##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 QUARTERLY REPORT
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-31616
 INTERNATIONAL LEASE FINANCE CORPORATION
  California
(State or other jurisdiction of 
incorporation or organization)
    
    22-3059110
(I.R.S. Employer
Identification No.)10250 Constellation Blvd., Suite 3400
Los Angeles, California
(Address of principal executive offices)
    
    90067
(Zip Code)
 (310) 788-1999
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 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 March 31, 2010 and December 31, 2009
    
    
    4Condensed, Consolidated Statements of Income Three months ended March 31, 2010 and 2009
    
    
    5Condensed, Consolidated Statements of Comprehensive Income Three months ended March 31, 2010 and 2009
    
    
    6Condensed, Consolidated Statements of Cash Flows Three months ended March 31, 2010 and 2009
    
    
    7Notes to Condensed, Consolidated Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    44Item 4. Controls and Procedures
    
    
    45Part II. Other InformationItem 1. Legal Proceedings
    
    
    46Item 1A. Risk Factors
    
    
    46Item 5. Other Information
    
    
    53Item 6. Exhibits
    
    
    54Signatures
    
    
    55EX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-10.6EX-10.7EX-10.8EX-12EX-31.1EX-31.2EX-32.1
  -2-




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##### Table of Contents



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
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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)
 (Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCash and cash equivalents, including interest
bearing accounts of $3,152,464 (2010) and
$324,827 (2009)
    
    $
    3,160,280
    
    
    $
    336,911Restricted cash, including interest bearing
accounts of $899,928 (2010) and $246,115
(2009)
    
    
    899,928
    
    
    
    315,156Notes receivable, net of allowance, and net
investment in finance and sales-type leases
    
    
    406,375
    
    
    
    373,141Flight equipment under operating leases
    
    
    56,940,806
    
    
    
    57,718,323Less accumulated depreciation
    
    
    13,846,033
    
    
    
    13,788,52243,094,773
    
    
    
    43,929,801Deposits on flight equipment purchases
    
    
    164,016
    
    
    
    163,221Lease receivables and other assets
    
    
    452,542
    
    
    
    477,218Derivative assets, net
    
    
    126,526
    
    
    
    190,857Variable interest entities assets
    
    
    
    
    
    
    79,720Deferred debt issue costs, less accumulated
amortization of $145,248 (2010) and $146,933 (2009)
    
    
    152,880
    
    
    
    101,017$
    48,457,320
    
    
    $
    45,967,042LIABILITIES AND SHAREHOLDERS EQUITYAccrued interest and other payables
    
    $
    553,295
    
    
    $
    474,971Current income taxes
    
    
    85,858
    
    
    
    80,924Tax benefit sharing payable to AIG
    
    
    
    
    
    
    85,000Loans from AIG Funding
    
    
    3,938,487
    
    
    
    3,909,567Debt financing, net of deferred debt discount of $75,290 (2010) and
$9,556 (2009)
    
    
    27,470,877
    
    
    
    24,802,172Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Foreign currency adjustment related to foreign currency denominated debt
    
    
    259,900
    
    
    
    391,100Security deposits on aircraft, overhauls and other
    
    
    1,487,136
    
    
    
    1,469,956Rentals received in advance
    
    
    294,789
    
    
    
    315,154Deferred income taxes
    
    
    4,844,678
    
    
    
    4,881,558Variable interest entities liabilities
    
    
    
    
    
    
    6,464Commitments and Contingencies  Note JSHAREHOLDERS 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
    
    
    604,994
    
    
    
    603,542Accumulated other comprehensive income (loss)
    
    
    (88,621
    )
    
    
    (138,206
    )Retained earnings
    
    
    6,852,345
    
    
    
    6,931,258Total shareholders equity
    
    
    8,522,300
    
    
    
    8,550,176$
    48,457,320
    
    
    $
    45,967,042
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED, CONSOLIDATED STATEMENTS OF INCOME
 FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Dollars in thousands)
 (Unaudited)
 March 31,
    
    
    March 31,2010
    
    
    2009REVENUESRental of flight equipment
    
    $
    1,324,752
    
    
    $
    1,261,386Flight equipment marketing
    
    
    (436,150
    )
    
    
    (6,142
    )Interest and other
    
    
    12,986
    
    
    
    15,329901,588
    
    
    
    1,270,573EXPENSESInterest
    
    
    334,866
    
    
    
    355,394Effect from derivatives, net of change in
hedged items due to changes in
foreign exchange
rates
    
    
    40,066
    
    
    
    2,114Depreciation of flight equipment
    
    
    490,241
    
    
    
    472,123Provision for overhauls
    
    
    94,890
    
    
    
    69,301Flight equipment rent
    
    
    4,500
    
    
    
    4,500Selling, general and administrative
    
    
    35,637
    
    
    
    52,2391,000,200
    
    
    
    955,671(LOSS) INCOME BEFORE INCOME TAXES
    
    
    (98,612
    )
    
    
    314,902(Benefit) provision for income taxes
    
    
    (35,686
    )
    
    
    111,945NET (LOSS) INCOME
    
    $
    (62,926
    )
    
    $
    202,957
  -5-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED, CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Dollars in thousands)
 (Unaudited)
 March 31,
    
    
    March 31,2010
    
    
    2009NET (LOSS) INCOME
    
    $
    (62,926
    )
    
    $
    202,957OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in fair value of cash flow
hedges, net of taxes of $(26,687) (2010)
and $(9,776) (2009)
    
    
    49,561
    
    
    
    18,156Change in unrealized appreciation on
securities available for sale, net of taxes
of $(13) (2010) and $20 (2009)
    
    
    24
    
    
    
    (38
    )49,585
    
    
    
    18,118COMPREHENSIVE (LOSS) INCOME
    
    $
    (13,341
    )
    
