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Cover Page - shares	6 Months Ended
Cover Page - shares	Jun. 30, 2020	Aug. 01, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	001-32959
Entity Registrant Name	AIRCASTLE LIMITED
Entity Incorporation, State or Country Code	D0
Entity Tax Identification Number	98-0444035
Entity Address, Address Line One	c/o Aircastle Advisor LLC
Entity Address, Address Line Two	201 Tresser Boulevard, Suite 400
Entity Address, City or Town	Stamford
Entity Address, State or Province	CT
City Area Code	203
Local Phone Number	504-1020
Title of 12(b) Security	Common Shares, par value $0.01 per share
Trading Symbol	N/A
Security Exchange Name	NONE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		14,048
Entity Central Index Key	0001362988
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Address, Postal Zip Code	06901

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
ASSETS
Cash and cash equivalents	$ 319,032	$ 140,882
Restricted cash and cash equivalents	5,354	14,561
Accounts receivable	76,255	18,006
Flight equipment held for lease, net of accumulated depreciation of $1,803,936 and $1,501,664, respectively	6,866,811	7,375,018
Net investment in leases, net of allowance for credit losses of $2,972 and $0, respectively	319,531	419,396
Unconsolidated equity method investments	34,450	32,974
Other assets	257,047	201,209
Total assets	7,878,480	8,202,046
LIABILITIES
Borrowings from secured financings, net of debt issuance costs and discounts	974,167	1,129,345
Borrowings from unsecured financings, net of debt issuance costs and discounts	4,137,590	3,932,491
Accounts payable, accrued expenses and other liabilities	158,785	172,114
Lease rentals received in advance	77,444	108,060
Security deposits	91,649	124,954
Maintenance payments	603,232	682,398
Total liabilities	6,042,867	6,149,362
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at June 30, 2020; and 75,122,129 shares issued and outstanding at December 31, 2019	0	751
Additional paid-in capital	1,485,777	1,446,664
Retained earnings	349,836	605,269
Total shareholders’ equity	1,835,613	2,052,684
Total liabilities and shareholders’ equity	$ 7,878,480	$ 8,202,046

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accumulated depreciation on flight equipment held for lease	$ 1,803,936	$ 1,501,664
Financing Receivable, Allowance for Credit Loss, Current	$ 2,972	$ 0
Common shares, par value	$ 0.01	$ 0.01
Common shares, shares authorized	250,000,000	250,000,000
Common shares, shares issued	14,048	75,122,129
Common shares, shares outstanding	14,048	75,122,129
Preference shares, par value	$ 0.01	$ 0.01
Preference shares, shares authorized	50,000,000	50,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenues:
Lease rental revenue	$ 172,380	$ 192,823	$ 371,300	$ 374,057
Direct financing and sales-type lease revenue	4,537	8,321	11,303	16,764
Amortization of lease premiums, discounts and incentives	(6,404)	(5,345)	(12,100)	(11,056)
Total lease revenue	242,681	222,366	489,223	422,733
Gain (loss) on sale of flight equipment	(279)	346	26,770	12,348
Total revenues	255,452	223,416	537,950	437,343
Operating expenses:
Depreciation	88,117	89,578	177,822	174,313
Interest, net	56,226	66,377	117,733	129,840
Selling, general and administrative (including non-cash share-based payment expense of $0 and $3,177 for the three months ended, and $38,727 and $5,903 for the six months ended June 30, 2020 and 2019, respectively)	13,564	18,317	75,946	36,317
Impairment of flight equipment	280,088	7,404	342,745	7,404
Maintenance and other costs	4,241	5,213	8,997	12,617
Total operating expenses	442,236	186,889	723,243	360,491
Gain (Loss) on Extinguishment of Debt	(65)	0	(4,020)	0
Merger Expenses	(220)	0	(32,430)	0
Other expense:
Other	1	(1,910)	(111)	(3,971)
Nonoperating Income (Expense)	(284)	(1,910)	(36,561)	(3,971)
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	(187,068)	34,617	(221,854)	72,881
Income tax provision	4,671	5,992	4,820	9,090
Earnings of unconsolidated equity method investments, net of tax	762	2,487	1,476	2,131
Net income (loss)	(190,977)	31,112	(225,198)	65,922
Net derivative loss reclassified into earnings	0	0	0	184
Net current period other comprehensive income	0	0	0	184
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	(190,977)	31,112	(225,198)	66,106
Maintenance revenue
Revenues:
Revenues from contracts with customers	72,168	26,567	118,720	42,968
Other revenue
Revenues:
Revenues from contracts with customers	$ 13,050	$ 704	$ 21,957	$ 2,262

Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Non-cash share based payment expense	$ 0	$ 3,177	$ 38,727	$ 5,903

