##### Table of Contents



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934
   [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934
 
  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
  X
 
  Large
accelerated filer
    

Accelerated
filer
    

Non-accelerated
filer X
    

Smaller
reporting company(Do not check if a smaller reporting company)
 X




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##### 



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-Q QUARTERLY REPORT
 
 TABLE OF CONTENTS
 PageTable of Definitions
    
    3Part I. Financial InformationItem 1. Financial Statements (Unaudited)Condensed, Consolidated Balance Sheets
March 31, 2011 and December 31, 2010
    
    4Condensed, Consolidated Statements of Operations
Three months ended March 31, 2011 and 2010
    
    5Condensed, Consolidated Statements of Comprehensive Income
Three months ended March 31, 2011 and 2010
    
    6Condensed, Consolidated Statements of Cash Flows
Three months ended March 31, 2011 and 2010
    
    7Notes to Condensed, Consolidated Financial Statements
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    29Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    48Item 4. Controls and Procedures
    
    49Part II. Other InformationItem 1. Legal Proceedings
    
    50Item 1A. Risk Factors
    
    50Item 6. Exhibits
    
    57Signatures
    
    58EX-10.2EX-10.3EX-10.4EX-12EX-31.1EX-31.2EX-32.1
  -2-




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##### Table of Contents



TABLE OF DEFINITIONS
 AIG
    
    American International Group, Inc.AIG Funding
    
    AIG Funding, Inc.AIGFP
    
    AIG Financial Products Corp.Airbus
    
    Airbus S.A.S.AOCI
    
    Accumulated other comprehensive incomeAVG
    
    Asset Value GuaranteeBoeing
    
    The Boeing CompanyThe Company, ILFC, we, our, us
    
    International Lease Finance CorporationCVA
    
    Credit Value AdjustmentDepartment of the Treasury
    
    United States Department of the TreasuryECA
    
    Export Credit AgencyFASB
    
    Financial Accounting Standards BoardFitch
    
    Fitch Ratings, Inc.FRBNY
    
    Federal Reserve Bank of New YorkFRBNY Credit Agreement
    

The credit agreement, dated as of September
22, 2008, as amended, between AIG and the
FRBNYGAAP
    
    Generally Accepted Accounting Principles in
the United States of AmericaMaster Transaction Agreement
    
    Master Transaction Agreement, entered into
by AIG on December 8, 2010, with the
Department of the TreasuryMoodys
    
    Moodys Investor Service, Inc.MVA
    
    Market Value AdjustmentOCI
    
    Other comprehensive incomeSEC
    
    U.S. Securities and Exchange CommissionS&P
    
    Standard and Poors, a division of The
McGraw-Hill Companies, Inc.TARP
    
    Troubled Asset Relief ProgramVaR
    
    Value at RiskVIEs
    
    Variable Interest EntitiesVolare
    
    Estate of Volare AirlinesWKSI
    
    Well Known Seasoned Issuer
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
 FINANCIAL STATEMENTS
 INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED, CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share and per share amounts)
(Unaudited)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCash and cash equivalents, including interest bearing accounts of $2,147,869 (2011) and
$3,058,747 (2010)
    
    $
    2,155,769
    
    
    $
    3,067,697Restricted cash, including interest bearing accounts of $401,857 (2011) and $402,373
(2010)
    
    
    401,857
    
    
    
    457,053Notes receivable, net of allowance, and net investment in finance and sales-type leases
    
    
    91,358
    
    
    
    132,685Flight equipment under operating leases
    
    
    51,565,044
    
    
    
    51,646,586Less accumulated depreciation
    
    
    13,439,542
    
    
    
    13,120,42138,125,502
    
    
    
    38,526,165Flight equipment held for sale
    
    
    27,378
    
    
    
    255,178Deposits on flight equipment purchases
    
    
    200,614
    
    
    
    184,410Lease receivables and other assets
    
    
    398,243
    
    
    
    402,932Derivative assets, net
    
    
    178,579
    
    
    
    60,150Deferred debt issue costs, less accumulated amortization of $197,424 (2011) and $181,460
(2010)
    
    
    283,756
    
    
    
    232,576$
    41,863,056
    
    
    $
    43,318,846LIABILITIES AND SHAREHOLDERS EQUITYAccrued interest and other payables
    
    $
    559,202
    
    
    $
    689,606Current income taxes
    
    
    79,127
    
    
    
    108,898Secured debt financing, net of deferred debt discount of $21,112 (2011) and $22,309
(2010)
    
    
    9,402,279
    
    
    
    9,556,634Unsecured debt financing, net of deferred debt discount of $45,683 (2011) and $47,977
(2010)
    
    
    15,664,486
    
    
    
    16,997,466Subordinated debt
    
    
    1,000,000
    
    
    
    1,000,000Foreign currency adjustment related to foreign currency denominated debt
    
    
    249,500
    
    
    
    165,400Security deposits, overhaul rental and other customer deposits
    
    
    1,611,289
    
    
    
    1,620,784Rentals received in advance
    
    
    263,931
    
    
    
    284,115Deferred income taxes
    
    
    4,714,981
    
    
    
    4,663,939Commitments
and Contingencies - Note MSHAREHOLDERS 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
    
    
    608,070
    
    
    
    606,367Accumulated other comprehensive income (loss)
    
    
    (47,936
    )
    
    
    (58,944
    )Retained earnings
    
    
    6,604,545
    
    
    
    6,530,999Total shareholders equity
    
    
    8,318,261
    
    
    
    8,232,004$
    41,863,056
    
    
    $
    43,318,846
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED, CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(Dollars in thousands)
(Unaudited)
 March 31, 2011
    
    
    March 31, 2010REVENUES AND OTHER INCOMERental of flight equipment
    
    $
    1,140,921
    
    
    $
    1,229,862Flight equipment marketing and gain on aircraft sales
    
    
    674
    
    
    
    1,284Interest and other
    
    
    26,918
    
    
    
    12,9861,168,513
    
    
    
    1,244,132EXPENSESInterest
    
    
    407,500
    
    
    
    334,866Effect from derivatives, net of change in hedged
items due to changes in foreign exchange rates
    
    
    622
    
    
    
    40,066Depreciation of flight equipment
    
    
    452,531
    
    
    
    490,241Aircraft impairment charges and fair value
adjustments on flight equipment sold or to be
disposed of
    
    
    103,310
    
    
    
    353,387Flight equipment rent
    
    
    4,500
    
    
    
    4,500Selling, general and administrative
    
    
    51,713
    
    
    
    35,637Other expenses
    
    
    30,975
    
    
    
    84,0471,051,151
    
    
    
    1,342,744INCOME (LOSS) BEFORE INCOME TAXES
    
    
    117,362
    
    
    
    (98,612
    )Provision (benefit) for income taxes
    
    
    43,641
    
    
    
    (35,686
    )NET INCOME (LOSS)
    
    $
    73,721
    
    
    $
    (62,926
    )
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED, CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(Dollars in thousands)
(Unaudited)
 March 31, 2011
    
    
    March 31, 2010NET INCOME (LOSS)
    
    $
    73,721
    
    
    $
    (62,926
    )OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXNet changes in fair value of cash flow hedges, net of taxes of $(6,160) (2011) and
$(26,687) (2010)
    
    
    11,439
    
    
    
    49,561Change in unrealized appreciation on securities available for sale, net of taxes of $0
(2011) and $(13) (2010)
    
    
    (431
    )
    
    
    2411,008
    
    
    
    49,585COMPREHENSIVE INCOME (LOSS)
    
    $
    84,729
    
    
    $
    (13,341
    )
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 CONDENSED, CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(Dollars in thousands)
(Unaudited)
 March 31, 2011
    
    
    March 31, 2010OPERATING ACTIVITIESNet income (loss)
    
    $
    73,721
    
    
    $
    (62,926
    )Adjustments to reconcile net income to net cash provided by operating activities:Depreciation of flight equipment
    
    
    452,531
    
    
    
    490,241Deferred income taxes
    
    
    44,883
    
    
    
    (54,884
    )Derivative instruments
    
    
    (100,830
    )
    
    
    140,578Foreign currency adjustment of non-US$ denominated debt
    
    
    84,100
    
    
    
    (131,200
    )Amortization of deferred debt issue costs
    
    
    15,964
    
    
    
    8,966Amortization of debt discount
    
    
    3,490
    
    
    
    1,436Amortization of prepaid lease costs
    
    
    11,540
    
    
    
    10,534Aircraft impairment charges and fair value adjustments
    
    
    103,310
    
    
    
    353,387Lease expenses related to aircraft sales
    
    
    (644
    )
    
    
    84,047Interest paid-in-kind to AIG Funding
    
    
    
    
    
    
    28,920Other, including foreign exchange adjustments on foreign currency denominated
cash and gain on aircraft sales
    
    
    (1,531
    )
    
    
    (14,685
    )Changes in operating assets and liabilities:Lease receivables and other assets
    
    
    (4,174
    )
    
    
    18,643Accrued interest and other payables
    
    
    (131,681
    )
    
    
    5,414Current income taxes
    
    
    (29,771
    )
    
    
    4,934Tax benefit sharing payable to AIG
    
    
    
    
    
    
    (85,000
    )Rentals received in advance
    
    
    (20,184
    )
    
    
    (20,365
    )Net cash provided by operating activities
    
    
    500,724
    
    
    
    778,040INVESTING ACTIVITIESAcquisition of flight equipment
    
    
    (98,487
    )
    
    
    Payments for deposits and progress payments
    
    
    (47,940
    )
    
    
    (10,518
    )Proceeds from disposal of flight equipment
    
    
    198,643
    
    
    
    Restricted cash
    
    
    55,196
    
    
    
    (584,772
    )Collections on notes receivable and finance and sales-type leases
    
    
    37,380
    
    
    
    13,779Other
    
    
    (2,814
    )
    
    
    (147
    )Net cash provided by (used in) investing activities
    
    
    141,978
    
    
    
    (581,658
    )FINANCING ACTIVITIESProceeds from debt financing
    
    
    
    
    
    
    3,407,175Payments in reduction of debt financing
    
    
    (1,490,825
    )
    
    
    (739,906
    )Debt issue costs
    
    
    (67,144
    )
    
    
    (60,868
    )Payment of common and preferred dividends
    
    
    (175
    )
    
    
    (87
    )Security and rental deposits received
    
    
    19,380
    
    
    
    10,202Security and rental deposits returned
    
    
    (15,808
    )
    
    
    (7,764
    )Transfers of security and rental deposits on sales of aircraft
    
    
    (19,391
    )
    
    
    Overhaul rentals collected
    
    
    105,570
    
    
    
    94,890Overhaul deposits reimbursed
    
    
    (82,914
    )
    
    
    (80,781
    )Transfer of overhauls rentals on sales of aircraft
    
    
    (18,623
    )Net change in other deposits
    
    
    14,679
    
    
    
    4,879Net cash (used in) provided by financing activities
    
    
    (1,555,251
    )
    
    
    2,627,740Net (decrease) increase in cash
    
    
    (912,549
    )
    
    
    2,824,122Effect of exchange rate changes on cash
    
    
    621
    
    
    
    (753
    )Cash at beginning of period
    
    
    3,067,697
    
    
    
    336,911Cash at end of period
    
    $
    2,155,769
    
    
    $
    3,160,280
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

CONDENSED, CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(Dollars in thousands)
(Unaudited)
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
 March 31, 2011
    
    
    March 31, 2010Cash paid during the period for:Interest, excluding interest capitalized of $2,106 (2011) and $1,474 (2010)
    
    $
    544,459
    
    
    $
    321,867Income taxes, net
    
    
    28,528
    (a)
    
    
    270
 
 (a)
    
    Approximately $26 million was paid to AIG for ILFC tax liability.
 Non-Cash Investing and Financing Activities
  Held for sale assets in the amount of $49,060 were reclassified to Flight equipment under
operating leases in the amount of $52,420, with $3,360 realized in income for aircraft that
no longer meet the definition of held for sale.
 $31,734 of Deposits on flight equipment purchases were applied to Acquisition of flight
equipment under operating leases.Customer security deposits of $7,354 were forfeited and recognized in income.$3,050 of Flight equipment under operating leases was transferred to Other assets upon the
part-out of an aircraft.
  $7,619 of Deposits on flight equipment purchases were applied to Acquisition of flight
equipment under operating leases.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS
 March 31, 2011
 (Unaudited)
 A.
    
