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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q


QUARTERLY REPORT





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

For the quarterly period ended March 31, 2003

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 0-11350

INTERNATIONAL LEASE FINANCE CORPORATION

(Exact name of registrant as specified in its charter)


|                                                                                           |  |                                                
|------------------------------------------------------------------------------------------ |  | -----------------------------------------------
|California
(State or other jurisdiction of
incorporation or organization)                  |  | 22-3059110
(I.R.S. Employer
Identification No.)
|                                                                                           |  |                                                
|1999 Avenue of the Stars, Los Angeles, California
(Address of principal executive offices) |  | 90067
(Zip Code)                               

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yeso No x

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

As of April 30, 2003, there were 42,198,119 shares of Common Stock, no par
value, outstanding.





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TABLE OF CONTENTS



|                                                           |                                                                                               |                                                                      |  |  |  |  |  | 
|---------------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                             
|                                                           | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                                           |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                               
|                                                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                                                           |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                                                           |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                
|CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
|                                                           | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                           | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                                           | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                                
|                                                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                                
|CERTIFICATIONS                                            
|INDEX TO EXHIBITS                                         
|EXHIBIT 12                                                



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##### Table of Contents



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

TABLE OF CONTENTS

|                                                          |                                                                                                   |      |                                                                                                                 |    |  |    | 
|--------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------------------------------------------- | -- |  | -- | 
|Part I. Financial Information                             |                                                                                                   | Page
|                                                          |                                                                                                   |      |                                                                                                                 |   
|                                                          | Item 1. Financial Statements (Unaudited)                                                          |      |                                                                                                                 |    | 
|                                                          |                                                                                                   |      | Condensed Consolidated Balance Sheets
March 31, 2003 and December 31, 2002                                      |    |  | 3  | 
|                                                          |                                                                                                   |      | Condensed Consolidated Statements of Income and Comprehensive Income
Three Months Ended March 31, 2003 and 2002 |    |  | 4  | 
|                                                          |                                                                                                   |      | Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2003 and 2002                      |    |  | 5  | 
|                                                          |                                                                                                   |      | Notes to Condensed Consolidated Financial Statements                                                            |    |  | 7  | 
|Cautionary Statement Regarding Forward Looking Statements |                                                                                                   |      | 8                                                                                                               |   
|                                                          | Item 2. Managements Discussion and Analysis of the Financial Condition and Results of Operations |      |                                                                                                                 | 9  | 
|                                                          | Item 3. Quantitative and Qualitative Disclosures about Market Risk                                |      |                                                                                                                 | 15 | 
|                                                          | Item 4. Controls and
Procedures                                                                   |      |                                                                                                                 | 16 | 
|Part II. Other Information                                |                                                                                                   |      |                                                                                                                 |   
|                                                          | Item 6. Exhibits and Reports on Form 8-K                                                          |      |                                                                                                                 | 17 | 
|                                                          |                                                                                                   |      | Signatures                                                                                                      |    |  | 18 | 
|                                                          |                                                                                                   |      | Certifications                                                                                                  |    |  | 19 | 

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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)

|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |              |           |           |  | 
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | -------------------------- | --------- | --------- | ----------- | ---------- | ------------ | --------- | --------- |  | 
|                                                                                               |                                                                                                                                    |                               |                            |           |           | March 31,   |            | December 31,
|                                                                                               |                                                                                                                                    |                               |                            |           |           | 2003        |            | 2002        
|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |             
|                                                                                               |                                                                                                                                    |                               |                            |           |           | (Unaudited) |            |              |           |          
|ASSETS                                                                                         |                                                                                                                                    |                               |                            |           |           |             |            |             
|Cash, including interest bearing accounts
of $85,273 (2003) and $65,693 (2002)                 |                                                                                                                                    | $                             | 86,665                     |           |           | $           | 66,049     |             
|Current income taxes receivable                                                                |                                                                                                                                    |                               | 263,503                    |           |           |             | 193,526    |             
|Notes receivable and net investment in finance leases                                          |                                                                                                                                    |                               | 463,859                    |           |           |             | 372,577    |             
|Flight equipment under operating leases                                                        |                                                                                                                                    |                               | 31,376,024                 |           |           |             | 29,631,150 |             
|                                                                                               |                                                                                                                                    | Less accumulated depreciation |                            |           | 4,607,555 |             |            |              | 4,343,403 |          
|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |             
|                                                                                               |                                                                                                                                    |                               | 26,768,469                 |           |           |             | 25,287,747 |             
|Deposits on flight equipment purchases                                                         |                                                                                                                                    |                               | 1,169,735                  |           |           |             | 1,157,864  |             
|Accrued interest, other receivables and other assets                                           |                                                                                                                                    |                               | 166,491                    |           |           |             | 142,817    |             
|Derivative assets                                                                              |                                                                                                                                    |                               | 238,738                    |           |           |             | 170,395    |             
|Investments                                                                                    |                                                                                                                                    |                               | 63,441                     |           |           |             | 64,067     |             
|Deferred debt issue costs  less accumulated amortization of
$73,237 (2003) and $68,516 (2002) |                                                                                                                                    |                               | 40,216                     |           |           |             | 35,571     |             
|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |             
|                                                                                               |                                                                                                                                    | $                             | 29,261,117                 |           |           | $           | 27,490,613 |             
|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |             
|LIABILITIES AND SHAREHOLDERS EQUITY                                                           |                                                                                                                                    |                               |                            |           |           |             |            |             
|Accrued interest and other payables                                                            |                                                                                                                                    | $                             | 320,593                    |           |           | $           | 235,827    |             
|Debt financing, net of deferred debt discount of $23,271
(2003) and $31,928 (2002)             |                                                                                                                                    |                               | 20,099,045                 |           |           |             | 18,716,644 |             
|Foreign currency adjustment                                                                    |                                                                                                                                    |                               | 330,040                    |           |           |             | 264,880    |             
|Derivative
liabilities                                                                         |                                                                                                                                    |                               | 112,833                    |           |           |             | 135,853    |             
|Capital lease obligations                                                                      |                                                                                                                                    |                               | 242,203                    |           |           |             | 260,623    |             
|Security and other deposits on flight equipment                                                |                                                                                                                                    |                               | 880,420                    |           |           |             | 864,053    |             
|Rentals received in advance                                                                    |                                                                                                                                    |                               | 138,311                    |           |           |             | 129,244    |             
|Deferred income taxes                                                                          |                                                                                                                                    |                               | 2,460,772                  |           |           |             | 2,322,327  |             
|SHAREHOLDERS EQUITY                                                                           |                                                                                                                                    |                               |                            |           |           |             |            |             
|                                                                                               | Market Auction Preferred Stock, $100,000 per share liquidation
value; Series A and B each having 500 shares issued and outstanding |                               |                            | 100,000   |           |             |            | 100,000      |          
|                                                                                               | Common stockno par value; 100,000,000 authorized shares,
42,198,119 issued and outstanding                                        |                               |                            | 653,582   |           |             |            | 653,582      |          
|                                                                                               | Paid-in capital                                                                                                                    |                               |                            | 579,955   |           |             |            | 579,955      |          
|                                                                                               | Accumulated other comprehensive loss                                                                                               |                               |                            | (119,044  | )         |             |            | (138,620     | )        
|                                                                                               | Retained earnings                                                                                                                  |                               |                            | 3,462,407 |           |             |            | 3,366,245    |          
|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |             
|                                                                                               |                                                                                                                                    |                               | Total shareholders equity |           |           | 4,676,900   |            |              |           | 4,561,162 | 
|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |             
|                                                                                               |                                                                                                                                    | $                             | 29,261,117                 |           |           | $           | 27,490,613 |             
|                                                                                               |                                                                                                                                    |                               |                            |           |           |             |            |             