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019
Statement of Cash Flows [Abstract]
Net income (loss)	$ (190,977)	$ (225,198)	$ 65,922
Adjustments to reconcile net income (loss) to net cash and restricted cash provided by operating activities:
Depreciation	88,117	177,822	174,313
Amortization of deferred financing costs		6,840	6,958
Amortization of lease premiums, discounts and incentives	6,404	12,100	11,056
Deferred income taxes		1,479	7,957
Non-cash share-based payment expense	0	38,727	5,903
Cash flow hedges reclassified into earnings	0	0	184
Proceeds from Collection of Finance Receivables		11,861	10,971
Security deposits and maintenance payments included in earnings		(129,349)	(24,162)
Gain on sale of flight equipment	279	(26,770)	(12,348)
Gain (Loss) on Extinguishment of Debt	(65)	(4,020)	0
Impairment of flight equipment	280,088	342,745	7,404
Provision for Loan and Lease Losses	1,206	4,801	0
Other		(1,300)	393
Changes in certain assets and liabilities:
Accounts receivable		(54,404)	(7,899)
Other assets		(52,990)	3,582
Accounts payable, accrued expenses and other liabilities		(13,981)	(11,619)
Lease rentals received in advance		(33,064)	7,181
Net cash and restricted cash provided by operating activities		63,339	245,612
Cash flows from investing activities:
Acquisition and improvement of flight equipment		(52,419)	(660,723)
Proceeds from sale of flight equipment		155,560	56,924
Aircraft purchase deposits and progress payments, net of returned deposits and aircraft sales deposits		(10,212)	18,054
Other		(508)	2,241
Net cash and restricted cash provided by (used in) investing activities		92,421	(591,055)
Cash flows from financing activities:
Repurchase of shares		(27,906)	(14,288)
Proceeds from Contributions from Parent		25,536	0
Proceeds from secured and unsecured debt financings		650,000	1,841,848
Repayments of secured and unsecured debt financings		(608,189)	(1,105,353)
Payment for Debt Extinguishment or Debt Prepayment Cost		2,750	0
Deferred financing costs		0	(12,165)
Security deposits and maintenance payments received		49,824	92,514
Security deposits and maintenance payments returned		(49,307)	(64,788)
Dividends paid		(24,025)	(45,054)
Net cash and restricted cash provided by financing activities		13,183	692,714
Net increase in cash and restricted cash:		168,943	347,271
Cash and restricted cash at beginning of period		155,443	167,853
Cash and restricted cash at end of period	324,386	324,386	515,124
Unrestricted and restricted cash and cash equivalents	$ 324,386	324,386	515,124
Supplemental disclosures of cash flow information:
Cash paid for interest		116,546	121,523
Cash paid for income taxes		144	115
Supplemental disclosures of non-cash investing activities:
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets assumed in asset acquisitions		37,742	35,889
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets settled in sale of flight equipment		16,480	10,938
Transfers from flight equipment held for lease to Net investment in leases and Other assets		28,916	59,185
Payments to Acquire Interest in Subsidiaries and Affiliates		$ 0	$ 7,551

Consolidated Statements of Shareholder's Equity Statement - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]
Common Stock, Shares, Outstanding		75,454,511
Stockholders' Equity Attributable to Parent	$ 2,008,681	$ 754	$ 1,468,779	$ 539,332	$ (184)
Stock Issued During Period, Shares, New Issues		276,923
Stock Issued During Period, Value, New Issues	0	$ 3	(3)
Stock Repurchased During Period, Shares		(653,796)
Stock Repurchased During Period, Value	(11,424)	$ (6)	(11,418)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	2,410		2,410
APIC, Share-based Payment Arrangement, Restricted Stock Unit, Increase for Cost Recognition			796
Dividends, Common Stock, Cash	(22,518)			(22,518)
Net income (loss)	34,810			34,810
Net derivative loss reclassified into earnings	184				(184)
Proceeds from Contributions from Parent	0
Net income (loss)	65,922
Net derivative loss reclassified into earnings	184
Common Stock, Shares, Outstanding		75,077,638
Stockholders' Equity Attributable to Parent	2,012,939	$ 751	1,460,564	551,624	0
Stock Issued During Period, Shares, New Issues		35,000
Stock Issued During Period, Value, New Issues	0	$ 0	0
Stock Repurchased During Period, Shares		(129,524)
Stock Repurchased During Period, Value	(2,864)	$ (1)	(2,863)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	2,833		2,833
Dividends, Common Stock, Cash	(22,536)			(22,536)
Net income (loss)	31,112			31,112
Net derivative loss reclassified into earnings	0
Common Stock, Shares, Outstanding		74,983,114
Stockholders' Equity Attributable to Parent	$ 2,021,484	$ 750	1,460,534	560,200	0
Common Stock, Shares, Outstanding	75,122,129	75,122,129
Stockholders' Equity Attributable to Parent	$ 2,052,684	$ 751	1,446,664	605,269	0
Proceeds from Contributions from Parent	25,536		25,536
Stock Issued During Period, Shares, New Issues		28,568
Stock Issued During Period, Value, New Issues	0	$ 1	(1)
Stock Repurchased During Period, Shares		(73,903)
Stock Repurchased During Period, Value	(2,370)	$ (1)	(2,369)
APIC, Share-based Payment Arrangement, Increase for Cost Recognition	38,727		38,727
APIC, Share-based Payment Arrangement, Restricted Stock Unit, Increase for Cost Recognition	2,005		2,005
Dividends, Common Stock, Cash	(24,025)			(24,025)
Net income (loss)	(34,221)			(34,221)
Proceeds from Contributions from Parent	25,536
Net income (loss)	(225,198)
Net derivative loss reclassified into earnings	$ 0
Common Stock, Shares, Outstanding	14,048	14,048
Stockholders' Equity Attributable to Parent	$ 2,026,590	$ 0	1,485,777	540,813	0
Net income (loss)	(190,977)			(190,977)
Net derivative loss reclassified into earnings	$ 0
Common Stock, Shares, Outstanding	14,048	14,048
Stockholders' Equity Attributable to Parent	$ 1,835,613	$ 0	$ 1,485,777	$ 349,836	$ 0

