##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10  Q



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

For the quarterly period ended June 30, 2001

OR



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

For the transition period from ________ to _________

Commission file number          0-11350

International Lease Finance Corporation
(Exact name of registrant as specified in its charter)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]        No [   ]

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

|                           |  |                              
|-------------------------- |  | -----------------------------
|Class                      |  | Outstanding at August 6, 2001
|                           |  |                              
|Common Stock, no par value |  | 35,818,122                   



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TABLE OF CONTENTS



|                              |                                                                                       |                                                                      |  |  |  |  |  | 
|----------------------------- | ------------------------------------------------------------------------------------- | -------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              |                                                                                       | CONDENSED CONSOLIDATED BALANCE SHEETS                               
|                              |                                                                                       | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                              |                                                                                       | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                              |                                                                                       | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                              |                                                                                       | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                
|                              | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                              | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION   
|                              | ITEM 6. Exhibits and Reports on Form 8-K                                             
|SIGNATURES                   
|Exhibit 12.1                 



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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

INDEX

|                               |                                                                                                   |                                                                                                                |          |   | 
|------------------------------ | ------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------- | -------- | - | 
|                               |                                                                                                   |                                                                                                                | Page No.
|Part I. Financial Information:
|                              
|                              
|                              
|                              
|                               | Item 1. Financial Statements (Unaudited)                                                          |                                                                                                                |         
|                              
|                              
|                              
|                              
|                               |                                                                                                   | Condensed Consolidated Balance Sheets
June 30, 2001 and December 31, 2000                                      |          | 3
|                              
|                              
|                              
|                              
|                               |                                                                                                   | Condensed Consolidated Statements of Income and
Comprehensive Income
Three Months Ended June 30, 2001 and 2000 |          | 4
|                              
|                              
|                              
|                              
|                               |                                                                                                   | Condensed Consolidated Statements of
Income and Comprehensive Income
Six Months Ended June 30, 2001 and 2000   |          | 5
|                              
|                              
|                              
|                              
|                               |                                                                                                   | Condensed Consolidated Statements of Cash Flows
Six Months Ended June 30, 2001 and 2000                        |          | 6
|                              
|                              
|                              
|                              
|                               |                                                                                                   | Notes to Condensed Consolidated Financial Statements                                                           |          | 8
|                              
|                              
|                              
|                              
|                               | Item 2. Managements Discussion and Analysis of the
Financial Condition and Results of Operations |                                                                                                                | 12      
|                              
|                              
|                              
|                              
|                               | Item 3. Quantitative and Qualitative Disclosures About
Market Risk                                |                                                                                                                | 18      
|                              
|                              
|                              
|                              
|Part II. Other Information     |                                                                                                   |                                                                                                               
|                              
|                              
|                              
|                              
|                               | Item 6. Exhibits and Reports on Form 8-K                                                          |                                                                                                                | 19      
|                              
|                              
|                              
|                              
|Signatures                     |                                                                                                   | 20                                                                                                            

-2-



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##### Table of Contents

















|       |                              | 
|------ | ---------------------------- | 
|ITEM 1 | PART I FINANCIAL INFORMATION

INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)