    Basis of PreparationILFC is an indirect wholly-owned subsidiary of AIG. AIG is a holding company, which,
through its subsidiaries, is primarily engaged in a broad range of insurance and
insurance-related activities in the United States and abroad. The accompanying unaudited,
condensed, consolidated financial statements have been prepared in accordance with GAAP 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 GAAP for complete financial statements.The accompanying unaudited, condensed, consolidated financial statements include our
accounts, accounts of all other entities in which we have a controlling financial interest, as
well as accounts of VIEs in which we are the primary beneficiary. See Note N  Variable
Interest Entitiesfor further discussions on VIEs. All material intercompany accounts have been
eliminated in consolidation. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) considered necessary for a fair statement of the results for the
interim periods presented have been included. Certain reclassifications have been made to the
2010 unaudited, condensed, consolidated financial statements to conform to the 2011
presentation. Operating results for the three months ended March 31, 2011, are not necessarily
indicative of the results that may be expected for the year ending December 31, 2011. These
statements should be read in conjunction with the consolidated financial statements and
footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31,
2010.B.
    
    Recent Accounting PronouncementsWe did not adopt any new accounting standards during the first three months of 2011.C.
    
    Restricted CashWe entered into ECA facility agreements in 1999 and 2004 through subsidiaries. See Note G
  Debt Financings.We had no loans outstanding under the 1999 ECA facility as of March 31,
2011. Our current long-term debt ratings require us to segregate security deposits, overhaul
rentals and rental payments received under the leases of the aircraft funded under the 2004 ECA
facility (segregated rental payments are used to make scheduled principal and interest payments
on the outstanding debt). The segregated funds are deposited into separate accounts pledged to
and controlled by the security trustee of the 2004 ECA facility. At March 31, 2011, we had
segregated security deposits, overhaul rentals and rental payments aggregating approximately
$355 million related to aircraft funded under the 2004 ECA facility. The segregated amounts
fluctuate with changes in security deposits, overhaul rentals, rental payments and debt
maturities related to the aircraft funded under the 2004 ECA facility. In addition, if a
default resulting in an acceleration of the obligations under the 2004 ECA facility were to
occur, pursuant to a cross-collateralization agreement, we would have to segregate lease
payments, overhaul rentals and security deposits received after such acceleration event
occurred relating to all the aircraft funded under the 1999 ECA facility, even though those
aircraft are no longer subject to a loan at March 31, 2011.In March 2010, we entered into a $550 million secured term loan through a newly formed
subsidiary. The proceeds from this transaction are restricted until the collateral is
transferred to certain of our subsidiaries that guarantee the debt on a secured basis and whose
equity were pledged to secure the term loan and at March 31, 2011, approximately $47 million of
the proceeds remained restricted.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 The subsidiaries described above meet the definition of a VIE and have been designated as
non-restricted subsidiaries, under our indentures. See Note G  Debt Financingsand Note N -
Variable Interest Entities.D.
    
    Allowance for Credit LossesOn occasion we enter into finance or sales type leases, or in limited circumstances we
will advance cash, or accept a notes receivable, in conjunction with the sale of an aircraft.
At March 31, 2011, we had four aircraft under finance and sales type leases with aggregate
principal balance of $66.5 million and notes receivable with aggregate principal balance, net
of allowance, of $24.9 million. At December 31, 2010, the principal related to the four
aircraft under finance leases aggregated $67.6 million and the principal of our notes
receivable aggregated $65.1 million.We had the following activity in our allowance for credit losses on notes receivable for
the following periods:
 (Dollars in thousands)Allowance for credit losses:Balance at December 31, 2009
    
    $
    1,531Provision
    
    
    19,511Write-offs
    
    
    Recoveries
    
    
    Balance at December 31, 2010
    
    $
    21,042Provision
    
    
    11,619Write-offs
    
    
    Recoveries
    
    
    (1,531
    )Balance at March 31, 2011
    
    $
    31,130
 E.
    
    Aircraft Impairment Charges and Fair Value Adjustments on Flight Equipment Sold or to
be Disposed ofWe reported the following impairment charges and fair value adjustments on flight
equipment during the three months ended March 31, 2011 and 2010, respectively, as follows:
 Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Aircraft
    
    
    Impairment
    
    
    
    
    
    
    ImpairmentImpaired
    
    
    Charges and
    
    
    
    
    
    
    Charges andor
    
    
    Fair Value
    
    
    Aircraft
    
    
    Fair ValueAdjusted
    
    
    Adjustments
    
    
    Impaired
    
    
    AdjustmentsLoss/(Gain)
    
    (Dollars in millions)Impairment
charges on aircraft
likely to be sold
and fair value
adjustments on
aircraft likely to
be sold or sold
    
    
    9
    
    
    $
    107.0
    
    
    
    52
    
    
    $
    353.4Fair value
adjustments on held
for sale aircraft
sold or transferred
from held for sale
back to flight
equipment under
operating leases
    
    
    8
    
    
    
    (6.2
    )
    
    
    
    
    
    
    Impairment charges
on aircraft
designated for
part-out
    
    
    1
    
    
    $
    2.5
    
    
    
    
    
    
    $
    Total Impairment
charges and fair
value adjustments
on flight equipment
    
    
    18
    
    
    $
    103.3
    
    
    
    52
    
    
    $
    353.4
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 Three months ended March 31, 2011During the three months ended March 31, 2011, we sold three aircraft to third parties from
our Fleet held for use, and as a result recorded fair value adjustments aggregating $5.9
million for the three months ended March 31, 2011. Additionally, we were in negotiations with
third parties for the sale of six aircraft and deemed those aircraft more likely than not to be
sold as of March 31, 2011. These aircraft did not meet the criteria required to be classified
as Flight equipment held for sale; however, due to current market conditions and in accordance
with GAAP we recorded impairment charges aggregating $101.1 million related to those aircraft.In addition, during the three months ended March 31, 2011, we determined that two aircraft
we had previously classified as Flight equipment held for sale no longer met the criteria and
reclassified those aircraft to Flight equipment under operating lease. In accordance with
GAAP, we recorded the two aircraft at the lower of depreciated cost, had the aircraft never
been classified as Flight equipment held for sale, or its fair value at the date of the
reclassification of the aircraft, and recorded fair value adjustments resulting in a net credit
of $3.3 million related to those aircraft for the three months ended March 31, 2011. We also
sold six aircraft that were classified as Flight equipment held for sale, and recorded fair
value adjustments related to those aircraft aggregating a net credit of $2.9 million.During the three months ended March 31, 2011, we also designated one aircraft for part-out
and recorded impairment charges of $2.5 million to record the parts at their fair value. The
fair value of the parts is included in Lease receivables and other assets on our Condensed
Consolidated Balance Sheet.Three months ended March 31, 2010On April 13, 2010, to generate liquidity to repay maturing debt obligations, we signed an
agreement to sell 53 aircraft from our existing fleet to a third party for an aggregate
purchase price of $1.987 billion. As of May 7, 2010, we were also a party to negotiations to
sell two 747-300s manufactured in 1988. As of March 31, 2010, none of the aircraft met the
criteria required under GAAP to be recorded as held for sale; however, due to market conditions
at that time and in accordance with GAAP, we recorded impairment charges aggregating $353.4
million related to 52 of these 55 aircraft for the three months ended March 31, 2010.F.
    
    Flight Equipment Held for SaleAt March 31, 2011 and December 31, 2010, we had one and nine aircraft, respectively, that
met the criteria for, and were classified as, Flight equipment held for sale. The balance in
Flight equipment held for sale of $27.4 million and $255.2 million at March 31, 2011 and
December 31, 2010, respectively, represents the estimated fair value of such aircraft. We cease
recognition of depreciation expense on aircraft subsequent to transferring them from Flight
equipment under operating leases. During the three months ended March 31, 2011, we transferred
two aircraft that no longer met the criteria for Flight equipment held for sale to Flight
equipment under operating leases. Subsequent to March 31, 2011, we determined that the
remaining aircraft classified as Flight equipment held for sale at March 31, 2011 no longer met
the criteria for the classification and, at such determination, the aircraft was transferred to
Flight equipment under operating leases.Net cash proceeds from sales of flight equipment classified as held for sale is received
as each individual aircraft sale is consummated. The actual purchase price may differ from the
recorded estimated fair value of the aircraft when classified as held for sale, depending on
the timing of the completion of a sale and, in some cases, whether an aircraft classified as
held for sale is subsequently substituted with different aircraft.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)
March 31, 2011
(Unaudited)
 We had the following activity in Flight equipment held for sale for the three months ended
March 31, 2011:
 Flight Equipment Held for Sale
    
    Aircraft
    
    
    Carrying Value(Dollars in thousands)Balance at December 31, 2010
    
    
    9
    
    
    $
    255,178Transferred to Flight equipment under operating
leases
    
    
    (2
    )
    
    
    (49,060
    )Flight equipment sold
    
    
    (6
    )
    
    
    (178,740
    )Flight equipment held for sale at March 31, 2011
    
    
    1
    
    
    $
    27,378G.  Debt FinancingsOur debt financing was comprised of the following at the following dates:March 31,2011
    
    
    December 31, 2010(Dollars in thousands)SecuredSenior secured bonds
    
    $
    3,900,000
    
    
    $
    3,900,000ECA financings
    
    
    2,626,088
    
    
    
    2,777,285Bank debt
    
    
    1,465,400
    
    
    
    1,465,400Other secured financings (a)
    
    
    1,431,903
    
    
    
    1,436,258Less: Deferred debt discount
    
    
    (21,112
    )
    
    
    (22,309
    )9,402,279
    
    
    
    9,556,634UnsecuredBonds and Medium-Term Notes
    
    
    15,475,569
    
    
    
    16,810,843Bank debt
    
    
    234,600
    
    
    
    234,600Less: Deferred debt discount
    
    
    (45,683
    )
    
    
    (47,977
    )15,664,486
    
    
    
    16,997,466Total Senior Debt Financings
    
    
    25,066,765
    
    
    
    26,554,100Subordinated Debt
    
    
    1,000,000
    
    
    
    1,000,000$
    26,066,765
    
    
    $
    27,554,100
 
 (a)
    