See notes to condensed consolidated
financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Dollars in thousands)

|                                  |                                     |   |             |         |      |   |         |         | 
|--------------------------------- | ----------------------------------- | - | ----------- | ------- | ---- | - | ------- | ------- | 
|                                  |                                     |   | 2003        |         | 2002
|                                  |                                     |   |             |         |     
|                                  |                                     |   | (Unaudited)
|REVENUES                          |                                     |   |             |         |      |   |         |        
|                                  | Rental of flight equipment          |   | $           | 701,495 |      |   | $       | 609,009 | 
|                                  | Flight equipment marketing          |   |             | 7,950   |      |   |         | 13,260  | 
|                                  | Interest and other                  |   |             | 12,899  |      |   |         | 20,265  | 
|                                  |                                     |   |             |         |      |   |         |        
|                                  |                                     |   | 722,344     |         |      |   | 642,534 |        
|                                  |                                     |   |             |         |      |   |         |        
|EXPENSES                          |                                     |   |             |         |      |   |         |        
|                                  | Interest                            |   |             | 219,110 |      |   |         | 188,186 | 
|                                  | Depreciation of flight equipment    |   |             | 264,147 |      |   |         | 216,767 | 
|                                  | Flight equipment rent               |   |             | 13,482  |      |   |         | 19,400  | 
|                                  | Provision for overhauls             |   |             | 28,223  |      |   |         | 21,294  | 
|                                  | Selling, general and administrative |   |             | 20,577  |      |   |         | 21,523  | 
|                                  |                                     |   |             |         |      |   |         |        
|                                  |                                     |   | 545,539     |         |      |   | 467,170 |        
|                                  |                                     |   |             |         |      |   |         |        
|INCOME BEFORE INCOME TAXES        |                                     |   | 176,805     |         |      |   | 175,364 |        
|                                  | Provision for income taxes          |   |             | 59,624  |      |   |         | 62,059  | 
|                                  |                                     |   |             |         |      |   |         |        
|NET INCOME                        |                                     |   | 117,181     |         |      |   | 113,305 |        
|                                  |                                     |   |             |         |      |   |         |        
|COMPREHENSIVE INCOME (NET OF TAX) |                                     |   |             |         |      |   |         |        
|                                  | Net changes in cash flow hedges     |   |             | 61,930  |      |   |         | 26,889  | 
|                                  | Foreign currency adjustment         |   |             | (42,354 | )    |   |         | 7,212   | 
|                                  |                                     |   |             |         |      |   |         |        
|                                  |                                     |   | 19,576      |         |      |   | 34,101  |        
|                                  |                                     |   |             |         |      |   |         |        
|COMPREHENSIVE INCOME              |                                     | $ | 136,757     |         |      | $ | 147,406 |        
|                                  |                                     |   |             |         |      |   |         |        

See notes to condensed consolidated financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(Dollars in thousands)