|                                                                                                                                                                                                                                 |                               |   |             |           |              |   |            |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | - | ----------- | --------- | ------------ | - | ---------- | --------- | 
|                                                                                                                                                                                                                                 |                               |   | June 30,    |           | December 31,
|                                                                                                                                                                                                                                 |                               |   | 2001        |           | 2000        
|                                                                                                                                                                                                                                 |                               |   |             |           |             
|                                                                                                                                                                                                                                 |                               |   | (Unaudited) |           |              |   |           
|ASSETS                                                                                                                                                                                                                           |                               |   |             |           |              |   |            |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Cash, including interest bearing accounts
of $127,374 (2001) and $130,576 (2000)                                                                                                                                                 |                               | $ | 132,302     |           |              | $ | 134,653    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Current income taxes receivable                                                                                                                                                                                                  |                               |   | 124,536     |           |              |   | 58,990     |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Notes receivable and net investment in
finance and sales-type leases                                                                                                                                                             |                               |   | 426,578     |           |              |   | 410,125    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Flight equipment under operating leases                                                                                                                                                                                          |                               |   | 23,133,956  |           |              |   | 20,534,304 |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                 | Less accumulated depreciation |   |             | 3,026,955 |              |   |            | 2,655,915 | 
|                                                                                                                                                                                                                                 |                               |   |             |           |              |   |            |          
|                                                                                                                                                                                                                                 |                               |   | 20,107,001  |           |              |   | 17,878,389 |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Deposits on flight equipment purchases                                                                                                                                                                                           |                               |   | 1,151,429   |           |              |   | 1,058,182  |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Accrued interest, other receivables
and other assets                                                                                                                                                                             |                               |   | 105,755     |           |              |   | 93,719     |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Investments                                                                                                                                                                                                                      |                               |   | 57,857      |           |              |   | 45,086     |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Deferred debt issue costs-less
accumulated amortization of $66,788
(2001) and $60,613 (2000)                                                                                                                                     |                               |   | 25,261      |           |              |   | 22,334     |          
|                                                                                                                                                                                                                                 |                               |   |             |           |              |   |            |          
|                                                                                                                                                                                                                                 |                               | $ | 22,130,719  |           |              | $ | 19,701,478 |          
|                                                                                                                                                                                                                                 |                               |   |             |           |              |   |            |          
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                                                             |                               |   |             |           |              |   |            |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Accrued interest and other payables                                                                                                                                                                                              |                               | $ | 239,794     |           |              | $ | 249,179    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Debt financing, net of deferred debt
discount of $15,503 (2001) and $34,754 (2000)                                                                                                                                               |                               |   | 14,996,916  |           |              |   | 12,958,164 |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Capital lease obligations                                                                                                                                                                                                        |                               |   | 415,080     |           |              |   | 463,362    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Security & other deposits on flight
equipment                                                                                                                                                                                    |                               |   | 1,029,563   |           |              |   | 905,414    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Rentals received in advance                                                                                                                                                                                                      |                               |   | 134,539     |           |              |   | 129,152    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Deferred income taxes payable                                                                                                                                                                                                    |                               |   | 1,710,235   |           |              |   | 1,532,428  |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|SHAREHOLDERS EQUITY                                                                                                                                                                                                             |                               |   |             |           |              |   |            |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Preferred stock no par value; 20,000,000
authorized shares
Market Auction Preferred Stock, $100,000 per
share liquidation value; Series A, B, C, D, E,
F, G and H (2001 and 2000) each having 500
shares issued and outstanding |                               |   | 400,000     |           |              |   | 400,000    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Common stock no par value; 100,000,000
authorized shares, 35,818,122 (2001
and 2000) issued and outstanding                                                                                                                     |                               |   | 3,582       |           |              |   | 3,582      |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Additional paid-in capital                                                                                                                                                                                                       |                               |   | 579,955     |           |              |   | 579,955    |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Accumulated other comprehensive (loss) income                                                                                                                                                                                    |                               |   | (16,148     | )         |              |   | 9,256      |          
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                
|Retained earnings                                                                                                                                                                                                                |                               |   | 2,637,203   |           |              |   | 2,470,986  |          
|                                                                                                                                                                                                                                 |                               |   |             |           |              |   |            |          
|                                                                                                                                                                                                                                 |                               |   | 3,604,592   |           |              |   | 3,463,779  |          
|                                                                                                                                                                                                                                 |                               |   |             |           |              |   |            |          
|                                                                                                                                                                                                                                 |                               | $ | 22,130,719  |           |              | $ | 19,701,478 |          
|                                                                                                                                                                                                                                 |                               |   |             |           |              |   |            |          

See notes to condensed consolidated financial statements.

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##### Table of Contents









INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
(Dollars in thousands)

|                                      |                                         |   |             |         |      |   |         |         | 
|------------------------------------- | --------------------------------------- | - | ----------- | ------- | ---- | - | ------- | ------- | 
|                                      |                                         |   | 2001        |         | 2000
|                                      |                                         |   |             |         |     
|                                      |                                         |   | (Unaudited)
|REVENUES:                             |                                         |   |             |         |      |   |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Rental of flight equipment              |   | $           | 623,619 |      |   | $       | 581,047 | 
|                                     
|                                     
|                                     
|                                     
|                                      | Flight equipment marketing              |   |             | 20,653  |      |   |         | 14,412  | 
|                                     
|                                     
|                                     
|                                     
|                                      | Interest and other                      |   |             | 14,043  |      |   |         | 14,398  | 
|                                      |                                         |   |             |         |      |   |         |        
|                                      |                                         |   | 658,315     |         |      |   | 609,857 |        
|                                      |                                         |   |             |         |      |   |         |        
|EXPENSES:                             |                                         |   |             |         |      |   |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Interest                                |   |             | 203,614 |      |   |         | 185,150 | 
|                                     
|                                     
|                                     
|                                     
|                                      | Depreciation of flight equipment        |   |             | 201,566 |      |   |         | 177,180 | 
|                                     
|                                     
|                                     
|                                     
|                                      | Flight equipment rent                   |   |             | 28,396  |      |   |         | 35,006  | 
|                                     
|                                     
|                                     
|                                     
|                                      | Provision for overhauls                 |   |             | 21,612  |      |   |         | 26,957  | 
|                                     
|                                     
|                                     
|                                     
|                                      | Selling, general & administrative       |   |             | 14,854  |      |   |         | 10,836  | 
|                                      |                                         |   |             |         |      |   |         |        
|                                      |                                         |   | 470,042     |         |      |   | 435,129 |        
|                                      |                                         |   |             |         |      |   |         |        
|INCOME BEFORE INCOME TAXES            |                                         |   | 188,273     |         |      |   | 174,728 |        
|                                     
|                                     
|                                     
|                                     
|                                      | Provision for income taxes              |   |             | 66,748  |      |   |         | 61,788  | 
|                                      |                                         |   |             |         |      |   |         |        
|NET INCOME                            |                                         |   | 121,525     |         |      |   | 112,940 |        
|                                      |                                         |   |             |         |      |   |         |        
|COMPREHENSIVE INCOME:                 |                                         |   |             |         |      |   |         |        
|                                     
|                                     
|                                     
|                                     
|                                      | Net changes in cash flow hedges         |   |             | 10,260  |      |   |         |        | 
|                                     
|                                     
|                                     
|                                     
|                                      | Foreign currency translation adjustment |   |             | 2,556   |      |   |         |        | 
|                                      |                                         |   |             |         |      |   |         |        
|OTHER COMPREHENSIVE INCOME NET OF TAX |                                         |   | 12,816      |         |      |   |        |        
|                                      |                                         |   |             |         |      |   |         |        
|COMPREHENSIVE INCOME                  |                                         | $ | 134,341     |         |      | $ | 112,940 |        
|                                      |                                         |   |             |         |      |   |         |        

See notes to condensed consolidated financial statements.