    Of this amount, $109.6 million (2011) and $113.7 million (2010) is non-recourse to
ILFC. These secured financings were incurred by VIEs and consolidated into our condensed
consolidated financial statements. The above amounts represent the anticipated settlement of our outstanding debt obligations
as of March 31, 2011 and December 31, 2010. Certain adjustments required to present currently
outstanding hedged debt obligations have been recorded and presented separately on our
Condensed, Consolidated Balance Sheets, including adjustments related to foreign currency
hedging and interest rate hedging activities.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 We have created direct and indirect wholly-owned subsidiaries for the purpose of
purchasing aircraft and obtaining financings secured by such aircraft. These entities have been
designated as non-restricted subsidiaries under our indentures, and meet the definition of a
VIE. We have determined that we are the primary beneficiary of such VIEs and, accordingly, we consolidate such entities into our
condensed, consolidated financial statements. See Note N  Variable Interest Entitiesfor more
information on VIEs.Senior Secured Bonds     On August 20, 2010, we issued $3.9 billion of senior secured notes, with $1.35 billion
maturing in September 2014 and bearing interest of 6.5%, $1.275 billion maturing in September
2016 and bearing interest of 6.75%, and $1.275 billion maturing in September 2018 and bearing
interest of 7.125%. The notes are secured by a designated pool of aircraft, initially
consisting of 174 aircraft and their related leases and certain cash collateral. In addition,
two of ILFCs subsidiaries, which either own or hold leases of aircraft included in the pool
securing the notes, have guaranteed the notes. We can redeem the notes at any time prior to
their maturity, provided we give notification between 30 to 60 days prior to the intended
redemption date and subject to a penalty of the greater of 1% of the outstanding principal
amount and a make-whole premium. There is no sinking fund for the notes.The indenture governing the senior secured notes contains customary covenants that, among
other things, restrict our and our restricted subsidiaries ability to: (i)create liens; (ii)
sell, transfer or otherwise dispose of assets; (iii)declare or pay dividends or acquire or
retire shares of our capital stock; (iv)designate restricted subsidiaries as non-restricted
subsidiaries or designate non-restricted subsidiaries; (v)make investments in or transfer
assets to non-restricted subsidiaries; and (vi)consolidate, merge, sell or otherwise dispose
of all, or substantially all, of our assets.The indenture also provides for customary events of default, including but not limited to,
the failure to pay scheduled principal and interest payments on the notes, the failure to
comply with covenants and agreements specified in the indenture, the acceleration of certain
other indebtedness resulting from non-payment of that indebtedness, and certain events of
insolvency. If any event of default occurs, any amount then outstanding under the senior
secured notes may immediately become due and payable.We used the proceeds from the issuance of the senior secured bonds to repay in full loans
from AIG Funding.Export Credit Facilities     We entered into ECA facility agreements in 1999 and 2004 through certain direct and
indirect wholly-owned subsidiaries that have been designated as non-restricted subsidiaries
under our indentures. The 1999 and 2004 ECA facilities were used to fund purchases of Airbus
aircraft through 2001 and June 2010, respectively. New financings are no longer available to us
under either ECA facility and we had no loans outstanding under the 1999 ECA facility as of
March 31, 2011. The loans made under the ECA facilities were used to fund a portion of each
aircrafts net purchase price. The loans are guaranteed by various European ECAs. We have
collateralized the debt with pledges of the shares of wholly-owned subsidiaries that hold title
to the aircraft financed under the facilities.In January 1999, we entered into the 1999 ECA facility and used amounts borrowed under
this facility to finance purchases of 62 Airbus aircraft through 2001. At March 31, 2011, all
loans under the facility had been paid in full. The facility is, however, party to a
cross-collateralization agreement relating to the 2004 ECA facility, as further discussed
below. The net book value of the aircraft used as collateral under this facility was $1.6
billion at March 31, 2011.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 In May 2004, we entered into the 2004 ECA facility, which was amended in May 2009 to allow
us to borrow up to $4.6 billion for the purchase of Airbus aircraft delivered through June 30,
2010. We used $4.3 billion of the available amount to finance purchases of 76 aircraft. Each
aircraft purchased was financed by a ten-year fully amortizing loan. As of March 31, 2011,
approximately $2.6 billion was outstanding under this facility. The interest rates on the loans
outstanding under the facility are either fixed or based on LIBOR and ranged from 0.42% to
4.71% at March 31, 2011. The net book value of the aircraft purchased under this facility was
$4.2 billion at March 31, 2011.Our current long-term debt ratings require us to segregate security deposits, overhaul
rentals and rental payments received for aircraft with loan balances outstanding under the 2004
ECA facility (segregated rental payments are used to make scheduled principal and interest
payments on the outstanding debt under the 2004 ECA facility). The segregated funds are
deposited into separate accounts pledged to and controlled by the security trustee of the
facility. In addition, we must register the existing individual mortgages on certain aircraft
funded under both the 1999 and 2004 ECA facilities in the local jurisdictions in which the
respective aircraft are registered (mortgages are only required to be filed on aircraft with
loan balances outstanding or otherwise as agreed in connection with the cross-collateralization
agreement as described below). At March 31, 2011, we had segregated security deposits, overhaul
rentals and rental payments aggregating approximately $355 million related to aircraft funded
under the 2004 ECA facility. The segregated amounts will fluctuate with changes in security
deposits, overhaul rentals, rental payments and debt maturities related to the aircraft funded
under the 2004 facility.During the first quarter of 2010, we entered into agreements to cross-collateralize the
1999 ECA facility with the 2004 ECA facility. As part of such cross-collateralization we (i)
guaranteed the obligations under the 2004 ECA facility through our subsidiary established to
finance Airbus aircraft under our 1999 ECA facility; (ii)agreed to grant mortgages over
certain aircraft financed under the 1999 ECA facility and security interests over other
collateral related to the aircraft financed under the 1999 ECA facility to secure the guaranty
obligation; (iii)accepted a loan-to-value ratio (aggregating the loans and aircraft from the
1999 ECA facility and the 2004 ECA facility) of no more than 50%, in order to release liens
(including the liens incurred under the cross-collateralization agreement) on any aircraft
financed under the 1999 or 2004 ECA facilities or other assets related to the aircraft; and
(iv)agreed to allow proceeds generated from certain disposals of aircraft to be applied to
obligations under the 2004 ECA facility. As of March 31, 2011, there were no outstanding
obligations under the 1999 facility.We also agreed to additional restrictive covenants relating to the 2004 ECA facility,
restricting us from (i)paying dividends on our capital stock with the proceeds of asset sales
and (ii)selling or transferring aircraft with an aggregate net book value exceeding a certain
disposition amount, which is currently approximately $10.4 billion. The disposition amount will
be reduced by approximately $91.4 million at the end of each calendar quarter during the
effective period. The covenants are in effect from the date of the agreement until December 31,
2012. A breach of these restrictive covenants would result in a termination event for the ten
loans funded subsequent to the date of the agreement and would make those loans, which
aggregated $295.4 million at March 31, 2011, due in full at the time of such a termination
event.In addition, if a termination event resulting in an acceleration of the obligations under
the 2004 ECA facility were to occur, pursuant to the cross-collateralization agreement, we
would have to segregate lease payments, overhaul rentals and security deposits received after
such acceleration event occurred relating to all the aircraft funded under the 1999 ECA
facility, even though those aircraft are no longer subject to a loan at March 31, 2011.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 Secured Bank DebtWe have a credit facility, dated October 13, 2006, as amended, under which the original
maximum amount available was $2.5 billion. We repaid $800 million aggregate principal amount of
loans outstanding under this facility in the fourth quarter of 2010 and the amended facility
prohibits us from re-borrowing amounts repaid under this facility. Therefore, the current size
of the facility is $1.7 billion. As of March 31, 2011, we had secured loans of $1.465 billion
outstanding under the facility, all of which will mature in October 2012. The interest on the
secured loans is based on LIBOR plus a margin of 2.15%, plus facility fees of 0.2% on the
outstanding principal balance. The remaining $235 million outstanding under the facility
consists of unsecured loans that will mature on their originally scheduled maturity date in
October 2011, with a LIBOR based interest rate equal to 0.96% at March 31, 2011.The collateralization requirement under the amended facility provides that the $1.465
billion of secured loans must be secured by a lien on the equity interests of certain of ILFCs
non-restricted subsidiaries that own aircraft with aggregate appraised values of originally not
less than 133% of the outstanding principal amount (the Required Collateral Amount). The
credit facility includes an ongoing requirement, tested periodically, that the appraised value
of the eligible aircraft owned by the pledged subsidiaries must be equal to or greater than
100% of the Required Collateral Amount. This ongoing requirement is subject to the right to
transfer additional eligible aircraft to the pledged subsidiaries or ratably prepay the loans.
We also guarantee the secured loans through certain other subsidiaries.The credit facility also contains financial and restrictive covenants that (i)limit our
ability to incur indebtedness, (ii)restrict certain payments, liens and sales of assets by us,
and (iii)require us to maintain a fixed charge coverage ratio and consolidated tangible net
worth in excess of certain minimum levels.We intend to use the proceeds from the secured term loan agreement entered into on March
30, 2011, described in more detail below under Other Secured Financing Arrangementsto prepay a
portion of the amounts outstanding under this credit facility.Other Secured Financing Arrangements     In May 2009, ILFC provided $39.0 million of subordinated financing to a non-restricted
subsidiary. The entity used these funds and an additional $106.0 million borrowed from third
parties to purchase an aircraft, which it leases to an airline. ILFC acts as servicer of the
lease for the entity. The $106.0 million loan has two tranches. The first tranche is $82.0
million, fully amortizes over the lease term, and is non-recourse to ILFC. The second tranche
is $24.0 million, partially amortizes over the lease term, and is guaranteed by ILFC. Both
tranches of the loan are secured by the aircraft and the lease receivables. Both tranches
mature in May 2018 with interest rates based on LIBOR. At March 31, 2011, the interest rates on
the $82.0 million and $24.0 million tranches were 3.41% and 5.11%, respectively. The entity
entered into two interest rate cap agreements to economically hedge the related LIBOR interest
rate risk in excess of 4.00%. At March 31, 2011, $86.7 million was outstanding under the two
tranches and the net book value of the aircraft was $135.9 million.In June 2009, we borrowed $55.4 million through a non-restricted subsidiary, which owns
one aircraft leased to an airline. Half of the original loan amortizes over five years and the
remaining $27.7 million is due in 2014. The loan is non-recourse to ILFC and is secured by the
aircraft and the lease receivables. The interest rate on the loan is fixed at 6.58%. At March
31, 2011, $45.2 million was outstanding and the net book value of the aircraft was $90.6
million.On March 17, 2010, we entered into a $750 million term loan agreement secured by 43
aircraft and all related equipment and leases. The aircraft had an average appraised base
market value of approximately $1.3 billion, for an initial loan-to-value ratio of approximately
56%. The loan matures on March 17, 2015, and
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 bears interest at LIBOR plus a margin of 4.75%
with a LIBOR floor of 2.0%. The principal of the loan is payable in full at maturity with no
scheduled amortization, but we can voluntarily prepay the loan at any time. On March 17, 2010,
we also entered into an additional term loan agreement of $550 million through a newly formed
non-restricted subsidiary. The obligations of the subsidiary borrower are guaranteed on an
unsecured basis by ILFC and on a secured basis by certain non-restricted subsidiaries of ILFC
that hold title to 37 aircraft. The aircraft had an average appraised base market value of
approximately $969 million, for an initial loan-to-value ratio of approximately 57%. The loan
matures on March 17, 2016, and bears interest at LIBOR plus a margin of 5.0% with a LIBOR floor
of 2.0%. The principal of the loan is payable in full at maturity with no scheduled
amortization. The proceeds from this loan are restricted from use in our operations until we
transfer the related collateral to the non-restricted subsidiaries. At March 31, 2011,
approximately $47 million of the proceeds remained restricted. We can voluntarily prepay the
loan at any time, subject to a 1% prepayment penalty prior to March 17, 2012. Both loans
require a loan-to-value ratio of no more than 63%. The loans also contain customary covenants
and events of default, including limitations on the ability of us and our subsidiaries, as
applicable, to create liens; incur additional indebtedness; consolidate, merge, sell or
otherwise dispose of all or substantially all of our assets; and enter into transactions with
affiliates.On March 30, 2011, one of our non-restricted subsidiaries entered into a secured term loan
agreement with lender commitments in the amount of $1.3245 billion, which was subsequently
increased to $1.5245 billion. The loan matures on March 30, 2018, with scheduled principal
payments commencing in June 2012, and bears interest at LIBOR plus a margin of 2.75%, or, if
applicable, a base rate plus a margin of 1.75%. The obligations of the subsidiary borrower are
guaranteed on an unsecured basis by ILFC and on a secured basis by certain wholly owned
subsidiaries of the subsidiary borrower. The security granted initially includes a portfolio of
54 aircraft, together with attached leases and all related equipment, with an average appraised
base market value of approximately $2.4 billion as of January 1, 2011, which equals an initial
loan-to-value ratio of approximately 65%, and the equity interests in certain special purpose
subsidiaries of the subsidiary borrower (SPEs) that will own the aircraft and related
equipment and leases that are pledged as security for the loans. The proceeds of the loan
will be made available to the subsidiary borrower as aircraft are transferred to the SPEs, at
an advance rate equal to 65% of the initial appraised value of the aircraft transferred to the
SPEs.The subsidiary borrower will be required to maintain compliance with a maximum
loan-to-value ratio, which varies over time, as set forth in the term loan agreement. If the
subsidiary borrower does not maintain compliance with the maximum loan-to-value ratio, it will
be required to either prepay portions of the outstanding loans or transfer additional aircraft
to SPEs, subject to certain concentration criteria, so that the ratio is equal to or less than
the maximum loan-to-value ratio.We can voluntarily prepay the loan at any time, subject to a 2% prepayment penalty prior
to March 30, 2012, and a 1% prepayment penalty between March 30, 2012 and March 30, 2013. The
loan facility contains customary covenants and events of default, including covenants that
limit the ability of the subsidiary borrower and its subsidiaries to (i)incur additional
indebtedness; (ii)create liens; (iii)consolidate, merge or dispose of all or substantially
all of their assets; and (iv)enter into transactions with affiliates.Unsecured Bonds and Medium-Term NotesAutomatic Shelf Registration: We have an effective automatic shelf registration statement
filed with the SEC. As a result of our WKSI status, we have an unlimited amount of debt
securities registered for sale.Pursuant to our automatic shelf registration: (i)on August 20, 2010, we issued $500
million of 8.875% notes due 2017 and (ii)on December 7, 2010, we issued $1.0 billion of 8.25%
notes due 2020. At March 31, 2011, we also had $8.7 billion of public bonds and medium-term
notes outstanding, with interest rates ranging from 0.62% to 7.50%, which we had issued in
prior years under previous registration statements.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 Euro Medium-Term Note Programme: We have a $7.0 billion Euro Medium-Term Note Programme,
under which we had approximately $1.2 billion of Euro denominated notes outstanding at March
31, 2011. The notes mature on August 15, 2011, and bear interest based on Euribor with a spread
of 0.375%. The Programme is perpetual. As a bond issue matures, the principal amount of that
bond becomes available for new issuances under the Programme. We have eliminated the currency
exposure arising from the notes by hedging the notes into U.S. dollars and fixing the interest
rates at a range of 5.355% to 5.367%. We translate the debt into U.S. dollars using current
exchange rates prevailing at the balance sheet date. The foreign exchange adjustment for the
foreign currency denominated notes was $249.5 million and $165.4 million at March 31, 2011 and
December 31, 2010, respectively.A rollforward for the quarter ended March 31, 2011, of the foreign exchange adjustment for
the foreign currency adjustment related to foreign currency denominated notes is presented
below:
 (Dollars in thousands)Foreign currency adjustment related to foreign currency
denominated debt at December 31, 2010
    