    $
    221,075
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED, CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
 (Dollars in thousands)
 (Unaudited)
 March 31,
    
    
    March 31,2010
    
    
    2009OPERATING ACTIVITIESNet (Loss) income
    
    $
    (62,926
    )
    
    $
    202,957Adjustments to reconcile net income to net cash provided by operating activities:Depreciation of flight equipment
    
    
    490,241
    
    
    
    472,123Change in deferred income taxes
    
    
    (54,884
    )
    
    
    110,433Change in fair value of derivative instruments
    
    
    140,578
    
    
    
    104,654Foreign currency adjustment of non-US$ denominated debt
    
    
    (131,200
    )
    
    
    (116,890
    )Amortization of deferred debt issue costs
    
    
    8,966
    
    
    
    12,419Amortization of debt discount
    
    
    1,436
    
    
    
    5,481Amortization of prepaid lease costs
    
    
    10,534
    
    
    
    13,493Aircraft impairment charges
    
    
    351,283
    
    
    
    7,507Lease expenses related to sales
    
    
    84,047
    
    
    
    Interest paid-in-kind to AIG Funding
    
    
    28,920
    
    
    
    Other, including foreign exchange adjustments on foreign currency
denominated cash
    
    
    (9,029
    )
    
    
    (4,179
    )Changes in operating assets and liabilities:Increase (decrease) in lease receivables and other assets
    
    
    18,643
    
    
    
    (69,567
    )Increase in accrued interest and other payables
    
    
    6,240
    
    
    
    9,588Change in current income taxes
    
    
    4,934
    
    
    
    670Tax benefit sharing with AIG
    
    
    (85,000
    )
    
    
    Decrease in rentals received in advance
    
    
    (20,365
    )
    
    
    (11,114
    )Net cash provided by operating activities
    
    
    782,418
    
    
    
    737,575INVESTING ACTIVITIESAcquisition of flight equipment for operating leases
    
    
    
    
    
    
    (754,804
    )Payments for deposits and progress payments
    
    
    (8,414
    )
    
    
    (52,863
    )Increase in restricted cash
    
    
    (584,772
    )
    
    
    (265,235
    )Collections on notes receivable and finance and sales-type leases 
net of income amortized
    
    
    8,123
    
    
    
    7,129Other
    
    
    (147
    )
    
    
    (10
    )Net cash used in investing activities
    
    
    (585,210
    )
    
    
    (1,065,783
    )FINANCING ACTIVITIESNet change in commercial paper
    
    
    
    
    
    
    (1,750,000
    )Loans from AIG Funding
    
    
    
    
    
    
    1,700,000Proceeds from debt financing
    
    
    3,407,175
    
    
    
    328,168Payments in reduction of debt financing
    
    
    (739,906
    )
    
    
    (917,207
    )Debt issue costs
    
    
    (60,868
    )
    
    
    (12,930
    )Payment of preferred dividends
    
    
    (87
    )
    
    
    (1,300
    )Increase (decrease) in customer and other deposits
    
    
    20,600
    
    
    
    (43,579
    )Net cash provided by (used in) financing activities
    
    
    2,626,914
    
    
    
    (696,848
    )Net increase (decrease) in cash
    
    
    2,824,122
    
    
    
    (1,025,056
    )Effect of exchange rate changes on cash
    
    
    (753
    )
    
    
    (1,631
    )Cash at beginning of period
    
    
    336,911
    
    
    
    2,385,948Cash at end of period
    
    $
    3,160,280
    
    
    $
    1,359,261
 (Table continued on following page)
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED, CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(Dollars in thousands)
(Unaudited)
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 March 31,
    
    March 31,2010
    
    2009Cash paid during the period for:Interest, excluding interest
capitalized of $1,474 (2010) and
$4,609 (2009)
    
    $
    321,867
    
    
    $
    368,480Income taxes, net
    
    
    270
    
    
    
    841
 Non-Cash Investing and Financing Activities
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2010
 (Unaudited)
 Basis of Preparation
  Recent Accounting Pronouncements. Variable Interest Entities
 AIG Going Concern Consideration
  Recent Accounting Pronouncements
  Accounting for Transfers of Financial Assets
  Consolidation of Variable Interest Entities
 (i) (ii)
 -9-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Variable Interest
Entities.
 Measuring Liabilities at Fair Value
  Future Application of Accounting Standards:
 Subsequent Events
  Flight Equipment Marketing
   -10-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
  Restricted Cash
 Debt Financings.
 Debt Financings.
 Debt Financings Variable Interest Entities.
 Debt Financings
 March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)SecuredECA financings
    
    $
    3,020,897
    
    
    $
    3,004,763Loans from AIG Funding
    
    
    3,938,487
    
    
    
    3,909,567Other secured financings (a)
    
    
    1,448,967
    
    
    
    153,1168,408,351
    
    
    
    7,067,446UnsecuredBonds and Medium-Term Notes
    
    
    18,042,803
    
    
    
    16,566,099Bank debt (b)
    
    
    5,033,500
    
    
    
    5,087,75023,076,303
    
    
    
    21,653,849Total Secured and Unsecured Debt
Financing
    
    
    31,484,654
    
    
    
    28,721,295Less: Deferred debt discount
    
    
    (75,290
    )
    
    
    (9,556
    )31,409,364
    
    
    
    28,711,739Subordinated Debt
    
    
    1,000,000
    
    
    
    1,000,000$
    32,409,364
    
    
    $
    29,711,739
 
 (a)
    
    Includes secured financings non-recourse to ILFC of $125.7 million and $129.6 million
at March 31, 2010 and December 31, 2009, respectively.(b)
    