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##### Table of Contents









INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(Dollars in thousands)

|                                                                      |                                         |   |             |           |      |   |           |           | 
|--------------------------------------------------------------------- | --------------------------------------- | - | ----------- | --------- | ---- | - | --------- | --------- | 
|                                                                      |                                         |   | 2001        |           | 2000
|                                                                      |                                         |   |             |           |     
|                                                                      |                                         |   | (Unaudited)
|REVENUES:                                                             |                                         |   |             |           |      |   |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Rental of flight equipment              |   | $           | 1,203,203 |      |   | $         | 1,112,837 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Flight equipment marketing              |   |             | 38,916    |      |   |           | 21,576    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest and other                      |   |             | 37,859    |      |   |           | 25,147    | 
|                                                                      |                                         |   |             |           |      |   |           |          
|                                                                      |                                         | $ | 1,279,978   |           |      |   | 1,159,560 |          
|                                                                      |                                         |   |             |           |      |   |           |          
|EXPENSES:                                                             |                                         |   |             |           |      |   |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Interest                                |   |             | 405,638   |      |   |           | 359,323   | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Depreciation of flight equipment        |   |             | 382,718   |      |   |           | 341,089   | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Flight equipment rent                   |   |             | 60,928    |      |   |           | 69,333    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Provision for overhauls                 |   |             | 46,090    |      |   |           | 47,743    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Selling, general & administrative       |   |             | 34,796    |      |   |           | 23,794    | 
|                                                                      |                                         |   |             |           |      |   |           |          
|                                                                      |                                         |   | 930,170     |           |      |   | 841,282   |          
|                                                                      |                                         |   |             |           |      |   |           |          
|INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGE |                                         |   | 349,808     |           |      |   | 318,278   |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Provision for income taxes              |   |             | 124,340   |      |   |           | 112,256   | 
|                                                                      |                                         |   |             |           |      |   |           |          
|NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
CHANGE NET OF TAXES |                                         |   | 225,468     |           |      |   | 206,022   |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Cumulative effect of accounting change                                |                                         |   | 15,191      |           |      |   |          |          
|                                                                      |                                         |   |             |           |      |   |           |          
|NET INCOME                                                            |                                         |   | 240,659     |           |      |   | 206,022   |          
|                                                                      |                                         |   |             |           |      |   |           |          
|COMPREHENSIVE INCOME:                                                 |                                         |   |             |           |      |   |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net changes in cash flow hedges         |   |             | (20,000   | )    |   |           |          | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Foreign currency translation adjustment |   |             | 15,068    |      |   |           |          | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cumulative effect of accounting change  |   |             | (20,473   | )    |   |           |          | 
|                                                                      |                                         |   |             |           |      |   |           |          
|OTHER COMPREHENSIVE INCOME NET OF TAX                                 |                                         |   | (25,405     | )         |      |   |          |          
|                                                                      |                                         |   |             |           |      |   |           |          
|COMPREHENSIVE INCOME                                                  |                                         | $ | 215,254     |           |      | $ | 206,022   |          
|                                                                      |                                         |   |             |           |      |   |           |          
|SUPPLEMENTAL COMPREHENSIVE INCOME INFORMATION                         |                                         |   |             |           |      |   |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Cumulative foreign currency translation gain
adjustment, net of tax   |                                         | $ | 25,695      |           |      |   |           |          
|                                                                      |                                         |   |             |           |      |   |           |          
|Cumulative cash flow hedge loss adjustment
net of tax                 |                                         | $ | (41,843     | )         |      |   |           |          
|                                                                      |                                         |   |             |           |      |   |           |          

See notes to condensed consolidated financial statements.

-5-



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##### Table of Contents









INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED June 30, 2001 AND 2000
(Dollars in thousands)