    $
    165,400Foreign currency period adjustment of non-US$ denominated debt
    
    
    84,100Foreign currency adjustment related to foreign currency
denominated debt at March 31, 2011
    
    $
    249,500
 Other Senior Notes: On March 22, 2010 and April 6, 2010, we issued a combined $1.25
billion aggregate principal amount of 8.625% senior notes due September 15, 2015, and $1.5
billion aggregate principal amount of 8.750% senior notes due March 15, 2017, pursuant to an
indenture dated as of March 22, 2010. The notes are due in full on their scheduled maturity
dates. The notes are not subject to redemption prior to their stated maturity and there are no
sinking fund requirements. In connection with the note issuances, we entered into registration
rights agreements obligating us to, among other things, complete a registered exchange offer to
exchange the notes of each series for new registered notes of such series with substantially
identical terms, or register the notes pursuant to a shelf registration statement.The annual interest rate on the affected notes increased by 0.25% per year for 90 days,
commencing on January 26, 2011, because the registration statement relating to the exchange
offer was not declared effective by the SEC by that date, as required under the registration
rights agreement. On April 26, 2011, the annual interest rate on the affected notes increased
by an additional 0.25% because we were unable to consummate the exchange offer by such date.
The registration statement was declared effective on April 6, 2011, and we completed the
exchange offer on May 5, 2011. The applicable interest rate reverted to the original level when
the exchange offer was consummated.The indenture governing the notes contains customary covenants that, among other things,
restrict our, and our restricted subsidiaries, ability to (i)incur liens on assets; (ii)
declare or pay dividends or acquire or retire shares of our capital stock during certain events
of default; (iii)designate restricted subsidiaries as non-restricted subsidiaries or designate
non-restricted subsidiaries; (iv)make investments in or transfer assets to non-restricted
subsidiaries; and (v)consolidate, merge, sell, or otherwise dispose of all or substantially
all of our assets.The indenture also provides for customary events of default, including but not limited to,
the failure to pay scheduled principal and interest payments on the notes, the failure to
comply with covenants and agreements specified in the indenture, the acceleration of certain
other indebtedness resulting from non-
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 payment of that indebtedness, and certain events of
insolvency. If any event of default occurs, any amount then outstanding under the senior notes
may immediately become due and payable.Unsecured Bank Debt
     On January 31, 2011, we entered into a new $2.0 billion unsecured three-year revolving
credit facility with a group of 11 banks that will expire on January 31, 2014. This revolving
credit facility provides for interest rates based on either a base rate or LIBOR plus an
applicable margin determined by a ratings-based pricing grid. The credit agreement contains
customary events of default and restrictive financial covenants that require us to maintain a
minimum fixed charge coverage ratio, a minimum consolidated tangible net worth and a maximum
ratio of consolidated debt to consolidated tangible net worth. As of March 31, 2011, no amounts
were outstanding under this revolving facility.As of March 31, 2011, $234.6 million of unsecured loans were outstanding under our credit
agreement dated as of October 13, 2006. These loans remain unsecured and mature in October 2011
on the original maturity date for this credit facility. The interest on the loans is LIBOR
based and was 0.96% at March 31, 2011. The remaining outstanding loans under the agreement, as
amended, are secured. See Secured Bank Debtabove.Subordinated Debt     In December 2005, we issued two tranches of subordinated debt totaling $1.0 billion. Both
tranches mature on December 21, 2065, but each tranche has a different call option. The $600
million tranche had a call option date of December 21, 2010, and the $400 million tranche has a
call option date of December 21, 2015. We did not exercise the call option at December 21, 2010 and the interest rate on the $600
million tranche changed from a fixed interest rate of 5.90% to a floating rate with an initial
credit spread of 1.55% plus the highest of (i)3 month LIBOR; (ii)10-year constant maturity
treasury; and (iii)30-year constant maturity treasury. The interest will reset quarterly and
at March 31, 2011, the interest rate was 5.97%. The $400 million tranche has a fixed interest
rate of 6.25% until the 2015 call option date, and if we do not exercise the call option, the
interest rate will change to a floating rate, reset quarterly, based on the initial credit
spread of 1.80% plus the highest of (i)3 month LIBOR; (ii)10-year constant maturity treasury;
and (iii)30-year constant maturity treasury. If we choose to redeem the $600 million tranche,
we must pay 100% of the principal amount of the bonds being redeemed, plus any accrued and
unpaid interest to the redemption date. If we choose to redeem only a portion of the
outstanding bonds, at least $50 million principal amount of the bonds must remain outstanding.H.
    
    Derivative ActivitiesWe use derivatives to manage exposures to interest rate and foreign currency risks. At
March 31, 2011, we had interest rate and foreign currency swap agreements with a related
counterparty and interest rate cap agreements with an unrelated counterparty.We record changes in fair value of derivatives in income or OCI depending on the
designation of the hedge as either a fair value hedge or cash flow hedge, respectively. Where
hedge accounting is not achieved, the change in fair value of the derivative is recorded in
income. In the case of a re-designation of a derivative contract, the balance accumulated in
AOCI at the time of the re-designation is amortized into income over the remaining life of the
underlying derivative. Our foreign currency swap agreements mature in August 2011, our interest
rate swap agreements mature through 2015, and our interest rate cap agreements mature in 2018.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 We have entered into two interest rate cap agreements with an unrelated counterparty in
connection with a secured financing transaction. We have not designated the interest rate caps
as hedges, and all changes in fair value are recorded in income.All of our interest rate and foreign currency swap agreements are subject to a master
netting agreement, which would allow the netting of derivative assets and liabilities in the
case of default under any one contract. Our derivative portfolio is recorded at fair value on
our balance sheet on a net basis in Derivative assets, net (see Note I  Fair Value
Measurements). We account for all of our interest rate swap and foreign currency swap
agreements as cash flow hedges. We do not have any credit risk related contingent features and
are not required to post collateral under any of our existing derivative contracts.Derivatives have notional amounts, which generally represent amounts used to calculate
contractual cash flows to be exchanged under the contract. The following table presents
notional and fair values of derivatives outstanding at the following dates:
 Asset Derivatives
    
    
    Liability DerivativesNotional Value
    
    
    Fair Value
    
    
    Notional Value
    
    
    Fair ValueUSD
    
    
    
    
    
    
    USD(In thousands)March 31, 2011:Derivatives designated as
hedging instruments:Interest rate swap agreements (a)
    
    $
    
    
    
    $
    
    
    
    $
    583,176
    
    
    $
    (47,406
    )Foreign exchange swap agreements
    
    
    1,000,000
    
    
    
    224,956
    
    
    
    
    
    
    
    Total derivatives designated as
hedging instruments
    
    
    
    
    
    $
    224,956
    
    
    
    
    
    
    $
    (47,406
    )Derivatives not designated as
hedging instruments:Interest rate cap agreements
    
    $
    86,660
    
    
    $
    1,029
    
    
    $
    
    
    
    $
    Total derivatives
    
    
    
    
    
    $
    225,985
    
    
    
    
    
    
    $
    (47,406
    )December 31, 2010:Derivatives designated as
hedging instruments:Interest rate swap agreements (a)
    
    $
    
    
    
    $
    
    
    
    $
    625,717
    
    
    $
    (56,244
    )Foreign exchange swap agreements
    
    
    1,000,000
    
    
    
    114,431
    
    
    
    
    
    
    
    Total derivatives designated as
hedging instruments
    
    
    
    
    
    $
    114,431
    
    
    
    
    
    
    $
    (56,244
    )Derivatives not designated as
hedging instruments:Interest rate cap agreements
    
    $
    89,520
    
    
    $
    1,963
    
    
    $
    
    
    
    $
    Total derivatives
    
    
    
    
    
    $
    116,394
    
    
    
    
    
    
    $
    (56,244
    )
 
 (a)
    
    Converts floating interest rate debt into fixed rate debt.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 During the three months ended March 31, 2011 and 2010, we recorded the following in OCI
related to derivative instruments:
 Gain (Loss)Three Months EndedMarch 31,2011
    
    
    2010(Dollars in thousands)Effective portion of change in fair market value of derivatives (a)(b)
    
    $
    100,658
    
    
    $
    (55,204
    )Amortization of balances of de-designated hedges and other adjustments
    
    
    1,041
    
    
    
    252Foreign exchange component of cross currency swaps charged (credited) to
income
    
    
    (84,100
    )
    
    
    131,200Income tax effect
    
    
    (6,160
    )
    
    
    (26,687
    )Net changes in cash flow hedges, net of taxes
    
    $
    11,439
    
    
    $
    49,561
 
 (a)
    
    Includes $(44) and $(21,987) of combined CVA and MVA for the three months ended March
31, 2011 and 2010, respectively.(b)
    
    2010 includes losses of $(15,409) on a derivative contract that matured during the
three months ended March 31, 2010, that was de-designated as a cash flow hedge and then
subsequently re-designated during the life of the contract. The following table presents the effective portion of the unrealized gain (loss) on
derivative positions recorded in OCI:
 Amount of Unrealized Gain or(Loss)Recorded in OCI on Derivatives(Effective Portion)Three Months EndedMarch 31,Derivatives Designated as Cash Flow Hedges
    
    2011
    
    
    2010(Dollars in thousands)Interest rate swap agreements
    
    $
    376
    
    
    $
    (9,418
    )Foreign exchange swap agreements
    
    
    82,716
    
    
    
    (73,069
    )Total (a)
    
    $
    83,092
    
    
    $
    (82,487
    )
 
 (a)
    
    Includes $(44) and $(21,987) of combined CVA and MVA for the three months ended March
31, 2011 and 2010, respectively. -20-




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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 The following table presents amounts reclassified from AOCI into income when cash payments
were made or received on our qualifying cash flow hedges:
 Amount of Gain or (Loss)Reclassified fromAOCI Into Income(Effective Portion)Three Months EndedLocation of Gain or (Loss) Reclassified from AOCI
    
    March 31,into Income (Effective Portion)
    
    2011
    
    
    2010(Dollars in thousands)Interest rate swap agreements  interest expense
    
    $
    (6,903
    )
    
    $
    (8,787
    )Foreign exchange swap agreements  interest expense
    
    
    (10,663
    )
    
    
    (18,272
    )Foreign exchange swap agreements  lease revenue
    
    
    
    
    
    
    (224
    )Total
    
    $
    (17,566
    )
    
    $
    (27,283
    )
 We estimate that within the next twelve months, we will amortize into earnings
approximately $28.6 million of the pre-tax balance in AOCI under cash flow hedge accounting in
connection with our program to convert debt from floating to fixed interest rates.
 The following table presents the effect of derivatives recorded in the Condensed,
Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010:
 Amount of Gain or (Loss)Recognizedin Income on Derivatives(Ineffective Portion) (a)Three Months EndedMarch 31,2011
    
    
    2010(Dollars in thousands)Derivatives Designated as Cash Flow Hedges:Interest rate swap agreements
    
    $
    (31
    )
    
    $
    (59
    )Foreign exchange swap agreements
    
    
    1,330
    
    
    
    (23,291
    )Total
    
    
    1,299
    
    
    
    (23,350
    )Derivatives Not Designated as a Hedge:Interest rate cap agreements
    
    
    (880
    )
    
    
    (1,055
    )Reconciliation to Condensed, Consolidated Statements of Operations:Income effect of maturing derivative contracts
    
    
    
    
    
    
    (15,409
    )Reclassification of amounts de-designated as hedges recorded in AOCI
    
    
    (1,041
    )
    
    
    (252
    )Effect from derivatives, net of change in hedged items due to
changes in foreign exchange rates
    
    $
    (622
    )
    
    $
    (40,066
    )
 
 (a)
    
    All components of each derivatives gain or loss were included in the assessment of
effectiveness.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 I.
    