Summary of Significant Accounting Policies	6 Months Ended
Summary of Significant Accounting Policies	Jun. 30, 2020
Accounting Policies [Abstract]
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]	Summary of Significant Accounting Policies Organization and Basis of Presentation Aircastle Limited (“Aircastle,” the “Company,” “we,” “us” or “our”) is a Bermuda exempted company that was incorporated on October 29, 2004 under the provisions of Section 14 of the Companies Act of 1981 of Bermuda. Aircastle’s business is acquiring, leasing, managing and selling commercial jet aircraft. On March 27, 2020, the Company successfully completed its merger (the “Merger”) and is now controlled by affiliates of Marubeni Corporation and Mizuho Leasing Company, Limited (“Mizuho Leasing”). Aircastle is a holding company that conducts its business through subsidiaries. Aircastle directly or indirectly owns all of the outstanding common shares of its subsidiaries. The consolidated financial statements presented are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The Company manages, analyzes and reports on its business and results of operations on the basis of one operating segment: leasing, financing, selling and managing commercial flight equipment. Our Chief Executive Officer is the chief operating decision maker. The accompanying consolidated financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, in our opinion, reflect all adjustments, including normal recurring items, which are necessary to present fairly the results for interim periods. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the entire year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC; however, we believe that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Effective January 1, 2020, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 326, Financial Instruments - Credit Losses (“ASC 326”). The standard applies to entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. The standard affect loans, debt securities, trade receivables, net investments in leases, off-balance-sheet credit exposures, reinsurance receivables, and other financial assets not excluded from the scope that have the contractual right to receive cash. Net investment in leases comprised the Company’s financial asset principally affected by the standard. Operating lease receivables are not within the scope of ASC 326. Upon the Company’s adoption of ASC 326, our net investment in leases was recorded in the consolidated financial statements net of an allowance for credit losses. This allowance for credit losses reflects the Company’s estimate of lessee default probabilities and loss given default percentages. The estimate of expected credit losses considers relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of reported amounts. Our allowance also considers the potential loss due to non-credit risk related to unguaranteed residual values. We adopted the standard using the “modified retrospective” approach with a January 1, 2020 adjustment to the opening balance of retained earnings. The adoption of the standard did not have a material impact on our consolidated financial statements or related disclosures. Effective January 1, 2020, the Company adopted, the FASB Accounting Standard Update (“ASU”) No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The standard modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The adoption of the standard did not have a material impact on our consolidated financial statements or related disclosures. Effective January 1, 2020, the Company adopted the FASB ASU No. 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use-software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The adoption of the standard did not have a material impact on our consolidated financial statements or related disclosures. Effective January 1, 2020, the Company adopted the FASB ASU No. 2018-17, Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities. The standard changes how all entities evaluate decision-making fees under the variable interest entity guidance. The standard is applied retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The adoption of the standard did not have a material impact on our consolidated financial statements or related disclosures. The Company’s management has reviewed and evaluated all events or transactions for potential recognition and/or disclosure subsequent to the balance sheet date of June 30, 2020, through the date on which the consolidated financial statements included in this Form 10-Q were issued. Principles of Consolidation The consolidated financial statements include the accounts of Aircastle and all its subsidiaries. Aircastle consolidates two Variable Interest Entities (“VIEs”) of which Aircastle is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. We consolidate VIEs in which we have determined that we are the primary beneficiary. We use judgment when deciding: (a) whether an entity is subject to consolidation as a VIE; (b) who the variable interest holders are; (c) the potential expected losses and residual returns of the variable interest holders; and (d) which variable interest holder is the primary beneficiary. When determining which enterprise is the primary beneficiary, we consider: (1) the entity’s purpose and design; (2) which variable interest holder has the power to direct the activities that most significantly impact the entity’s economic performance; and (3) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. When certain events occur, we reconsider whether we are the primary beneficiary of VIEs. We do not reconsider whether we are a primary beneficiary solely because of operating losses incurred by an entity. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While Aircastle believes the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates. Lease Revenue Recognition We lease flight equipment under net operating leases with lease terms typically ranging from three to seven years. We generally do not offer renewal terms or purchase options in our leases, although certain of our operating leases allow the lessee the option to extend the lease for an additional term. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the initial lease, assuming no renewals. Operating lease rentals that adjust based on a London Interbank Offered Rate (“LIBOR”) index are recognized on a straight-line basis over the lease term using the prevailing rate at lease commencement. Changes to rate-based lease rentals are recognized in the statements of income (loss) in the period of change. In certain instances, we may provide lease concessions to customers, generally in the form of lease rental deferrals. While these deferral arrangements affect the timing of lease rental payments, the total amount of lease rental payments required over the lease term is generally the same as that which was required under the original lease agreement. We account for the deferrals as if no modifications to the lease agreements were made and record the deferred rentals as a receivable within Other assets in our consolidated balance sheet. If we determine that the collectability of rental payments is no longer probable (including any deferral thereof), we recognize lease rental revenue using a cash basis of accounting rather than an accrual method. In the period we conclude that collection of lease payments is no longer probable, we recognize any difference between revenue amounts recognized to date under the accrual method and payments that have been collected from the lessee, including security deposit amounts held, as a current period adjustment to lease rental revenue. The COVID-19 virus has had an unprecedented negative impact on the global economy, and in particular on the aviation sector. There has been a dramatic slowdown in air traffic, with many markets in near complete shutdown. According to the International Air Transport Association (“IATA”), as of mid-June 2020, air travel is down to approximately 30% of normal levels and a full recovery to pre-pandemic levels is not expected for several years. Substantially all the world’s airlines are experiencing financial difficulties and liquidity challenges. While we believe the long-term demand for air travel will return to historical trends over time, the near-term impacts of the COVID-19 virus’ economic shock are material; the extent and duration of which cannot currently be determined. Airlines have been seeking to preserve liquidity through a combination of requesting government support, raising debt and equity, delaying or canceling new aircraft orders, furloughing employees, as well as requesting deferrals from lessors. We have agreed to defer near-term lease payments with certain of our airline customers, which they are obliged to repay over time. As of August 1, 2020, we have agreed to defer approximately $99,000 in near-term lease payments, including $61,209 that appear in our Consolidated Balance Sheet as components of Accounts receivable, Net investment in leases, or Other assets as of June 30, 2020. This represents approximately 12% of Lease rental and Direct financing and sales-type lease revenues for the twelve months ended June 30, 2020. Deferrals have been agreed to with 40 airlines, representing 50% of our customer base, and for an average deferral of four months of lease rentals. In a limited number of situations, we have agreed to broader restructurings of contractual terms, for example obtaining better security packages, term extensions, or other valuable considerations in exchange for short-term economic concessions. If air traffic remains depressed over an extended period and if our customers are unable to obtain sufficient funds from private, governmental or other sources, we may need to grant additional deferrals to our customers or extend the periods of repayment for deferrals we have already made. We may ultimately not be able to collect all the amounts we have deferred. As of August 1, 2020, six of our customers entered judicial insolvency proceedings. We lease 21 aircraft to these customers, which comprise 12% of our net book value of flight equipment (including Flight equipment held for lease and Net investment in leases, or “net book value”) and 11% of our Lease rental revenue as of and for the twelve months ended June 30, 2020. One of these is LATAM, our second largest customer, which represents 7% of our net book value of flight equipment and 7% of our Lease rental revenue as of and for the twelve months ended June 30, 2020. As of August 1, 2020, only one aircraft lease has been rejected in the various proceedings, but that number may increase as the judicial processes advance. Based on historic experience, the judicial process can take anywhere from twelve months up to eighteen months to be resolved. We are actively engaged in the various judicial procedures to protect our economic interests. As a result of these proceedings, the recognition of lease rental revenue for certain customers may be done on a cash basis of accounting rather than the accrual method depending on the customers lease security arrangements. Impairment of Flight Equipment We perform a recoverability assessment of all aircraft in our fleet, on an aircraft-by-aircraft basis annually during the second quarter. In addition, a recoverability assessment is performed whenever events or changes in circumstances, or indicators, suggest that the carrying amount or net book value of an asset may not be recoverable. Indicators may include, but are not limited to, a significant lease restructuring or early lease termination, significant change in aircraft model’s storage levels, the introduction of newer technology aircraft or engines, an aircraft type is no longer in production or a significant airworthiness directive is issued. When we perform a recoverability assessment, we measure whether the estimated future undiscounted net cash flows expected to be generated by the aircraft exceed its net book value. The undiscounted cash flows consist of cash flows from currently contracted lease rental and maintenance payments, future projected lease rates, transition costs, estimated down time, estimated residual or scrap values for an aircraft, economic conditions and other factors. In the event that an aircraft does not meet the recoverability test, the aircraft will be adjusted to fair value, resulting in an impairment charge. See Note 2 – Fair Value Measurements. Management develops the assumptions used in the recoverability analysis based on current and future expectations of the global demand for a particular aircraft type and historical experience in the aircraft leasing market and aviation industry, as well as information received from third party industry sources. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors. We are closely monitoring the impact of the COVID-19 virus on our customers, air traffic, lease rental rates, and aircraft valuations, and will perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We will focus on our customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, aircraft with near-term lease expirations, and certain aircraft variants that are more susceptible to the impact of COVID-19 and value deteriorations. Net Investment in Leases If a lease meets specific criteria at lease commencement or at the effective date of a lease modification, we recognize the lease as a direct financing or sales-type lease. The net investment in direct financing and sales-type leases consists of the lease receivable, estimated unguaranteed residual value of the lease flight equipment at lease-end and, for direct financing leases, deferred selling profit. For sales-type leases, we recognize the difference between the net book value of the aircraft and the net investment in the lease as a gain or loss on sale of flight equipment. Selling profit on a direct financing lease is deferred and amortized over the lease term, and a selling loss is recognized at lease commencement. Interest income on our net investment in leases is recognized as Direct financing and sales-type leases revenue over the lease term in a manner that produces a constant rate of return on the net investment in the lease. The net investment in leases is recorded in the consolidated financial statements net of an allowance for credit losses. The allowance for credit losses is recorded upon the initial recognition of the net investment in the lease based on the Company’s estimate of expected credit losses over the lease term. The allowance reflects the Company’s estimate of lessee default probabilities and loss given default percentages. When determining the credit loss allowance, we consider relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the net investment in the lease. The allowance also considers potential losses due to non-credit risk related to unguaranteed residual values. A provision for credit losses is recorded as a component of Selling, general, and administrative expenses in our Consolidated Statements of Income (Loss) to adjust the allowance for changes to management’s estimate of expected credit losses. Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard applies to entities that have contracts, such as debt agreements, lease agreements or derivative instruments, which reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Entities can elect not to apply certain modification accounting requirements for contract modifications that replace a reference rate affected by reference rate reform. If elected, such contracts are accounted for as a continuation of the existing contract and no reassessments or re-measurements are required. The standard is effective for all entities from March 12, 2020 through December 31, 2022 and does not apply to contract modifications made after December 31, 2022. We have not adopted ASC 848 for this interim period and are currently evaluating the election available to us under the standard and the impact it may have on our financial statements. In April 2020, the FASB Staff issued a question-and-answer document (the “Q&A”) regarding accounting for lease concessions related to the effects of the COVID-19 pandemic. The Q&A provides that entities may elect to apply or not apply the lease modification guidance in ASC 842, “Leases”, for lease concessions provided by lessors as a result of the COVID-19 pandemic. The Company has elected not to apply the lease modification guidance in ASC 842 for such lease concessions – see “Lease Revenue Recognition” above.