|                                                                                  |  |                                                                  |            |             |         |      |            |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------------------------------------------------------- | ---------- | ----------- | ------- | ---- | ---------- | - | ------- | -
|                                                                                  |  |                                                                  |            | 2001        |         | 2000
|                                                                                  |  |                                                                  |            |             |         |     
|                                                                                  |  |                                                                  |            | (Unaudited)
|OPERATING ACTIVITIES:                                                             |  |                                                                  |            |             |         |      |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Net income                                                                        |  | $                                                                | 240,659    |             |         | $    | 206,022    |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Adjustments to reconcile net income
to net cash provided by operating activities: |  |                                                                  |            |             |         |      |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Depreciation of flight equipment                                 |            |             | 382,718 |      |            |   | 341,089 |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Deferred income taxes                                            |            |             | 191,901 |      |            |   | 155,060 |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Foreign exchange adjustment of Euro denominated
debt             |            |             | (83,069 | )    |            |   |        |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Change in derivative instruments                                 |            |             | 95,449  |      |            |   |        |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Amortization of deferred debt issue costs                        |            |             | 6,175   |      |            |   | 5,432   |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Equity in net income of affiliates                               |            |             | (1,425  | )    |            |   | (873    | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Change in unamortized debt discount                              |            |             | 19,250  |      |            |   | (9,308  | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Changes in operating assets and liabilities:                                      |  |                                                                  |            |             |         |      |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Increase in notes receivable                                     |            |             | (21,297 | )    |            |   | (21,027 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Increase in accrued interest, other
receivables and other assets |            |             | (10,853 | )    |            |   | (19,205 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Change in current income taxes                                   |            |             | (65,546 | )    |            |   | (51,342 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | (Decrease)/Increase in accrued interest and
other payables       |            |             | (9,386  | )    |            |   | 2,127   |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                  |  | Increase in rentals received in
advance                          |            |             | 5,387   |      |            |   | 13,073  |  
|                                                                                  |  |                                                                  |            |             |         |      |            |  
|Net cash provided by operating activities                                         |  |                                                                  | 749,963    |             |         |      | 621,048    |  
|                                                                                  |  |                                                                  |            |             |         |      |            |  
|INVESTING ACTIVITIES:                                                             |  |                                                                  |            |             |         |      |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Acquisition of flight equipment for
operating leases                              |  |                                                                  | (2,653,168 | )           |         |      | (2,188,056 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Acquisition of flight equipment for finance leases                                |  |                                                                  | (39,207    | )           |         |      |           |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|(Increase)/Decrease in deposits and progress
payments                             |  |                                                                  | (93,247    | )           |         |      | 80,041     |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from disposal of flight equipment -
net of gain                          |  |                                                                  | 48,602     |             |         |      | 58,705     |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in notes receivable                                                      |  |                                                                  |           |             |         |      | (20,703    | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Collections on notes receivable and finance
leases                                |  |                                                                  | 24,732     |             |         |      | 21,374     |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in investment in unconsolidated
subsidiaries                             |  |                                                                  |           |             |         |      | (11,555    | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Dividends from unconsolidated subsidiary                                          |  |                                                                  | 26         |             |         |      |           |  
|                                                                                  |  |                                                                  |            |             |         |      |            |  
|Net cash used in investing activities                                             |  |                                                                  | (2,712,262 | )           |         |      | (2,060,194 | )
|                                                                                  |  |                                                                  |            |             |         |      |            |  
|FINANCING ACTIVITIES:                                                             |  |                                                                  |            |             |         |      |            |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Proceeds from debt financing                                                      |  |                                                                  | 6,271,292  |             |         |      | 4,993,826  |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payments in reduction of debt financing                                           |  |                                                                  | (4,351,950 | )           |         |      | (3,498,862 | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Debt issue costs                                                                  |  |                                                                  | (9,102     | )           |         |      | (2,590     | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Increase in customer deposits                                                     |  |                                                                  | 124,149    |             |         |      | 6,753      |  
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Payment of common and preferred dividends                                         |  |                                                                  | (74,441    | )           |         |      | (123,523   | )
|                                                                                  |  |                                                                  |            |             |         |      |            |  
|Net cash provided by financing activities                                         |  |                                                                  | 1,959,948  |             |         |      | 1,375,604  |  
|                                                                                  |  |                                                                  |            |             |         |      |            |  
|Decrease in cash                                                                  |  |                                                                  | (2,351     | )           |         |      | (63,542    | )
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Cash at beginning of period                                                       |  |                                                                  | 134,653    |             |         |      | 123,109    |  
|                                                                                  |  |                                                                  |            |             |         |      |            |  
|Cash at end of period                                                             |  | $                                                                | 132,302    |             |         | $    | 59,567     |  
|                                                                                  |  |                                                                  |            |             |         |      |            |  

-6-



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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED June 30, 2001 AND 2000
(Dollars in thousands)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

|                                 |                                                                       |  |  |  |  |  |             |         |      |  |   |         | 
|-------------------------------- | --------------------------------------------------------------------- |  |  |  |  |  | ----------- | ------- | ---- |  | - | ------- | 
|                                 |                                                                       |  |  |  |  |  | 2001        |         | 2000
|                                 |                                                                       |  |  |  |  |  |             |         |     
|                                 |                                                                       |  |  |  |  |  | (Unaudited)
|Cash paid during the period for: |                                                                       |  |  |  |  |  |             |        
|                                
|                                
|                                
|                                
|                                 | Interest(net of amount capitalized
$28,373 (2001) and $22,976 (2000)) |  |  |  |  |  | $           | 384,395 |      |  | $ | 348,469 | 
|                                
|                                
|                                
|                                
|                                 | Income taxes (net of refunds)                                         |  |  |  |  |  |             | 6,165   |      |  |   | 8,539   | 

2001:

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

2000:

Two aircraft were received in exchange for notes receivable and other
assets in the amount of $41,429.

See notes to condensed consolidated financial statements.

