 |           | 2006 |  | Thereafter
|                                                     |  |                                |            |      |  |      |           |      |  |      |           |      |  |           
|                                                     |  | (Dollars in thousands)        
|Public Debt                                          |  | $                              | 14,838,136 |      |  | $    | 1,033,068 |      |  | $    | 3,505,674 |      |  | $          | 3,200,623 |  |  | $ | 1,790,549 |  |  | $ | 1,234,174 |  |  | $ | 4,074,048  | 
|Capital Lease Obligations                            |  |                                | 313,759    |      |  |      | 53,137    |      |  |      | 111,745   |      |  |            | 105,194   |  |  |   | 43,683    |  |  |   |          |  |  |   |           | 
|Commercial Paper                                     |  |                                | 3,253,354  |      |  |      | 3,234,854 |      |  |      | 18,500    |      |  |            |          |  |  |   |          |  |  |   |          |  |  |   |           | 
|Operating Leases                                     |  |                                | 129,456    |      |  |      | 1,582     |      |  |      | 3,276     |      |  |            | 11,257    |  |  |   | 11,404    |  |  |   | 8,491     |  |  |   | 93,446     | 
|Operating Leases under
Sales-Lease-Back
Transactions |  |                                | 1,132,831  |      |  |      | 279,630   |      |  |      | 390,810   |      |  |            | 462,391   |  |  |   |          |  |  |   |          |  |  |   |           | 
|Purchase Commitments                                 |  |                                | 29,325,200 |      |  |      | 1,657,000 |      |  |      | 3,900,400 |      |  |            | 3,878,000 |  |  |   | 4,984,900 |  |  |   | 4,792,900 |  |  |   | 10,112,000 | 
|                                                     |  |                                |            |      |  |      |           |      |  |      |           |      |  |            |           |  |  |   |           |  |  |   |           |  |  |   |            | 
|Total                                                |  | $                              | 48,992,736 |      |  | $    | 6,259,271 |      |  | $    | 7,930,405 |      |  | $          | 7,657,465 |  |  | $ | 6,830,536 |  |  | $ | 6,035,565 |  |  | $ | 14,279,494 | 
|                                                     |  |                                |            |      |  |      |           |      |  |      |           |      |  |            |           |  |  |   |           |  |  |   |           |  |  |   |            | 

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##### Table of Contents





|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|------- | -------------------------------------------------------------------------------------------------

Contingent Commitments

|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |           | 
|-------------------------------- |  | ------------------------------------- | --------- | ---- |  | ---- | ------ | ---- |  | ---- | ------- | ---- |  | ---------- | ------- |  |  | - | ------- |  |  | - | ------- |  |  | - | --------- | 
|                                 |  | Contingency Expiration by Fiscal Year
|                                 |  |                                      
|                                 |  | Total                                 |           | 2002 |  | 2003 |        | 2004 |  | 2005 |         | 2006 |  | Thereafter
|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |           
|                                 |  | (Dollars in thousands)               
|Purchase Options on New
Aircraft |  | $                                     | 2,956,400 |      |  |      |       |      |  | $    | 187,800 |      |  | $          | 697,300 |  |  | $ | 621,600 |  |  | $ | 555,900 |  |  | $ | 893,800   | 
|Put Options(a)                   |  |                                       | 679,110   |      |  |      |       |      |  |      | 231,614 |      |  |            | 67,422  |  |  |   | 256,658 |  |  |   |        |  |  |   | 123,416   | 
|Asset Value Guarantees(a)        |  |                                       | 205,299   |      |  | $    | 69,296 |      |  |      | 63,000  |      |  |            | 4,726   |  |  |   | 11,041  |  |  |   | 14,492  |  |  |   | 42,744    | 
|Loan Guarantees(a)               |  |                                       | 53,179    |      |  |      | 471    |      |  |      | 26,562  |      |  |            | 12,193  |  |  |   | 3,000   |  |  |   | 6,000   |  |  |   | 4,953     | 
|Lines of Credit                  |  |                                       | 10,000    |      |  |      | 10,000 |      |  |      |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |          | 
|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |           | 
|Total                            |  | $                                     | 3,903,988 |      |  | $    | 79,767 |      |  | $    | 508,976 |      |  | $          | 781,641 |  |  | $ | 892,299 |  |  | $ | 576,392 |  |  | $ | 1,064,913 | 
|                                 |  |                                       |           |      |  |      |        |      |  |      |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |           | 



---

|(a) |  | From time to time, the Company participates 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 the Company be called upon to fulfill its
obligations, the Company would have recourse to the value of the
underlying aircraft.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents





|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|------- | -------------------------------------------------------------------------------------------------

Results of Operations- Three months ended June 30, 2002 versus 2001.

