UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 QUARTERLY REPORT
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-31616
 INTERNATIONAL LEASE FINANCE CORPORATION
  California
    
    22-3059110(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)10250 Constellation Blvd., Suite 3400
Los Angeles, California
    
    90067(Address of principal executive offices)
    
    (Zip Code)
 310) 788-1999
 þ o
 o o
  Large accelerated filer oAccelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)Smaller reporting company o o þ




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-Q QUARTERLY REPORT
 
 TABLE OF CONTENTS
 PageTable of Definitions
    
    
    3Part I. Financial InformationItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets September 30, 2009 and December 31, 2008
    
    
    4Condensed Consolidated Statements of Income Three months ended September 30, 2009 and 2008
    
    
    5Condensed Consolidated Statements of Income Nine months ended September 30, 2009 and 2008
    
    
    5Condensed Consolidated Statements of Comprehensive Income Three months ended September 30, 2009 and 2008
    
    
    6Condensed Consolidated Statements of Comprehensive Income Nine months ended September 30, 2009 and 2008
    
    
    6Condensed Consolidated Statements of Cash Flows Nine months ended September 30, 2009 and 2008
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    40Item 4T. Controls and Procedures
    
    
    41Part II. Other InformationItem 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    42Item 5. Other Information
    
    
    45Item 6. Exhibits
    
    
    45Signatures
    
    
    47
 -2-




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##### 



TABLE OF DEFINITIONS
 AIG
    
    American International Group, Inc.AIG Funding
    
    AIG Funding, Inc.AIGFP
    
    AIG Financial Products Corp.Airbus
    
    Airbus S.A.S.AOCI
    
    Accumulated other comprehensive incomeASC
    
    FASB Accounting Standards CodificationBoeing
    
    The Boeing CompanyThe Company, ILFC, we, our, us
    
    International Lease Finance CorporationCPFF
    
    FRBNY Commercial Paper Funding FacilityCVA
    
    Credit Value AdjustmentECA
    
    Export Credit AgencyFASB
    
    Financial Accounting Standards BoardFitch
    
    Fitch Ratings, Inc.FRBNY
    
    Federal Reserve Bank of New YorkFRBNY Credit Agreement
    
    The credit agreement, dated as of September
22, 2008, as amended, between AIG and the
FRBNYGAAP
    
    Generally Accepted Accounting Principles in
the United States of AmericaKrasAir
    
    Krasnoyarsk AirlinesMoodys
    
    Moodys Investor Service, Inc.MVA
    
    Market Value AdjustmentOCI
    
    Other comprehensive incomeQSPE
    
    Qualifying special-purpose entitySEC
    
    U.S. Securities and Exchange CommissionS&P
    
    Standard and Poors, a division of The
McGraw-Hill Companies, Inc.VaR
    
    Value at RiskVIEs
    
    Variable Interest EntitiesVolare
    
    Estate of Volare AirlinesWKSI
    
    Well Known Seasoned Issuer
 -3-




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##### 



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)
(Unaudited)
 September 30,
    
    
    December 31,2009
    
    
    2008ASSETSCash and cash equivalents, including interest bearing accounts of
$431,810 (2009) and $2,382,068 (2008)
    
    $
    446,457
    
    
    $
    2,385,948Restricted cash, including interest bearing accounts of $228,729 (2009)
    
    
    290,484
    
    
    
    Notes receivable, net of allowance, and net investment in finance and
sales-type leases
    
    
    350,566
    
    
    
    383,086Flight equipment under operating leases
    
    
    57,697,727
    
    
    
    55,372,328Less accumulated depreciation
    
    
    13,461,503
    
    
    
    12,152,18944,236,224
    
    
    
    43,220,139Deposits on flight equipment purchases
    
    
    205,150
    
    
    
    568,549Lease receivables and other assets
    
    
    496,171
    
    
    
    478,944Derivative assets, net
    
    
    279,293
    
    
    
    88,203Variable interest entities assets
    
    
    82,299
    
    
    
    98,746Deferred debt issue costs, less accumulated amortization of
$140,215 (2009) and $131,527 (2008)
    
    
    108,327
    
    
    
    91,899$
    46,494,971
    
    
    $
    47,315,514LIABILITIES AND SHAREHOLDERS EQUITYAccrued interest and other payables
    
    $
    465,419
    
    
    $
    441,656Current income taxes
    
    
    22,781
    
    
    
    32,083Tax benefit sharing payable to AIG
    
    
    85,000
    
    
    
    85,000Loans from AIG Funding
    
    
    1,700,000
    
    
    
    Debt financing, net of deferred debt discount of $10,769 (2009) and
$18,919 (2008)
    
    
    27,804,409
    
    
    
    31,476,668Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Foreign currency adjustment related to foreign currency denominated debt
    
    
    486,120
    
    
    
    338,100Security deposits on aircraft, overhauls and other
    
    
    1,463,028
    
    
    
    1,527,884Rentals received in advance
    
    
    305,472
    
    
    
    299,961Deferred income taxes
    
    
    4,845,458
    
    
    
    4,478,250Variable interest entities liabilities
    
    
    7,031
    
    
    
    10,699Commitments and Contingencies  Note HSHAREHOLDERS EQUITYMarket Auction Preferred Stock, $100,000 per share liquidation
value; Series A and B, each having 500 shares issued
and outstanding
    
    
    100,000
    
    
    
    100,000Common stock  no par value; 100,000,000 authorized shares,
45,267,723 issued and outstanding
    
    
    1,053,582
    
    
    
    1,053,582Paid-in capital
    
    
    602,530
    
    
    
    600,237Accumulated other comprehensive income (loss)
    
    
    (167,751
    )
    
    
    (168,065
    )Retained earnings
    
    
    6,721,892
    
    
    
    6,039,459Total shareholders equity
    
    
    8,310,253
    
    
    
    7,625,213$
    46,494,971
    
    
    $
    47,315,514
  -4-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in thousands)
(Unaudited)
 September 30,
    
    
    September 30,2009
    
    
    2008REVENUESRental of flight equipment
    
    $
    1,354,797
    
    
    $
    1,267,459Flight equipment marketing
    
    
    (18,938
    )
    
    
    5,841Interest and other
    
    
    11,320
    
    
    
    25,6531,347,179
    
    
    
    1,298,953EXPENSESInterest
    
    
    332,750
    
    
    