-7-



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##### Table of Contents









INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
(UNAUDITED)



|A. |  | 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 2000 unaudited condensed consolidated financial
statements to conform to the 2001 presentation. Operating results for
the six months ended June 30, 2001 are not necessarily indicative of
the results that may be expected for the year ended December 31, 2001.
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, 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|B. |  | Accounting for Derivatives and Hedging Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | All derivatives are recognized on the balance sheet at their fair value.
On the date that the Company enters into a derivative contract, it
designates the derivative as (1) a hedge of (a) the fair value of a
recognized asset or liability or (b) an unrecognized firm commitment
(a fair value hedge); (2) a hedge of (a) a forecasted transaction or (b)
the variability of cash flows that are to be received or paid in connection
with a recognized asset or liability (a cash flow hedge); or (3) a
foreign-currency fair value or cash flow hedge (a foreign currency hedge).
Changes in the fair value of a derivative that is highly effective as and
that is designated and qualifies as a fair-value hedge, along with changes
in the fair value of the hedged asset or liability that are attributable to
the hedged risk (including changes that reflects losses or gains on firm
commitments), are recorded in current-period earnings. Changes in the fair
value of a derivative that is highly effective as and that is designated and
qualifies as a cash flow hedge, to the extent that the hedge is effective,
are recorded in accumulated other comprehensive income, until earnings are
affected by the variability of cash flows of the hedged transaction (e.g.
until periodic settlements of the variable-rate asset or liability are
recorded in earnings). Any hedge ineffectiveness (which represents the
amount by which the changes in the fair value of the derivative exceed the
variability in the cash flows of the forecasted transaction) is recorded in
current-period earnings. Changes in the fair value of a derivative that is
highly effective as and that is designated and qualifies as a foreign
currency hedge is recorded in either current-period earnings or other
accumulated comprehensive income, depending on whether the hedging
relationship satisfies the criteria for a fair value or cash flow hedge.
Changes in the fair value of derivative trading and non-hedging instruments
are reported in current-period earnings.
|  
|   |  | The Company formally documents all relationships between hedging
instruments and hedged items, as well as risk management objectives and
strategies for undertaking various hedge transactions. This includes
linking all derivatives that are designated as fair value, cash flow, or
foreign currency hedges to (1) specific assets or liabilities on the balance
sheet, or (2) specific firm commitments or forecasted transactions. The
Company also formally assesses (both at the hedges inception and on an
ongoing basis) whether the derivatives that are used in hedging transactions
have been highly effective in offsetting changes in the fair value or cash
flows of hedged items and whether those derivatives may be expected to
remain highly effective in future periods. When it is determined that a
derivative is not (or has ceased to be) highly effective as a hedge, the
Company will discontinue hedge accounting prospectively, as discussed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

-8-



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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
(UNAUDITED)



| |  | The Company discontinues hedge accounting prospectively when (1) it
determines that the derivative is no longer effective in offsetting changes
in the fair value or cash flows of a hedged item; (2) the derivative expires
or is sold, terminated, or exercised; (3) it is no longer probable that the
forecasted transaction will occur; (4) a hedged firm commitment no longer
meets the definition of a firm commitment; or (5) management determines that
designating the derivative as a hedging instrument is no longer appropriate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | When hedge accounting is discontinued due to the Companys determination
that the derivative no longer qualifies as an effective fair value hedge,
the Company will continue to carry the derivative on the balance sheet at
its fair value, but cease to adjust the hedged asset or liability for
changes in fair value. When the Company discontinues hedge accounting
because it is no longer probable that the forecasted transaction will occur
in the originally expected period, the gain or loss on the derivative
remains in accumulated other comprehensive income and is reclassified into
earnings when the forecasted transaction affects earnings. However, if it
is probable that a forecasted transaction will not occur by the end of the
originally specified time period or within an additional two-month period of
time thereafter, the gains and losses that were accumulated in accumulated
other comprehensive income will be recognized immediately in earnings. In
all situations in which hedge accounting is discontinued and the derivative
remains outstanding, the Company will carry the derivative at its fair value
on the balance sheet, recognizing changes in the fair value in
current-period earnings.

-9-



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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
(DOLLARS IN THOUSANDS)
(UNAUDITED)

|C. |  | Adoption of SFAS 133                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The Company adopted 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 (SFAS 133) on January 1, 2001. The
Company uses derivatives to manage exposures to interest rate and foreign
currency risks. The Company recorded $4.4 million net-of-tax of hedge
ineffectiveness in interest expense related to cross currency fair value
hedges, for the six months ended June 30, 2001. Hedge ineffectiveness
related to cash flow hedges for the period was immaterial to the Company.
In accordance with the transition provision of SFAS 133, the Company
recorded the following cumulative effect adjustments in earnings as of
January 1, 2001, net of taxes:

|                                                                                                                                              |                                                   |   |         |         |   | 
|--------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------- | - | ------- | ------- | - | 
|Related to non-hedging instruments:                                                                                                           |                                                   |   |         |        
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                              | Fair value of hedging instruments                 |   | $       | 2,805   |  
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|Related to previous designated fair value hedging relationships                                                                               |                                                   |   |         |        
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                              | Fair value of hedging instruments                 |   |         | (13,954 | )
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                              | Offsetting changes in fair value of hedged items  |   |         | 13,954  |  
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                              | Previously deferred hedging gains and losses, net |   |         | 12,386  |  
|                                                                                                                                              |                                                   |   |         |        
|Total cumulative effect on earnings, net of tax                                                                                               |                                                   | $ | 15,191  |        
|                                                                                                                                              |                                                   |   |         |        
|In addition, the Company recorded the following net-of-tax
cumulative effect adjustments in other comprehensive income as of
January 1, 2001: |                                                   |   |         |        
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|Related to previously designated cash flow hedging relationships:                                                                             |                                                   |   |         |        
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                              | Fair value of hedging instruments                 |   | $       | (45,927 | )
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                              | Previously defined hedging gains and losses       |   |         | 25,454  |  
|                                                                                                                                              |                                                   |   |         |        
|Total cumulative effect on other comprehensive (loss)
income, net of tax                                                                      |                                                   | $ | (20,473 | )      
|                                                                                                                                              |                                                   |   |         |        