Revenues from the rentals of flight equipment increased 9.1% to $680.3
million in 2002 compared to $623.6 million in 2001, due to an increase in the
number of aircraft available for operating lease, partially offset by an
increase in the number of aircraft being reconfigured and redelivered and
therefore not earning revenue for the entire period. Revenues were also
negatively impacted by lower lease rates and restructured rents, as a result of
a slowdown of the airline industry that was exacerbated after the September 11,
2001 terrorist attacks. The Company expects these factors to further negatively
impact revenues in the third and fourth quarters of 2002. At June 30, 2002 the
Companys leased fleet consisted of 532 aircraft compared to a fleet of 448
aircraft at June 30, 2001. The cost of the leased fleet, which includes
aircraft subject to sale-lease back transactions from which rental income is
earned, increased to $29.1 billion in 2002 compared to $24.5 billion in 2001.

In addition to its leasing operations, the Company engages in the
marketing of flight equipment throughout the lease term, as well as the sales
of flight equipment on a principal and commission basis. Revenues from flight
equipment marketing decreased to $6.4 million in 2002 compared to $20.7 million
in 2001 as a result of a decrease in sales of company owned equipment. The
Company did not sell any equipment during the second quarter of 2002, and sold
two engines and two aircraft during the second quarter of 2001.

Interest and other revenue increased to $39.8 million in 2002 compared to
$14.0 million in 2001 primarily due to forfeitures of security and other
deposits resulting from nonperformance by customers and manufacturers.

Interest expense increased to $218.9 million in 2002 compared to $203.6
million in 2001 as a result of an increase in average debt outstanding, to
finance aircraft acquisitions (excluding the effect of debt discount), to $17.7
billion in 2002 compared to $14.8 billion in 2001. This increase was partially
offset by a decrease in the average composite borrowing rate to 4.98% in 2002
compared to 5.71% in 2001. The Companys composite borrowing rate fluctuated
as follows:

|                     |  |      |      |      |  |          |      |   |  |  |       |   
|-------------------- |  | ---- | ---- | ---- |  | -------- | ---- | - |  |  | ----- | --
|                     |  | 2002 |      | 2001 |  | Decrease
|                     |  |      |      |      |  |         
|Beginning of Quarter |  |      | 4.93 | %    |  |          | 5.92 | % |  |  | (0.99 | )%
|End of Quarter       |  |      | 5.03 | %    |  |          | 5.49 | % |  |  | (0.46 | )%
|Average              |  |      | 4.98 | %    |  |          | 5.71 | % |  |  | (0.73 | )%

Interest expense for the three months ended June 30, 2002 includes a $1.6
million charge related to hedging activities.

Depreciation of flight equipment increased to $235.7 million in 2002
compared to $201.6 million in 2001 due to the increased cost of the fleet.

The Company, in prior periods, has entered into sale-leaseback
transactions. Currently 18 aircraft are accounted for under these
transactions. Rent expense decreased to $19.4 million in 2002 compared to
$28.4 million in 2001 due to a decrease in the lease rates resulting from a
decrease in interest rates affecting the floating rate component of the lease
rates, principal amortization, and the repurchase of one aircraft.

Provision for overhauls decreased to $18.8 million in 2002 compared to
$21.6 million in 2001. The cumulative effect of favorable payout factors
realized in the second quarter resulted in a reduction in the reserve rate used
in calculating the provision for overhauls. Further, the Company experienced
lower overhaul revenue collections as a result of an increase in restructured
overhaul payments, a slowdown in the economy and the September 11, 2001
terrorist attacks.

Selling, general and administrative expenses increased to $22.2 million in
2002 compared to $14.9 million in 2001 primarily due to an increase in costs
related to the reconfiguration and re-delivery of aircraft from one lessee to
another.