    Fair Value Measurements
 Fair value is defined as the price that would be received to sell an asset, or paid to
transfer a liability, in an orderly transaction between market participants at the measurement
date. The degree of judgment used in measuring the fair value of financial instruments
generally correlates with the level of pricing observability. Assets and liabilities recorded
at fair value on our Condensed, Consolidated Balance Sheets are measured and classified in a
hierarchy for disclosure purposes consisting of three levels based on the observability of
inputs available in the marketplace used to measure the fair value. Level 1 refers to fair
values determined based on quoted prices in active markets for identical assets; Level 2 refers
to fair values estimated using significant other observable inputs; and Level 3 refers to fair
values estimated using significant non-observable inputs.
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
 The following table presents our assets and liabilities measured at fair value on a
recurring basis as of March 31, 2011 and December 31, 2010, categorized using the fair value
hierarchy described above.
 CounterpartyLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Netting (a)
    
    
    Total(Dollars in thousands)March 31, 2011:Derivative assets
    
    $
    
    
    
    $
    225,985
    
    
    $
    
    
    
    $
    (47,406
    )
    
    $
    178,579Derivative liabilities
    
    
    
    
    
    
    (47,406
    )
    
    
    
    
    
    
    47,406
    
    
    
    Total
    
    $
    
    
    
    $
    178,579
    
    
    $
    
    
    
    $
    
    
    
    $
    178,579December 31, 2010:Derivative assets
    
    $
    
    
    
    $
    116,394
    
    
    $
    
    
    
    $
    (56,244
    )
    
    $
    60,150Derivative liabilities
    
    
    
    
    
    
    (56,244
    )
    
    
    
    
    
    
    56,244
    
    
    
    Total
    
    $
    
    
    
    $
    60,150
    
    
    $
    
    
    
    $
    
    
    
    $
    60,150
 
 (a)
    
    As permitted under GAAP, we have elected to offset derivative assets and derivative
liabilities under our master netting agreement.
 Assets and Liabilities Measured at Fair Value on a Non-recurring Basis
 We measure the fair value of aircraft and certain other assets on a non-recurring basis,
generally quarterly, annually, or when events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable.
 The fair value of an aircraft is classified as a Level 3 valuation. Fair value of flight
equipment is determined using an income approach based on the present value of cash flows from
contractual lease agreements, contingent rentals where appropriate, and projected future lease
payments, which extend to the end of the aircrafts economic life in its highest and best use
configuration, as well as a disposition value, based on the expectations of market
participants.
 We recognized impairment charges and fair value adjustments for the three months ended
March 31, 2011 and 2010, as provided in Note E  Aircraft Impairment Charges and Fair Value
Adjustments on Flight Equipment Sold or to be Disposed of.
 The following table presents the effect on our Condensed, consolidated financial
statements as a result of the non-recurring impairment charges and fair value adjustments
recorded to Flight equipment for the three months ended March 31, 2011:
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 Impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CarryingBook Value at
    
    
    Charges and
    
    
    
    
    
    
    
    
    
    
    Depreciation
    
    
    Value atDecember 31,
    
    
    Fair Value
    
    
    
    
    
    
    
    
    
    
    and Other
    
    
    March 31,2010
    
    
    Adjustments
    
    
    Reclassifications
    
    
    Sales
    
    
    Adjustments
    
    
    2011(Dollars in millions)Flight equipment
under operating
lease
    
    $
    243.7
    
    
    $
    (109.5
    )
    
    $
    49.3
    
    
    $
    (17.2
    )
    
    $
    (4.2
    )
    
    $
    162.1Flight equipment
held for sale
    
    
    227.6
    
    
    
    6.2
    
    
    
    (52.4
    )
    
    
    (181.4
    )
    
    
    
    
    
    
    Lease receivables
and other assets
    
    
    
    
    
    
    
    
    
    
    3.1
    
    
    
    
    
    
    
    
    
    
    
    3.1Total
    
    $
    471.3
    
    
    $
    (103.3
    )
    
    $
    
    
    
    $
    (198.6
    )
    
    $
    (4.2
    )
    
    $
    165.2
 J.
    
    Fair Value Disclosures of Financial Instruments
 We used the following methods and assumptions in estimating our fair value disclosures for
financial instruments:
 Cash: The carrying value reported on the balance sheet for cash and cash equivalents
approximates its fair value.
 Notes Receivable: The fair values for notes receivable are estimated using discounted cash
flow analyses, using market derived discount rates.
 Debt Financing: The fair value of our long-term fixed rate debt is estimated using
discounted cash flow analyses, based on our spread to U.S. Treasury bonds for similar debt at
year end. The fair value of our long-term floating rate debt is estimated using discounted cash
flow analysis based on credit default spreads.
 Derivatives: Fair values were based on the use of AIG valuation models that utilize, among
other things, current interest, foreign exchange and volatility rates, as applicable.
 AVGs:Guarantees entered into after December 31, 2002, are included in Accrued interest
and other payables on our Condensed, Consolidated Balance Sheets. Fair value is approximately
equal to unamortized fees.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 The carrying amounts and fair values of our financial instruments at March 31, 2011
and December 31, 2010, are as follows:
 March 31, 2011
    
    
    December 31, 2010Carrying Amount
    
    
    Fair Value of
    
    
    Carrying Amount of
    
    
    Fair Value ofof Asset (Liability)
    
    
    Asset (Liability)
    
    
    Asset (Liability)
    
    
    Asset (Liability)(Dollars in thousands)Cash, including restricted cash
    
    $
    2,557,626
    (a)
    
    $
    2,557,626
    
    
    $
    3,524,750
    (a)
    
    $
    3,524,750Notes receivable
    
    
    24,881
    
    
    
    23,469
    
    
    
    65,065
    
    
    
    64,622Debt financing (including
subordinated debt and foreign
currency adjustment, excluding debt
discount)
    
    
    (26,383,306
    )
    
    
    (27,132,644
    )
    
    
    (27,789,786
    )
    
    
    (28,267,765
    )Derivative assets
    
    
    178,579
    
    
    
    178,579
    
    
    
    60,150
    
    
    
    60,150Guarantees
    
    
    (9,535
    )
    
    
    (11,084
    )
    
    
    (10,013
    )
    
    
    (11,654
    )
 
 (a)
    
    Includes restricted cash of $401.9 million (2011) and $457.1 million (2010).
 K.
    
    Security Deposits on Aircraft, Overhaul Rentals and Other Customer Deposits
 As of March 31, 2011 and 2010, Security Deposits, overhaul rentals and other customer
deposits were comprised of:
 March 31,
    
    
    December 31,2011
    
    
    2010(Dollars in thousands)Security deposits paid by lessees
    
    $
    919,220
    
    
    $
    945,195Overhaul rentals
    
    
    557,179
    
    
    
    555,423Other customer deposits
    
    
    134,890
    
    
    
    120,166Total
    
    $
    1,611,289
    
    
    $
    1,620,784
 L.
    
    Related Party Transactions
 Intercompany Allocations and Fees:We are party to cost sharing agreements, including tax,
with AIG. Generally, these agreements provide for the allocation of corporate costs based upon
a proportional allocation of costs to all subsidiaries. We also pay other subsidiaries of AIG a
fee related to management services provided for certain of our foreign subsidiaries. We earned
management fees from two trusts consolidated by AIG for the management of aircraft we sold to
the trusts in prior years. During the three months ended March 31, 2010, we paid AIG $85.0
million that was due and payable on a loan related to certain tax planning activities we had
participated in during 2002 and 2003.Loans from AIG Funding, Inc.:We borrowed $3.9 billion from AIG Funding, an affiliate of
our parent, in 2009 to assist in funding our liquidity needs. On August 20, 2010, we prepaid in
full the principal balance of approximately $3.9 billion plus accrued interest.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 
 
 Derivatives and Insurance Premiums:All of our interest rate swap and foreign currency
swap agreements are with AIGFP, a related party. See Note I  Fair Value Measurementsand Note
H  Derivative Activities. In addition, we purchase insurance through a broker who may place
part of our policies with AIG. Total insurance premiums were $2.0 million and $1.5 million for
the three months ended March 31, 2011 and 2010, respectively.
 Our financial statements include the following amounts involving related parties:
 Three Months EndedStatement of Operations
    
    March 31, 2011
    
    
    March 31, 2010(Dollars in thousands)Expense (income):Interest expense on loans from AIG Funding
    
    $
    
    
    
    $
    60,510Effect from derivatives on contracts with AIGFP
    
    
    (258
    )
    
    
    (39,011
    )Interest on derivative contracts with AIGFP
    
    
    17,566
    
    
    
    27,059Lease revenue related to hedging of lease receipts with AIGFP
    
    
    
    
    
    
    224Allocation of corporate costs from AIG
    
    
    6,106
    
    
    
    4,260Management fees received
    
    
    (2,240
    )
    
    
    (2,298
    )Management fees paid to subsidiaries of AIG
    
    
    27
    
    
    
    240
 Balance Sheet
    
    March 31, 2011
    
    
    December 31, 2010(Dollars in thousands)Asset (liability):Derivative assets, net
    
    $
    177,550
    
    
    $
    58,187Income taxes payable to AIG (a)
    
    
    (79,127
    )
    
    
    (108,784
    )Accrued corporate costs payable to AIG
    
    
    (21,844
    )
    
    
    (20,753
    )
 
 (a)
    
    We paid approximately $26 million to AIG during the three months ended March 31, 2011.
 M.
    
    Commitments and Contingencies
 Guarantees
 
    
    Asset Value Guarantees:We have guaranteed a portion of the residual value of 22
aircraft to financial institutions and other unrelated third parties for a fee. These
guarantees expire at various dates through 2023 and generally obligate us to pay the
shortfall between the fair market value and the guaranteed value of the aircraft and
provide us with an option to purchase the aircraft for the guaranteed value. At March
31, 2011, the maximum aggregate potential commitment that we were obligated to pay
under such guarantees, without any offset for the projected value of the aircraft,
was approximately $530 million.
    
