##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number 001-31616
 INTERNATIONAL LEASE FINANCE CORPORATION
  California
(State or other jurisdiction of 
incorporation or organization)
    
    22-3059110
(I.R.S. Employer
Identification No.)10250 Constellation Blvd., Suite 3400
Los Angeles, California
(Address of principal executive offices)
    
    90067
(Zip Code)
 (310) 788-1999
  þ o
  o o þ
  o þ




---



##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-Q QUARTERLY REPORT
 
 TABLE OF CONTENTS
  PagePart I. Financial InformationItem 1. Financial Statements (Unaudited except for December 31, 2006)Condensed Consolidated Balance Sheets
June 30, 2007 and December 31, 2006
    
    
    2Condensed Consolidated Statements of Income
Three months ended June 30, 2007 and 2006
    
    
    3Condensed Consolidated Statements of Income
Six months ended June 30, 2007 and 2006
    
    
    3Condensed Consolidated Statements of Comprehensive Income
Three months ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Comprehensive Income
Six months ended June 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 2007 and 2006
    
    
    5Notes to Condensed Consolidated Financial
Statements
    
    
    7Item 2. Managements Discussion and Analysis of the Financial
Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures about Market
Risk
    
    
    21Item 4T. Controls and Procedures
    
    
    22Part II. Other InformationItem 1A. Risk Factors
    
    
    24Item 6. Exhibits
    
    
    25Signatures
    
    
    26EXHIBIT 12EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
  FINANCIAL STATEMENTS 
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)ASSETSCash, including interest bearing accounts of $134,765 (June 30, 2007)
and $154,812 (December 31, 2006)
    
    $
    140,553
    
    
    $
    157,120Current income taxes
    
    
    587,478
    
    
    
    448,343Notes receivable, net of allowance, and net investment in finance leases
    
    
    397,769
    
    
    
    431,944Flight equipment under operating leases
    
    
    51,593,118
    
    
    
    47,200,028Less accumulated depreciation
    
    
    9,553,221
    
    
    
    8,724,07942,039,897
    
    
    
    38,475,949Deposits on flight equipment purchases
    
    
    603,056
    
    
    
    1,077,444Lease receivables and other assets
    
    
    492,453
    
    
    
    476,670Derivative assets
    
    
    918,608
    
    
    
    738,620Variable interest entities assets
    
    
    117,780
    
    
    
    124,734Deferred debt issue costs  less accumulated amortization of $99,862
(June 30, 2007) and $83,977 (December 31, 2006)
    
    
    109,882
    
    
    
    104,704$
    45,407,476
    
    
    $
    42,035,528LIABILITIES AND SHAREHOLDERS EQUITYAccrued interest and other payables
    
    $
    509,657
    
    
    $
    417,424Tax benefit sharing payable to AIG
    
    
    245,000
    
    
    
    245,000Debt financing, net of deferred debt discount of $36,169 (June 30,
2007) and $33,105 (December 31, 2006)
    
    
    30,527,667
    
    
    
    27,860,242Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Foreign currency adjustment related to foreign currency denominated debt
    
    
    798,834
    
    
    
    677,402Security deposits on aircraft, overhauls and other
    
    
    1,251,431
    
    
    
    1,281,833Rentals received in advance
    
    
    256,832
    
    
    
    223,313Deferred income taxes
    
    
    3,996,872
    
    
    
    3,747,141Variable interest entities liabilities
    
    
    7,999
    
    
    
    8,175SHAREHOLDERS EQUITYMarket Auction Preferred Stock, $100,000 per share liquidation
value; Series A and B each having 500 shares issued
and outstanding
    
    
    100,000
    
    
    
    100,000Common stockno par value; 100,000,000 authorized shares,
45,267,723 issued and outstanding
    
    
    1,053,582
    
    
    
    1,053,582Paid-in capital
    
    
    592,270
    
    
    
    591,757Accumulated other comprehensive income (loss)
    
    
    13,565
    
    
    
    2,718Retained earnings
    
    
    5,053,767
    
    
    