    In April 2010, we entered into amendments to our revolving credit facility dated
October 13, 2006. As a result of these amendments, approximately $2.155 billion of the
unsecured bank debt will be secured by aircraft.  -11-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
  Variable Interest Entities .
 ECA Financings
     (i)
 -12-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 (ii) (iii) (iv)
 (i) (ii)
  Loans from AIG Funding
  (i) (ii) (iii)
 (i)
 -13-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 (ii) (iii)
 (i) (ii) (iii)
 Other Secured Financing Arrangements
   -14-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
  Bonds and Medium-Term Notes
 Automatic Shelf Registration
 Euro Medium-Term Note Programme
 Other Senior Notes
  (i) (ii) (iii) (iv) (v)
 -15-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Bank Credit Facilities
 Revolving Credit Facilities:
 Subsequent Events
 Term Loans: Subsequent Events
 Subordinated Debt
 (i) (ii) (iii)
 Derivative Activities
   -16-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
   Fair Value
Measurements
  Asset Derivatives
    
    
    Liability DerivativesNotional Value
    
    
    Fair Value
    
    
    Notional Value
    
    
    Fair ValueUSD
    
    
    
    
    
    
    USD(In thousands)March 31, 2010:Derivatives designated as
hedging instruments:Interest rate swap agreements
(a)
    
    $
    
    
    
    $
    
    
    
    $
    727,972
    
    
    $
    (60,519
    )Foreign exchange swap
agreements
    
    

         1,600,000
    
    
    
    184,016
    
    
    
    
    
    
    
    Total derivatives designated as
hedging
instruments
    
    
    
    
    
    $
    184,016
    
    
    
    
    
    
    $
    (60,519
    )Derivatives not designated as
hedging instruments:Interest rate cap
agreements
    
    $
    97,884
    
    
    $
    3,029
    
    
    $
    
    
    
    $
    Total derivatives
    
    
    
    
    
    $
    187,045
    
    
    
    
    
    
    $
    (60,519
    )December 31, 2009:Derivatives designated as
hedging instruments:Interest rate swap agreements
(a)
    
    $
    
    
    
    $
    
    
    
    $
    1,070,513
    
    
    $
    (66,916
    )Foreign exchange swap
agreements
    
    


    1,600,000
    
    
    
    254,261
    
    
    
    14,191
    
    
    
    (574
    )Total derivatives designated as
hedging instruments$
    254,261
    
    
    
    
    
    
    $
    (67,490
    )Derivatives not designated as
hedging instruments:Interest rate cap
agreements
    
    $
    100,631
    
    
    $
    4,086
    
    
    $
    
    
    
    $
    (67,490
    )$
    258,347
    
    
    
    
    
    
    $
    (67,490
    )
 
 (a)
    
    Converts floating interest rate debt into fixed rate debt. -17-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
   Three Months EndedMarch 31,2010
    
    
    2009(Dollars in thousands)Effective portion of change in fair
market value of derivatives
(a)(b)
    
    $
    (55,204
    )
    
    $
    (88,837
    )Amortization of balances of de-designated
hedges and other adjustments
    
    
    252
    
    
    
    (121
    )Foreign exchange component of cross
currency swaps (credited) charged to
income
    
    
    131,200
    
    
    
    116,890Income tax
effect
    
    
    (26,687
    )
    
    
    (9,776
    )Net changes in cash flow hedges, net of
taxes
    
    $
    49,561
    
    
    $
    18,156
 
 (a)
    
    Includes $(21,987) and $2,213 of combined CVA and MVA for the three-month periods
ended March 31, 2010 and 2009.(b)
    
    2010 includes losses of $(15,409) on a derivative contract that matured during the
three months ended March 31, 2010, that was de-designated as a cash flow hedge and then
subsequently re-designated during the life of the contract.  Amount of UnrealizedGain or (Loss)Recorded in OCI onDerivatives(Effective Portion)Three Months EndedMarch 31,Derivatives Designated as Cash Flow Hedges
    
    2010
    
    
    2009(Dollars in thousands)Interest rate swap agreements
    
    $
    (9,418
    )
    
    $
    (3,084
    )Foreign exchange swap agreements
(a)
    
    
    (73,069
    )
    
    
    (99,163
    )Total
    
    $
    (82,487
    )
    
    $
    (102,247
    )
 
 (a)
    
    Includes $(21,987) and $2,213 of combined CVA and MVA for the three-month periods ended
March 31, 2010 and 2009.  Amount of Gain or (Loss)Reclassified fromAOCI Into Income(Effective Portion)Three Months EndedMarch 31,Location of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
    
    2010
    
    
    2009(Dollars in thousands)Interest rate swap agreements  interest expense
    
    $
    (8,787
    )
    
    $
    (20,669
    )Foreign exchange swap agreements  interest expense
    
    
    (18,272
    )
    
    
    6,096Foreign exchange swap agreements  lease
revenue
    
    
    (224
    )
    
    
    1,163Total
    
    $
    (27,283
    )
    
    $
    (13,410
    )
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
   Amount of Gain or (Loss)Recognizedin Income on Derivatives(Ineffective Portion) (a)Three Months EndedMarch 31,2010
    
    
    2009(Dollars in thousands)Derivatives Designated as Cash Flow Hedges:Interest
rate swap
agreements
    
    $
    (59
    )
    
    $
    (195
    )Foreign exchange swap
    
    
    (23,291
    )
    
    
    (2,040
    )Total
    
    
    (23,350
    )
    
    
    (2,235
    )Derivatives Not Designated as a Hedge:Interest rate cap agreements
    
    
    (1,055
    )
    
    
    Reconciliation to Condensed, Consolidated Statements of Income:Income effect of maturing derivative
contracts
    
    
    (15,409
    )
    
    
    Reclassification of amounts de-designated as hedges
recorded in AOCI
    
    
    (252
    )
    
    
    121Effect from derivatives, net of change in hedged items
due to changes in foreign exchange
rates
    
    $
    (40,066
    )
    