During the six months ended June 30, 2001, the Company recorded the
following in earnings, net of
taxes, in accordance with SFAS 133:

|                                                                |                                                  |   |        |         |  
|--------------------------------------------------------------- | ------------------------------------------------ | - | ------ | ------- | -
|Related to non-hedging instruments:                             |                                                  |   |        |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Fair value of hedging instruments                |   | $      | 1,344   |  
|                                                               
|                                                               
|                                                               
|                                                               
|Related to previous designated fair value hedging relationships |                                                  |   |        |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Fair value of hedging instruments                |   |        | (12,429 | )
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Offsetting changes in fair value of hedged items |   |        | 7,983   |  
|                                                                |                                                  |   |        |        
|Total cumulative effect on earnings, net of tax                 |                                                  | $ | (3,102 | )      
|                                                                |                                                  |   |        |        

-10-



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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001
(DOLLARS IN THOUSANDS)
(UNAUDITED)

During the six months ended June 30, 2001,
$12,547 was reclassified from
accumulated other comprehensive income to interest expense under cash flow
hedge accounting in connection with the Companys program to convert debt from
floating to fixed rates. The Company expects that within the next twelve
months it will reclassify as earnings $27,098 of the balance recorded in
accumulated other comprehensive income.

-11-



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##### Table of Contents











|       |                                                          | 
|------ | -------------------------------------------------------- | 
|ITEM 2 | INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD LOOKING STATEMENTS

Certain of the statements in this discussion, as well as other
forward-looking statements within this document, contain estimates and
projections of cash flows and debt financing to support future capital
requirements. While these forward-looking 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
forward-looking statements. The Company undertakes no obligation to release
publicly any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of anticipated
or unanticipated events.

FINANCIAL CONDITION

The Company borrows funds for the purchase of flight equipment, including
funds for progress payments during the construction phase from various sources,
principally on an unsecured basis. The Companys debt financing and capital
lease obligations were comprised of the following at the following dates:

| |                                                    |  |   |                        |   |              |   |            |   | 
| | -------------------------------------------------- |  | - | ---------------------- | - | ------------ | - | ---------- | - | 
| |                                                    |  |   | June 30,               |   | December 31,
| |                                                    |  |   | 2001                   |   | 2000        
| |                                                    |  |   |                        |   |             
| |                                                    |  |   | (Dollars in thousands)
| | Public term debt with single
maturities            |  | $ | 3,948,731              |   |              | $ | 3,456,675  |  
|
|
|
|
| | Public medium-term notes with
varying maturities   |  |   | 4,274,000              |   |              |   | 3,175,000  |  
|
|
|
|
| | Capital lease obligations                          |  |   | 415,080                |   |              |   | 463,362    |  
|
|
|
|
| | Bank and other term debt                           |  |   | 2,480,174              |   |              |   | 2,072,562  |  
| |                                                    |  |   |                        |   |              |   |           
| | Total term debt and capital lease
obligations      |  |   | 11,117,985             |   |              |   | 9,167,599  |  
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | Derivatives                                        |  |   | 159,822                |   |              |   |           |  
|
|
|
|
| | Commercial paper                                   |  |   | 4,149,693              |   |              |   | 4,288,681  |  
|
|
|
|
| | Deferred debt discount                             |  |   | (15,504                | ) |              |   | (34,754    | )
| |                                                    |  |   |                        |   |              |   |           
| | Total debt financing and capital lease
obligations |  | $ | 15,411,996             |   |              | $ | 13,421,526 |  
| |                                                    |  |   |                        |   |              |   |           
| | Composite interest rate                            |  |   | 5.49                   | % |              |   | 6.37       | %
|
|
|
|
| | Percentage of total debt at fixed rates            |  |   | 73.72                  | % |              |   | 68.65      | %
|
|
|
|
| | Composite interest rate on fixed rate debt         |  |   | 5.93                   | % |              |   | 6.20       | %
|
|
|
|
| | Bank prime rate                                    |  |   | 6.75                   | % |              |   | 9.50       | %

The interest on substantially all of the public debt (exclusive of the
Commercial Paper) is fixed for the terms of the notes. The Company has
committed revolving loans and lines of credit with 48 commercial banks
aggregating $3.2 billion and an uncommitted line of credit with one bank for
$30.0 million. These revolving loans and lines of credit principally provide for interest rates that vary according to the pricing option in effect at the
time of borrowing. Pricing options include prime, a range from .20% over LIBOR
to .35% over LIBOR based upon utilization, or a rate determined by a
competitive bid process with the banks. The revolving loans and lines
of credit are subject to facility fees of up to .08% of amounts available. Such financing
is used primarily as backup for the Companys Commercial Paper Program.

-12-



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##### Table of Contents



|       |                                                          | 
|------ | -------------------------------------------------------- | 
|ITEM 2 | INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


The Company has an effective shelf registration with respect to $2.0
billion of debt securities, under which $1,250.0 million of notes were sold
through June 30, 2001. Additionally, a $750.0 million Medium-Term Note Program
has been designated under the shelf registration, under which $750.0 million of
notes were sold through June 30, 2001. The Companys new shelf
registration statement in the amount of $4.0 billion became effective on May
10, 2001. A $1.5 billion Medium-Term Note program was implemented under the
shelf registration statement under which $920.0 million were sold as of
June 30, 2001.