    4,826,941Total shareholders equity
    
    
    6,813,184
    
    
    
    6,574,998$
    45,407,476
    
    
    $
    42,035,528
  -2-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)REVENUESRental of flight equipment
    
    $
    1,133,056
    
    
    $
    1,002,643Flight equipment marketing
    
    
    2,220
    
    
    
    20,776Interest and other
    
    
    21,993
    
    
    
    22,2161,157,269
    
    
    
    1,045,635EXPENSESInterest
    
    
    411,070
    
    
    
    364,417Effect from derivatives, net of change
in hedged items due to changes in
foreign exchange rates
    
    
    344
    
    
    
    (9,848
    )Depreciation of flight equipment
    
    
    434,169
    
    
    
    385,451Flight equipment rent
    
    
    4,500
    
    
    
    4,500Provision for overhauls
    
    
    66,437
    
    
    
    67,967Selling, general and administrative
    
    
    46,192
    
    
    
    56,760962,712
    
    
    
    869,247INCOME BEFORE INCOME TAXES
    
    
    194,557
    
    
    
    176,388Provision for income taxes
    
    
    69,180
    
    
    
    56,744NET INCOME
    
    $
    125,377
    
    
    $
    119,644
 
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)REVENUESRental of flight equipment
    
    $
    2,202,512
    
    
    $
    1,916,953Flight equipment marketing
    
    
    4,817
    
    
    
    39,589Interest and other
    
    
    40,616
    
    
    
    42,1642,247,945
    
    
    
    1,998,706EXPENSESInterest
    
    
    792,828
    
    
    
    696,623Effect from derivatives, net of change
in hedged items due to changes in
foreign exchange rates
    
    
    12,577
    
    
    
    (73,858
    )Depreciation of flight equipment
    
    
    839,701
    
    
    
    749,246Flight equipment rent
    
    
    9,000
    
    
    
    9,967Provision for overhauls
    
    
    128,410
    
    
    
    121,106Selling, general and administrative
    
    
    83,375
    
    
    
    100,3251,865,891
    
    
    
    1,603,409INCOME BEFORE INCOME TAXES
    
    
    382,054
    
    
    
    395,297Provision for income taxes
    
    
    137,518
    
    
    
    127,577NET INCOME
    
    $
    244,536
    
    
    $
    267,720
  -3-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)NET INCOME
    
    $
    125,377
    
    
    $
    119,644OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in cash flow hedges (net of
taxes of $(14,194) (2007) and $8,615
(2006))
    
    
    26,360
    
    
    
    15,998Change in unrealized appreciation on
securities available for sale (net of taxes
of $(106) (2007) and $818 (2006))
    
    
    197
    
    
    
    (1,519
    )26,557
    
    
    
    14,479COMPREHENSIVE INCOME
    
    $
    151,934
    
    
    $
    134,123
 
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)NET INCOME
    
    $
    244,536
    
    
    $
    267,720OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in cash flow hedges (net of
taxes of $(5,876) (2007) and $6,853 (2006))
    
    
    10,913
    
    
    
    12,727Change in unrealized appreciation on
securities available for sale (net of taxes
of $36 (2007) and $803 (2006))
    
    
    (66
    )
    
    
    (1,491
    )10,847
    
    
    
    11,236COMPREHENSIVE INCOME
    
    $
    255,383
    
    
    $
    278,956
  -4-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Dollars in thousands)
 2007
    
    
    2006(Unaudited)OPERATING ACTIVITIESNet income
    
    $
    244,536
    
    
    $
    267,720Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation of flight equipment
    
    
    839,701
    
    
    
    749,246Deferred income taxes
    
    
    243,890
    
    
    
    248,054Change in fair value of derivative instruments
    
    
    (163,199
    )
    
    
    (472,015
    )Foreign currency adjustment of non-US$ denominated debt
    
    
    122,725
    
    
    
    372,653Amortization of deferred debt issue costs
    
    
    15,885
    
    
    
    15,346Other, including foreign exchange adjustments on
foreign currency denominated cash
    