|                                          |                                                                                                        |                                                           |            |            |             |         |            |            |         |        |  
|----------------------------------------- | ------------------------------------------------------------------------------------------------------ | --------------------------------------------------------- | ---------- | ---------- | ----------- | ------- | ---------- | ---------- | ------- | ------ | -
|                                          |                                                                                                        |                                                           |            |            | 2003        |         | 2002      
|                                          |                                                                                                        |                                                           |            |            |             |         |           
|                                          |                                                                                                        |                                                           |            |            | (Unaudited)
|OPERATING ACTIVITIES                      |                                                                                                        |                                                           |            |            |             |         |            |           
|                                          | Net income                                                                                             |                                                           | $          | 117,181    |             |         | $          | 113,305    |        
|                                          | Adjustments to reconcile net income to net cash provided by
operating                      activities: |                                                           |            |            |             |         |            |            |        
|                                          |                                                                                                        | Depreciation of flight equipment                          |            |            | 264,147     |         |            |            | 216,767 |       
|                                          |                                                                                                        | Deferred income taxes                                     |            |            | 127,904     |         |            |            | 107,664 |       
|                                          |                                                                                                        | Foreign exchange adjustment                               |            |            | 65,160      |         |            |            | (2,356  | )     
|                                          |                                                                                                        | Change in derivative instruments                          |            |            | (67,611     | )       |            |            | 2,519   |       
|                                          |                                                                                                        | Amortization of deferred debt issue costs                 |            |            | 4,721       |         |            |            | 3,726   |       
|                                          |                                                                                                        | Equity in net loss (income) of affiliates                 |            |            | 238         |         |            |            | (686    | )     
|                                          |                                                                                                        | Change in unamortized debt discount                       |            |            | 8,657       |         |            |            | (9,789  | )     
|                                          | Changes in operating assets and liabilities:                                                           |                                                           |            |            |             |         |            |            |        
|                                          |                                                                                                        | Increase in notes receivable and finance leases           |            |            | (6,992      | )       |            |            | (1,228  | )     
|                                          |                                                                                                        | Increase in accrued interest, other receivables and other |            |            |             |         |            |            |         |       
|                                          |                                                                                                        |                                                           | assets     |            |             | (23,675 | )          |            |         | (6,788 | )
|                                          |                                                                                                        | Increase in current income taxes receivable               |            |            | (69,977     | )       |            |            | (47,671 | )     
|                                          |                                                                                                        | Increase in accrued interest and other payables           |            |            | 91,138      |         |            |            | 81,338  |       
|                                          |                                                                                                        | Increase in rentals received in advance                   |            |            | 9,067       |         |            |            | 8,423   |       
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           
|Net cash provided by operating activities |                                                                                                        |                                                           | 519,958    |            |             |         | 465,224    |           
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           
|INVESTING ACTIVITIES                      |                                                                                                        |                                                           |            |            |             |         |            |           
|                                          | Acquisition of flight equipment for operating leases                                                   |                                                           |            | (1,744,874 | )           |         |            | (1,705,703 | )      
|                                          | Increase in notes receivable and finance leases                                                        |                                                           |            | (94,194    | )           |         |            |           |        
|                                          | Increase in deposits and progress payments                                                             |                                                           |            | (11,871    | )           |         |            | (36,890    | )      
|                                          | Proceeds from disposal of flight equipment  net of gain                                               |                                                           |            |           |             |         |            | 36,215     |        
|                                          | Collections on notes receivable and finance leases                                                     |                                                           |            | 9,904      |             |         |            | 7,760      |        
|                                          | Other                                                                                                  |                                                           |            | 388        |             |         |            | 289        |        
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           
|Net cash used in investing activities     |                                                                                                        |                                                           | (1,840,647 | )          |             |         | (1,698,329 | )         
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           
|FINANCING ACTIVITIES                      |                                                                                                        |                                                           |            |            |             |         |            |           
|                                          | Repurchase of preferred stock                                                                          |                                                           |            |           |             |         |            | (33,500    | )      
|                                          | Net change in commercial paper                                                                         |                                                           |            | (213,789   | )           |         |            | (20,793    | )      
|                                          | Proceeds from debt financing                                                                           |                                                           |            | 2,876,000  |             |         |            | 2,169,000  |        
|                                          | Payments in reduction of debt financing and capital lease obligations                                  |                                                           |            | (1,306,886 | )           |         |            | (840,728   | )      
|                                          | Debt issue costs                                                                                       |                                                           |            | (9,366     | )           |         |            | (11,594    | )      
|                                          | Increase (decrease) in customer deposits                                                               |                                                           |            | 16,367     |             |         |            | (7,120     | )      
|                                          | Payment of common and preferred dividends                                                              |                                                           |            | (21,021    | )           |         |            | (13,138    | )      
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           
|Net cash provided by financing activities |                                                                                                        |                                                           | 1,341,305  |            |             |         | 1,242,127  |           
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           
|Increase in cash                          |                                                                                                        |                                                           | 20,616     |            |             |         | 9,022      |           
|Cash at beginning of period               |                                                                                                        |                                                           | 66,049     |            |             |         | 79,383     |           
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           
|                                          | Cash at end of period                                                                                  |                                                           | $          | 86,665     |             |         | $          | 88,405     |        
|                                          |                                                                                                        |                                                           |            |            |             |         |            |           

(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, 2003 AND 2002
(Dollars in thousands)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

|                                 |                                                                           |  |             |         |      |  |   |         | 
|-------------------------------- | ------------------------------------------------------------------------- |  | ----------- | ------- | ---- |  | - | ------- | 
|                                 |                                                                           |  | 2003        |         | 2002
|                                 |                                                                           |  |             |         |     
|                                 |                                                                           |  | (Unaudited)
|Cash paid during the period for: |                                                                           |  |             |         |      |  |   |        
|                                 | Interest (net of amount
capitalized of $13,100 (2003) and
$15,634 (2002)) |  | $           | 120,551 |      |  | $ | 100,513 | 
|                                 | Income taxes (net of refunds)                                             |  |             | 1,698   |      |  |   | 2,065   | 