    $
    (2,114
    )
 
 (a)
    
    All components of each derivatives gain or loss were included in the assessment of
effectiveness. Fair Value Measurements
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
  CounterpartyLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Netting (a)
    
    
    Total(Dollars in thousands)March 31, 2010:Derivative
assets
    
    $
    
    
    
    $
    187,045
    (b)
    
    $
    
    
    
    $
    (60,519
    )
    
    $
    126,526Derivative
liabilities
    
    
    
    
    
    
    (60,519
    )
    
    
    
    
    
    
    60,519
    
    
    
    Total derivative
assets, net
    
    $
    
    
    
    $
    126,526
    
    
    $
    
    
    
    $
    
    
    
    $
    126,526December 31, 2009:Derivative
assets
    
    $
    
    
    
    $
    258,347
    (b)
    
    $
    
    
    
    $
    (67,490
    )
    
    $
    190,857Derivative
liabilities
    
    
    
    
    
    
    (67,490
    )
    
    
    
    
    
    
    67,490
    
    
    
    Total derivative
assets, net
    
    $
    
    
    
    $
    190,857
    
    
    $
    
    
    
    $
    
    
    
    $
    190,857
 
 (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 aggregating $2.1 million and $24.2 million at
March 31, 2010 and December 31, 2009, respectively. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
 Notes to
Consolidated Financial Statements
 Flight Equipment
Marketing
  Fair Value Disclosures of Financial Instruments
  Cash, Including Restricted Cash
 Notes Receivable
 Debt Financing
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Long-term fixed rate debt:
 Floating rate non-ECA debt:
 ECA debt:
 Junior subordinated debt:
 Derivatives
 Guarantees
  March 31, 2010
    
    December 31, 2009Carrying
    
    
    
    
    
    CarryingAmount of
    
    Fair Value
    
    Amount of
    
    Fair ValueAsset
    
    of Asset
    
    Asset
    
    of Asset(Liability)
    
    (Liability)
    
    (Liability)
    
    (Liability)(Dollars in thousands)Cash, including restricted
cash
    
    $
    4,060,208
    
    
    $
    4,060,208
    
    
    $
    652,067
    
    
    $
    652,067Notes
receivable
    
    
    156,265
    
    
    
    157,043
    
    
    
    112,060
    
    
    
    107,063Debt financing (including loans from
AIG Funding, subordinated debt and
foreign currency adjustment,
excluding debt
discount)
    
    
    (32,744,554
    )
    
    
    (33,207,920
    )
    
    
    (30,112,395
    )
    
    
    (26,762,955
    )Derivative
assets, net
    
    
    126,526
    
    
    
    126,526
    
    
    
    190,857
    
    
    
    190,857Guarantees
    
    
    (13,383
    )
    
    
    (15,311
    )
    
    
    (10,860
    )
    
    
    (12,886
    )
 Related Party Transactions
  . Debt Financings.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Fair Value Measurements Derivative Activities
  Three Months EndedIncome Statement
    
    March 31,
    
    March 31,2010
    
    2009(Dollars in thousands)Expense (income):Interest expense on loans from AIG Funding
    
    $
    60,510
    
    
    $
    3,173Effect from derivatives on contracts with AIGFP
    
    
    (39,011
    )
    
    
    (2,114
    )Interest on
derivative contracts with AIGFP
    
    
    27,059
    
    
    
    14,573Lease revenue related to hedging of lease receipts with AIGFP
    
    
    224
    
    
    
    1,163Allocation of corporate costs from AIG
    
    
    4,260
    
    
    
    1,532Management fees received
    
    
    (2,298
    )
    
    
    (2,293
    )Management fees paid to subsidiaries of AIG
    
    
    240
    
    
    
    180
 March 31,
    
    December 31,Balance Sheet
    
    2010
    
    2009(Dollars in thousands)Asset (liability):Loans payable to AIG Funding
    
    $
    (3,938,487
    )
    
    $
    (3,909,567
    )Derivative assets, net
    
    
    123,497
    
    
    
    186,771Income taxes payable to AIG
    
    
    (85,858
    )
    
    
    (80,924
    )Taxes benefit sharing payable to AIG
    
    
    
    
    
    
    (85,000
    )Accrued corporate costs payable to AIG
    
    
    (5,183
    )
    
    
    (5,298
    )Accrued interest payable to AIG
    
    
    (681
    )
    
    
    (672
    )
 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 March
31, 2010, 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 March 31, 2010, the guaranteed value, without any offset for
the projected value of the aircraft, was approximately $26 million.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Debt
Financings
 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. We believe that the aircraft was
seized by the Russian customs authorities in the fourth quarter of 2008 on the basis
of certain alleged violations of the Russian customs code by KrasAir. In the second
quarter of 2009, another Russian airline signed a lease for the aircraft. The
aircraft had a net book value of $28.3 million at March 31, 2010. We are currently
engaged in simultaneous litigation and negotiations with the applicable Russian
customs authorities seeking a resolution of all customs-related issues. 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 29.6 million 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.
  K. Variable Interest Entities
 (i) (ii)
 -23-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Debt Financings
 Investment Activities
  (i) (ii)
 Non-Recourse Financing Structures
   Wholly-Owned ECA Financing Vehicles
  -24-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
 Other Secured Financings
 Debt
Financings
 Wholly-Owned Leasing Entities
 .
 Subsequent Events
 Debt Financings
 Debt Financings
   
    
    The limitation on the amount of liens we can incur in connection with secured
debt will increase from 12.5% of our Consolidated Tangible Net Assets, as defined
in the credit agreement, to 35%.
    
    The maturity date of $2.155 billion of the $2.5 billion outstanding under the
revolving credit agreement with an original maturity date of October 2011 will be
extended for twelve months. The extended loans will bear interest of LIBOR plus a
margin of 2.15%. The remaining $345 million of loans will mature on
their originally scheduled maturity date in October 2011.
    