    394,353Effect from derivatives, net of change in hedged items due to changes in
foreign exchange rates
    
    
    (8,880
    )
    
    
    (82
    )Effect from credit and market valuation adjustments on derivatives
    
    
    
    
    
    
    (51,238
    )Depreciation of flight equipment
    
    
    499,721
    
    
    
    475,110Provision for overhauls
    
    
    90,864
    
    
    
    75,343Flight equipment rent
    
    
    4,500
    
    
    
    4,500Selling, general and administrative
    
    
    47,337
    
    
    
    51,701966,292
    
    
    
    949,687INCOME BEFORE INCOME TAXES
    
    
    380,887
    
    
    
    349,266Provision for income taxes
    
    
    135,074
    
    
    
    124,660NET INCOME
    
    $
    245,813
    
    
    $
    224,606
 
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in thousands)
(Unaudited)
 September 30,
    
    
    September 30,2009
    
    
    2008REVENUESRental of flight equipment
    
    $
    3,915,054
    
    
    $
    3,712,849Flight equipment marketing
    
    
    (8,291
    )
    
    
    44,988Interest and other
    
    
    48,650
    
    
    
    69,4443,955,413
    
    
    
    3,827,281EXPENSESInterest
    
    
    1,041,357
    
    
    
    1,140,886Effect from derivatives, net of change
in hedged items due to changes in
foreign
exchange rates
    
    
    (13,207
    )
    
    
    7,449Depreciation of flight equipment
    
    
    1,460,621
    
    
    
    1,389,348Provision for overhauls
    
    
    234,250
    
    
    
    226,068Flight equipment rent
    
    
    13,500
    
    
    
    13,500Selling, general and administrative
    
    
    158,706
    
    
    
    136,5692,895,227
    
    
    
    2,913,820INCOME BEFORE INCOME TAXES
    
    
    1,060,186
    
    
    
    913,461Provision for income taxes
    
    
    374,491
    
    
    
    325,290NET INCOME
    
    $
    685,695
    
    
    $
    588,171
  -5-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in thousands)
(Unaudited)
 September 30,
    
    
    September 30,2009
    
    
    2008NET INCOME
    
    $
    245,813
    
    
    $
    224,606OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in fair value of cash flow
hedges, net of taxes of $(5,469) (2009) and
$40,398 (2008)
    
    
    10,156
    
    
    
    (75,025
    )Change in unrealized appreciation on
securities available for sale, net of taxes
of $(137) (2009) and $91 (2008)
    
    
    255
    
    
    
    (169
    )10,411
    
    
    
    (75,194
    )COMPREHENSIVE INCOME
    
    $
    256,224
    
    
    $
    149,412
 
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in thousands)
(Unaudited)
 September 30,
    
    
    September 30,2009
    
    
    2008NET INCOME
    
    $
    685,695
    
    
    $
    588,171OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in fair value of cash flow
hedges, net of taxes of $(21) (2009) and
$43,558 (2008)
    
    
    38
    
    
    
    (80,894
    )Change in unrealized appreciation on
securities available for sale, net of taxes
of $(149) (2009) and $248 (2008)
    
    
    276
    
    
    
    (460
    )314
    
    
    
    (81,354
    )COMPREHENSIVE INCOME
    
    $
    686,009
    
    
    $
    506,817
  -6-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in thousands)
(Unaudited)
 September 30,
    
    
    September 30,2009
    
    
    2008OPERATING ACTIVITIESNet income
    
    $
    685,695
    
    
    $
    588,171Adjustments to reconcile net income to net cash provided by
operating
activities:Depreciation of flight equipment
    
    
    1,460,621
    
    
    
    1,389,348Deferred income taxes
    
    
    367,038
    
    
    
    330,473Change in fair value of derivative instruments
    
    
    (191,031
    )
    
    
    215,231Foreign currency adjustment of non-US$ denominated debt
    
    
    148,020
    
    
    
    (253,140
    )Amortization of deferred debt issue costs
    
    
    31,617
    
    
    
    22,580Amortization of prepaid lease costs
    
    
    38,576
    
    
    
    44,572Other, including foreign exchange adjustments on foreign
currency denominated cash
    
    
    7,019
    
    
    
    (12,892
    )Changes in operating assets and liabilities:Increase in lease receivables and other assets
    
    
    (47,327
    )
    
    
    (11,010
    )Increase in accrued interest and other payables
    
    
    24,063
    
    
    
    73,715Change in current income taxes
    
    
    (9,302
    )
    
    
    (8,458
    )Increase in rentals received in advance
    
    
    5,511
    
    
    
    1,587Change in unamortized debt discount
    
    
    8,150
    
    
    
    12,493Net cash provided by operating activities
    
    
    2,528,650
    
    
    
    2,392,670INVESTING ACTIVITIESAcquisition of flight equipment for operating leases
    
    
    (2,313,557
    )
    
    
    (2,951,729
    )Payments for deposits and progress payments
    
    
    (52,234
    )
    
    
    (248,397
    )Proceeds from disposal of flight equipment  net of loss or gain
    
    
    164,164
    
    
    
    390,868Advance on notes receivable
    
    
    
    
    
    
    (43,854
    )Restricted cash
    
    
    (290,484
    )
    
    
    Collections on notes receivable and finance and sales-type
leases  net of income amortized
    
    
    95,733
    
    
    
    23,380Other
    
    
    (10
    )
    
    
    Net cash used in investing activities
    
    
    (2,396,388
    )
    
    
    (2,829,732
    )FINANCING ACTIVITIESNet change in commercial paper
    
    
    (1,752,000
    )
    
    
    (2,932,870
    )Loans from AIG Funding
    
    
    1,700,000
    
    
    
    1,671,268Proceeds from debt financing
    
    
    1,394,868
    
    
    
    9,311,223Payments in reduction of debt financing
    
    
    (3,323,277
    )
    
    
    (2,790,991
    )Debt issue costs
    
    
    (48,045
    )
    
    
    (20,085
    )Payment of common and preferred dividends
    
    
    (3,262
    )
    
    
    (41,869
    )(Decrease) increase in customer and other deposits
    
    
    (41,475
    )
    
    
    166,192Net cash (used in) provided by financing activities
    
    
    (2,073,191
    )
    
    
    5,362,868Net (decrease) increase in cash
    
    
    (1,940,929
    )
    