See notes to condensed consolidated financial statements.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Dollars in thousands)
(Unaudited)



|A. |  | Basis of Preparation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain reclassifications have been made to the 2002 unaudited
condensed consolidated financial statements to conform to the 2003
presentation. Operating results for the three months ended March 31, 2003
are not necessarily indicative of the results that may be expected for the
year ended December 31, 2003. These statements should be read in
conjunction with the consolidated financial statements and footnotes thereto
included in the Companys annual report on Form 10-K for the year ended
December 31, 2002.
|  
|B. |  | Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | The Company uses derivatives to manage exposures to interest rate and
foreign currency risks. During the three months ended March 31, 2003, the
Company recorded the following in earnings in accordance with Statement of
Financial Accounting Standards No. 133  Accounting for Certain Derivative
Instruments and Certain Hedging Activities, as amended by Statement of
Financial Accounting Standards No. 138 and related implementation guidance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                   |                                             |   |       |       |  
|---------------------------------- | ------------------------------------------- | - | ----- | ----- | -
|Related to derivative instruments: |                                             |   |       |      
|                                   | Fair value of non-hedging instruments       |   | $     | 2,541 |  
|                                   | Ineffectiveness related to cash flow hedges |   |       | (91   | )
|                                   |                                             |   |       |      
|Total effect on earnings           |                                             | $ | 2,450 |      
|                                   |                                             |   |       |      



| |  | During the three months ended March 31, 2003, $32,840 (net) was reclassified
from accumulated other comprehensive income to interest expense when
interest was paid or received on the Companys cash flow hedges. The
Company estimates that within the next twelve months it will amortize into
earnings approximately $100,000 of the pre-tax balance in other
comprehensive income under cash flow hedge accounting in connection with the
Companys program to convert debt from floating to fixed rates.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

Forward Looking Statements

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

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

Financial Condition

The Company borrows funds to purchase new and used flight equipment,
including funds for progress payments during the construction phase, and to
pay off existing debt obligations as they mature. Theses funds are borrowed
principally on an unsecured basis from various sources. During the first
quarter of 2003, the Company borrowed $2.9 billion (excluding commercial
paper) and $520.0 million was provided by operating activities to meet those
needs. As of March 31, 2003, the Company had committed to purchase 487
aircraft from Airbus and Boeing at an estimated aggregated purchase price of
$27.9 billion for delivery through 2010 and options to purchase 18
additional aircraft at an estimated aggregate purchase price of
approximately $1.3 billion. The Company currently expects to fund
expenditures for aircraft as well as liquidity needs from a combination of
available cash balances, internally generated funds and financing
arrangements. The Companys debt financing and capital lease obligations
were comprised of the following at the following dates:

|                                                 |                                                           |   |                        |            |              |   |           |            |  
|------------------------------------------------ | --------------------------------------------------------- | - | ---------------------- | ---------- | ------------ | - | --------- | ---------- | -
|                                                 |                                                           |   | March 31,              |            | December 31,
|                                                 |                                                           |   | 2003                   |            | 2002        
|                                                 |                                                           |   |                        |            |             
|                                                 |                                                           |   | (Dollars in thousands)
|Public term debt with single maturities          |                                                           | $ | 8,000,775              |            |              | $ | 7,475,775 |           
|Public medium-term notes with varying maturities |                                                           |   | 5,560,500              |            |              |   | 4,969,500 |           
|Capital lease obligations                        |                                                           |   | 242,203                |            |              |   | 260,623   |           
|Bank and other term debt                         |                                                           |   | 2,556,326              |            |              |   | 2,084,793 |           
|                                                 |                                                           |   |                        |            |              |   |           |           
|                                                 | Total term debt, bank debt, and capital lease obligations |   |                        | 16,359,804 |              |   |           | 14,790,691 |  
|Commercial paper                                 |                                                           |   | 4,004,715              |            |              |   | 4,218,504 |           
|Deferred debt discount                           |                                                           |   | (23,271                | )          |              |   | (31,928   | )         
|                                                 |                                                           |   |                        |            |              |   |           |           
|                                                 | Total debt financing and capital lease obligations        |   | $                      | 20,341,248 |              |   | $         | 18,977,267 |  
|                                                 |                                                           |   |                        |            |              |   |           |           
|Selected interest rates and ratio:               |                                                           |   |                        |            |              |   |           |           
|                                                 | Composite interest rate                                   |   |                        | 4.57       | %            |   |           | 4.73       | %
|                                                 | Percentage of total debt at fixed rates                   |   |                        | 73.75      | %            |   |           | 76.67      | %
|                                                 | Composite interest rate on fixed rate debt                |   |                        | 5.58       | %            |   |           | 5.69       | %
|                                                 | Bank prime rate                                           |   |                        | 4.25       | %            |   |           | 4.25       | %

The above amounts represent the Companys anticipated settlement of its
currently outstanding debt obligations. Certain adjustments required to
present currently outstanding debt obligations have been recorded and
presented separately on the face of the balance sheet, including adjustments
related to foreign currency and interest rate hedging activities. The
Company has eliminated the currency exposure arising from foreign currency
denominated notes by either hedging the notes through swaps or through the
offset provided by operating lease payments. The Company translates the debt
into US dollars using current exchange rates. The foreign exchange
adjustment for the foreign currency denominated debt was $330,040 (2003) and
$264,880 (2002). Composite interest rates and percentages of total debt at
fixed rate reflect the effect of derivative instruments.

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##### Table of Contents



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

Public Debt

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

|                                                                                                                                                  |  |          |       |                   |  |                       |       |                 |  |   |       |     |  |   |       |    
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | ----- | ----------------- |  | --------------------- | ----- | --------------- |  | - | ----- | --- |  | - | ----- | ---
|                                                                                                                                                  |  | Maximum  |       | Sold as of        |  | Sold as of            |       | Sold as of     
|                                                                                                                                                  |  | Offering |       | December 31, 2002 |  | March 31, 2003        |       | April 30 , 2003
|                                                                                                                                                  |  |          |       |                   |  |                       |       |                
|                                                                                                                                                  |  |          |       |                   |  | (Dollars in millions) |       |                 |  |  
|Registration
statement
dated
December 31,
2002
(including
$2.0 billion
Medium-Term
Note program
and $1.0
billion
Retail
Medium-Term
Note
Program) |  | $        | 6,080 | (a)               |  | $                     |      |                 |  | $ | 2,346 |     |  | $ | 3,701 |    
|Euro
Medium-Term
Note
Programme
dated May
2002                                                                                                    |  |          | 4,000 |                   |  |                       | 2,314 | (b)             |  |   | 2,314 | (b) |  |   | 2,314 | (b)



---

|(a) |  | Includes $1.08 billion, which was incorporated into the
registration statement from a prior registration statement, increasing
the maximum offering from $5.0 billion to $6.08 billion.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | The Company has hedged the foreign currency risk of the notes
through operating lease payments or derivatives.                                                                         

Capital Lease Obligations

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

Bank Term Debt

In January 1999, the Company entered into an Export Credit Facility, up
to a maximum of $4.3 billion, for aircraft to be delivered through 2001. The
Company used the facility to fund 85% of each aircrafts purchase price.
This facility is guaranteed by various European Export Credit Agencies. The
Company financed 62 aircraft with $2.8 billion under this facility over ten
years with interest rates from 5.753% to 5.898%. The debt is collaterized by
a pledge of the shares of a subsidiary of the Company which holds title to
the aircraft financed under the facility.