    The $2.155 billion of extended loans must be secured by aircraft with an
initial loan-to-value ratio of 75%.
  -25-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2010
(Unaudited)
  Aircraft Portfolio Sale
  -26-




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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,
 Overview
   First Quarter Operating Results
 Notes to Condensed, Consolidated Financial Statements
  -27-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Our Fleet
 Liquidity
  Debt Financing
 Liquidity
  Industry Condition and Sources of Revenue
    -28-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
       -29-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Liquidity
  Notes to Condensed Consolidated Financial
Statements.
 Part II  Item 1A. Risk Factors  Liquidity Risk 
   -30-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
    Our Relationship with AIG
 Potential Change in Ownership
 Debt Financings  Loans from AIG Funding.
  AIG Loan from the FRBNY
 Debt FinancingsLoans from AIG Funding .
 AIG Going Concern Consideration
  -31-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Critical Accounting Policies and Estimates
   
    
    Lease Revenue
    
    Initial Indirect Costs
    
    Flight Equipment Marketing
    
    Provision for Overhauls
    
    Flight Equipment
    
    Derivative Financial Instruments
    
    Fair Value Measurements
    
    Income Taxes
 Part II 
Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations Notes to
Condensed, Consolidated Financial Statements
 Debt Financings
    -32-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  March 31,
    
    
    December 31,2010
    
    
    2009(Dollars in thousands)SecuredECA financings
    
    $
    3,020,897
    
    
    $
    3,004,763Loans from AIG Funding
    
    
    3,938,487
    
    
    
    3,909,567Other secured financings (a)
    
    
    1,448,967
    
    
    
    153,1168,408,351
    
    
    
    7,067,446UnsecuredBonds and Medium-Term Notes
    
    
    18,042,803
    
    
    
    16,566,099Bank debt (b)
    
    
    5,033,500
    
    
    
    5,087,75023,076,303
    
    
    
    21,653,849Total Secured and Unsecured Debt Financing
    
    
    31,484,654
    
    
    
    28,721,295Less: Deferred debt discount
    
    
    (75,290
    )
    
    
    (9,556
    )31,409,364
    
    
    
    28,711,739Subordinated Debt
    
    
    1,000,000
    
    
    
    1,000,000$
    32,409,364
    
    
    $
    29,711,739Selected interest rates and ratios which include the economic effect of
derivative instruments:Composite interest rate
    
    
    4.69
    %
    
    
    4.35
    %Percentage of total debt at fixed rates
    
    
    57.94
    %
    
    
    58.64
    %Composite interest rate on fixed rate debt
    
    
    5.82
    %
    
    
    5.42
    %Bank prime rate
    
    
    3.25
    %
    
    
    3.25
    %
 
 (a)
    
    Includes secured financings non-recourse to ILFC of $125.7 million and $129.6 million
at March 31, 2010 and December 31, 2009, respectively.(b)
    
    In April 2010, we entered into amendments to our revolving credit facility dated
October 13, 2006. As a result of these amendments, approximately $2.155 billion of the
unsecured bank debt will be secured by aircraft.  Notes to Condensed, Consolidated Financial
Statements
 ECA Financings
  -33-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
    Liquidity.
 (i) (ii) (iii) (iv)
 (i) (ii)
 -34-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   Loans from AIG Funding
  (i) (ii) (iii)
 (i) (ii) (iii)
  -35-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 (i) (ii) (iii)
 Other Secured Financing Arrangements
    Bonds and Medium-Term Notes
 Automatic Shelf Registration
 -36-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Euro Medium-Term Note Programme:
 Other Senior Notes:
  (i) (ii) (iii) (iv) (v)
 Bank Credit Facilities
 Revolving Credit Facilities:
 Notes to
Condensed, Consolidated Financial Statements
 Term Loans:
 -37-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Notes to
Condensed, Consolidated Financial Statements
 Subordinated Debt
 (i) (ii) (iii)
 Commercial Paper and Other Short-Term Debt
 Commercial Paper: Liquidity
 Derivatives
    -38-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Credit Ratings
  Unsecured Debt Ratings
 Rating Agency
    
    Long-term Debt
    
    Corporate Rating
    
    Credit Watch/Review
    
    Date of Last Ratings ActionFitch
    
    BB
    
    BB
    
    Evolving
    
    April 30, 2010Moodys
    
    B1
    
    Not Rated
    
    Negative
    
    December 18, 2009S&P
    
    BB+
    
    BBB-
    
    Negative
    
    January 25, 2010
 Secured Debt Ratings
 $750 Million
    
    $550 MillionRating Agency
    
    Term Loan
    
    Term LoanFitch
    
    BBB-
    
    BBMoodys
    
    Ba2
    
    Ba3S&P
    
    BBB
    
    BBB-
  (i) (ii) (iii)
  -39-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Existing Commitments
 Commitments Due by Fiscal YearTotal
    
    2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    Thereafter(Dollars in thousands)Bonds and medium-term
notes
    
    $
    18,042,803
    
    
    $
    3,499,100
    
    
    $
    4,379,226
    
    
    $
    3,571,099
    
    
    $
    3,541,575
    
    
    $
    1,041,246
    
    
    $
    2,010,557Bank Revolving Credit
Facilities
    
    
    4,500,000
    
    
    
    2,000,000
    
    
    
    2,500,000
    (i)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unsecured Bank Term
Loans
    
    
    533,500
    
    
    
    48,500
    
    
    
    335,000
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    ECA Financings
    
    
    3,020,897
    
    
    
    372,567
    
    
    
    442,763
    
    
    
    413,715
    
    
    
    413,715
    
    
    
    408,618
    
    
    
    969,519Other Secured Financings
    
    
    1,448,967
    
    
    
    9,787
    
    
    