The Company has a Euro Medium-Term Note Program for $2.0 billion, under
which $771.0 million (#750.0 million) in notes were sold as of June 30, 2001.
The Company has hedged the foreign currency risk of the notes through operating
lease payments or through currency swaps.

The Company has an Export Credit Facility, for up to a maximum of $4.3
billion, for approximately 75 aircraft to be delivered through 2001. The
Company has the right, but is not required, to use the facility to fund 85% of
each aircrafts purchase price. This facility is guaranteed by various
European Export Credit Agencies. The interest rate varies from 5.753% to
5.898% depending on the delivery date of the aircraft. Through June 30, 2001,
the Company had borrowed $2.5 billion under this facility.

The Company currently has a $4.8 billion Commercial Paper Program. Under
this program, the Company may borrow minimum $100,000 for a period from one day
to 270 days. The weighted average interest rate of the Companys Commercial
Paper Program was 4.00% and 6.60% at June 30, 2001 and 2000 respectively.

The Company believes that the combination of internally generated funds
and debt financing currently available to the Company will allow the
Company to meet its capital requirements for at least the next 12 months.

-13-



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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations  Three months ended June 30, 2001 versus 2000.

The 7.3% increase in revenues from the rentals of flight equipment from
$581.0 million in 2000 to $623.6 million in 2001, is due to an increase in the
number of aircraft available for operating lease. At June 30, 2001 the
Companys leased fleet consisted of 448 aircraft compared to a fleet of 402
aircraft at June 30, 2000. Additionally, the cost of the leased fleet, which
includes aircraft subject to sale-lease back transactions from which rental
income is earned, increased 12.4% from $21.8 billion in 2000 to $24.5 billion
in 2001.

In addition to its leasing operations, the Company engages in the
marketing of flight equipment at the end of, or during, the lease term, as well
as the sales of flight equipment on a principal and commission basis. Revenue
from flight equipment marketing increased from $14.4 million in 2000 to $20.7
million in 2001 primarily due to an increase in third party flight equipment
marketing commissions. The Company sold two aircraft and two engines in each
of the quarters ended June 30, 2001 and 2000.

Interest expense increased from $185.2 million in 2000 to $203.6 million
in 2001 as a result of an increase in debt outstanding, excluding the effect of
debt discount and excluding market values of derivatives, from $13.4 billion in
2000 to $15.3 billion in 2001, partially offset by a decrease in the average
composite borrowing rate from 6.23% in 2000 to 5.71% in 2001. The Companys
composite borrowing rate fluctuated as follows:

|                     |  |      |      |      |  |          |      |   |  |  |       |   
|-------------------- |  | ---- | ---- | ---- |  | -------- | ---- | - |  |  | ----- | --
|                     |  | 2001 |      | 2000 |  | Decrease
|                     |  |      |      |      |  |         
|Beginning of Quarter |  |      | 5.92 | %    |  |          | 6.12 | % |  |  | (0.20 | )%
|                    
|                    
|                    
|                    
|End of Quarter       |  |      | 5.49 | %    |  |          | 6.33 | % |  |  | (0.84 | )%
|                    
|                    
|                    
|                    
|Average              |  |      | 5.71 | %    |  |          | 6.23 | % |  |  | (0.52 | )%

The Company adopted SFAS 133 on January 1, 2001 (see notes to the unaudited
condensed consolidated financial statements). Interest expense for the three
months ended June 30, 2001 includes $3.1 million in adjustments related to the
application of SFAS 133.

Depreciation of flight equipment increased from $177.2 million in 2000 to
$201.6 million in 2001 due to the increased cost of the fleet.

The Company, in prior periods, has entered into sale-leaseback
transactions relating to 19 aircraft. Rent expense decreased from $35.0
million in 2000 to $28.4 million in 2001 due to a decrease in the lease rates
resulting from decrease in interest rates affecting the floating rate component
of the lease rates and principal amortization.

Provision for overhauls decreased from $27.0 million in 2000 to $21.6
million in 2001 due to the cumulative effect of favorable payout factors
realized in the second quarter resulting in a reduction in the reserve rate
used in calculating the provision for overhauls. The number of aircraft and
aggregate number of hours flown on which the Company collects overhaul reserves
remained relatively constant compared to the prior year. An increase or
decrease in the number of aircraft on which the Company collects overhaul
revenue may result in a corresponding change in the aggregate number of hours
flown, for which overhaul reserves are provided.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Selling, general and administrative expenses increased from $10.8 million
in 2000 to $14.9 million in 2001 primarily due to an increase in costs related
to the reconfiguration and redelivery of aircraft previously leased.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations  Six months ended June 30, 2001 versus 2000.

The 8.12% increase in revenues from the rentals of flight equipment from
$1,112.8 million in 2000 to $1,203.2 million in 2001, is due to an increase in
the number of aircraft available for operating lease. At June 30, 2001 the
Companys leased fleet consisted of 448 aircraft compared to a fleet of 402
aircraft at June 30, 2000. Additionally, the cost of the leased fleet, which
includes aircraft subject to sale-lease back transactions from which rental
income is earned, increased 12.4% from $21.8 billion in 2000 to $24.5 billion
in 2001.