In 2003, the Company entered into various bank financings for a total
funded amount of $530.0 million. The financings mature through 2009. The
interest rates are LIBOR based and ranged from 2.465% to 2.935% at March 31,
2003.

Commercial Paper

The Company currently has a $4.8 billion Commercial Paper Program.
Under this program, the Company may borrow in minimum increments of $100,000
for a period from one day to 270 days. Notwithstanding the programs size,
it is the Companys intention to sell commercial paper not to exceed 150% of
the aggregate amount of the backup facilities available (see Bank
Commitments). The weighted average interest rate of the Companys Commercial
Paper Program was 1.26% at March 31, 2003 and 1.46% at December 31, 2002.

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##### Table of Contents



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

Bank Commitments

As of March 31, 2003, the Company had committed revolving loans and
lines of credit with 20 commercial banks aggregating $3.15 billion. These
revolving loans and lines of credit provide for interest rates that vary
according to the pricing option in effect at the time of borrowing. Pricing
options include prime, a range from .25% to .35% over LIBOR based upon
utilization, or a rate determined by a competitive bid process with the
banks. The revolving loans and lines of credit are subject to facility fees
of up to .10% of amounts available. This financing is used primarily as
backup for the Companys Commercial Paper Program. The Company had not drawn
on its revolving loans and lines of credit as of March 31, 2003.

Off Balance Sheet Arrangements

In 1995, 1996 and 1997, the Company, through subsidiaries, entered into
sale-leaseback transactions providing proceeds to the Company in the amounts
of $413.0 million, $507.6 million and $601.9 million, respectively, each
relating to seven aircraft. The transactions resulted in the sale and
leaseback of these aircraft under one year operating leases, each with six
one year extension options for a total of seven years for each aircraft. The
Company has not recorded any gains related to the transactions. The Company
has the option to either buy back the aircraft or redeliver the aircraft for
a fee to the lessor at the end of any lease period. The lease rates equate
to fixed principal amortization and floating interest payments based on
LIBOR or commercial paper pricing. The Company had repurchased three
aircraft before the lease termination, which were sold to third parties, and
the remaining five aircraft from the 1995 sale-leaseback transaction when
the leases expired in December 2002. If the Company does not negotiate
extensions of the one-year operating lease terms as they expire in September
2003 and 2004, it will be required to borrow additional funds to terminate
the transactions and reacquire the assets. The estimated remaining minimum
lease payments (exclusive of the interest component of rent) and buy-back
amounts, assuming the current contractual end of the transactions, are
$381.0 million (2003) and $462.4 million (2004). The Companys
implementation of FASB Interpretation No. 46 (FIN 46) may require the
Company to consolidate these entities, starting in the third quarter of
2003. If the Company is required to consolidate these entities, it expects
to record assets and liabilities of approximately $840.0 million and will
cease to record rent expense for the operating lessees.

The Company does not have any other relationships with unconsolidated
entities, which have been established for the purpose of facilitating
off-balance sheet arrangements or for other contractually narrow or limited
purposes. The Company has, however, from time to time established
subsidiaries, entered into joint ventures or created other partnership
arrangements with the limited purpose of leasing aircraft or facilitating
borrowing arrangements. The Company is in the process of reviewing all
entities that may be considered Variable Interest Entities and in which the
Company may have a variable interest as defined by FIN 46. The Company has
not yet determined the possible impact of consolidation of these entities,
due to the analysis and data collection effort required to apply FIN 46.

Derivatives

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

The counterparty to the Companys derivative instruments is AIG
Financial Products Corp., a related party with the highest ratings available
from the credit rating agencies, which enters into identical transactions
with independent third parties. The derivatives are subject to a bilateral
security agreement, which, in certain circumstances, may allow one party to
the agreement to require the second party to the agreement to provide
collateral. Failure of the instruments or counterparty to perform under the
derivative contracts could have a material impact on the Companys results
of operations.

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##### Table of Contents



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

Market Liquidity Risk

The Company is in compliance with all covenants and other requirements
set forth in its credit agreements. Further, the Company does not have any
rating downgrade triggers that would automatically accelerate the maturity
dates of its debt. However, a downgrade in the Companys credit rating could
adversely affect the Companys ability to renew existing, or obtain access
to new financing arrangements and would increase the cost of such financing
arrangements. For example, a downgrade in credit rating could preclude the
Company from issuing commercial paper under its current program.

Turmoil in the airline industry, continued global political unrest, and
worldwide health issues have led to increased uncertainty in the debt
markets in which the Company borrows funds. While the Company has been able
to borrow the funds necessary to finance operations in the current market
environment, additional turmoil in the airline industry or political
environment could limit the Companys ability to borrow funds from its
current funding sources. Should this occur the Company would seek
alternative sources of funding, including securitizations, manufacturers
financings, drawings upon its revolving loans and lines of credit facilities
or additional short-term borrowings. If the Company were unable to obtain
sufficient funding, it would negotiate with manufacturers to defer
deliveries of aircraft.

The following summarizes the Companys contractual obligations at March
31, 2003, and the possible effect of such obligations on the Companys
liquidity and cash flows in future periods.