    Aircraft Loan Guarantees:We guarantee two loans collateralized by aircraft to
financial institutions. The guarantees expire in 2014, when the loans mature, and
obligate us to pay an amount
up to the guaranteed value upon the default of the borrower, which may be offset by a
portion of the
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 underlying value of the aircraft collateral. At March 31, 2011, the
guaranteed value, without any offset for the projected value of the aircraft, was
approximately $22 million.
 Management regularly reviews the underlying values of the aircraft collateral to determine
our exposure under these guarantees. The next strike date for asset value guarantees is in June
2011. If called upon to perform under these contracts, we would purchase three aircraft for
approximately $27.8 million. We do not currently anticipate that we will be required to perform
under any of the three guarantees based upon the underlying values of the aircraft
collateralized.
 Legal Contingencies
 
    
    Flash Airlines, Yemen Airways-Yemenia and Airblue Limited:We are named in
lawsuits in connection with the 2004 crash of our Boeing 737-300 aircraft on lease to
Flash Airlines, an Egyptian carrier; the 2009 crash of our Airbus A310-300 aircraft
on lease to Yemen Airways-Yemenia, a Yemeni carrier; and the 2010 crash of our Airbus
A320-200 aircraft on lease to Airblue Limited, a Pakistani carrier. These lawsuits
were filed by the families of victims on the flights and seek unspecified damages for
wrongful death, costs, and fees. The Flash Airlines litigation originally commenced
in May 2004 in California, but all U.S. proceedings were dismissed in favor of
proceedings in France where claims are pending before the Tribunal de Grande Instance
civil courts in Bobigny and Paris. As of May 9, 2011, the parties are engaged in
settlement negotiations. We believe that we have substantial defenses to this action
and available liability insurance is adequate to cover our defense costs and any
potential liability. The Yemen Airways litigation and the Airblue Limited litigation
were filed in January 2011 and March 2011, respectively, in California Superior Court
in Los Angeles County. We have been served with the complaints, and each litigation
is in its incipient stage. While the plaintiffs have not specified any amount of
damages, we believe that we are adequately covered by available liability insurance
for both lawsuits and that we have substantial defenses to these actions. We do not
believe that the outcome of any of these lawsuits will have a material effect on our
consolidated financial condition, results of operations or cash flows.
    
    Estate of Volare Airlines: In November 2004, Volare, an Italian airline, filed for
bankruptcy in Italy. Prior to Volares bankruptcy, we leased to Volare, through
wholly-owned subsidiaries, two A320-200 aircraft and four A330-200 aircraft. In
addition, we managed the lease to Volare by an entity that is a related party to us
of one A330-200 aircraft. In October 2009, the Volare bankruptcy receiver filed a
claim in an Italian court in the amount of 29.6 million against us and our related
party for the return to the Volare estate of all payments made by it to us and our
related party in the year prior to Volares bankruptcy filing. At March 31, 2011, we
have reached a definitive settlement with the trustee of the estate, in which we have
agreed to pay an amount that has been accrued and included in Accrued interest and
other payable on our condensed consolidated balance sheets at March 31, 2011 and
December 31, 2010. The settlement amount accrued was not material to our consolidated
financial position, results of operations or cash flows.
 We are also a party to various claims and litigation matters arising in the ordinary
course of our business. We do not believe the outcome of any of these matters will be material
to our consolidated financial position, results of operations or cash flows.
 N.
    
    Variable Interest Entities
 Our leasing and financing activities require us to use many forms of entities to achieve
our business objectives and we have participated to varying degrees in the design and formation
of these entities. Our involvement in VIEs varies and includes being a passive investor in the
VIE with involvement from other
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 parties, managing and structuring all activities of the VIE,
and being the sole shareholder of the VIE. See Note G  Debt Financingsfor more information on
entities created for the purpose of obtaining financing.
 Investment Activities
 We have variable interests in ten entities to which we previously sold aircraft. The
interests include debt financings, preferential equity interests and, in some cases, providing
guarantees to banks which had provided the secured senior financings to the entities. Each
entity owns one aircraft. The individual financing agreements are cross-collateralized by the
aircraft. Because we do not control the activities which significantly impact the economic
performance of the entities, we do not consolidate the entities into our condensed,
consolidated financial statements. We have a credit facility with these entities to provide
financing up to approximately $13.5 million, of which approximately $8.4 million was borrowed
at March 31, 2011. The maximum exposure to loss for these entities is approximately $20
million, which is the combined net carrying value of this investment and maximum borrowings
available under the credit facility at March 31, 2011.
 Non-Recourse Financing Structures
 We continue to consolidate one entity in which ILFC has a variable interest that was
established to obtain secured financing for the purchase of an aircraft. ILFC provided $39.0
million of subordinated financing to the entity and the entity borrowed $106.0 million from
third parties, $82.0 million of which is non-recourse to ILFC. The entity owns one aircraft
with a net book value of $135.9 million at March 31, 2011. We have determined that we are the
primary beneficiary of this entity because we control and manage all aspects of this entity,
including directing the activities that most significantly affect the entitys economic
performance, and we absorb the majority of the risks and rewards of this entity.
 We also consolidate a wholly-owned subsidiary we created for the purpose of obtaining
secured financing for an aircraft. The entity meets the definition of a VIE because it does not
have sufficient equity to operate without ILFCs subordinated financial support in the form of
intercompany notes, which serve as equity even though they are legally debt instruments. This
entity borrowed $55.4 million from a third party. The loan is non-recourse to ILFC and is
secured by the aircraft and the lease receivables. The entity owns one aircraft with a net book
value of $90.6 million at March 31, 2011. We have determined that we are the primary
beneficiary of this entity because we control and manage all aspects of this entity, including
directing the activities that most significantly affect the entitys economic performance, and
we absorb the majority of the risks and rewards of this entity.
 Wholly-Owned ECA Financing Vehicles
 We have created certain wholly-owned subsidiaries for the purpose of purchasing aircraft
and obtaining financing secured by such aircraft. The secured debt is guaranteed by the
European ECAs. The entities meet the definition of a VIE because they do not have sufficient
equity to operate without ILFCs subordinated financial support in the form of intercompany
notes, which serve as equity even though they are legally debt instruments. We control and
manage all aspects of these entities and guarantee the activities of these entities and they
are therefore consolidated into our condensed, consolidated financial statements.
 Other Secured Financings
 We have created a number of wholly-owned subsidiaries for the purpose of obtaining secured
financings. The entities meet the definition of a VIE because they do not have sufficient
equity to operate without ILFCs subordinated financial support in the form of intercompany
notes, which serve as equity even though they are legally debt instruments. One of the entities
borrowed $550 million from third parties and a portfolio of 37 aircraft will be transferred
from ILFC to the subsidiaries of the entity to secure the loan. We control and manage all
aspects of these entities and guarantee the activities of these entities and they are therefore
consolidated into our condensed, consolidated financial statements. See Note G  Debt
Financingsfor more information on these financings.
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INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
March 31, 2011
(Unaudited)
 Wholly-Owned Leasing Entities
 We have created wholly-owned subsidiaries for the purpose of facilitating aircraft leases
with airlines. The entities meet the definition of a VIE because they do not have sufficient
equity to operate without ILFCs subordinated financial support in the form of intercompany
loans, which serve as equity even though they are
legally debt instruments. We control and manage all aspects of these entities and
guarantee the activities of these entities and they are therefore consolidated into our
condensed, consolidated financial statements.
 O.
    
    Other Expenses
 We recognized a $20 million expense for the three months ended March 31, 2011, which is
included in Other expenses in our Condensed, Consolidated Statement of Operations and is
related to the cancellation of an aircraft engine order. We eliminated the economic effect of
the $20 million expense by negotiating with our manufacturer vendors to recover these costs.
The recovery will be in two payments. One of these payments is related to a 2007 agreement with
one manufacturer for us to extend our evaluation period of aircraft under order until at least
2010. This payment is contingent upon our cancelling of the aircraft order and is not
contingent on placing any new order with the manufacturer. As a result of the cancellation of
such aircraft order in March 2011, we recorded the related payment receivable of $10 million in
Interest and other in the condensed, consolidated statement of operations for the period ended
March 31, 2011. The second payment of $10 million is related to an agreement with another
manufacturer, which among other contractual terms, includes a provision to reimburse us for the
remaining costs associated with the March 2011 order cancellation. The reimbursement payment
will be recognized as a reduction of the cost basis of future aircraft deliveries, as we
determined the payment to be connected with the purchase of such aircraft. In addition to this
charge, for the three months ended March 31, 2011, Other expenses include $11.6 million
resulting from the write down of two notes receivable, partially offset by approximately $0.6
million aggregate lease related income.
 Other expenses of $84.0 million for the three months ended March 31, 2010 relate to lease
related costs we expensed as a result of agreements to sell aircraft, subject to operating
leases, to third parties.
 P.
    
    Subsequent Events
 On April 21, 2011, we increased the lender commitments under our term loan agreement dated
March 30, 2011, by $200 million to a total commitment of $1.5245 billion. See Note G  Debt
Financings.
 On April 22, 2011, we signed a purchase agreement to acquire 80 A320neos and 20 A321neos
from Airbus. The first aircraft is scheduled to deliver in 2015. We had entered into a
memorandum of understanding with Airbus to acquire such aircraft during the first quarter of
2011.
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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Cautionary Statement Regarding Forward-looking Information
 Part II  Item 1A. Risk Factors,
 Overview
 (i) (ii) (iii)
 Recent Developments
 New Financing Arrangements Liquidity
 New Aircraft Purchase Agreements
 Management Team
 Operating Results
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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 ( (ii)
  Three Months EndedMarch 31, 2011
    
    
    March 31, 2010Aircraft
    
    
    Impairment
    
    
    
    
    
    
    ImpairmentImpaired
    
    
    Charges and
    
    
    
    
    
    
    Charges andor
    
    
    Fair Value
    
    
    Aircraft
    
    
    Fair ValueAdjusted
    
    
    Adjustments
    
    
    Impaired
    
    
    AdjustmentsLoss/(Gain)
    
    
    
    
    
    (Dollars in millions)Impairment charges on aircraft likely to be sold
and fair value adjustments on aircraft likely to be
sold or sold
    
    
    9
    
    
    $
    107.0
    
    
    
    52
    
    
    $
    353.4Fair value adjustments on held for sale aircraft sold
or transferred from held for sale back to flight
equipment under operating leases
    
    
    8
    
    
    
    (6.2
    )
    
    
    
    
    
    
    Impairment charges on aircraft designated for part-out
    
    
    1
    
    
    $
    2.5
    
    
    
    
    
    
    $
    Total Impairment charges and fair value adjustments
on flight equipment
    
    
    18
    
    
    $
    103.3
    
    
    
    52
    
    
    $
    353.4
 
 (a)
    
    Included in the amount for 2011 is a $3.3 million net fair value credit adjustment related
to two aircraft previously held for sale, but which no longer met such criteria. We
reclassified those aircraft to Flight equipment under operating leases during the three months
ended March 31, 2011. Also included in this amount for 2011 is $2.9 million aggregated fair
value credit adjustments related to sales price adjustments for six aircraft that were
previously held for sale and sold during the three months ended March 31, 2011. Cost of borrowing:
 Three Months EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2011
    
    
    2010
    
    
    2010(Dollars in thousands)Average Composite Interest Rate
    
    
    5.73
    %
    
    
    5.42
    %
    
    
    4.52
    %Average Debt Outstanding
    
    $
    26,879
    
    
    $
    28,822
    
    
    $
    31,103
 -30-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Our Fleet
  Number ofAircraftFlight equipment under operating leases at December 31, 2010
    
    
    933Aircraft transferred from Flight equipment held for sale to Flight equipment held for use
    
    
    2Aircraft purchases
    
    
    2Aircraft sold from Flight equipment under operating leases
    
    
    (3
    )Aircraft designated for part-out
    
    
    (1
    )Flight equipment under operating leases at March 31, 2011
    
    
    933
  Debt Financing
 Liquidity
 Industry Condition and Sources of Revenue
     -31-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
     Liquidity
 Debt Financings  Other Secured Financing Arrangements.
  -32-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
     Our Relationship with AIG
 Potential Change in Ownership
  AIG Loans from the FRBNY and Department of the Treasury
  -33-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 AIG Recapitalization and the Master Transaction Agreement
  Repayment and Termination of the FRBNY Credit Facility:
 Repurchase and Exchange of SPV Preferred Interests:
 Designated Entity Consent Rights: (i) (ii) (iii) (iv) (v) (vi) (vii)
 Critical Accounting Policies and Estimates
  -34-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  
    
    Overhaul Rentals
    
    Flight Equipment
    
    Recoverability Assessment:In monitoring the aircraft in our fleet for impairment
charges, we consider facts and circumstances, including potential sales, that would
require us to modify our assumptions used in our recoverability assessments and prepare
revised recoverability assessments as necessary.
    