    
    483
    
    
    
    (15,334
    )Changes in operating assets and liabilities:Lease receivables and other assets
    
    
    34,378
    
    
    
    (86,731
    )Change in current income taxes
    
    
    (139,135
    )
    
    
    (123,465
    )Increase in accrued interest and other payables
    
    
    88,021
    
    
    
    14,251Increase in rentals received in advance
    
    
    33,519
    
    
    
    36,697Change in unamortized debt discount
    
    
    (3,064
    )
    
    
    (7,079
    )Other
    
    
    6,565
    
    
    
    9,156Net cash provided by operating activities
    
    
    1,324,305
    
    
    
    1,008,499INVESTING ACTIVITIESAcquisition of flight equipment for operating leases
    
    
    (3,880,514
    )
    
    
    (4,433,997
    )(Increase) decrease in deposits and progress payments
    
    
    (256,778
    )
    
    
    260,016Proceeds from disposal of flight equipment  net of gain
    
    
    27,783
    
    
    
    253,466Advances on notes receivable
    
    
    
    
    
    
    (48,616
    )Collections on notes receivable and finance leases
    
    
    21,412
    
    
    
    34,337Other
    
    
    1,729
    
    
    
    3,968Net cash used in investing activities
    
    
    (4,086,368
    )
    
    
    (3,930,826
    )FINANCING ACTIVITIESNet change in commercial paper
    
    
    1,440,177
    
    
    
    1,343,499Proceeds from debt financing
    
    
    3,398,989
    
    
    
    3,499,100Payments in reduction of debt financing
    
    
    (2,169,970
    )
    
    
    (1,896,859
    )Debt issue costs
    
    
    (21,063
    )
    
    
    (22,547
    )Increase (decrease) in customer and other deposits
    
    
    112,506
    
    
    
    (6,273
    )Payment of common and preferred dividends
    
    
    (17,710
    )
    
    
    (20,548
    )Net cash provided by financing activities
    
    
    2,742,929
    
    
    
    2,896,372Net increase (decrease) in cash
    
    
    (19,134
    )
    
    
    (25,955
    )Effect of exchange rate changes on cash
    
    
    2,567
    
    
    
    4,857Cash at beginning of period
    
    
    157,120
    
    
    
    157,960Cash at end of period
    
    $
    140,553
    
    
    $
    136,862
 (Table continued on following page)
 -5-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Dollars in thousands)
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 2007
    
    2006(Unaudited)Cash paid during the period for:Interest (excluding interest
capitalized of $19,638 (2007) and
$25,389 (2006))
    
    $
    723,420
    
    
    $
    641,479Income taxes, net
    
    
    32,763
    
    
    
    2,013
 Non-Cash Investing and Financing Activities
        -6-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007
(Unaudited)
 A.
    
    Basis of Preparation
  B.
    
    Derivative Activities
  Six Months Ended
    
    
    Three Months EndedJune 30
    
    
    June 30(Dollars in thousands)2007
    
    
    2006
    
    
    2007
    
    
    2006(Income) loss related to derivative instruments:Change in fair value of derivative instruments
with no hedge accounting treatment under SFAS
133 (a)
    
    $
    (17,546
    )
    
    $
    (238,123
    )
    
    $
    53
    
    
    $
    (100,620
    )Offsetting change in value of foreign
denominated debt related to contracts that did
not qualify for hedge accounting treatment
under SFAS 133
    
    
    33,572
    
    
    
    164,264
    
    
    
    (50
    )
    
    
    89,235Change in fair value of derivative
instruments accounted for as fair value hedges
    
    
    
    
    
    
    (52,827
    )
    
    
    
    
    
    
    (33,686
    )Offsetting change in value of foreign
denominated debt related to fair value hedges
    
    
    
    
    
    
    54,379
    
    
    
    
    
    
    
    35,223Ineffectiveness related to cash flow hedges
    
    
    298
    
    
    
    (1,551
    )
    
    
    (307
    )
    
    
    Reclassification of Other Comprehensive
Income related to derivative instruments
de-designated from hedges
    