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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
|------- | -------------------------------------------------------------------------------------------------

Results of Operations- Six months ended June 30, 2002 versus 2001.

Revenues from the rentals of flight equipment increased 7.2% to $1,289.3
million in 2002 compared to $1,203.2 million in 2001, due to an increase in the
number of aircraft available for operating lease, partially offset by an
increase in the number of aircraft being reconfigured and redelivered and
therefore not earning revenue for the entire period. Revenues were also
negatively impacted by lower lease rates and restructured rents, as a result of
a slowdown of the airline industry that was exacerbated after the September 11,
2001 terrorist attacks. The Company expects these factors to further negatively
impact revenues in the third and fourth quarters of 2002. At June 30, 2002 the
Companys leased fleet consisted of 532 aircraft compared to a fleet of 448
aircraft at June 30, 2001. The cost of the leased fleet, which includes
aircraft subject to sale-lease back transactions from which rental income is
earned, increased to $29.1 billion in 2002 compared to $24.5 billion in 2001.

In addition to its leasing operations, the Company engages in the
marketing of flight equipment throughout the lease term, as well as the sales
of flight equipment on a principal and commission basis. Revenues from flight
equipment marketing decreased to $19.6 million in 2002 compared to $38.9
million in 2001 as a result of a decrease in sales of company owned equipment.
The Company sold two aircraft during the six months ended June 30, 2002, and
sold two aircraft and two engines during the six months ended June 30, 2001.

Interest and other income increased to $60.0 million in 2002 compared to
$37.9 million in 2001 primarily due to forfeitures of security deposits because
of nonperformance by customers and manufacturers.

Interest expense increased to $407.1 million in 2002 compared to $405.6
million in 2001 as a result of an increase in average debt outstanding, to
finance aircraft acquisitions (excluding the effect of debt discount), to $17.7
billion in 2002 compared to $14.8 billion in 2001. This increase was partially
offset by a decrease in the average composite borrowing rate to 5.05% in 2002
compared to 5.93% in 2001. The Companys composite borrowing rate fluctuated
as follows:

|                        |  |      |      |      |  |          |      |   |  |  |       |   
|----------------------- |  | ---- | ---- | ---- |  | -------- | ---- | - |  |  | ----- | --
|                        |  | 2002 |      | 2001 |  | Decrease
|                        |  |      |      |      |  |         
|Beginning of six months |  |      | 5.07 | %    |  |          | 6.37 | % |  |  | (1.30 | )%
|End of six months       |  |      | 5.03 | %    |  |          | 5.49 | % |  |  | (0.46 | )%
|Average                 |  |      | 5.05 | %    |  |          | 5.93 | % |  |  | (0.88 | )%

Interest expense for the six months ended June 30, 2002 includes a $2.6 million
charge related to hedging activities.

Depreciation of flight equipment increased to $452.5 million in 2002
compared to $382.7 million in 2001 due to the increased cost of the fleet.

The Company, in prior periods, has entered into sale-leaseback
transactions. Currently 18 aircraft are accounted for under these
transactions. Rent expense decreased to $38.8 million in 2002 compared to
$60.9 million in 2001 due to a decrease in the lease rates resulting from a
decrease in interest rates affecting the floating rate component of the lease
rates, principal amortization, and the repurchase of one aircraft.

Provision for overhauls decreased to $40.1 million in 2002 compared to
$46.1 million in 2001. The cumulative effect of favorable payout factors
realized in the second quarter resulted in a reduction in the reserve rate used
in calculating the provision for overhauls. Further, the Company experienced
lower overhaul revenue collections as a result of an increase in restructured
overhaul payments, a slowdown in the economy and the September 11, 2001
terrorist attacks.

Selling, general and administrative expenses increased to $43.7 million in
2002 compared to $34.8 million in 2001 primarily due to an increase in costs
related to the reconfiguration and re-delivery of aircraft from one lessee to
another.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Value at Risk

Measuring potential losses in fair values has recently become the focus of
risk management efforts by many companies. Such measurements are performed
through the application of various statistical techniques. One such technique
is Value at Risk (VaR), a summary statistical measure that uses historical
interest rates, foreign currency exchange rates and equity prices which
estimates the volatility and correlation of these rates and prices to calculate
the maximum loss that could occur over a defined period of time given a certain
probability.