Fair Value Measurements

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair value measurements and disclosures require the use of valuation techniques to measure fair value that maximize the use of observable inputs and minimize use of unobservable inputs. These inputs are prioritized as follows:


•	Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.


•	Level 2: Inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities or market corroborated inputs.


•	Level 3: Unobservable inputs for which there is little or no market data and which require us to develop our own assumptions about how market participants price the asset or liability.

The valuation techniques that may be used to measure fair value are as follows:


•	The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.


•	The income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectation about those future amounts.


•	The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

The following tables set forth our financial assets as of June 30, 2020 and December 31, 2019 that we measured at fair value on a recurring basis by level within the fair value hierarchy. Assets measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement.



			Fair Value Measurements at June 30, 2020 Using Fair Value Hierarchy
	Fair Value as of June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	319,032	$	319,032	$	—	$	—	Market
Restricted cash and cash equivalents	5,354		5,354		—		—		Market
Derivative assets	2		—		2		—		Market
Total	$	324,388	$	324,386	$	2	$	—



			Fair Value Measurements at December 31, 2019 Using Fair Value Hierarchy
	Fair Value as of December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	140,882	$	140,882	$	—	$	—	Market
Restricted cash and cash equivalents	14,561		14,561		—		—		Market
Derivative assets	115		—		115		—		Market
Total	$	155,558	$	155,443	$	115	$	—

Our cash and cash equivalents, along with our restricted cash and cash equivalents balances, consist largely of money market securities that are highly liquid and easily tradable. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy. Our interest rate derivative included in Level 2 consists of a United States dollar-denominated interest rate cap, and its fair value is based on the market comparisons for similar instruments. We also considered the credit rating and risk of the counterparty providing the interest rate cap based on quantitative and qualitative factors.