    
    (3,747
    )
    
    
    
    
    
    
    648
    
    
    
    Loss (income) related to derivative
instruments and related economically hedged
items
    
    $
    12,577
    
    
    $
    (73,858
    )
    
    $
    344
    
    
    $
    (9,848
    )
 
 (a)
    
    In the second quarter of 2007, we redesignated four swaps for hedge accounting under SFAS
133, previously outstanding but did not qualify for hedge accounting treatment under SFAS 133.
Subsequent to the redesignation, all derivatives qualified as hedges under SFAS 133.  -7-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2007
(Unaudited)
  Six Months Ended
    
    Three Months EndedJune 30
    
    June 30(Dollars in thousands)2007
    
    2006
    
    2007
    
    2006$
    2,092
    
    
    $
    7,520
    
    
    $
    595
    
    
    $
    3,057
  C.
    
    Related Party Transactions
   June 30,
    
    
    December 31,2007
    
    
    2006
    
    
    2006(Dollars in thousands)Expense (income):Allocation of corporate costs from AIG
    
    $
    6,736
    
    
    $
    5,182Management services paid to AIG
    
    
    26
    
    
    
    48Management fees received from trusts
    
    
    (4,839
    )
    
    
    (4,812
    )Asset (liability):Taxes benefit sharing payable to AIG
    
    $
    (245,000
    )
    
    
    
    
    
    $
    (245,000
    )Accrued corporate costs payable to AIG
    
    
    (2,550
    )
    
    
    
    
    
    
    (1,805
    )Income taxes receivable from AIG
    
    
    587,478
    
    
    
    
    
    
    
    448,343Medium term notes
    
    
    (200,000
    )
    
    
    
    
    
    
    (200,000
    )Receivable from trusts
    
    
    107
    
    
    
    
    
    
    
    444
 Note B  Derivative Activities
 D.
    
    Recent Accounting Pronouncements
 Fin 48
   -8-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2007
(Unaudited)
    SFAS 157
  SFAS 159
  SOP 07-1
  -9-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
 Forward-Looking Statements
 Managements Discussion and Analysis of Financial Condition
and Results of Operations  Overview and Industry Conditions, Quantitative and Qualitative
Disclosures about Market Risk Part II  Item 1A. Risk Factors, Part I  Item 1A. Risk Factors
 -10-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Overview and Industry Condition
         -11-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   Critical Accounting Policies and Estimates
   
    
    Lease Revenue
    
    Flight Equipment Marketing
    
    Flight Equipment
    
    Provision for Overhauls
    
    Derivative Financial Instruments
    
    Income Taxes
 Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations
 Financial Condition
  -12-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  June 30,
    
    
    December 31,2007
    
    
    2006(Dollars in thousands)Public bonds and medium-term notes
    
    $
    22,417,479
    
    
    $
    21,317,011Bank and other term debt
    
    
    3,948,533
    
    
    
    3,818,688Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Total public debt, bank debt and subordinated debt
    
    
    27,366,012
    
    
    
    26,135,699Commercial paper
    
    
    4,197,824
    
    
    
    2,757,647Deferred debt discount
    
    
    (36,169
    )
    
    
    (33,104
    )Total debt financing
    
    $
    31,527,667
    
    
    $
    28,860,242Selected interest rates and ratio:Composite interest rate including the effect of
all derivative instruments
    
    
    5.27
    %
    
    
    5.24
    %Composite interest rate excluding the effect of
derivative instruments that did not qualify for
hedge accounting treatment under SFAS 133 (a)
    
    
    5.27
    %
    
    
    5.00
    %Percentage of total debt at fixed rates
    
    
    75.34
    %
    
    
    78.88
    %Composite interest rate on fixed rate debt
    
    
    5.16
    %
    
    
    5.12
    %Bank prime rate
    
    
    8.25
    %
    
    
    8.25
    %
 
 (a)
    
    At June 30, 2007, all derivatives qualified for, and were designated as, hedges under
SFAS 133.  -13-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Public Debt ( Exclusive of the Commercial Paper Program )
  Maximum
    