    
    4,925,806Effect of exchange rate changes on cash
    
    
    1,438
    
    
    
    (2,389
    )Cash at beginning of period
    
    
    2,385,948
    
    
    
    182,772Cash at end of period
    
    $
    446,457
    
    
    $
    5,106,189
 (Table continued on following page)
 -7-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Dollars in thousands)
(Unaudited)
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 September 30,
    
    September 30,2009
    
    2008Cash paid during the period for:Interest, excluding interest
capitalized of $8,798 (2009)
and $20,681 (2008)
    
    $
    1,067,499
    
    
    $
    1,023,533Income taxes, net
    
    
    16,754
    
    
    
    3,275
 Non-Cash Investing and Financing Activities
     Notes to Condensed Consolidated Financial Statements.
        -8-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
(Unaudited)
 Basis of Preparation
  Variable Interest Entities
 Consideration of ILFCs Ability to Continue as a Going Concern
    Effect of 2008 Out-of-Period Adjustment Related to Derivative Credit Value Adjustment and
Market Value Adjustment
  -9-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
  Recent Accounting Pronouncements
  Business Combinations
  Non-controlling Interests in Consolidated Financial Statements
  Disclosures about Derivative Instruments and Hedging Activities
 (i) (ii) (iii) Derivative Activities
 Interim Disclosures about Fair Value of Financial Instruments
  -10-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Fair Value
Disclosures of Financial Instruments
 Recognition and Presentation of Other-Than-Temporary Impairments
  Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly
  Subsequent Events
  FASB Accounting Standards Codification
  Future Application of Accounting Standards:
 Employers Disclosures about Postretirement Benefit Plan Assets
  -11-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Accounting for Transfers of Financial Assets
  Consolidation of Variable Interest Entities
 (i) (ii)
 Measuring Liabilities at Fair Value
  Restricted Cash
  Fair Value Measurements
  -12-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
  CounterpartyLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Netting (a)
    
    
    Total(Dollars in thousands)September 30, 2009:Derivative assets
    
    $
    
    
    
    $
    353,084
    (b)
    
    $
    
    
    
    $
    (73,791
    )
    
    $
    279,293Derivative liabilities
    
    
    
    
    
    
    (73,791
    )
    
    
    
    
    
    
    73,791
    
    
    
    Total derivative assets, net
    
    $
    
    
    
    $
    279,293
    
    
    $
    
    
    
    $
    
    
    
    $
    279,293December 31, 2008:Derivative assets
    
    $
    
    
    
    $
    192,568
    (b)
    
    $
    
    
    
    $
    (104,365
    )
    
    $
    88,203Derivative liabilities
    
    
    
    
    
    
    (104,365
    )
    
    
    
    
    
    
    104,365
    
    
    
    Total derivative assets, net
    
    $
    
    
    
    $
    88,203
    
    
    $
    
    
    
    $
    
    
    
    $
    88,203
 
 (a)
    
    As permitted under GAAP, we have elected to offset derivative assets and derivative
liabilities under our master netting agreement.(b)
    
    The balance includes CVA and MVA of $54.3 million and $19.8 million at September
30, 2009 and December 31, 2008, respectively. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
 Notes
to Consolidated Financial Statements
 Derivative Activities
     -13-




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##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Fair Value Measurements
  Asset Derivatives
    
    
    Liability DerivativesNotional Value
    
    
    Fair Value
    
    
    Notional Value
    
    
    Fair ValueUSD
    
    
    
    
    
    
    USD(In thousands)September 30, 2009:Derivatives designated as hedging
instruments:Interest rate swap agreements (a)
    
    $
    
    
    
    $
    
    
    
    $
    1,100,370
    
    
    $
    (71,674
    )Foreign exchange swap agreements
    
    
    1,600,000
    
    
    
    293,656
    
    
    
    34,445
    
    
    
    (2,117
    )Foreign exchange swap agreements
    
    £
    300,000
    
    
    
    55,963
    
    
    
    
    
    
    
    Total derivatives designated as
hedging instruments
    
    
    
    
    
    $
    349,619
    
    
    
    
    
    
    $
    (73,791
    )Derivatives not designated as
hedging instruments:Interest rate cap agreements
    
    $
    103,365
    
    
    $
    3,465
    
    
    $
    
    
    
    $
    Total derivatives
    
    
    
    
    
    $
    353,084
    
    
    
    
    
    
    $
    (73,791
    )December 31, 2008:Derivatives designated as hedging
instruments:Interest rate swap agreements (a)
    
    $
    
    
    
    $
    
    
    
    $
    1,215,309
    
    
    $
    (103,622
    )Foreign exchange swap agreements
    
    
    1,600,000
    
    
    
    187,589
    
    
    
    72,100
    
    
    
    (743
    )£
    300,000
    
    
    
    4,979
    
    
    
    
    
    
    
    Total derivatives designated as
hedging instruments
    
    
    
    
    
    $
    192,568
    
    
    
    
    
    
    $
    (104,365
    )
 
 (a)
    
    Converts floating interest rate debt into fixed rate debt. -14-




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##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Gain (Loss)Effective portion of change in fair market value of derivatives (a)
    
    $
    96,196
    
    
    $
    (654,134
    )
    
    $
    148,443
    
    
    $
    (376,972
    )Amortization of balances of de-designated hedges and other
adjustments
    
    
    (121
    )
    
    
    (194
    )
    
    
    (364
    )
    
    
    (620
    )Foreign exchange component of cross currency swaps (credited) charged
to income
    
    
    (80,450
    )
    
    
    538,905
    
    
    
    (148,020
    )
    
    
    253,140Income tax effect
    
    
    (5,469
    )
    
    
    40,398
    
    
    
    (21
    )
    
    
    43,558Net changes in cash flow hedges, net of taxes
    
    $
    10,156
    
    
    $
    (75,025
    )
    
    $
    38
    
    
    $
    (80,894
    )
 
 (a)
    
    2009 includes $26,214 and $(34,193) of combined CVA and MVA for the three- and nine-month
periods ended September 30, respectively. 2008 includes $(141,952) of combined CVA and MVA for
the three- and nine-month periods ended September 30. Changes in the combined CVA and MVA were
recorded in income prior to the three-month period ended September 30, 2008. See Note A 
Basis of Preparation.  Amount of Unrealized Gain or (Loss)Recorded in OCI on Derivatives(Effective Portion)Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Derivatives Designated as Cash Flow HedgesInterest rate swap agreements
    