    Recurring Recoverability Assessment:We identify those aircraft that are most
susceptible to failing the recoverability assessment and monitor those aircraft more
closely, which may result in more frequent recoverability assessments. The
recoverability of these aircraft is sensitive to changes in contractual cash flows,
future cash flow estimates and residual values. These are typically older aircraft that
are less in demand and have lower lease rates. As of March 31, 2011, we had identified
51 aircraft as being susceptible to failing the recoverability test. These aircraft had
a net book value of approximately $2.3 billion at March 31, 2011. All of these aircraft
passed the recoverability assessment with aggregate undiscounted cash flows exceeding
the carrying value of aircraft between 1.4% and 83.1%, which represents a 19.7% excess
above the net carrying value of those aircraft. Management believes that the carrying
values of these aircraft are supported by the estimated future undiscounted cash flows
expected to be generated by each aircraft.
    
    Recoverability Assessment  Potential Sales:We recorded the following impairment
charges and fair value adjustments for the three months ended March 31, 2011: (i)
$110.2 million on certain aircraft held for use as a result of recoverability analysis
performed on aircraft likely to be sold in future periods, and four aircraft sold
during the period, one of which was held for sale; and (ii)$2.5 million related to one
aircraft that was parted-out. These impairment charges and fair value adjustments were
offset by (i)$3.3 million of net aggregate fair value credit adjustments recorded
related to two other aircraft previously held for sale that were reclassified as held
for use during the three months ended March 31, 2011 and (ii)$6.1 million aggregate
fair value credit adjustments related to six aircraft previously held for sale and sold
during the period. See Note E of Notes to Condensed, Consolidated Financial Statements.
    
    Flight Equipment Held for Sale
    
    Depreciable Lives and Residual Values
    
    Derivative Financial Instruments
    
    Fair Value Measurements
    
    Lease Revenue
    
    Income Taxes
 Part II  Item
7. Managements Discussion and Analysis of Financial Condition and Results of Operations
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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Notes to Condensed,
Consolidated Financial Statements
 Debt Financings
   March 31,
    
    
    December 31,2011
    
    
    2010(Dollars in thousands)SecuredSenior secured bonds
    
    $
    3,900,000
    
    
    $
    3,900,000ECA financings
    
    
    2,626,088
    
    
    
    2,777,285Bank debt (a)
    
    
    1,465,400
    
    
    
    1,465,400Other secured financings (a)
    
    
    1,431,903
    
    
    
    1,436,258Less: Deferred debt discount
    
    
    (21,112
    )
    
    
    (22,309
    )9,402,279
    
    
    
    9,556,634UnsecuredBonds and Medium-Term Notes
    
    
    15,475,569
    
    
    
    16,810,843Bank debt
    
    
    234,600
    
    
    
    234,600Less: Deferred debt discount
    
    
    (45,683
    )
    
    
    (47,977
    )15,664,486
    
    
    
    16,997,466Total Senior Debt Financings
    
    
    25,066,765
    
    
    
    26,554,100Subordinated Debt
    
    
    1,000,000
    
    
    
    1,000,000$
    26,066,765
    
    
    $
    27,554,100Selected interest rates and ratios which
include the economic effect of derivative
instruments:Composite interest rate
    
    
    5.80
    %
    
    
    5.66
    %Percentage of total debt at fixed rates
    
    
    78.42
    %
    
    
    79.30
    %Composite interest rate on fixed rate debt
    
    
    6.31
    %
    
    
    6.38
    %Bank prime rate
    
    
    3.25
    %
    
    
    3.25
    %
 
 (a)
    
    Of this amount, $109.6 million (2011) and $113.7 million (2010) is non-recourse to ILFC.
These secured financings were incurred by VIEs and consolidated into our condensed,
consolidated financial statements.  -36-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  Notes to Condensed
Consolidated Financial Statements .
  Senior Secured Bonds
  (i) (ii) (iii) (iv) (v) (vi)
   Export Credit Facilities
   -37-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   (i) (ii) (iii) (iv)
 (i) (ii)
  Secured Bank Debt
  -38-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   (i) (ii) (iii)
 Other Secured Financing Arrangements,
 Other Secured Financing Arrangements
    -39-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  (i) (ii) (iii) (iv)
 Unsecured Bonds and Medium-Term Notes
 Automatic Shelf Registration
 (i) (ii)
 Euro Medium-Term Note Programme
 -40-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
  (Dollars in thousands)Foreign currency adjustment related to foreign currency
denominated debt at December 31, 2010
    
    $
    165,400Foreign currency period adjustment of non-US$ denominated debt
    
    
    84,100Foreign currency adjustment related to foreign currency
denominated debt at March 31, 2011
    
    $
    249,500
 Other Senior Notes
  (i) (ii) (iii) (iv) (v)
  Unsecured Bank Debt
  -41-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Secured Bank Debt
 Subordinated Debt
 (i) (ii) (iii) (i) (ii) (iii)
 Derivatives
    Credit Ratings
 (i) (ii)
 -42-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   Unsecured Debt Ratings
 Rating Agency
    
    Long-term Debt
    
    Corporate Rating
    
    Outlook
    
    Date of Last Ratings ActionFitch
    
    BB
    
    BB
    
    Evolving
    
    April 30, 2010Moodys
    
    B1
    
    B1
    
    Stable
    
    August 11, 2010S&P
    
    BB+
    
    BBB-
    
    Negative
    
    June 9, 2010
 Secured Debt Ratings
 $3.9 BillionRating Agency
    
    $750 Million Term Loan
    
    $550 Million Term Loan
    
    Senior Secured NotesFitch
    
    BBB-
    
    BB
    
    BBB-Moodys
    
    Ba2
    
    Ba3
    
    Ba3S&P
    
    BBB
    
    BBB-
    
    BBB-
  -43-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Existing Commitments
  Commitments Due by Fiscal YearTotal
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter(Dollars in thousands)Bonds and
medium-term notes
    
    $
    15,475,569
    
    
    $
    3,064,121
    
    
    $
    3,570,607
    
    
    $
    3,540,815
    
    
    $
    1,039,926
    
    
    $
    1,260,100
    
    
    $
    3,000,000Unsecured Bank Loans
    
    
    234,600
    
    
    
    234,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Senior Secured Bonds
    
    
    3,900,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,350,000
    
    
    
    
    
    
    
    2,550,000Secured Bank Loans
    
    
    1,465,400
    
    
    
    
    
    
    
    1,465,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ECA Financings
    
    
    2,626,088
    
    
    
    290,942
    
    
    
    428,960
    
    
    
    428,960
    
    
    
    423,862
    
    
    
    335,794
    
    
    
    717,570Other Secured
Financings
    
    
    1,431,903
    
    
    
    10,491
    
    
    
    14,877
    
    
    
    15,963
    
    
    
    36,716
    
    
    
    760,370
    
    
    
    593,486Subordinated Debt
    
    
    1,000,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,000Interest Payments on
Debt Outstanding
(a)(b)
    
    
    9,218,969
    
    
    
    1,184,159
    
    
    
    1,286,265
    
    
    
    1,072,161
    
    
    
    865,953
    
    
    
    687,997
    
    
    
    4,122,434Operating Leases (c)(d)
    
    
    56,834
    
    
    
    9,005
    
    
    
    12,453
    
    
    
    12,951
    
    
    
    13,362
    
    
    
    9,063
    
    
    
    Pension Obligations (e)
    
    
    9,770
    
    
    
    1,539
    
    
    
    1,577
    
    
    
    1,639
    
    
    
    1,676
    
    
    
    1,676
    
    
    
    1,663Purchase Commitments
(f)
    
    
    17,551,400
    
    
    
    174,300
    
    
    
    308,800
    
    
    
    1,015,100
    
    
    
    1,615,600
    
    
    
    2,457,900
    
    
    
    11,979,700Total
    
    $
    52,970,533
    
    
    $
    4,969,157
    
    
    $
    7,088,939
    
    
    $
    6,087,589
    
    
    $
    5,347,095
    
    
    $
    5,512,900
    
    
    $
    23,964,853
 Contingent Commitments
 Contingency Expiration by Fiscal YearTotal
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    Thereafter(Dollars in thousands)AVGs (g)
    
    $
    551,394
    
    
    $
    27,841
    
    
    $
    78,950
    
    
    $
    96,003
    
    
    $
    35,986
    
    
    $
    157,132
    
    
    $
    155,482Total (h)
    
    $
    551,394
    
    
    $
    27,841
    
    
    $
    78,950
    
    
    $
    96,003
    
    
    $
    35,986
    
    
    $
    157,132
    
    
    $
    155,482
 
 (a)
    
    Future interest payments on floating rate debt are estimated using floating interest
rates in effect at March 31, 2011.(b)
    
    Includes the effect of interest rate and foreign currency derivative instruments.(c)
    
    Excludes fully defeased aircraft sale-lease back transactions.(d)
    
    Minimum rentals have not been reduced by minimum sublease rentals of $6.1 million
receivable in the future under non-cancellable subleases.(e)
    
    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 2011 consists
of total estimated allocations for 2011 and the column Thereafter consists of the 2016
estimated allocation. The amount allocated has not been material to date.(f)
    
    The amounts include 80 A320neos and 20 A321neos from Airbus. We entered into a
purchase agreement to acquire such aircraft from Airbus in April 2011.(g)
    
    From time to time, we participate with airlines, banks and other financial
institutions in the financing of aircraft by providing asset guarantees, put options or loan
guarantees collateralized by aircraft. As a result, should we be called upon to fulfill our
obligations, we would have recourse to the value of the underlying aircraft.(h)
    
    Excluded from total contingent commitments are $239.8 million of uncertain tax
liabilities and any effect of net tax liabilities. The future cash flows to these liabilities
are uncertain and we are unable to make reasonable estimates of the outflows. -44-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 Off-Balance-Sheet Arrangements
 Notes to Condensed, Consolidated Financial Statements
 Results of Operations
 Income before Income Taxes for the Three Months Ended March 31, 2011 Versus 2010
  
    
    During the three months ended March 31, 2011, we (i)sold nine aircraft to third
parties, six of which were previously recorded as Flight equipment held for sale; (ii)were
in negotiations with third parties for the sale of six aircraft and deemed those aircraft
more likely than not to be sold; and (iii)designated one aircraft for part-out. Based on a
fair value analysis, we recorded impairment charges and fair value adjustments aggregating
$112.7 million related to ten of those 16 aircraft. These impairment charges and fair value
adjustments were partially offset by fair value credit adjustments aggregating $9.4 million
related to the five aircraft sold and previously recorded as Flight equipment held for sale
and two other aircraft reclassified from Flight equipment held for sale to held for use
during the period.
    