Existing Commitments (Exclusive of Interest)

|                                                         |  |                                |            |      |  |      |           |      |  |      |           |      |  |                        |           |  |  |   |           |  |  |   |           |  |  |   |           | 
|-------------------------------------------------------- |  | ------------------------------ | ---------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---------------------- | --------- |  |  | - | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                                         |  | Commitments Due by Fiscal Year
|                                                         |  |                               
|                                                         |  | Total                          |            | 2003 |  | 2004 |           | 2005 |  | 2006 |           | 2007 |  | Thereafter            
|                                                         |  |                                |            |      |  |      |           |      |  |      |           |      |  |                       
|                                                         |  |                                |            |      |  |      |           |      |  |      |           |      |  | (Dollars in thousands) |           |  |  |   |           |  |  |  
|Public and Bank Term Debt                                |  | $                              | 16,117,601 |      |  | $    | 2,402,706 |      |  | $    | 3,509,624 |      |  | $                      | 2,802,549 |  |  | $ | 1,823,174 |  |  | $ | 2,622,424 |  |  | $ | 2,957,124 | 
|Capital Lease Obligations                                |  |                                | 242,203    |      |  |      | 93,326    |      |  |      | 105,194   |      |  |                        | 43,683    |  |  |   |          |  |  |   |          |  |  |   |          | 
|Commercial Paper                                         |  |                                | 4,004,715  |      |  |      | 4,004,715 |      |  |      |          |      |  |                        |          |  |  |   |          |  |  |   |          |  |  |   |          | 
|Operating Leases                                         |  |                                | 127,230    |      |  |      | 4,595     |      |  |      | 11,336    |      |  |                        | 11,485    |  |  |   | 8,575     |  |  |   | 8,918     |  |  |   | 82,321    | 
|Operating Leases under
Sales-Lease-Back
Transactions (a) |  |                                | 843,407    |      |  |      | 381,016   |      |  |      | 462,391   |      |  |                        |          |  |  |   |          |  |  |   |          |  |  |   |          | 
|Purchase Commitments                                     |  |                                | 27,873,900 |      |  |      | 2,907,000 |      |  |      | 4,655,000 |      |  |                        | 4,682,700 |  |  |   | 5,013,700 |  |  |   | 4,332,100 |  |  |   | 6,283,400 | 
|                                                         |  |                                |            |      |  |      |           |      |  |      |           |      |  |                        |           |  |  |   |           |  |  |   |           |  |  |   |           | 
|Total                                                    |  | $                              | 49,209,056 |      |  | $    | 9,793,358 |      |  | $    | 8,743,545 |      |  | $                      | 7,540,417 |  |  | $ | 6,845,449 |  |  | $ | 6,963,442 |  |  | $ | 9,322,845 | 
|                                                         |  |                                |            |      |  |      |           |      |  |      |           |      |  |                        |           |  |  |   |           |  |  |   |           |  |  |   |           | 



---

|(a) |  | Includes the repurchase of six aircraft in 2003 and seven aircraft in 2004.
|--- |  | ---------------------------------------------------------------------------

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##### Table of Contents



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

Contingent Commitments

|                                 |  |                                       |           |      |  |      |         |      |  |                        |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|-------------------------------- |  | ------------------------------------- | --------- | ---- |  | ---- | ------- | ---- |  | ---------------------- | ------- | ---- |  | ---------- | ------- |  |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                 |  | Contingency Expiration by Fiscal Year
|                                 |  |                                      
|                                 |  | Total                                 |           | 2003 |  | 2004 |         | 2005 |  | 2006                   |         | 2007 |  | Thereafter
|                                 |  |                                       |           |      |  |      |         |      |  |                        |         |      |  |           
|                                 |  |                                       |           |      |  |      |         |      |  | (Dollars in thousands) |         |      |  |            |         |  |  |  
|Purchase Options on
New Aircraft |  | $                                     | 1,287,200 |      |  | $    |        |      |  | $                      | 36,600  |      |  | $          | 295,100 |  |  | $ | 248,400 |  |  | $ | 567,000 |  |  | $ | 140,100 | 
|Put Options (a)                  |  |                                       | 769,995   |      |  |      | 231,614 |      |  |                        | 67,422  |      |  |            | 256,658 |  |  |   |        |  |  |   |        |  |  |   | 214,301 | 
|Asset Value
Guarantees (a)       |  |                                       | 153,189   |      |  |      | 63,000  |      |  |                        | 4,726   |      |  |            | 11,041  |  |  |   | 8,178   |  |  |   |        |  |  |   | 66,244  | 
|Loan Guarantees (a)              |  |                                       | 85,673    |      |  |      | 13,500  |      |  |                        | 3,456   |      |  |            | 5,000   |  |  |   | 6,000   |  |  |   |        |  |  |   | 57,717  | 
|Lines of Credit                  |  |                                       | 20,000    |      |  |      | 20,000  |      |  |                        |        |      |  |            |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|                                 |  |                                       |           |      |  |      |         |      |  |                        |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |         | 
|Total                            |  | $                                     | 2,316,057 |      |  | $    | 328,114 |      |  | $                      | 112,204 |      |  | $          | 567,799 |  |  | $ | 262,578 |  |  | $ | 567,000 |  |  | $ | 478,362 | 
|                                 |  |                                       |           |      |  |      |         |      |  |                        |         |      |  |            |         |  |  |   |         |  |  |   |         |  |  |   |         | 



---

|(a) |  | From time to time, the Company participates with airlines, banks and
other financial institutions to assist in financing aircraft by providing
asset guarantees, put options, or loan guarantees collateralized by
aircraft. As a result, should the Company be called upon to fulfill its
obligations, the Company would have recourse to the value of the
underlying aircraft.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Industry Condition