    $
    (12,256
    )
    
    $
    (11,768
    )
    
    $
    7,747
    
    
    $
    (18,014
    )Foreign exchange swap agreements (a)
    
    
    82,290
    
    
    
    (642,081
    )
    
    
    81,747
    
    
    
    (336,760
    )Total
    
    $
    70,034
    
    
    $
    (653,849
    )
    
    $
    89,494
    
    
    $
    (354,774
    )
 
 (a)
    
    2009 includes $26,214 and $(34,193) of combined CVA and MVA for the three- and-nine month
periods ended September 30, 2009, respectively. 2008 includes $(141,952) of combined CVA and
MVA for the three- and nine-month periods ended September 30. Changes in the combined CVA and
MVA were recorded in income prior to the three-month period ended September 30, 2008. See Note
A  Basis of Preparation.  Amount of Gain or (Loss) Reclassified fromAOCI Into Income(Effective Portion)Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Location of Gain or (Loss) Reclassified from AOCI into
Income (Effective Portion)Interest rate swap agreements  interest expense
    
    $
    (10,034
    )
    
    $
    (5,678
    )
    
    $
    (26,015
    )
    
    $
    (10,393
    )Foreign exchange swap agreements  interest expense
    
    
    (15,386
    )
    
    
    8,296
    
    
    
    (33,672
    )
    
    
    40,341Foreign exchange swap agreements  lease revenue
    
    
    (742
    )
    
    
    (2,333
    )
    
    
    738
    
    
    
    (7,750
    )Total
    
    $
    (26,162
    )
    
    $
    285
    
    
    $
    (58,949
    )
    
    $
    22,198
 -15-




---



##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
   Amount of Gain or (Loss) Recognizedin Income on Derivatives(Ineffective Portion) (a)Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Derivatives Designated as Cash Flow Hedges:Interest rate swap agreements
    
    $
    (232
    )
    
    $
    (251
    )
    
    $
    (622
    )
    
    $
    (748
    )Foreign exchange swap agreements
    
    
    9,559
    
    
    
    139
    
    
    
    14,733
    
    
    
    (7,282
    )Total
    
    
    9,327
    
    
    
    (112
    )
    
    
    14,111
    
    
    
    (8,030
    )Derivatives Not Designated as a Hedge:Interest rate cap agreements (b)
    
    
    (568
    )
    
    
    
    
    
    
    (1,268
    )
    
    
    Reconciliation to Condensed Consolidated Statements of Income:Reclassification of amounts de-designated as hedges
recorded in AOCI
    
    
    121
    
    
    
    194
    
    
    
    364
    
    
    
    581Effect from derivatives, net of change in hedged items
due to changes in foreign exchange rates
    
    $
    8,880
    
    
    $
    82
    
    
    $
    13,207
    
    
    $
    (7,449
    )
 
 (a)
    
    All components of each derivatives gain or loss were included in the assessment of
effectiveness.(b)
    
    An additional $0.8 million of amortization of premium paid to the derivative counterparty was
recognized in Interest expense during the nine months ended September 30, 2009. No premium
was amortized during the three months ended September 30, 2009. Fair Value Disclosures of Financial Instruments
  Cash, Including Restricted Cash
 Notes Receivable
 Debt Financing
 Commercial paper:
 Long-term fixed rate debt:
 -16-




---



##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Floating rate non-ECA debt:
 ECA debt:
 Junior subordinated debt:
 Derivatives
 Guarantees
  September 30, 2009
    
    December 31, 2008Carrying
    
    
    
    
    
    CarryingAmount of
    
    Fair Value
    
    Amount of
    
    Fair ValueAsset
    
    of Asset
    
    Asset
    
    of Asset(Liability)
    
    (Liability)
    
    (Liability)
    
    (Liability)(Dollars in thousands)Cash, including restricted cash
    
    $
    736,941
    
    
    $
    736,941
    
    
    $
    2,385,948
    
    
    $
    2,385,948Notes receivable
    
    
    86,767
    
    
    
    81,577
    
    
    
    81,327
    
    
    
    71,012Debt financing (including loans
from AIG Funding, subordinated
debt and foreign currency
adjustment, excluding debt
discount)
    
    
    (31,001,298
    )
    
    
    (27,761,373
    )
    
    
    (32,833,687
    )
    
    
    (28,818,662
    )Derivative assets, net
    
    
    279,293
    
    
    
    279,293
    
    
    
    88,203
    
    
    
    88,203Guarantees
    
    
    (11,340
    )
    
    
    (13,465
    )
    
    
    (12,778
    )
    
    
    (15,209
    )
 Related Party Transactions
  Debt Financings. Subsequent Event
 Fair Value
 -17-




---



##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Measurements Derivative Activities
  Three Months Ended
    
    Nine Months EndedSeptember 30, 
2009
    
    September 30, 
2008
    
    September 30, 
2009
    
    September 30, 
2008(Dollars in thousands)Income StatementExpense (income):Allocation of corporate costs from AIG
    
    $
    1,882
    
    
    $
    3,715
    
    
    $
    7,368
    
    
    $
    10,328Management fees paid to subsidiaries of AIG
    
    
    247
    
    
    
    215
    
    
    
    683
    
    
    
    638Management fees received
    
    
    (2,453
    )
    
    
    (2,430
    )
    
    
    (7,113
    )
    
    
    (7,332
    )Interest expense on loans from AIG Funding
    
    
    28,342
    
    
    
    2,896
    
    
    
    59,936
    
    
    
    2,896September 30,
    
    December 31,2009
    
    2008(Dollars in thousands)Balance SheetAsset (liability):Derivative assets, net
    
    
    
    
    
    
    
    
    
    $
    275,828
    
    
    $
    88,203Taxes benefit sharing payable to AIG
    
    
    
    
    
    
    
    
    
    
    (85,000
    )
    
    
    (85,000
    )Accrued corporate costs payable to AIG
    
    
    
    
    
    
    
    
    
    
    (3,863
    )
    
    
    (6,092
    )Loans payable to AIG Funding
    
    
    
    
    
    
    
    
    
    
    (1,700,000
    )
    
    
    Income taxes payable to AIG
    
    
    
    
    
    
    
    
    
    
    (22,781
    )
    
    
    (32,083
    )Net payable for management fees and other
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (3
    )
 Commitments and Contingencies
 Guarantees
 
    
    Asset Value Guarantees:We have guaranteed a portion of the residual value of 22
aircraft to financial institutions and other unrelated third parties for a fee. These
guarantees expire at various dates through 2023 and generally obligate us to pay the
shortfall between the fair market value and the guaranteed value of the aircraft and
provide us with an option to purchase the aircraft for the guaranteed value. At
September 30, 2009, the maximum commitment that we would be obligated to
pay under such guarantees, without any offset for the projected value of the aircraft,
was approximately $530 million.
    