For the three and six months ended June 30, 2020 and the year ended December 31, 2019, we had no transfers into or out of Level 3.

We measure the fair value of certain assets and liabilities on a non-recurring basis, when U.S. GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may

not be recoverable. Assets subject to these measurements include our investment in unconsolidated joint ventures and aircraft. We record aircraft at fair value when we determine the carrying value may not be recoverable. Fair value measurements for aircraft in impairment tests are based on the average of the market approach that uses Level 2 inputs, which include third party appraisal data and an income approach that uses Level 3 inputs, which include the Company’s assumptions and appraisal data as to future cash proceeds from leasing and selling aircraft discounted using the Company’s weighted average cost of capital.

We account for our investment in unconsolidated joint ventures under the equity method of accounting. Investments are recorded at cost and are adjusted by undistributed earnings and losses and the distributions of dividends and capital. These investments are also reviewed for impairment whenever events or circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary.

Aircraft Valuation

During the six months ended June 30, 2020, the Company recorded impairment charges related to twenty aircraft due to scheduled lease expirations, early lease terminations, lessee defaults and/or protective filings, or as a result of our annual recoverability assessment conducted during the second quarter of 2020. These twenty aircraft were comprised of eleven narrow-body and nine wide-body aircraft. The Company recorded impairment charges totaling $342,745 and recognized $136,236 of maintenance reserves, security deposits and lease rentals received in advance into revenue during the six months ended June 30, 2020 – refer to the sections below for additional details.

Transactional Impairments

In February 2020, the Company initiated a process to accept the redelivery of four wide-body aircraft prior to their scheduled lease expirations due to a lessee default. As a result, the Company recorded impairment charges of $62,657 and recognized $38,804 of maintenance revenue, $8,740 of security deposits, and $5,863 of lease rentals received in advance into revenue during the first quarter of 2020.

During the second quarter, the Company recorded impairment charges totaling $77,298 related to eleven aircraft due to the scheduled lease expirations of one narrow-body aircraft and one wide-body aircraft, as well as the early terminations of nine narrow-body aircraft. The Company recognized $69,995 of maintenance revenue and $12,834 of security deposits into revenue related to these eleven aircraft during the second quarter of 2020.

During the second quarter, six of our customers filed for bankruptcy protection. As a result, the Company reviewed the related aircraft for recoverability and recorded impairment charges of $159,750 during the second quarter of 2020 related to three wide-body aircraft.

Annual Recoverability Assessment

We completed our annual recoverability assessment of our aircraft in the second quarter of 2020. In addition to the transactional impairments discussed above, we recorded impairment charges totaling $43,040 related to one narrow-body and one wide-body aircraft as a result of our annual recoverability assessment. Although we have completed our annual recoverability assessment, we will continue to monitor the developments of the COVID-19 virus throughout the remainder of the year. We will closely monitor the impact of the virus on our customers, air traffic, lease rental rates, and aircraft valuations, and will perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We will focus on our customers that have entered judicial insolvency proceedings and any additional customers that may become subject to similar-type proceedings, aircraft with near-term lease expirations, and certain aircraft variants that are more susceptible to the impact of COVID-19 and value deteriorations.

The recoverability assessment is a comparison of the carrying value of each aircraft to its undiscounted expected future cash flows. We develop the assumptions used in the recoverability assessment, including those relating to current and future demand for each aircraft type, based on management’s experience in the aircraft leasing industry, as well as information received from third-party sources. Estimates of the undiscounted cash flows for each aircraft type are impacted by changes in contracted and future expected lease rates, residual values, expected scrap values, economic conditions and other factors.

If our estimates or assumptions change, we may revise our cash flow assumptions and record future impairment charges. While we believe that the estimates and related assumptions used in the annual recoverability assessment are appropriate, actual results could differ from those estimates.

Financial Instruments

Our financial instruments, other than cash, consist principally of cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, amounts borrowed under financings and interest rate derivatives. The fair value of cash, cash equivalents, restricted cash and cash equivalents, accounts receivable and accounts payable approximates the carrying value of these financial instruments because of their short-term nature.

The fair value of our senior notes is estimated using quoted market prices. The fair values of all our other financings are estimated using a discounted cash flow analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of our financial instruments at June 30, 2020 and December 31, 2019 were as follows:



	June 30, 2020				December 31, 2019
	Carrying Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	650,000	$	636,118	$	150,000	$	150,000
Unsecured Term Loan	215,000		208,985		215,000		215,000
ECA Financings	45,443		47,660		147,644		150,805
Bank Financings	937,605		935,547		993,593		1,010,482
Senior Notes	3,300,000		3,193,612		3,600,000		3,787,268

All our financial instruments are classified as Level 2 with the exception of our Senior Notes, which are classified as Level 1.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Lease Rental Revenues and Flight Equipment Held for Lease

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Lessor, Operating Leases [Text Block]

Lease Rental Revenues and Flight Equipment Held for Lease

Minimum future annual lease rentals contracted to be received under our existing operating leases of flight equipment at June 30, 2020 were as follows:



Year Ending December 31,	Amount⁽¹⁾
Remainder of 2020	$	391,123
2021	665,509
2022	582,359
2023	502,207
2024	390,977
Thereafter	460,916
Total	$	2,993,091

_______________


(1)	Reflects impact of lessee lease rental deferrals.

Geographic concentration of lease rental revenue earned from flight equipment held for lease was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
Region	2020		2019		2020		2019
Asia and Pacific	44	%	44	%	43	%	43	%
Europe	29	%	28	%	27	%	28	%
Middle East and Africa	5	%	10	%	7	%	11	%
North America	10	%	8	%	11	%	8	%
South America	12	%	10	%	12	%	10	%

Total	100	%	100	%	100	%	100	%

The classification of regions in the table above and in the tables and discussion below is determined based on the principal location of the lessee of each aircraft.