    13,901
    
    
    
    14,878
    
    
    
    15,963
    
    
    
    36,716
    
    
    
    1,357,722Loans from AIG Funding
    
    
    3,938,487
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,938,487
    
    
    
    
    
    
    
    Subordinated Debt
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Interest Payments on Debt
Outstanding (a)(b)(c)
    
    
    8,306,880
    
    
    
    1,271,841
    
    
    
    1,307,945
    
    
    
    1,017,462
    
    
    
    758,886
    
    
    
    418,270
    
    
    
    3,532,476Operating Leases (d)(e)
    
    
    68,453
    
    
    
    8,665
    
    
    
    11,968
    
    
    
    12,448
    
    
    
    12,947
    
    
    
    13,362
    
    
    
    9,063Pension Obligations (f)
    
    
    8,483
    
    
    
    1,268
    
    
    
    1,319
    
    
    
    1,370
    
    
    
    1,431
    
    
    
    1,512
    
    
    
    1,583Purchase Commitments
    
    
    13,744,800
    
    
    
    242,700
    
    
    
    247,600
    
    
    
    639,400
    
    
    
    1,103,000
    
    
    
    1,822,700
    
    
    
    9,689,400Total
    
    $
    54,613,270
    
    
    $
    7,454,428
    
    
    $
    9,239,722
    
    
    $
    5,820,372
    
    
    $
    9,786,004
    
    
    $
    3,742,424
    
    
    $
    18,570,322
 Contingent Commitments
 Contingency Expiration by Fiscal YearTotal
    
    2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    Thereafter(Dollars in thousands)AVGs (g)
    
    $
    555,526
    
    
    $
    
    
    
    $
    27,841
    
    
    $
    78,950
    
    
    $
    96,003
    
    
    $
    40,118
    
    
    $
    312,614Total (h)
    
    $
    555,526
    
    
    $
    
    
    
    $
    27,841
    
    
    $
    78,950
    
    
    $
    96,003
    
    
    $
    40,118
    
    
    $
    312,614
 
 (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 March 31, 2010.(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 $7.6 million 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 2010 consists of
total estimated allocations for 2010 and the column Thereafter consists of the 2015
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 $178.2 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)
    
    Subsequent to March 31, 2010, the maturity date for approximately $2.16 billion of the
facility due October 2011 was extended to October 2012, subject to satisfaction of certain
collateralization milestones. -40-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Off-Balance-Sheet Arrangements
  Results of Operations
 Three Months Ended March 31, 2010 Versus 2009
  (i) (ii) (i) (ii) (iii)
  Notes to
Condensed, Consolidated Financial Statements
 -41-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  (i) (ii)
   Increase2010
    
    2009
    
    (Decrease)Beginning of Quarter
    
    
    4.35
    %
    
    
    4.51
    %
    
    
    (0.16
    )%End of Quarter
    
    
    4.69
    %
    
    
    4.37
    %
    
    
    0.32
    %Average
    
    
    4.52
    %
    
    
    4.44
    %
    
    
    0.08
    %
 Notes to Condensed, Consolidated Financial Statements.
  (i) (ii) (iii)
  (i) (ii)
  -42-




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   -43-




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Value at Risk
     ILFC Market RiskAt
    
    AtMarch 31, 2010
    
    December 31, 2009(Dollars in millions)Average
    
    High
    
    Low
    
    Average
    
    High
    
    LowCombined
    
    $
    59.4
    
    
    $
    106.1
    
    
    $
    35.9
    
    
    $
    46.5
    
    
    $
    80.0
    
    
    $
    35.9Interest Rate
    
    
    59.4
    
    
    
    106.1
    
    
    
    36.2
    
    
    
    46.6
    
    
    
    80.0
    
    
    
    36.2Currency
    
    
    0.2
    
    
    
    0.5
    
    
    
    
    
    
    
    0.3
    
    
    
    0.7
    
    
    
    0.1
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ITEM 4. CONTROLS AND PROCEDURES
 (A) Evaluation of Disclosure Controls and Procedures
   (B) Changes in Internal Control Over Financial Reporting
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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Flash Airlines:
 Krasnoyarsk Airlines:
 Estate of Volare Airlines: 
  
 ITEM 1A. RISK FACTORS
  Capital Structure Risk
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PART II. OTHER INFORMATION (CONTINUED)
  
    
    making it more difficult for us to satisfy our obligations with respect to our
indebtedness;
    
    requiring us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thereby reducing funds available for other purposes,
including acquiring new aircraft and exploring business opportunities;
    
    increasing our vulnerability to adverse economic and industry conditions;
    
    limiting our flexibility in planning for, or reacting to, changes in our business and
industry; and
    
    limiting our ability to borrow additional funds or refinance our existing
indebtedness.
 Liquidity Risk
   Notes to
Condensed Consolidated Financial Statements.
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PART II. OTHER INFORMATION (CONTINUED)
     Borrowing Risks
 Credit Ratings Downgrade Risk 
 (i) (ii) (iii)
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PART II. OTHER INFORMATION (CONTINUED)
  Interest Rate Risk 
  Restrictive Covenants on Our Operations
  
    
    incur debt;
    
    encumber our assets;
    
    dispose of certain assets;
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our
assets;
    
    enter into sale-leaseback transactions;
    
    make equity or debt investments in other parties;
    
    enter into transactions with affiliates;
    
    make capital expenditures;
    
    designate our subsidiaries as unrestricted subsidiaries; and
    
    pay dividends and distributions.
  Relationship with AIG
 AIG as Our Parent Company
 AIG as Our Counterparty of Derivatives
 AIG Going Concern Consideration
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PART II. OTHER INFORMATION (CONTINUED)
  Key Personnel Risk
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PART II. OTHER INFORMATION (CONTINUED)
 Overall Airline Industry Risk
  