The Companys sources of revenue are principally from scheduled and charter
airlines and companies associated with the airline industry. The Companys
revenues and results of operation are therefore affected by how its customers
cope with the economic environment in which airlines operate. In the past two
years, the airline industry has been negatively affected by a number of
factors, including acts of terrorism and related lingering fears, the war in
Iraq, a sluggish worldwide economy, the cost of fuel, the cost of insurance and
most recently the outbreak of Severe Acute Respiratory Syndrome (SARS). The
Companys revenues and results of operations have been negatively affected in
2002 and 2003 by participation in customer restructurings and requirements to
re-lease aircraft repossessed from airlines which have ceased operations.
During 2003, two of the Companys customers, Avianca (1 aircraft) and Hawaiian
Airlines (4 aircraft), filed for protection under Chapter 11 of the United
States Bankruptcy Code and one of the Companys customers, Air Canada (11 owned
and one managed aircraft), filed for bankruptcy under Canadas Companies
Creditors Arrangement Act. At April 30, 2003, these airlines continue to
operate the aircraft under the protection of the bankruptcy proceedings.

The Company generates approximately 20% of its revenues from customers based in
Asia and the Pacific region, and has numerous other customers who operate
flights to and from those areas. Travel between Asia and the rest of the world
has been impacted by the outbreak of SARS. Many airlines in Asia and those
traveling to Asia have curtailed flights in response to the reluctance of
people willing to travel to Asia. What additional negative impact SARS will
have on the Companys revenues and results of operations for the year ending
December 31, 2003, as of yet, is still unknown.

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##### Table of Contents



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

Results of Operations- Three months ended March 31, 2003 versus 2002.

Revenues
from the rentals of flight equipment increased 15.2% to $701.5 million in 2003
compared to $609.0 million in 2002, due to an increase in the
number of aircraft available for operating lease, partially offset by an
increase in the number of aircraft being reconfigured and redelivered and
therefore not earning revenue for the entire period. At March 31, 2003, the
Company had one aircraft off-lease (not subject to a signed lease agreement or
a signed letter of intent), which had been off-lease for less than three
months. Revenues were also negatively impacted by lower lease rates and
restructured rents, as a result of a slowdown of the airline industry.

Lease Margin (Rentals of flight equipment less total expense, divided by
Rentals of flight equipment) is a measure by which the Company evaluates the
overall profitability of its leasing operations. The Companys lease margin
decreased to 22.23% in 2003 compared to 23.29% in 2002. The Company expects
factors described in Industry Conditions to further negatively impact revenues
in 2003 and beyond as airlines continue to experience financial difficulties.
At March 31, 2003 the Companys fleet, on which it earns rental revenue,
consisted of 590 aircraft compared to a fleet of 481 aircraft at March 31,
2002. The cost of the leased fleet, which includes aircraft subject to
sale-lease back transactions from which rental income is earned, increased to
$32.5 billion at March 31, 2003 compared to $27.2 billion at March 31, 2002.

In addition to its leasing operations, the Company engages in the
marketing of flight equipment throughout the lease term, as well as the sales
of third party owned flight equipment on a principal and commission basis.
Revenues from flight equipment marketing decreased to $8.0 million in 2003
compared to $13.3 million in 2002 as a result of the type of equipment marketed
in each of the quarters and net book value of the company owned equipment sold.
The Company did not sell any company owned equipment in 2003, but earned third
party marketing commissions and sold two company owned aircraft in 2002.

Interest and other revenue decreased to $12.9 million in 2003 compared to
$20.3 million in 2002 primarily due to a decrease in forfeitures of security
and other deposits and contract termination fees resulting from nonperformance
by customers and manufacturers.

Interest expense increased to $219.1 million in 2003 compared to $188.2
million in 2002 as a result of an increase in average debt outstanding, which
is borrowed to finance aircraft acquisitions (excluding the effect of debt
discount and foreign exchange adjustments), to $19.7 billion in 2003 compared
to $16.5 billion in 2002. This increase was partially offset by a decrease in
the average composite borrowing rate to 4.65% in 2003 compared to 5.00% in
2002. The Companys composite borrowing rate decreased as follows:

|                     |  |      |      |      |  |          |      |   |  |  |      |  
|-------------------- |  | ---- | ---- | ---- |  | -------- | ---- | - |  |  | ---- | -
|                     |  | 2003 |      | 2002 |  | Decrease
|                     |  |      |      |      |  |         
|Beginning of Quarter |  |      | 4.73 | %    |  |          | 5.07 | % |  |  | 0.34 | %
|End of Quarter       |  |      | 4.57 | %    |  |          | 4.93 | % |  |  | 0.36 | %
|Average              |  |      | 4.65 | %    |  |          | 5.00 | % |  |  | 0.35 | %

Interest expense for the three months ended March 31, 2003 includes a $2.5
million benefit related to derivative activities.

Depreciation of flight equipment increased 21.8% to $264.1 million in 2003
compared to $216.8 million in 2002 due to the increased cost of the fleet.

The Company, in prior periods, had entered into sale-leaseback
transactions. Currently 13 aircraft are accounted for under these
transactions. Flight equipment rent decreased to $13.5 million in 2003 compared
to $19.4 million in 2002 due to buy back of five aircraft in connection with
the maturity of one facility in 2002, principal amortization and a decrease in
the lease rates, resulting from a decrease in interest rates, affecting the
floating rate component of the lease rates.

Provision for overhauls increased to $28.2 million in 2003 compared to
$21.3 million in 2002 due to an increase in collections and an increase in
aggregate number of hours flown on which the Company collects overhaul revenue.

The provision for income taxes decreased to $59.6 million in 2003 compared
to $62.1 million in 2002. The effective tax rate decreased to 33.7% from 35.4%
in the first quarter 2003 compared to 2002. The decrease resulted from the
increased impact of the Extraterritorial Income regime due to new deliveries in 2003.