The Company believes that statistical models alone do not provide a
reliable method of monitoring and controlling market risk. While VaR models
are relatively sophisticated, the quantitative market risk information
generated is limited by the assumptions and parameters established in creating
the related models. Therefore, such models are tools and do not substitute for
the experience or judgment of senior management.

The Company is exposed to market risk and the risk of loss of fair value
and possible liquidity strain resulting from adverse fluctuations in interest
rates and foreign exchange prices. The Company statistically measures the loss
of fair value through the application of a VaR model on a quarterly basis. In
this analysis the net fair value of the Company is determined using the
financial instrument and other assets. This includes tax adjusted future flight
equipment lease revenues, aircraft residual values at maturity of the lease
contracts and financial instrument liabilities, which includes future servicing
of current debt. The estimated impact of current derivative positions is also
taken into account.

The Company calculates the VaR with respect to the net fair value by using
historical scenarios. This methodology entails re-pricing all assets and
liabilities under explicit changes in market rates within a specific historical
time period. In this case, the most recent three years of historical
information for interest rates and foreign exchange rates were used to
construct the historical scenarios at December 31, 2001 and June 30, 2002
respectively. For each scenario, each financial instrument is re-priced.
Scenario values for the Company are then calculated by netting the values of
all the underlying assets and liabilities. The final VaR number represents the
maximum adverse deviation in fair market value incurred by these scenarios with
95% confidence (i.e. only 5% of historical scenarios show losses greater than
the VaR figure). A one month holding period is assumed in computing the VaR
figure. The following table presents the average, high and low VaRs for the
Company with respect to its fair value as of June 30, 2002 and December 31,
2001:

|        |  |                       |      |                   |  |   |      | 
|------- |  | --------------------- | ---- | ----------------- |  | - | ---- | 
|        |  | ILFC
Market Risk     
|        |  |                      
|        |  | June 30, 2002         |      | December 31, 2001
|        |  |                       |      |                  
|        |  | (Dollars in millions)
|Average |  | $                     | 24.8 |                   |  | $ | 9.8  | 
|High    |  |                       | 42.8 |                   |  |   | 13.3 | 
|Low     |  |                       | 10.1 |                   |  |   | 6.8  | 

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PART II. OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | a) |  | Exhibits
| | -- |  | --------



| | 1  |  | Amended and Restated Programme
Agreement, dated May 15, 2002, between the Company and the
Dealers named therein.                                
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 4  |  | Amended and Restated Agency
Agreement, dated May 15, 2002, between the Company,
Citibank, N.A. and Dexia Banque Internationale a Luxembourg S.A.
|
| | 12 |  | Computation of Ratios of Earnings to Fixed Charges and Preferred
Stock Dividends.                                                               



| | b) |  | Reports on Form 8-K:                      
| | -- |  | ------------------------------------------
|
| |    |  | Form 8-K, event date May 21, 2002 (Item 7)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

INTERNATIONAL LEASE FINANCE CORPORATION

|               |  |                                                                                         
|-------------- |  | ----------------------------------------------------------------------------------------
|August 8, 2002 |  | /S/   Steven F. Udvar-Hazy                                                              
|               |  |                                                                                         
|               |  | STEVEN F. UDVAR-HAZY
Chairman of the Board and Chief
Executive Officer                  
|              
|August 8, 2002 |  | /S/   Alan H. Lund                                                                      
|               |  |                                                                                         
|               |  | ALAN H. LUND
Vice Chairman-Finance, Chief
Financial Officer and Chief
Accounting Officer

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES




INDEX TO EXHIBITS

|            |  |                                                                                                                                                 
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                                                                                 
|            |  |                                                                                                                                                 
|1           |  | Amended and Restated Programme
Agreement, dated May 15, 2002, between the Company and the
Dealers named therein.                                
|           
|4           |  | Amended and Restated Agency
Agreement, dated May 15, 2002, between the Company,
Citibank, N.A. and Dexia Banque Internationale a Luxembourg S.A.
|           
|12          |  | Computation of Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends                                                                

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