    Sold as of
    
    Sold as of
    
    Sold as ofOffering
    
    December 31, 2006
    
    June 30, 2007
    
    July 23, 2007(Dollars in millions)Registration
statement
dated August
16, 2006
(including
$10.0
billion
Medium-Term
Note
Program)
    
    Unlimited(a)
    
    $
    1,900
    
    
    $
    4,350
    
    
    $
    4,350Registration
statement
dated
December 20,
2002
(including
$2.88
billion
Medium-Term
Note Program
and $1.0
billion
Retail
Medium-Term
Note
Program)

    $
    6,080
    (b)
    
    
    5,782
    
    
    
    5,838
    
    
    
    5,854Euro
Medium-Term
Note
Programme
dated
September
2005 (c)(d)

    
    
    7,000
    
    
    
    4,276
    
    
    
    4,276
    
    
    
    4,276
 
 (a)
    
    Includes $645 million, which was incorporated into the registration statement from
a prior registration statement. As a result of the Companys Well Known Seasoned Issuer
(WKSI) status, we have an unlimited amount of debt securities registered for sale.(b)
    
    Includes $1.08 billion, which was incorporated into the registration statement from
a prior registration statement, increasing the maximum offering from $5.0 billion to
$6.08 billion.(c)
    
    We have economically hedged the foreign currency risk of the notes through
derivatives or through the offset provided by operating lease payments denominated in the
related currency.(d)
    
    This is a perpetual program. As a bond matures, the principal amount becomes
available for new issuances under the program. Bank Term Debt
    Subordinated Debt
  -14-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED
 (i) (ii) (iii)
 Commercial Paper
 Bank Commitments
 Bank Commitments
  Other Variable Interest Entities
   Derivatives
 Accounting for Derivative Instruments and Hedging
Activities,
  -15-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Market Liquidity Risk
    Existing Commitments
 Commitments Due by Fiscal YearTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter(Dollars in thousands)Public and Bank
Term Debt
    
    $
    26,366,012
    
    
    $
    3,825,699
    
    
    $
    4,550,759
    
    
    $
    4,092,751
    
    
    $
    4,408,032
    
    
    $
    4,796,861
    
    
    $
    4,691,910Commercial Paper
    
    
    4,197,824
    
    
    
    4,197,824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subordinated Debt
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Interest Payments
on Debt Outstanding
(a)(b)
    
    
    8,184,205
    
    
    
    727,167
    
    
    
    1,263,093
    
    
    
    1,041,686
    
    
    
    814,626
    
    
    
    585,653
    
    
    
    3,751,980Operating Leases
    
    
    80,930
    
    
    
    4,490
    
    
    
    9,303
    
    
    
    9,594
    
    
    
    9,969
    
    
    
    10,367
    
    
    
    37,207Pension Obligations
(c)
    
    
    4,226
    
    
    
    637
    
    
    
    658
    
    
    
    678
    
    
    
    712
    
    
    
    753
    
    
    
    788Tax Benefit Sharing
Agreement Due to
AIG
    
    
    245,000
    
    
    
    160,000
    
    
    
    
    
    
    
    85,000
    
    
    
    
    
    
    
    
    
    
    
    Purchase
Commitments
    
    
    20,927,500
    
    
    
    889,800
    
    
    
    4,115,000
    
    
    
    2,649,700
    
    
    
    1,286,000
    
    
    
    1,159,400
    
    
    
    10,827,600Total
    
    $
    61,005,697
    
    
    $
    9,805,617
    
    
    $
    9,938,813
    
    
    $
    7,879,409
    
    
    $
    6,519,339
    
    
    $
    6,553,034
    
    
    $
    20,309,485
 -16-




---



##### Table of Contents



ITEM 2.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Contingent Commitments
 Contingency Expiration by Fiscal YearTotal
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter(Dollars in thousands)Put Options (d)
    
    
    343,550
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343,550Asset Value
Guarantees (d)
    
    
    166,818
    
    
    
    
    
    
    