    During the three months ended March 31, 2010, we performed recoverability assessments in
conjunction with potential sales of aircraft and determined that 52 aircraft were not fully
recoverable. Based upon a fair value analysis, we recorded impairment charges aggregating
$353.4 million to record these aircraft to their fair value.
  Three Months Ended March 31, 2011 Versus 2010
 (i) (ii) (iii) (i) (ii)
 -45-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
   (i) Condensed, Consolidated Financial Statements (ii) (iii)
   Increase2011
    
    
    2010
    
    
    (Decrease)Beginning of Quarter
    
    
    5.66
    %
    
    
    4.35
    %
    
    
    1.31
    %End of Quarter
    
    
    5.80
    %
    
    
    4.69
    %
    
    
    1.11
    %Average
    
    
    5.73
    %
    
    
    4.52
    %
    
    
    1.21
    %
 Notes to Condensed, Consolidated Financial
Statements.
  Notes to Condensed, Consolidated Financial Statements.
  (i)
 -46-




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MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
 (ii) (iii)
    -47-




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Value at Risk
     ILFC Market RiskAt
    
    
    
    
    
    
    
    
    
    
    AtMarch 31, 2011
    
    
    December 31, 2010(Dollars in millions)Average
    
    
    High
    
    
    Low
    
    
    Average
    
    
    High
    
    
    LowCombined
    
    $
    105.1
    
    
    $
    161.0
    
    
    $
    20.0
    
    
    $
    88.9
    
    
    $
    158.6
    
    
    $
    20.0Interest Rate
    
    
    105.1
    
    
    
    160.9
    
    
    
    20.0
    
    
    
    88.9
    
    
    
    158.5
    
    
    
    20.0Currency
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.0
 -48-




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ITEM 4. CONTROLS AND PROCEDURES(A)
    
    Evaluation of Disclosure Controls and Procedures
 We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our filings under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the periods specified in the
rules and forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to our management, including the Chief Executive Officer and the Senior
Vice President and Chief Financial Officer (collectively, the Certifying Officers), as
appropriate, to allow timely decisions regarding required disclosure.In conjunction with the close of each fiscal quarter, we conduct a review and
evaluation under the supervision and with the participation of our management, including the
Certifying Officers, the effectiveness of our disclosure controls and procedures, as defined
in Rules 13a  15(e) and 15d  15(e) of the Securities Exchange Act of 1934, as amended.
Based on that evaluation, our Certifying Officers have concluded that our disclosure
controls and procedures were effective at the reasonable assurance level as of March 31,
2011, the end of the period covered by this report.(B)
    
    Changes in Internal Control Over Financial ReportingThere have been no changes in our internal control over financial reporting during the
three months ended March 31, 2011, that have materially affected, or are reasonably likely
to materially affect, our internal controls over financial reporting.
 -49-




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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Flash Airlines, Yemen Airways-Yemenia and Airblue Limited:
 Estate of Volare Airlines
  
 ITEM 1A. RISK FACTORS
  Capital Structure Risk
   
    
    making it more difficult for us to satisfy our obligations with respect to our indebtedness;
 -50-




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PART II. OTHER INFORMATION (CONTINUED)
 
    
    requiring us to dedicate a substantial portion of our cash flow from operations
to payments on our indebtedness, thereby reducing funds available for other
purposes, including acquiring new aircraft and exploring business opportunities;
    
    increasing our vulnerability to adverse economic and industry conditions;
    
    limiting our flexibility in planning for, or reacting to, changes in our business
and industry; and
    
    limiting our ability to borrow additional funds or refinance our existing
indebtedness.
 Liquidity Risk
      -51-




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PART II. OTHER INFORMATION (CONTINUED)
   Borrowing Risks
 Credit Ratings Downgrade Risk -
 (i) (ii)
  Interest Rate Risk -
  Restrictive Covenants on Our Operations
  
    
    incur debt;
    
    encumber our assets;
    
    dispose of certain assets;
 -52-




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PART II. OTHER INFORMATION (CONTINUED)
 
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
    
    enter into sale-leaseback transactions;
    
    make equity or debt investments in other parties;
    
    enter into transactions with affiliates;
    
    make capital expenditures;
    
    designate our subsidiaries as unrestricted subsidiaries; and
    
    pay dividends and distributions.
  Relationship with AIG
 AIG as Our Parent Company
 AIG Master Transaction Agreement with the Department of the Treasury
 
    
    amending or waiving any provisions of our articles of incorporation, bylaws, or
similar organizational document in a manner that would adversely affect, in any material
respect, the rights of our equity interests;
    
    authorizing or issuing any equity interests, unless to AIG, or a wholly-owned
subsidiary of AIG;
    
    selling or disposing of assets for total consideration greater than or equal to $2.5
billion in any twelve month period;
    
    acquiring assets after December 8, 2010, other than pursuant to existing purchase
commitments at such date, with aggregate scheduled payments under the purchase contracts
for such assets greater than or equal to $2.5 billion in any twelve month period;
    
    engaging in any public offering or other sale or transfer of our equity interests;
    
    voluntarily liquidating, filing for bankruptcy, or taking any other legal action
evidencing insolvency; and
    
    increasing our net indebtedness by more than $1 billion compared to the same date in
the previous year, or compared to December 8, 2010, if the measurement is made before
December 8, 2011.
  AIG as Our Counterparty of Derivatives
 -53-




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##### Table of Contents



PART II. OTHER INFORMATION (CONTINUED)
  Key Personnel Risk
  Overall Airline Industry Risk
  
    
    demand for air travel
    
    
    
    geopolitical events
    
    competition between carriers
    
    
    
    security, terrorism and war
    
    fuel prices and availability
    
    
    
    worldwide health concerns
    
    labor costs and stoppages
    
    
    
    equity and borrowing capacity
    
    maintenance costs
    
    
    
    environmental concerns
    
    employee labor contracts
    
    
    
    government regulation
    
    air traffic control infrastructure constraints
    
    
    
    interest rates
    
    airport access
    
    
    
    overcapacity
    
    insurance costs and coverage
    
    
    
    natural disasters
    
    heavy reliance on automated systems
  
    
    lower demand for the aircraft in our fleet and, generally, reduced market lease
rates and lease margins;
    
    a higher incidence of lessee defaults, lease restructurings and repossessions
affecting net income due to maintenance, consulting and legal costs associated with
the repossessions, as well as lost revenue for the time the aircraft are off lease
and possibly lower lease rates from the new lessees;
    
    a higher incidence of situations where we engage in restructuring lease rates for
our troubled customers which reduces overall lease revenue;
    
    an inability to immediately place new and used aircraft on commercially
acceptable terms when they become available through our purchase commitments and
regular lease terminations, resulting in
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PART II. OTHER INFORMATION (CONTINUED)
 lower lease margins due to aircraft not earning revenue and resulting in payments for
storage, insurance and maintenance; and
    
    a loss if our aircraft is damaged or destroyed by an event specifically excluded
from the insurance policy such as dirty bombs, bio-hazardous materials and
electromagnetic pulsing.
 Lessee Non-Performance Risk
 Overall Airline Industry
Risk
  Airframe, Engine and Other Manufacturer Risks
  
    
    missed or late delivery of aircraft ordered by us and an inability to meet our
contractual obligations to our customers, resulting in lost or delayed revenues,
lower growth rates and strained customer relationships;
    
    an inability to acquire aircraft and related components on terms which will allow
us to lease those aircraft to customers at a profit, resulting in lower growth rates
or a contraction in our fleet;
    
    a marketplace with too many aircraft available, creating downward pressure on
demand for the aircraft in our fleet and reduced market lease rates; and
    
    poor customer support from the manufacturers of aircraft and components resulting
in reduced demand for a particular manufacturers product, creating downward
pressure on demand for those aircraft in our fleet and reduced market lease rates
for those aircraft.
 Aircraft Related Risks
 Residual Value  (i) (ii) (iii) Notes
to Condensed, Consolidated Financial Statements
 -55-




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##### Table of Contents



PART II. OTHER INFORMATION (CONTINUED)
 Obsolescence Risk 
  Greenhouse Gas Emissions Risk 
 Other Risks
 Foreign Currency Risk 
 Accounting Pronouncements 
    -56-




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PART II. OTHER INFORMATION (CONTINUED)
 Tax Related Risks
 
 ITEM 6.
    
    EXHIBITS
 a)
    
    Exhibits
 3.1
    
    Restated Articles of Incorporation of the
Company (filed as an exhibit to Form 10-Q for the quarter ended
September 30, 2008, and incorporated herein by reference).3.2
    
    Amended and Restated By-laws of the Company
(filed as an exhibit to Form 10-Q for the quarter ended June 30, 2010,
and incorporated herein by reference).4.
    
    The Company agrees to furnish to the
Commission upon request a copy of each instrument with respect to
issues of long-term debt of the Company and its subsidiaries, the
authorized principal amount of which does not exceed 10% of the
consolidated assets of the Company and its subsidiaries.10.1
    
    $2,000,000,000 Three-Year Revolving Credit
Agreement, dated as of January 31, 2011, among the Company, the banks
named therein and Citibank, N.A., as administrative agent (filed as an
exhibit to Form 8-K filed on January 31, 2011 and incorporated herein
by reference).10.2
    
    Term Loan Credit Agreement, dated as of March
30, 2011, among Temescal Aircraft Inc., as borrower, the Company, Park
Topanga Aircraft Inc., Charmlee Aircraft Inc., and Ballysky Aircraft
Ireland Limited, as obligors, the lenders identified therein, Citibank
N.A., as administrative agent and collateral agent, Citigroup Global
Markets Inc. and Credit Suisse Securities (USA) LLC, as joint lead
structuring agents and joint lead placement agents, and BNP Paribas,
as joint placement agent (portions of this exhibit have been omitted
pursuant to a request for confidential treatment).10.3
    
    Aircraft Mortgage and Security Agreement,
dated as of March 30, 2011, among Park Topanga Aircraft Inc., Temescal
Aircraft Inc., Ballysky Aircraft Ireland Limited, Charmlee Aircraft
Inc., the additional grantors referred to therein, and Citibank, N.A.,
as collateral agent (portions of this exhibit have been omitted
pursuant to a request for confidential treatment).10.4
    
    Incremental Lender Assumption Agreement,
dated as of April 21, 2011, among Temescal Aircraft Inc., the Company,
Park Topanga Aircraft Inc., Charmlee Aircraft Inc., Ballysky Aircraft
Ireland Limited, KfW IPEX-Bank GmbH, as the incremental lender, and
Citibank, N.A., as administrative agent (portions of this exhibit have
been omitted pursuant to a request for confidential treatment).12.
    
    Computation of Ratios of Earnings to Fixed
Charges and Preferred Stock Dividends.31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of President and Chief Financial Officer.32.1
    
    Certification under 18 U.S.C., Section 1350.
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##### Table of Contents



SIGNATURES
   May 10, 2011
    /s/ Henri CourpronHENRI COURPRONChief Executive Officer

(Principal Executive Officer)May 10, 2011
    /s/ Frederick S. CromerFREDERICK S. CROMERPresident and
Chief Financial Officer 
(Principal Financial Officer)May 10, 2011
    /s/ Kurt H. SchwarzKURT H. SCHWARZSenior Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer) -58-




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##### Table of Contents



INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
   3.1
    
    Restated Articles of Incorporation of the Company (filed as an
exhibit to Form 10-Q for the quarter ended September 30, 2008, and incorporated
herein by reference).3.2
    
    Amended and Restated By-laws of the Company (filed as an exhibit to
Form 10-Q for the quarter ended June 30, 2010, and incorporated herein by
reference).4.
    
    The Company agrees to furnish to the Commission upon request a copy
of each instrument with respect to issues of long-term debt of the Company and its
subsidiaries, the authorized principal amount of which does not exceed 10% of the
consolidated assets of the Company and its subsidiaries.10.1
    
    $2,000,000,000 Three-Year Revolving Credit Agreement, dated as of
January 31, 2011, among the Company, the banks named therein and Citibank, N.A.,
as administrative agent (filed as an exhibit to Form 8-K filed on January 31, 2011
and incorporated herein by reference).10.2
    
    Term Loan Credit Agreement, dated as of March 30, 2011, among
Temescal Aircraft Inc., as borrower, the Company, Park Topanga Aircraft Inc.,
Charmlee Aircraft Inc., and Ballysky Aircraft Ireland Limited, as obligors, the
lenders identified therein, Citibank N.A., as administrative agent and collateral
agent, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC, as
joint lead structuring agents and joint lead placement agents, and BNP Paribas, as
joint placement agent (portions of this exhibit have been omitted pursuant to a
request for confidential treatment).10.3
    
    Aircraft Mortgage and Security Agreement, dated as of March 30, 2011,
among Park Topanga Aircraft Inc., Temescal Aircraft Inc., Ballysky Aircraft
Ireland Limited, Charmlee Aircraft Inc., the additional grantors referred to
therein, and Citibank, N.A., as collateral agent (portions of this exhibit have
been omitted pursuant to a request for confidential treatment).10.4
    
    Incremental Lender Assumption Agreement, dated as of April 21, 2011,
among Temescal Aircraft Inc., the Company, Park Topanga Aircraft Inc., Charmlee
Aircraft Inc., Ballysky Aircraft Ireland Limited, KfW IPEX-Bank GmbH, as the
incremental lender, and Citibank, N.A., as administrative agent (portions of this
exhibit have been omitted pursuant to a request for confidential treatment).12.
    
    Computation of Ratios of Earnings to Fixed Charges and Preferred
Stock Dividends.31.1
    
    Certification of Chief Executive Officer.31.2
    
    Certification of President and Chief Financial Officer.32.1
    
    Certification under 18 U.S.C., Section 1350.
 -59-