    Aircraft Loan Guarantees:We have guaranteed two loans collateralized by aircraft
to financial institutions for a fee. The guarantees expire in 2014, when the loans
mature and obligate us to pay an amount up to the guaranteed value upon the default
of the borrower, which may be offset by a portion of the underlying value of the
aircraft collateral. At September 30, 2009, the guaranteed value, without any offset
for the projected value of the aircraft, was approximately $28 million.
  Subsequent
Event
 -18-




---



##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Legal Contingencies
 
    
    Flash Airlines:We are named in lawsuits in connection with the January 3, 2004
crash of our Boeing 737-300 aircraft on lease to Flash Airlines, an Egyptian carrier.
These lawsuits were filed by the families of victims on the flight and seek
unspecified damages for wrongful death, costs and fees. The initial lawsuit was
filed in May 2004 in California, and subsequent lawsuits were filed in California and
Arkansas. All cases filed in the U.S. were dismissed on the grounds of forum non
conveniens and transferred to the French Tribunal de Grande Instance civil court in
either Bobigny or Paris. The Bobigny plaintiffs challenged French jurisdiction,
whereupon the French civil court decided to retain jurisdiction, on appeal the Paris
Court of Appeal reversed, and on appeal the French Cour de Cassation elected to defer
its decision pending a trial on the merits. We believe we are adequately covered in
these cases by the liability insurance policies carried by Flash Airlines and we have
substantial defenses to these actions. We do not believe that the outcome of these
lawsuits will have a material effect on our consolidated financial condition, results
of operations or cash flows.
    
    Krasnoyarsk Airlines:We leased a 757-200ER aircraft to a Russian airline,
KrasAir, which is now the subject of a Russian bankruptcy-like proceeding. The
aircraft lease was assigned to another Russian carrier, Air Company Atlant-Soyuz
Incorporated, which defaulted under the lease. In the first quarter of 2009, we were
informed that the Russian customs authority had seized the aircraft during a time
frame we believe to be late 2008. The aircraft was seized on the basis of certain
alleged violations by KrasAir with respect to the import of the aircraft, including
the import type and customs fees owed. The Russian customs authority filed a case in
April 2009 in the general jurisdiction court in Krasnoyarsk, Russia seeking an order
permitting it to confiscate the aircraft due to these alleged violations. Shortly
after the lawsuit was filed, we intervened in the lawsuit in order to protect our
ownership rights and informed the insurance underwriters under KrasAirs,
Atlant-Soyuzs, and our insurance policies of this matter. In the second quarter of
2009, the court decided that the seizure of the aircraft by the Russian customs
authority was improper and denied the Russian customs authoritys request to
confiscate the aircraft. Also in the second quarter of 2009, another Russian airline
signed a lease for the aircraft. The aircraft was returned to us by the Russian
customs authority and is currently undergoing maintenance in Moscow, Russia and we
are currently negotiating a resolution of all customs-related issues with the Russian
customs authority. We cannot predict what the outcome of this matter will be, but we
do not believe that it will be material to our consolidated financial position,
results of operations or cash flows.
    
    Estate of Volare Airlines: In November 2004, Volare, an Italian airline, filed
for bankruptcy in Italy. Prior to Volares bankruptcy, we leased to Volare through
wholly-owned subsidiaries two A320-200 aircraft and four A330-200 aircraft. In
addition, we managed the lease to Volare by an entity that is a related party to us
of one A330-200 aircraft. In October 2009, the Volare bankruptcy receiver filed a
claim in an Italian court in the amount of 29,592,209.92 against us and our related
party for the return to the Volare estate of all payments made by it to us and our
related party in the year prior to Volares bankruptcy filing. We have engaged
Italian counsel to represent us and intend to defend this matter vigorously. We
cannot predict the outcome of this matter, but we do not believe that it will be
material to our consolidated financial position, results of operations or cash flows.
  -19-




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##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 I. Debt Financings
 September 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Public bonds and medium-term notes
    
    $
    17,440,799
    
    
    $
    19,748,541Bank debt
    
    
    7,092,000
    
    
    
    7,558,750ECA financings
    
    
    3,125,150
    
    
    
    2,436,296Other secured financings (a)
    
    
    157,229
    
    
    
    Loans from AIG Funding
    
    
    1,700,000
    
    
    
    Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Total public, bank, intercompany, and subordinated debt
    
    
    30,515,178
    
    
    
    30,743,587Commercial paper and other short-term debt
    
    
    
    
    
    
    1,752,000Less: Deferred debt discount
    
    
    (10,769
    )
    
    
    (18,919
    )Total debt financing and subordinated debt
    
    $
    30,504,409
    
    
    $
    32,476,668
 
 (a)
    
    $133.5 million of these secured financings is non-recourse to ILFC. These secured
financings were incurred by either a consolidated VIE or by a wholly owned subsidiary of
ILFC, each without recourse to ILFC.  Extension of 2004 Export Credit Agency Facility Agreement
 Debt financing, net
of deferred debt discount
 (i) (ii) (iii)
 Other Secured Financing Arrangements
 Variable
Interest Entities
 -20-




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##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
   Loans from AIG Funding
  Subsequent Event
 Commercial Paper
  Other Short Term Financing
  Variable Interest Entities
   -21-




---



##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
 Entities where we are the Primary Beneficiary
   Subsequent Event
 Loans from AIG Funding
  (i) (ii) (iii)
 (i) (ii) (iii)
 -22-