The following table shows the number of lessees with lease rental revenue of at least 5% of total lease rental revenue and their combined total percentage of lease rental revenue for the periods indicated:



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue	Number of Lessees	Combined % of Lease Rental Revenue
Largest lessees by lease rental revenue	4	29%	3	21%	4	27%	3	21%

The following table sets forth revenue attributable to individual countries representing at least 10% of Total revenue (including maintenance and other revenue) based on each lessee’s principal place of business for the periods indicated:



	Three Months Ended June 30,								Six Months Ended June 30,
	2020				2019				2020				2019
Country	Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue
India⁽¹⁾	$	—	—	%	$	42,312	19	%	$	—	—	%	$	61,638	14	%
Mexico⁽²⁾	67,922		27	%	—		—	%	74,954		14	%	—		—	%
South Africa⁽³⁾	—		—	%	—		—	%	57,920		11	%	—		—	%

_______________


(1)	For both the three and six months ended June 30, 2019, total revenue attributable to India included $17,554 of maintenance revenue recognized into revenue. For the three and six months ended June 30, 2020, total revenue attributable to India was less than 10%.


(2)	For the three and six months ended June 30, 2020, total revenue attributable to Mexico included $54,436 of maintenance revenue and $12,834 of security deposits recognized into revenue. For the three and six months ended June 30, 2019, total revenue attributable to Mexico was less than 10%.


(3)	For the three and six months ended June 30, 2020, total revenue attributable to South Africa included $263 and $39,067 of maintenance revenue, respectively, $8,740 of lease rentals received in advance and $5,863 of security deposits recognized into revenue. For the three and six months ended June 30, 2019, total revenue attributable to South Africa was less than 10%.

Geographic concentration of net book value of flight equipment (including flight equipment held for lease and net investment in leases, or “net book value”) was as follows:



	June 30, 2020				December 31, 2019
Region	Number of Aircraft		Net Book Value %		Number of Aircraft		Net Book Value %
Asia and Pacific	89		39	%	94		38	%
Europe	98		27	%	99		26	%
Middle East and Africa	11		4	%	16		7	%
North America	28		10	%	40		13	%
South America	26		13	%	26		15	%
Off-lease	22	⁽¹⁾	7	%	3	⁽²⁾	1	%
Total	274		100	%	278		100	%

_______________


(1)	Consisted of one Airbus A320-200 and one Airbus A330-200 aircraft, each of which are scheduled to be delivered during the third quarter of 2020 to lessees in North America and Europe, respectively, and one Airbus A319-100, eleven Airbus A320-200, five Airbus A330-200 and three Boeing 737-800 aircraft, which we are marketing for lease or sale.


(2)	Consisted of one Airbus A320-200 aircraft, which was delivered on lease to a customer in Europe during the first quarter of 2020, one Airbus A330-200 aircraft, which is scheduled to be delivered to a customer in Europe during the third quarter of 2020, and one Boeing 737-800 aircraft, which was sold during the first quarter of 2020.

The following table sets forth net book value of flight equipment (includes net book value of flight equipment held for lease and net investment in leases) attributable to individual countries representing at least 10% of net book value of flight equipment based on each lessee’s principal place of business as of:



	June 30, 2020				December 31, 2019
Country	Net Book Value		Net Book Value %	Number of Lessees	Net Book Value		Net Book Value %	Number of Lessees
India	$	901,093	13%	4	$	924,190	12%	4

At June 30, 2020 and December 31, 2019, the amounts of lease incentive liabilities recorded in maintenance payments on our Consolidated Balance Sheets were $11,184 and $9,176, respectively.

Net Investment in Finance Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Net Investment in Finance Leases

Net Investment in Leases

At June 30, 2020 and December 31, 2019, our net investment in leases consisted of 24 and 29 aircraft, respectively. The components of our net investment in leases at June 30, 2020, and December 31, 2019, were as follows:



	June 30, 2020			December 31, 2019
Lease receivable	$	122,460		$	164,816
Unguaranteed residual value of flight equipment	200,043			254,580
Net investment leases	322,503			419,396
Allowance for credit losses	(2,972		)	—
Net investment in leases, net of allowance	$	319,531		$	419,396

The activity in the allowance for credit losses related to our net investment in leases for the six months ended June 30, 2020 is as follows:



	Amount
Balance at December 31, 2019	$	—
Adoption of accounting standard	6,270
Provision for credit losses	3,595
Balance at March 31, 2020	9,865
Provision for credit losses	1,206
Write-offs	(8,099		)
Balance at June 30, 2020	$	2,972

During the six months ended June 30, 2020, we wrote off $8,099 of lease rentals against the allowance for credit losses due to the early lease termination of seven Airbus A320-200 aircraft which had been classified as Net investment in leases. At June 30, 2020, future lease payments on net investment in leases are as follows:



Year Ending December 31,	Amount
Remainder of 2020	$	20,936
2021	34,793
2022	23,960
2023	23,234
2024	8,950
Thereafter	32,406
Total lease payments to be received	144,279
Present value of lease payments - lease receivable	(122,460		)
Difference between undiscounted lease payments and lease receivable	$	21,819

Unconsolidated Equity Method Investment (Notes)

6 Months Ended

Jun. 30, 2020

Equity Method Investments and Joint Ventures [Abstract]

Unconsolidated Equity Method Investment

Unconsolidated Equity Method Investments

We have a joint venture with Mizuho Leasing which has nine aircraft with a net book value of $321,067 at June 30, 2020.



	Amount
Investment in joint ventures at December 31, 2019	$	32,974
Earnings from joint venture, net of tax	1,476
Investment in joint venture at June 30, 2020	$	34,450

In April 2020, we sold two engines to Magellan, an affiliate of Marubeni, for $5,355. This transaction was approved by our Audit Committee as an arm’s length transaction under our related party policy.