    
    Demand for air travel
    
    Competition between carriers
    
    Fuel prices and availability
    
    Labor costs and stoppages
    
    Maintenance costs
    
    Employee labor contracts
    
    Air traffic control infrastructure constraints
    
    Airport access
    
    Insurance costs and coverage
    
    Heavy reliance on automated systems
    
    Geopolitical events
    
    Security, terrorism and war
    
    Worldwide health concerns
    
    Equity and borrowing
capacity
    
    Environmental concerns
    
    Government regulation
    
    Interest rates
    
    Overcapacity
    
    Natural disasters
  
    
    lower demand for the aircraft in our fleet and reduced market lease rates and lease
margins;
    
    a higher incidence of lessee defaults, lease restructurings and repossessions
affecting net income due to maintenance, consulting and legal costs associated with the
repossessions, as well as lost revenue for the time the aircraft are off lease and
possibly lower lease rates from the new lessees;
    
    a higher incidence of situations where we engage in restructuring lease rates for our
troubled customers which reduces overall lease revenue;
    
    an inability to immediately place new and used aircraft on commercially acceptable
terms when they become available through our purchase commitments and regular lease
terminations, resulting in lower lease margins due to aircraft not earning revenue and
resulting in payments for storage, insurance and maintenance; and
    
    a loss if our aircraft is damaged or destroyed by an event specifically excluded from
the insurance policy such as dirty bombs, bio-hazardous materials and electromagnetic
pulsing.
  Lessee Non-Performance Risk
 Overall Airline Industry
Risk
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PART II. OTHER INFORMATION (CONTINUED)
 Airframe, Engine and Other Manufacturer Risks
  
    
    missed or late delivery of aircraft ordered by us and an inability to meet our
contractual obligations to our customers, resulting in lost or delayed revenues, lower
growth rates and strained customer relationships;
    
    an inability to acquire aircraft and related components on terms which will allow us
to lease those aircraft to customers at a profit, resulting in lower growth rates or a
contraction in our fleet;
    
    a marketplace with too many aircraft available, creating downward pressure on demand
for the aircraft in our fleet and reduced market lease rates;
    
    poor customer support from the manufacturers of aircraft and components resulting in
reduced demand for a particular manufacturers product, creating downward pressure on
demand for those aircraft in our fleet and reduced market lease rates for those aircraft;
and
    
    reduction in our competitiveness due to deep discounting by the manufacturers, which
may lead to reduced market lease rates and may impact our ability to remarket or sell
aircraft in our fleet.
 Aircraft Related Risks
 Residual Value  (i) (ii) (iii) Part II  Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations  Critical
Accounting Policies and Estimates  Flight Equipment
 Obsolescence Risk 
 Greenhouse Gas Emissions Risk 
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PART II. OTHER INFORMATION (CONTINUED)
 Other Risks
 Foreign Currency Risk 
 Accounting Pronouncements 
 
 ITEM 5. OTHER INFORMATION
 a)
    
    During the three months ended March 31, 2010, changes were made to our board of
directors. As of the date of this quarterly report, our directors are as follows:
 Name
    
    TitleDouglas M.
Steenland
    
    ChairmanAlan H. Lund
    
    Vice Chairman, President and Interim Chief
Executive OfficerLeslie 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
    
    Director
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PART II. OTHER INFORMATION (CONTINUED)
 
 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 (filed as an exhibit to Form 10-Q/A for the quarter ended September 30, 2009,
and incorporated herein by reference).4.1
    
    Indenture, dated March 22, 2010, among the Company, Wilmington Trust FSB,
as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security
registrar and authentication agent (filed as an exhibit to the Form 8-K filed on
March 24, 2010, and incorporated herein by reference).4.2
    
    Registration Rights Agreement, dated March 22, 2010, among the Company and
Banc of America Securities LLC, Citigroup Global Markets Inc., Credit Suisse
Securities (USA) LLC and UBS Securities LLC, as representatives of the initial
purchasers (filed as an exhibit to the Form 8-K filed on March 24, 2010, and
incorporated herein by reference).4.3
    
    Registration Rights Agreement, dated as of April 6, 2010, among the Company
and Banc of America Securities LLC, Barclays Capital Inc., Citigroup Global Markets
Inc., Credit Suisse Securities (USA) LLC, J. P. Morgan Securities Inc. and UBS
Securities LLC, as representatives of the initial purchasers (filed as an exhibit to
the Form 8-K filed on April 6, 2010, and incorporated herein by reference).4.4
    
    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
    
    Side Letter Agreement, dated as of February 27, 2010, among the Company,
Whitney Leasing Limited, Aircraft SPC-12, Inc., Bank of Scotland PLC, Bank of
Scotland PLC, Paris Branch, and Bank of Scotland PLC, Frankfurt Branch.10.2
    
    Term Loan 1 Credit Agreement, dated as of March 17, 2010, among the
Company, ILFC Ireland Limited and ILFC (Bermuda) III, Ltd., as initial intermediate
lessees, the lenders from time to time party thereto, Bank of America, N.A., as
administrative agent and collateral agent and Goldman Sachs Lending Partners LLC, as
syndication agent (portions of this exhibit have been omitted pursuant to a request
for confidential treatment).10.3
    
    Term Loan 1 Aircraft Mortgage and Security Agreement, dated as of March 17,
2010, among the Company, ILFC Ireland Limited, ILFC (Bermuda) III, Ltd., additional
grantors from time to time party thereto and Bank of America, N.A., as collateral
agent.10.4
    
    Term Loan 2 Credit Agreement, dated as of March 17, 2010, among Delos
Aircraft Inc., as borrower, the Company and certain other subsidiaries as guarantors
party thereto, the lenders from time to time party thereto, Bank of America, N.A., as
administrative agent and collateral agent and Goldman Sachs Lending Partners LLC, as
syndication agent (portions of this exhibit have been omitted pursuant to a request
for confidential treatment).10.5
    