---



##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2009
(Unaudited)
   -23-




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Cautionary Statement Regarding Forward-looking Information
 Part II  Item 1A. Risk Factors, Part I  Item 1A. Risk Factors
 Overview
  Notes to Condensed
Consolidated Financial Statements Liquidity
 Our Fleet
  -24-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Debt Financing
 Liquidity Debt
Financings  Loans from AIG Funding
  Industry Condition and Sources of Revenue
    -25-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
      Consideration of ILFCs Ability to Continue as a Going Concern
   -26-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Liquidity
  Part II  Item 1A. Risk Factors 
Liquidity Risk 
 Debt
Financings  Loans from AIG Funding
  Our Relationship with AIG
 Debt Financings 
Loans from AIG Funding
 -27-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 AIG Loan from the FRBNY
 Debt
FinancingsLoans from AIG Funding .
 AIG Going Concern Consideration
  Our Potential Sale by AIG
 Debt
Financings  Loans from AIG Funding.
 Critical Accounting Policies and Estimates
  -28-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  
    
    Lease Revenue
    
    Flight Equipment Marketing
    
    Provision for Overhauls
    
    Flight Equipment
    
    Derivative Financial Instruments
    
    Fair Value Measurements
    
    Income Taxes
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Part II  Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations
 Debt Financings
   -29-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  September 30,
    
    
    December 31,2009
    
    
    2008(Dollars in thousands)Public bonds and medium-term notes
    
    $
    17,440,799
    
    
    $
    19,748,541Bank debt
    
    
    7,092,000
    
    
    
    7,558,750ECA financings
    
    
    3,125,150
    
    
    
    2,436,296Other secured financings (a)
    
    
    157,229
    
    
    
    Loans from AIG Funding
    
    
    1,700,000
    
    
    
    Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Total public, bank, intercompany, and subordinated debt
    
    
    30,515,178
    
    
    
    30,743,587Commercial paper
    
    
    
    
    
    
    1,752,000Less: Deferred debt discount
    
    
    (10,769
    )
    
    
    (18,919
    )Total debt financing and subordinated debt
    
    $
    30,504,409
    
    
    $
    32,476,668Selected interest rates and ratios which include the economic effect of
derivative instruments:Composite interest rate
    
    
    4.11
    %
    
    
    4.51
    %Percentage of total debt at fixed rates
    
    
    60.26
    %
    
    
    63.89
    %Composite interest rate on fixed rate debt
    
    
    5.47
    %
    
    
    5.41
    %Bank prime rate
    
    
    3.25
    %
    
    
    3.25
    %
 
 (a)
    
    $133.5 million of these secured financings is non-recourse to ILFC. These secured
financings were incurred by either a consolidated VIE or by a wholly owned subsidiary of
ILFC, each without recourse to ILFC.  Public Bonds and Medium-Term Notes
 Liquidity
 MaximumOffering
    
    Sold(Dollars in millions)Registration statement dated August 7, 2009 (a)
    
    Unlimited (b)
    
    $
    Euro Medium-Term Note Programme dated September 4, 2009 (c)(d)
    
    $
    7,000
    
    
    
    2,334
 
 (a)
    
    We may establish new medium-term note programs under this new shelf registration
statement when the public debt markets become available to us again. If the public debt
markets become available before a new program is established, we do have the ability to
issue debt under the shelf registration statement in individual transactions.(b)
    
    As a result of our WKSI status, we have an unlimited amount of debt securities
registered for sale.(c)
    
    We have hedged the foreign currency risk of the notes through derivatives.(d)
    
    This is a perpetual program. As a bond matures, the principal amount becomes
available for new issuances under the program. -30-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Bank Credit Facilities
 Revolving Credit Facilities:
 Term Loans:
 ECA Financings
 Export Credit Facilities:
   (i) (ii) (iii) (iv)
 -31-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Liquidity,
  Loans from AIG Funding
   (i) (ii) (iii)
 (i) (ii) (iii)
  -32-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Other Secured Financing Arrangements
   Subordinated Debt
 (i) (ii) (iii)
 Commercial Paper and Other Short-Term Debt
 Commercial Paper: Liquidity
 Other short-term financing:
 Derivatives
   -33-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   Credit Ratings
  Rating Agency
    
    Short-term Debt
    
    Long-term Debt
    
    Credit Watch/Review
    
    Date of Last Ratings ActionFitch
    
    
    F2
    
    
    
    BBB
    
    
    Evolving
    
    May 15, 2009Moodys
    
    
    P-3
    
    
    
    Baa3
    
    
    Negative
    
    July 31, 2009S&P
    
    
    A-2
    
    
    
    BBB+
    
    
    Negative
    
    April 2, 2009
  (i) (ii) (iii)
  -34-




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Existing Commitments
 Commitments Due by Fiscal YearTotal
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter(Dollars in thousands)Public bonds and medium-term
notes
    
    $
    17,440,799
    
    
    $
    893,465
    
    
    $
    4,001,394
    
    
    $
    4,379,802
    
    
    $
    3,571,716
    
    
    $
    3,541,816
    
    
    $
    1,052,606Bank Credit Facilities
    
    
    6,500,000
    
    
    
    2,000,000
    (i)
    
    
    2,000,000
    
    
    
    2,500,000
    
    
    
    
    
    
    
    
    
    
    
    Bank Term Loans
    
    
    592,000
    
    
    
    4,250
    
    
    
    102,750
    
    
    
    335,000
    
    
    
    150,000
    
    
    
    
    
    
    
    ECA Financings
    
    
    3,125,150
    
    
    
    120,387
    
    
    
    513,202
    
    
    
    425,185
    
    
    
    396,138
    
    
    
    396,138
    
    
    
    1,274,100Other Secured Financings
    
    
    157,229
    
    
    
    3,419
    
    
    
    12,924
    
    
    
    13,855
    
    
    
    14,827
    
    
    
    15,923
    
    
    
    96,281Loans from AIG Funding (i)
    
    
    1,700,000
    
    
    
    1,700,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subordinated Debt
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Interest Payments on Debt
Outstanding (a)(b)(c)
    
    
    6,388,863
    
    
    
    388,333
    
    
    
    1,057,622
    
    
    
    784,134
    
    
    
    492,174
    
    
    
    310,638
    
    
    
    3,355,962Operating Leases (d)(e)
    
    
    74,103
    
    
    
    2,803
    
    
    
    11,515
    
    
    
    11,958
    
    
    
    12,439
    
    
    
    12,938
    
    
    
    22,450Pension Obligations (f)
    
    
    8,999
    
    
    
    1,346
    
    
    
    1,405
    
    
    
    1,463
    
    
    
    1,526
    
    
    
    1,595
    
    
    
    1,664Tax Benefit Sharing
Agreement Due to AIG
    
    
    85,000
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase Commitments
    
    
    13,963,100
    
    
    
    271,200
    
    
    
    242,700
    
    
    
    247,600
    
    
    
    639,400
    
    
    
    2,277,900
    
    
    
    10,284,300Total
    
    $
    51,035,243
    
    
    $
    5,470,203
    
    
    $
    7,943,512
    
    
    $
    8,698,997
    
    
    $
    5,278,220
    
    
    $
    6,556,948
    
    
    $
    17,087,363
 Contingent Commitments
 Contingency Expiration by Fiscal YearTotal
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter(Dollars in thousands)AVGs (g).
    