    35,452
    
    
    
    16,150
    
    
    
    
    
    
    
    27,841
    
    
    
    87,375Loan Guarantees (d)
    
    
    33,659
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,659Lines of Credit
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    Total
    
    $
    594,027
    
    
    $
    
    
    
    $
    35,452
    
    
    $
    16,150
    
    
    $
    
    
    
    $
    77,841
    
    
    $
    464,584
 
 (a)
    
    Future interest payments on floating rate debt are estimated using floating
interest rate in effect at June 30, 2007.(b)
    
    Includes the effect of interest rate and foreign currency derivative instruments.(c)
    
    Our pension obligations are part of intercompany expenses, which AIG allocates to
us on an annual basis. The amount is an estimate of such allocation. The column 2007
consists of total estimated allocations for 2007 and the column Thereafter consists of
the 2012 estimated allocation. The amount allocated has not been material to date.(d)
    
    From time to time, we participate with airlines, banks and other financial
institutions to assist in financing aircraft by providing asset guarantees, put options,
or loan guarantees collateralized by aircraft. As a result, should we be called upon to
fulfill our obligations, we would have recourse to the value of the underlying aircraft. Results of Operations
 (i) (ii)
     Note B. Notes to Condensed Consolidated
 -17-




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Financial Statements
 2007
    
    2006
    
    IncreaseBeginning of Quarter
    
    
    5.23
    %
    
    
    5.12
    %
    
    
    0.11
    %End of Quarter
    
    
    5.27
    %
    
    
    5.24
    %
    
    
    0.03
    %Average
    
    
    5.25
    %
    
    
    5.18
    %
    
    
    0.07
    %
    (i) (ii) (iii) (i) (ii) (iii)
    Results of Operations
 (i) (ii)
  -18-




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  (i) (ii)
  Note B. Notes to Condensed Consolidated Financial Statements
  2007
    
    2006
    
    IncreaseBeginning of Six Months
    
    
    5.24
    %
    
    
    5.00
    %
    
    
    0.24
    %End of Six Months
    
    
    5.27
    %
    
    
    5.24
    %
    
    
    0.03
    %Average
    
    
    5.26
    %
    
    
    5.12
    %
    
    
    0.14
    %
    (i) (ii) (iii) (i) (ii) (iii) (iv)
   -19-




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   -20-




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Value at Risk
     ILFC Market RiskSix Months Ended
    
    Year EndedJune 30, 2007
    
    December 31, 2006(Dollars in millions)Average
    
    High
    
    Low
    
    Average
    
    High
    
    LowCombined
    
    $
    84.8
    
    
    $
    102.3
    
    
    $
    71.6
    
    
    $
    151.5
    
    
    $
    208.7
    
    
    $
    102.3Interest Rate
    
    
    84.5
    
    
    
    102.2
    
    
    
    71.8
    
    
    
    151.3
    
    
    
    208.0
    
    
    
    102.2Currency
    
    
    0.8
    
    
    
    1.0
    
    
    
    0.7
    
    
    
    0.9
    
    
    
    1.6
    
    
    
    0.3
 -21-




---



##### Table of Contents



ITEM 4T.
    
    CONTROLS AND PROCEDURES (A) Evaluation of Disclosure Controls and Procedures
     (B) Identification of Material Weaknesses in Internal Control Over Financial
Reporting
 Changes in
Internal Control Over Financial Reporting
  -22-




---



##### Table of Contents



ITEM 4T.
 CONTROLS AND PROCEDURES
(CONTINUED)
 (C) Changes in Internal Control Over Financial Reporting
   
    
    We established enhanced procedures performed by accounting personnel over
documentation with respect to hedge accounting.
    
    We established reviews of ineffectiveness measures by qualified personnel to
ensure acceptable methods are used.
   -23-




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
 Managements Discussion and Analysis of Financial
Condition and Results of Operations  Overview and Industry Conditions Quantitative and Qualitative Disclosures about Market Risk.
   