    Term Loan 2 Security Agreement, dated as of March 17, 2010, among Hyperion
Aircraft Inc., Delos Aircraft Inc., Artemis (Delos) Limited, Apollo Aircraft Inc.,
the additional grantors from time to time party thereto and Bank of America, N.A., as
collateral agent.10.6
    
    Amendment No. 2, dated as of April 16, 2010, to the $2,000,000,000
Five-Year Revolving Credit Agreement dated as of October 14, 2005, among the Company,
CitiCorp USA, Inc., as administrative agent, and the other financial institutions
listed therein.10.7
    
    Amendment No. 1, dated as of April 16, 2010, to the $2,500,000,000
Five-Year Revolving Credit Agreement dated as of October 13, 2006, among the Company,
CitiCorp USA, Inc., as administrative agent, and the other financial institutions
listed therein (portions of this exhibit have been omitted pursuant to a request for
confidential treatment).10.8
    
    Security and Guarantee Agreement, dated as of April 16, 2010, among
Citicorp USA, Inc., as collateral agent, and Flying Fortress Inc., Flying Fortress US
Leasing Inc., Flying Fortress Ireland Leasing Limited and the additional guarantors
named therein, as the guarantors.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.
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##### Table of Contents



SIGNATURES
  INTERNATIONAL LEASE FINANCE CORPORATIONMay 7, 2010
    
    /s/ Alan H. Lund

ALAN H. LUNDVice Chairman, President and 

Interim Chief Executive Officer

(Principal Executive Officer)May 7, 2010
    
    /s/ Frederick S. Cromer

FREDERICK S. CROMERSenior Vice President and 

Chief Financial Officer

(Principal Financial Officer)May 7, 2010
    
    /s/ Kurt H. Schwarz

KURT H. SCHWARZSenior Vice President,
Chief Accounting Officer and
Controller

(Principal Accounting Officer)
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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
   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 (filed as an exhibit to Form 10-Q/A for the quarter ended September 30, 2009,
and incorporated herein by reference).4.1
    
    Indenture, dated March 22, 2010, among the Company, Wilmington Trust FSB,
as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security
registrar and authentication agent (filed as an exhibit to the Form 8-K filed on
March 24, 2010, and incorporated herein by reference).4.2
    
    Registration Rights Agreement, dated March 22, 2010, among the Company and
Banc of America Securities LLC, Citigroup Global Markets Inc., Credit Suisse
Securities (USA) LLC and UBS Securities LLC, as representatives of the initial
purchasers (filed as an exhibit to the Form 8-K filed on March 24, 2010, and
incorporated herein by reference).4.3
    
    Registration Rights Agreement, dated as of April 6, 2010, among the Company
and Banc of America Securities LLC, Barclays Capital Inc., Citigroup Global Markets
Inc., Credit Suisse Securities (USA) LLC, J. P. Morgan Securities Inc. and UBS
Securities LLC, as representatives of the initial purchasers (filed as an exhibit to
the Form 8-K filed on April 6, 2010, and incorporated herein by reference).4.4
    
    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
    
    Side Letter Agreement, dated as of February 27, 2010, among the Company,
Whitney Leasing Limited, Aircraft SPC-12, Inc., Bank of Scotland PLC, Bank of
Scotland PLC, Paris Branch, and Bank of Scotland PLC, Frankfurt Branch.10.2
    
    Term Loan 1 Credit Agreement, dated as of March 17, 2010, among the
Company, ILFC Ireland Limited and ILFC (Bermuda) III, Ltd., as initial intermediate
lessees, the lenders from time to time party thereto, Bank of America, N.A., as
administrative agent and collateral agent and Goldman Sachs Lending Partners LLC, as
syndication agent (portions of this exhibit have been omitted pursuant to a request
for confidential treatment).10.3
    
    Term Loan 1 Aircraft Mortgage and Security Agreement, dated as of March 17,
2010, among the Company, ILFC Ireland Limited, ILFC (Bermuda) III, Ltd., additional
grantors from time to time party thereto and Bank of America, N.A., as collateral
agent.10.4
    
    Term Loan 2 Credit Agreement, dated as of March 17, 2010, among Delos
Aircraft Inc., as borrower, the Company and certain other subsidiaries as guarantors
party thereto, the lenders from time to time party thereto, Bank of America, N.A., as
administrative agent and collateral agent and Goldman Sachs Lending Partners LLC, as
syndication agent (portions of this exhibit have been omitted pursuant to a request
for confidential treatment).10.5
    
    Term Loan 2 Security Agreement, dated as of March 17, 2010, among Hyperion
Aircraft Inc., Delos Aircraft Inc., Artemis (Delos) Limited, Apollo Aircraft Inc.,
the additional grantors from time to time party thereto and Bank of America, N.A., as
collateral agent.10.6
    
    Amendment No. 2, dated as of April 16, 2010, to the $2,000,000,000
Five-Year Revolving Credit Agreement dated as of October 14, 2005, among the Company,
CitiCorp USA, Inc., as administrative agent, and the other financial institutions
listed therein.10.7
    
    Amendment No. 1, dated as of April 16, 2010, to the $2,500,000,000
Five-Year Revolving Credit Agreement dated as of October 13, 2006, among the Company,
CitiCorp USA, Inc., as administrative agent, and the other financial institutions
listed therein (portions of this exhibit have been omitted pursuant to a request for
confidential treatment).10.8
    
    Security and Guarantee Agreement, dated as of April 16, 2010, among
Citicorp USA, Inc., as collateral agent, and Flying Fortress Inc., Flying Fortress US
Leasing Inc., Flying Fortress Ireland Leasing Limited and the additional guarantors
named therein, as the guarantors.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.
 -56-