    $
    557,634
    
    
    $
    
    
    
    $
    
    
    
    $
    27,841
    
    
    $
    78,950
    
    
    $
    96,003
    
    
    $
    354,840Total (h)
    
    $
    557,634
    
    
    $
    
    
    
    $
    
    
    
    $
    27,841
    
    
    $
    78,950
    
    
    $
    96,003
    
    
    $
    354,840
 
 (a)
    
    Includes interest on loans from AIG Funding.(b)
    
    Future interest payments on floating rate debt are estimated using floating interest
rates in effect at September 30, 2009.(c)
    
    Includes the effect of interest rate and foreign currency derivative instruments.(d)
    
Excludes fully defeased aircraft sale-lease back transactions.(e)
    
    Minimum rentals have not been reduced by minimum sublease rentals of $8,258 receivable in the
future under non-cancellable subleases.(f)
    
    Our pension obligations are part of intercompany expenses, which AIG allocates to us on an
annual basis. The amount is an estimate of such allocation. The column 2009 consists of
total estimated allocations for 2009 and the column Thereafter consists of the 2014
estimated allocation. The amount allocated has not been material to date.(g)
    
    From time to time, we participate with airlines, banks and other financial institutions in
the financing of aircraft by providing asset guarantees, put options, or loan guarantees
collateralized by aircraft. As a result, should we be called upon to fulfill our obligations,
we would have recourse to the value of the underlying aircraft.(h)
    
    Excluded from total contingent commitments are $148.6 million of uncertain tax liabilities.
The future cash flows to these liabilities are uncertain and we are unable to make reasonable
estimates of the outflows.(i)
    
    The $2.0 billion bank credit facility was repaid in October 2009 on its maturity date with
proceeds from a $2.0 billion loan from AIG Funding. This loan is in addition to the $1.7
billion already owed to AIG Funding that is shown in the table above. The outstanding
loans totaling $1.7 billion were also amended and restated in October 2009. The loans from
AIG Funding aggregating $3.7 billion now all mature in September 2013. -35-




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Off-Balance-Sheet Arrangements
  Results of Operations
 Three Months Ended September 30, 2009 Versus 2008
 (i) (ii) (i) (ii) (iii)
   (i) (ii) (iii) (iv) (v)
  -36-




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  2009
    
    2008
    
    (Decrease)Beginning of Quarter
    
    
    4.25
    %
    
    
    4.74
    %
    
    
    (0.49
    )%End of Quarter
    
    
    4.11
    %
    
    
    5.01
    %
    
    
    (0.90
    )%Average
    
    
    4.18
    %
    
    
    4.88
    %
    
    
    (0.70
    )%
 Notes to Condensed Consolidated Financial
Statements.
  (i) (ii)
  (i) (ii)
   Nine Months Ended September 30, 2009 Versus 2008
  -37-




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 (i) (ii) (iii) (i) (ii) (iii)
   (i) (ii) (iii) (iv) (v) (i) (ii)
   2009
    
    2008
    
    (Decrease)Beginning of Nine Months
    
    
    4.51
    %
    
    
    5.16
    %
    
    
    (0.65
    )%End of Nine Months
    
    
    4.11
    %
    
    
    5.01
    %
    
    
    (0.90
    )%Average
    
    
    4.31
    %
    
    
    5.08
    %
    
    
    (0.77
    )%
 -38-




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   (i) (ii)
  (i) (ii) (iii) (i) (ii) (iii) (iv)
   -39-




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##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Value at Risk
     ILFC Market RiskNine Months Ended
    
    Year EndedSeptember 30, 2009
    
    December 31, 2008(Dollars in millions)Average
    
    High
    
    Low
    
    Average
    
    High
    
    LowCombined
    
    $
    38.2
    
    
    $
    41.6
    
    
    $
    35.9
    
    
    $
    53.2
    
    
    $
    96.2
    
    
    $
    36.1Interest Rate
    
    
    38.2
    
    
    
    41.7
    
    
    
    36.2
    
    
    
    53.7
    
    
    
    97.6
    
    
    
    36.5Currency
    
    
    0.4
    
    
    
    0.7
    
    
    
    0.1
    
    
    
    1.0
    
    
    
    1.6
    
    
    
    0.7
 -40-




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##### 



ITEM 4T. CONTROLS AND PROCEDURES
 (A) Evaluation of Disclosure Controls and Procedures
   Variable Interest Entities:
 (B) Changes in Internal Control Over Financial Reporting
  -41-




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##### 



PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Flash Airlines:
 Krasnoyarsk Airlines:
 Estate of Volare Airlines: 
  
 ITEM 1A. RISK FACTORS
 Part I  Item 1A. Risk Factors Part II  Item 1A. Risk Factors
 -42-




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##### 



PART II. OTHER INFORMATION (CONTINUED)
  Item 1A. Risk Factors
 
    
    Other Risks  Key Personnel
  
    
    Liquidity Risk
  Debt FinancingsLoans from AIG
Funding .
  -43-




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##### 



PART II. OTHER INFORMATION (CONTINUED)
  
    
    Credit Ratings Downgrade Risk
  (i) (ii) (iii) (iv)
  
    
    Restrictive Covenants on Our Operations
  
    
    incur debt;
    
    encumber our assets;
    
    dispose of certain assets;
    
    enter into sale-leaseback transactions;
    
    make equity or debt investments in other parties;
    
    make capital expenditures; and
    
    pay dividends and distributions.
  -44-




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##### 



PART II. OTHER INFORMATION (CONTINUED)
 Part I  Item 1A. Risk Factors Part II  Item 1A.
Risk Factors
 