Variable Interest Entities	6 Months Ended
Variable Interest Entities	Jun. 30, 2020
Variable Interest Entities [Abstract]
Variable Interest Entities	Variable Interest Entities Aircastle consolidates two VIEs (the “Air Knight VIEs”) of which it is the primary beneficiary. The operating activities of these VIEs are limited to acquiring, owning, leasing, maintaining, operating and, under certain circumstances, selling two aircraft as discussed below. During February 2020, we repaid the export credit agency (the “ECA Financings”) for four of the six aircraft owned by the Air Knight VIEs, which included principal and accrued interest amounts outstanding of $95,128 and incurred early extinguishment costs of $4,020. In June 2020, the leases of the four aircraft subject to the ECA Financings were formally terminated and the aircraft were released as security under such financings. The only assets that the Air Knight VIEs have on their books are net investments in leases that are eliminated in the consolidated financial statements. The related aircraft, with a net book value as of June 30, 2020 of $124,432, were included in our flight equipment held for lease. The consolidated debt outstanding, net of debt issuance costs, of the Air Knight VIEs as of June 30, 2020 is $44,860.

Secured and Unsecured Debt Financings

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Secured and Unsecured Debt Financings

The outstanding amounts of our secured and unsecured debt financings are as follows:



	At June 30, 2020						At December 31, 2019
Debt Obligation	Outstanding Borrowings			Number of Aircraft	Interest Rate	Final Stated Maturity	Outstanding Borrowings
Secured Debt Financings:
ECA Financings⁽¹⁾	$	45,443		2	3.49% to 3.96%	12/03/21 to 11/30/24	$	147,644
Bank Financings⁽²⁾	937,605			34	2.18% to 4.55%	06/17/23 to 01/19/26	993,593
Less: Debt issuance costs and discounts	(8,881		)	—			(11,892		)
Total secured debt financings, net of debt issuance costs and discounts	974,167			36			1,129,345

Unsecured Debt Financings:
Senior Notes due 2020⁽³⁾	—				7.625%	04/15/20	300,000
Senior Notes due 2021	500,000				5.125%	03/15/21	500,000
Senior Notes due 2022	500,000				5.50%	02/15/22	500,000
Senior 5.00% Notes due 2023	500,000				5.00%	04/01/23	500,000
Senior 4.40% Notes due 2023	650,000				4.40%	09/25/23	650,000
Senior Notes due 2024	500,000				4.125%	05/01/24	500,000
Senior Notes due 2026	650,000				4.250%	06/15/26	650,000
Unsecured Term Loans	215,000				1.78%	03/07/22 to 03/07/24	215,000
Revolving Credit Facilities	650,000				1.56% to 1.57%	12/27/21 to 06/27/22	150,000
Less: Debt issuance costs and discounts	(27,410		)				(32,509		)
Total unsecured debt financings, net of debt issuance costs and discounts	4,137,590						3,932,491
Total secured and unsecured debt financings, net of debt issuance costs and discounts	$	5,111,757					$	5,061,836


(1)	The borrowings under these financings at June 30, 2020 have a weighted-average rate of interest of 3.60%. During February 2020, the Company repaid the ECA Financings for four aircraft owned by the Air Knight VIEs, which were released as security for such financings during the second quarter of 2020 – see Note 6.


(2)	The borrowings under these financings at June 30, 2020 have a weighted-average fixed rate of interest of 3.21%.


(3)	Repaid on April 15, 2020.

At June 30, 2020, we had $650,000 outstanding under our revolving credit facilities and had $450,000 available for borrowing.

As of June 30, 2020, we were in compliance with all applicable covenants in our financings.

Shareholders' Equity and Share Based Payment	6 Months Ended
Shareholders' Equity and Share Based Payment	Jun. 30, 2020
Shareholders’ Equity and Share Based Payment [Abstract]
Shareholders’ Equity and Share Based Payment	Shareholders' Equity and Share-Based Payment On March 27, 2020, (the “Merger Date”), the total authorized share capital of the Company was $3,000, comprised of 250,000,000 common shares of $0.01 each and 50,000,000 preference shares of $0.01 each, and the issued share capital of the Company was comprised of 14,048 common shares of $0.01 each. In December 2019, the Company accelerated the vesting of certain restricted common share awards and the vesting and payment of certain Performance Share Units (“PSUs”) held by the Company’s executive officers, initially granted under the Aircastle Limited Amended and Restated 2014 Omnibus Incentive Plan. Share-based compensation expense of $2,683 related to restricted common shares and $12,466 related to PSUs represents the cost of this accelerated vesting from January 1, 2020 through the Merger Date. As per the Agreement and Plan of Merger, dated as of November 5, 2019, (the “Merger Agreement”), on the Merger Date, the Company paid $4,063 and $21,473 representing the payment for 126,971 unvested restricted common shares and 671,030 unvested PSUs, respectively. Concurrently, the Company received $25,536 from the MM Air Limited, which was recorded as an additional paid-in-capital as of the Merger Date. The Company also repurchased 73,903 shares totaling $2,370 from our employees and directors to settle tax obligations related to share vesting. Included in share-based compensation expense for the six months ended June 30, 2020 is $4,197 and $19,381 related to remaining outstanding restricted common shares and remaining outstanding PSUs, respectively, that were accelerated and paid out (in the case of PSUs, at the maximum level of performance) in accordance with the Merger Agreement.

Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income taxes have been provided for based upon the tax laws and rates in countries in which our operations are conducted and income is earned. The Company received an assurance from the Bermuda Minister of Finance that it would be exempted from local income, withholding and capital gains taxes until March 2035. Consequently, the provision for income taxes relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily the United States and Ireland.

The sources of income (loss) from continuing operations before income taxes and earnings of our unconsolidated equity method investments for the three and six months ended June 30, 2020 and 2019 were as follows:



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
U.S. operations	$	5,915		$	1,959	$	10,820		$	3,875
Non-U.S. operations	(192,983		)	32,658		(232,674		)	69,006
Income (loss) from continuing operations before income taxes and earnings (loss) of unconsolidated equity method investments	$	(187,068	)	$	34,617	$	(221,854	)	$	72,881

Our aircraft-owning subsidiaries that are recognized as corporations for U.S. tax purposes are primarily non-U.S. corporations. These subsidiaries generally earn income from sources outside the United States and typically are not subject to U.S. federal, state or local income taxes. The aircraft owning subsidiaries resident in Ireland, Mauritius and the U.S. are subject to tax in those respective jurisdictions.