In addition to its leasing operations, the Company engages in the
marketing of flight equipment at the end of, or during, the lease term, as well
as the sales of flight equipment on a principal and commission basis. Revenue
from flight equipment marketing increased from $21.6 million in 2000 to $38.9
million in 2001 primarily due to an increase in third party flight equipment
marketing commissions. The Company sold two aircraft and three engines in the
six months ended June 30, 2001 and two aircraft and five engines in the six
months ended June 30, 2000.

Interest expense increased from $359.3 million in 2000 to $405.6 million
in 2001 as a result of an increase in debt outstanding, excluding the effect of
debt discount and excluding market values of derivatives, from $13.4 billion in
2000 to $15.3 billion in 2001, partially offset by a decrease in the average
Composite borrowing rate from 6.24% in 2000 to 5.93% in 2001. The Companys
composite borrowing rate fluctuated as follows:

|                        |  |      |      |      |  |            |      |   |  |          |       |   
|----------------------- |  | ---- | ---- | ---- |  | ---------- | ---- | - |  | -------- | ----- | --
|                        |  |      |      |      |  |            |      |   |  | Increase
|                        |  | 2001 |      | 2000 |  | (Decrease)
|                        |  |      |      |      |  |           
|Beginning of Six Months |  |      | 6.37 | %    |  |            | 6.14 | % |  |          | 0.23  | % 
|                       
|                       
|                       
|                       
|End of Quarter          |  |      | 5.49 | %    |  |            | 6.33 | % |  |          | (0.84 | )%
|                       
|                       
|                       
|                       
|Average                 |  |      | 5.93 | %    |  |            | 6.24 | % |  |          | (0.31 | )%

The Company adopted SFAS 133 on January 1, 2001 (see notes to the
financial statements). The transition adjustment in the amount of $15.2
million is accounted for as the cumulative effect of an accounting change.
Interest expense for the six months ended June 30, 2001 includes $4.8 million
in adjustments related to the application of SFAS 133.

Depreciation of flight equipment increased from $341.1 million in 2000 to
$382.7 million in 2001 due to the increased cost of the fleet.

The Company, in prior periods, has entered into sale-leaseback
transactions relating to 19 aircraft. Rent expense decreased from $69.3
million in 2000 to $60.9 million in 2001 due to a decrease in the lease rates
resulting from a decrease in interest rates affecting the floating rate
component of the lease rates and principal amortization.

Provision for overhauls decreased from $47.7 million in 2000 to $46.1
million in 2001 due to the cumulative effect of favorable payout factors realized in the second quarter
resulting in a reduction in the reserve rate used in calculating the provision
for overhauls. The number of aircraft and aggregate number of hours flown on
which the Company collects overhaul reserves remained relatively constant
compared to the prior year. An increase or decrease in the number of aircraft on which
the Company collects overhaul revenue may result in a corresponding change in
the aggregate number of hours flown, for which overhaul reserves are provided.

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Selling, general and administrative expenses increased from $23.8 million in
2000 to $34.8 million in 2001 primarily due to an increase in costs related to
the reconfiguration and redelivery of aircraft previously leased.

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|       |                                                                                                                    
|------ | -------------------------------------------------------------------------------------------------------------------
|ITEM 3 | INTERNATIONAL LEASE FINANCE CORPORATION
AND SUBSIDIARIES
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 judgement of senior management.

The Company is exposed to market risk and the risk of loss of fair value
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 assets. This
includes tax adjusted future flight equipment lease revenues, aircraft residual
values at maturity of the lease contracts and financial instrument liabilities,
which includes future servicing of current debt. The 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 two and three years of historical
information for interest rates and foreign exchange rates were used to
construct the historical scenarios at December 31, 2000 and June 30, 2001
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. As of December 31, 2000 and June 30, 2001, the VaR for the Company with
respect to its fair value was $11 million and $8 million, respectively.

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PART II. OTHER INFORMATION
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES







ITEM 6.  Exhibits and Reports on Form 8-K



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

| |      |                                                                                 
| | ---- | --------------------------------------------------------------------------------
| | 12.1 | Computation of Ratios of Earnings to Fixed Charges and
Preferred Stock Dividends



| | b) |  | Reports on Form 8-K:                        
| | -- |  | --------------------------------------------
|
| |    |  | Form 8-K, event date
April 26, 2001 (Item 7)
|
| |    |  | Form 8-K, event date May 7, 2001 (Item 7)   
|
| |    |  | Form 8-K, event date May 14, 2001 (Item 7)  
|
| |    |  | Form 8-K, event date June 15, 2001 (Item 7) 

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SIGNATURES

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

|               |  |                                                          
|-------------- |  | ---------------------------------------------------------
|               |  | INTERNATIONAL LEASE FINANCE CORPORATION                  
|              
|August 6, 2001 |  | /S/ Leslie L. Gonda
LESLIE L. GONDA
Chairman of the Board

|               |  |                                                                                                          
|-------------- |  | ---------------------------------------------------------------------------------------------------------
|August 6, 2001 |  | /S/ Alan H. LundALAN H. LUNDExecutive Vice PresidentCo-Chief Operating Officerand Chief Financial Officer

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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

INDEX TO EXHIBITS

|            |  |                                                                                 
|----------- |  | --------------------------------------------------------------------------------
|Exhibit No. |  |                                                                                 
|            |  |                                                                                 
|12.1        |  | Computation of Ratios of Earnings to Fixed Charges and Preferred Stock
Dividends

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