 ITEM 5. OTHER INFORMATION
 a)
    
    During the three months ended September 30, 2009, changes were made to our board of
directors. As of the date of this quarterly report, our directors are as follows:
 Name
    
    TitleSteven F. Udvar-Hazy
    
    Chairman of the Board and Chief Executive OfficerJohn L. Plueger
    
    President, Chief Operating Officer and DirectorAlan H. Lund
    
    Vice Chairman, Chief Financial Officer and
DirectorLeslie L. Gonda
    
    Chairman of the Executive Committee and DirectorWilliam N. Dooley
    
    DirectorRobert A. Gender
    
    DirectorLouis L. Gonda
    
    DirectorDavid L. Herzog
    
    DirectorAlain Karaoglan
    
    DirectorAlan M. Pryor
    
    DirectorDouglas M. Steenland
    
    Director
 
 ITEM 6. EXHIBITS
 a)
    
    Exhibits
 3.1
    
    Restated Articles of Incorporation of the Company (filed as an exhibit to
Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by
reference).3.2
    
    Amended and Restated By-laws of the Company, as adopted on September 22,
2009.4.1
    
    The Company agrees to furnish to the Commission upon request a copy of each
instrument with respect to issues of long-term debt of the Company and its
subsidiaries, the authorized principal amount of which does not exceed 10% of the
consolidated assets of the Company and its subsidiaries.10.1
    
    $2,000,000,000 Credit Agreement dated as of October 13, 2009, among
International Lease Finance Corporation, certain subsidiaries of International Lease
Finance Corporation named therein, AIG Funding, Inc., as lender, and Wells Fargo Bank
Northwest, National Association, as security trustee (portions of this exhibit have
been omitted pursuant to a request for confidential treatment) (filed as an exhibit
to the Form 8-K filed on October 19, 2009 and incorporated herein by reference).10.2
    
    $1,700,000,000 Amended and Restated Credit Agreement dated as of October
13, 2009, among International Lease Finance Corporation, certain subsidiaries of
International Lease Finance Corporation named therein, AIG Funding, Inc., as lender,
and Wells Fargo Bank Northwest, National Association, as security trustee (portions
of this exhibit have been omitted pursuant to a request for confidential treatment)
(filed as an exhibit to the Form 8-K filed on October 19, 2009 and incorporated
herein by reference).10.3
    
    First Lien Borrower Party Guarantee Agreement dated as of October 13, 2009,
among International Lease Finance Corporation and certain subsidiaries of
International Lease Finance
Corporation named therein for the benefit of the Federal Reserve Bank of New York
(filed as an exhibit to the Form 8-K filed on October 19, 2009 and incorporated
herein by reference).10.4
    
    Third Lien Borrower Party Guarantee Agreement dated as of October 13, 2009,
among International Lease Finance Corporation and certain subsidiaries of
International Lease Finance Corporation named therein for the benefit of the Federal
Reserve Bank of New York (filed as an exhibit to the Form 8-K filed on October 19,
2009 and incorporated herein by reference).12.
    
    Computation of Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends.
 -45-




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##### 



PART II. OTHER INFORMATION (CONTINUED)
 31.1
    
    Certification of Chairman of the Board and Chief Executive Officer.31.2
    
    Certification of Vice Chairman and Chief Financial Officer.32.1
    
    Certification under 18 U.S.C., Section 1350.
 -46-




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##### 



SIGNATURES
  INTERNATIONAL LEASE FINANCE CORPORATIONNovember 6, 2009
    /S/ Steven F. Udvar-HazySTEVEN F. UDVAR-HAZYChairman of the Board and
Chief Executive Officer
(Principal Executive Officer)November 6, 2009
    /S/ Alan H. LundALAN H. LUNDVice Chairman and
Chief Financial Officer
(Principal Financial Officer)November 6, 2009
    /S/ Kurt H. SchwarzKURT H. SCHWARZSenior Vice President,
Chief Accounting Officer and
Controller
(Principal Accounting Officer) -47-




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##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  Exhibit No.3.1
    
    Restated Articles of Incorporation of the Company (filed as an exhibit to
Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by
reference).3.2
    
    Amended and Restated By-laws of the Company, as adopted on September 22,
2009.4.1
    
    The Company agrees to furnish to the Commission upon request a copy of each
instrument with respect to issues of long-term debt of the Company and its
subsidiaries, the authorized principal amount of which does not exceed 10% of the
consolidated assets of the Company and its subsidiaries.10.1
    
    $2,000,000,000 Credit Agreement dated as of October 13, 2009, among
International Lease Finance Corporation, certain subsidiaries of International Lease
Finance Corporation named therein, AIG Funding, Inc., as lender, and Wells Fargo Bank
Northwest, National Association, as security trustee (portions of this exhibit have
been omitted pursuant to a request for confidential treatment) (filed as an exhibit
to the Form 8-K filed on October 19, 2009 and incorporated herein by reference).10.2
    
    $1,700,000,000 Amended and Restated Credit Agreement dated as of October
13, 2009, among International Lease Finance Corporation, certain subsidiaries of
International Lease Finance Corporation named therein, AIG Funding, Inc., as lender,
and Wells Fargo Bank Northwest, National Association, as security trustee (portions
of this exhibit have been omitted pursuant to a request for confidential treatment)
(filed as an exhibit to the Form 8-K filed on October 19, 2009 and incorporated
herein by reference).10.3
    
    First Lien Borrower Party Guarantee Agreement dated as of October 13, 2009,
among International Lease Finance Corporation and certain subsidiaries of
International Lease Finance Corporation named therein for the benefit of the Federal
Reserve Bank of New York (filed as an exhibit to the Form 8-K filed on October 19,
2009 and incorporated herein by reference).10.4
    
    Third Lien Borrower Party Guarantee Agreement dated as of October 13, 2009,
among International Lease Finance Corporation and certain subsidiaries of
International Lease Finance Corporation named therein for the benefit of the Federal
Reserve Bank of New York (filed as an exhibit to the Form 8-K filed on October 19,
2009 and incorporated herein by reference).12.
    
    Computation of Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends.31.1
    
    Certification of Chairman of the Board and Chief Executive Officer.31.2
    
    Certification of Vice Chairman and Chief Financial Officer.32.1
    
    Certification under 18 U.S.C., Section 1350.
 -48-