    
    Overall Airline Industry Risk
 Ø
    
    Demand for air travelØ
    
    Competition between carriersØ
    
    Fuel prices and availabilityØ
    
    Labor costs and stoppagesØ
    
    Maintenance costsØ
    
    Employee labor contractsØ
    
    Air traffic control infrastructure constraintsØ
    
    Airport accessØ
    
    Insurance costs and coverageØ
    
    Security, terrorism and warØ
    
    Worldwide health concernsØ
    
    Equity and borrowing capacityØ
    
    Environmental concernsØ
    
    Government regulationØ
    
    Interest ratesØ
    
    Overcapacity
 
    
    Airframe, Engine and Other Manufacturer Risk
    
    Borrowing Risks
 Ø
    
    LiquidityØ
    
    Interest rate risk
 
    
    Other Risks
 Ø
    
    Residual valueØ
    
    ObsolescenceØ
    
    Key personnelØ
    
    Foreign currency exchange rate riskØ
    
    Relationship with AIGØ
    
    Accounting pronouncements
 Item 1A. Risk
Factors
 -24-




---



##### Table of Contents



PART II. OTHER INFORMATION (CONTINUED)
 
 ITEM 6. EXHIBITS
 a) Exhibits3.1
    
    Restated Articles of Incorporation of the Company,
as amended through December 9, 1992, filed November 3, 1993 (filed as an
exhibit to Registration Statement No. 33-50913 and incorporated herein by
reference).3.2
    
    Certificate of Determination of Preferences of
Series A Market Auction Preferred Stock (filed December 9, 1992 as an
exhibit to Registration Statement No. 33-54294 and incorporated herein by
reference).3.3
    
    Certificate of Determination of Preferences of
Series B Market Auction Preferred Stock (filed December 9, 1992 as an
exhibit to Registration Statement 33-54294 and incorporated herein by
reference).3.4
    
    Certificate of Determination of Preferences of
Series C Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.5
    
    Certificate of Determination of Preferences of
Series D Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.6
    
    Certificate of Determination of Preferences of
Series E Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.7
    
    Certificate of Determination of Preferences of
Series F Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1994 and incorporated herein by
reference).3.8
    
    Certificate of Determination of Preferences of
Series G Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and incorporated herein by
reference).3.9
    
    Certificate of Determination of Preferences of
Series H Market Auction Preferred Stock (filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and incorporated herein by
reference).3.10
    
    Certificate of Determination of Preferences of
Preferred Stock of the Company (filed as an exhibit to Form 10-K for the
year ended December 31, 2001 and incorporated herein by reference).3.11
    
    By-Laws of the Company, including amendment thereto
dated August 31, 1990 (filed as an exhibit to Form 10-K for the year
ended December 31, 2003 and incorporated herein by reference).3.12
    
    Unanimous Written Consent of Sole Stockholder of
the Company, dated January 2, 2002, amending the Bylaws of the Company
(filed as an exhibit to Form 10-Q for the quarter ended June 30, 2003 and
incorporated herein by reference).12.
    
    Computation of Ratios of Earnings to Fixed Charges
and Preferred Stock Dividends31.1
    
    Certification of Chairman of the Board and Chief Executive Officer31.2
    
    Certification of Vice Chairman and Chief Financial Officer32.1
    
    Certification under 18 U.S.C., Section 1350
 -25-




---



##### Table of Contents



SIGNATURES
  INTERNATIONAL LEASE FINANCE CORPORATIONAugust 6, 2007
    
    /S/ Steven F. Udvar-Hazy

STEVEN F. UDVAR-HAZYChairman of the Board andChief Executive OfficerAugust 6, 2007
    
    /S/ Alan H. Lund

ALAN H. LUNDVice Chairman andChief Financial Officer
 -26-




---



##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
  Exhibit No.12.
    
    Computation of Ratios of Earnings to Fixed Charges
and Preferred Stock Dividends31.1
    
    Certification of Chairman of the Board and Chief Executive Officer31.2
    
    Certification of Vice Chairman and Chief Financial Officer32.1
    
    Certification under 18 U.S.C., Section 1350
 -27-