The Company has historically re-leased aircraft returning at the end of
the lease before the end of the lease term. For aircraft returning before the
end of the lease term, the Company has generally been able to re-lease aircraft
within two to three months of its return. The Company has not recognized any
impairment related to its fleet, as the existing service potential of the
aircraft in the Companys portfolio has not been diminished. Further, the
Company has been able to re-lease aircraft without diminution in lease rates to
an extent that would warrant an impairment write down.

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##### Table of Contents






ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Value at Risk

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

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

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

The Company calculates the VaR with respect to the net fair value by using
historical scenarios. This methodology entails re-pricing all assets and
liabilities under explicit changes in market rates within a specific historical
time period. In this case, the most recent three years of historical
information for interest rates and foreign exchange rates were used to
construct the historical scenarios at March 31, 2003 and December 31, 2002
respectively. For each scenario, each financial instrument is re-priced.
Scenario values for the Company are then calculated by netting the values of
all the underlying assets and liabilities. The final VaR number represents the
maximum adverse deviation in fair market value incurred by these scenarios with
95% confidence (i.e. only 5% of historical scenarios show losses greater than
the VaR figure). A one month holding period is assumed in computing the VaR
figure. The following table presents the average, high and low VaRs for the
Company with respect to its fair value for the periods ended March 31, 2003 and
December 31, 2002:

|              |  |                    |     |                   |  |                       |     |         |  |      |     |     |  |   |      |  |  |   |      |  |  |   |     | 
|------------- |  | ------------------ | --- | ----------------- |  | --------------------- | --- | ------- |  | ---- | --- | --- |  | - | ---- |  |  | - | ---- |  |  | - | --- | 
|              |  | ILFC Market Risk  
|              |  |                   
|              |  | Three
Months Ended |     | Year
Ended       
|              |  | March 31, 2003     |     | December 31, 2002
|              |  |                    |     |                  
|              |  |                    |     |                   |  | (Dollars in millions) |     |         |  |      |     |     |  |  
|              |  | Average            |     | High              |  | Low                   |     | Average |  | High |     | Low
|              |  |                    |     |                   |  |                       |     |         |  |      |     |    
|Combined      |  | $                  | 7.8 |                   |  | $                     | 7.8 |         |  | $    | 7.8 |     |  | $ | 20.1 |  |  | $ | 42.8 |  |  | $ | 7.8 | 
|Interest Rate |  |                    | 7.9 |                   |  |                       | 7.9 |         |  |      | 7.8 |     |  |   | 20.0 |  |  |   | 42.8 |  |  |   | 7.8 | 
|Currency      |  |                    | 1.2 |                   |  |                       | 1.3 |         |  |      | 1.2 |     |  |   | 0.5  |  |  |   | 1.2  |  |  |   | 0.0 | 

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ITEM 4. CONTROLS AND PROCEDURES

During the 90 day period before the filing of this report, the Chairman of
the Board and Chief Executive Officer and the Vice Chairman, Chief Financial
Officer and Chief Accounting Officer of the Company (collectively, the
Certifying Officers) have evaluated the effectiveness of the Companys
disclosure controls and procedures. These disclosure controls and procedures
are those controls and procedures which are designed to insure that all of the
information required to be disclosed by the Company in its periodic reports
filed with the Securities and Exchange Commission (the Commission) is
recorded, processed, summarized and reported within the time periods specified
by the Commission rules and forms, and that the information is communicated to
the Certifying Officers on a timely basis.

The Certifying Officers concluded, based on their evaluation, that the
Companys disclosure controls and procedures are effective for the Company,
taking into consideration the size and nature of the Companys business and
operations. No significant deficiencies or material weaknesses in the controls
or procedures were detected; therefore, no corrective actions were needed to be
taken. Subsequent to the date when the disclosure controls and procedures were
evaluated, there have not been any significant changes in the Companys
disclosure controls or procedures or in other factors that could significantly
affect such controls or procedures.

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PART II. OTHER INFORMATION




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | a) |  | Exhibits                                                                                                                                                                                
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | 12.  Computation of Ratios of Earnings to Fixed Charges and Preferred Stock Dividends.                                                                                                  
|
| | b) |  | Reports on Form 8-K:                                                                                                                                                                    
|
| |    |  | Form 8-K, event date January 8, 2003 (Item 7)
Form 8-K, event date January 24, 2003 (Item 7)
Form 8-K, event date February 5, 2003 (Item 7)
Form 8-K, event date March 14, 2003 (Item 7)

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SIGNATURES

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

|                                        |  |                                                                                                   
|--------------------------------------- |  | --------------------------------------------------------------------------------------------------
|INTERNATIONAL LEASE FINANCE CORPORATION |  |                                                                                                   
|                                        |  |                                                                                                   
|April 30, 2003                          |  | /S/ Steven F. Udvar-Hazy

STEVEN F. UDVAR-HAZY
Chairman of the Board and
Chief Executive Officer  
|                                        |  |                                                                                                   
|April 30, 2003                          |  | /S/ Alan H. Lund

ALAN H. LUND
Vice Chairman,
Chief Financial Officer
and Chief Accounting Officer

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CERTIFICATIONS

I, Steven F. Udvar-Hazy, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of International Lease
Finance Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: April 30, 2003

|                                                                                               
|-----------------------------------------------------------------------------------------------
|/S/ Steven F. Udvar-Hazy
STEVEN F. UDVAR-HAZY
Chairman of the Board and Chief Executive Officer

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CERTIFICATIONS

I, Alan H. Lund, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of International Lease
Finance Corporation;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: April 30, 2003

|                                                                                                 
|-------------------------------------------------------------------------------------------------
|/S/ Alan H. Lund
ALAN H. LUND
Vice Chairman, Chief Financial Officer and Chief Accounting Officer

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES




INDEX TO EXHIBITS

Exhibit No.

|   |  |                                                                                 
|-- |  | --------------------------------------------------------------------------------
|12 |  | Computation of Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends

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