We have a U.S.-based subsidiary which provides management services to our subsidiaries and is subject to U.S. federal, state and local income taxes. We also have Ireland and Singapore based subsidiaries which provide management services to our non-U.S. subsidiaries and are subject to tax in those respective jurisdictions.

The consolidated income tax expense for the three and six months ended June 30, 2020 and 2019 was determined based upon estimates of the Company’s consolidated effective income tax rates for the years ending December 31, 2020 and 2019, respectively.

The Company’s effective tax rates (“ETRs”) for the three and six months ended June 30, 2020 and 2019 were (2.5)% and (2.2)%, and 17.3% and 12.5%, respectively. The three and six months ended June 30, 2020, included discrete items totaling $3,973 and $950 in tax benefits, respectively. The second quarter of 2019 included a discrete item of $2,845 related to a fair value adjustment on an intercompany asset transfer. Excluding these discrete tax items, the ETR would have been (4.6)% and (2.6)% for the three and six months ended June 30, 2020, respectively, and for the three and six months ended June 30, 2019, 9.1% and 8.6%, respectively. Movements in the ETR are generally caused by changes in the proportion of

the Company’s pre-tax earnings in taxable and non-tax jurisdictions. During the six months ended June 30, 2020, we incurred net impairment charges of $206,744 in low tax jurisdictions and a significant decrease in Bermuda income primarily related to Merger expenses of $32,385. During the six months ended June 30, 2019, we reported a significant decrease in Bermuda income primarily related to Avianca Brazil and an increase in Irish income related to Jet Airways.

Differences between statutory income tax rates and our effective income tax rates applied to pre-tax income (loss) from continuing operations consisted of the following:



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Notional U.S. federal income tax expense (benefit) at the statutory rate	$	(39,284	)	$	7,270		$	(46,589	)	$	15,305
U.S. state and local income tax, net	390			181			1,979			390
Non-U.S. operations:
Bermuda	46,088			(2,910		)	48,594			(8,048		)
Ireland	1,017			2,093			(171		)	2,602
Singapore	59			(2		)	85			(4		)
Other low tax jurisdictions	412			(872		)	2,066			(1,724		)
Non-deductible expenses in the U.S.	140			232			3,420			569
Other	(4,151		)	—			(4,564		)	—

Income tax provision	$	4,671		$	5,992		$	4,820		$	9,090

The Coronavirus Aid, Relief and Economic Security (“CARES”) Act was signed into law on March 27, 2020. The CARES Act, among other things, includes provisions relating to net operating loss carrybacks, alternative minimum tax credit refunds, modification to the net interest expense deduction limitation and technical correction to the tax depreciation methods for qualified improvement property. While we continue to evaluate the potential application of the CARES Act provisions, the CARES Act did not materially impact the Company’s effective tax rate for the six months ended June 30, 2020.

Interest, Net

6 Months Ended

Jun. 30, 2020

Interest Income (Expense), Net [Abstract]

Interest Net

Interest, Net

The following table shows the components of interest, net:



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Interest on borrowings and other liabilities	$	53,136		$	63,639		$	111,562		$	123,918
Amortization of deferred losses related to interest rate derivatives	—			—			—			184
Amortization of deferred financing fees and debt discount	3,259			3,594			6,840			6,958
Interest expense	56,395			67,233			118,402			131,060
Less: Interest income	(169		)	(856		)	(669		)	(1,220		)

Interest, net	$	56,226		$	66,377		$	117,733		$	129,840

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Rent expense, primarily for the corporate offices and sales and marketing offices, was $398 and $796 for the three and six months ended June 30, 2020, and $414 and $770 for the three and six months ended June 30, 2019, respectively.

As of June 30, 2020, Aircastle is obligated under non-cancelable operating leases relating principally to office facilities in Stamford, Connecticut; Dublin, Ireland; and Singapore for future minimum lease payments as follows:



Year Ending December 31,	Amount
Remainder of 2020	$	924
2021	1,892
2022	1,806
2023	1,696
2024	1,727
Thereafter	6,113
Total	$	14,158

At June 30, 2020, we had commitments to acquire 27 aircraft for $1,022,422, including 25 Embraer E-Jet E2 aircraft.

Commitments, including $109,855 of remaining progress payments, contractual price escalations and other adjustments for these aircraft, at June 30, 2020, net of amounts already paid, are as follows:



Year Ending December 31,	Amount⁽¹⁾
Remainder of 2020	$	104,611
2021	352,453
2022	336,473
2023	155,037
2024	73,848

Total	$	1,022,422

_______________


(1)	We are in the process of deferring some of our E Jet E-2 deliveries scheduled to be delivered over the next twelve months to a later date which would reduce our commitments due within one year by approximately $111,302.

As of August 1, 2020, we had commitments to acquire 25 aircraft for $983,922.

Other Assets

6 Months Ended

Jun. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

The following table describes the principal components of other assets on our Consolidated Balance Sheets as of:



	June 30, 2020		December 31, 2019
Deferred income tax asset	$	3,159	$	1,007
Lease incentives and lease premiums, net of amortization of $67,500 and $71,851, respectively	95,976		112,923
Flight equipment held for sale	326		333
Aircraft purchase deposits and Embraer E-2 progress payments	43,286		33,754
Right-of-use asset⁽¹⁾	8,783		9,329
Deferred rent receivable	41,847		5,255
Other assets	63,670		38,608

Total other assets	$	257,047	$	201,209

______________

(1)

Net of lease incentives and tenant allowances.

Accounts Payable, Accrued Expenses and Other Liabilities

6 Months Ended

Jun. 30, 2020

Payables and Accruals [Abstract]

Accounts Payable, Accrued Expenses and Other Liabilities

The following table describes the principal components of accounts payable, accrued expenses and other liabilities recorded on our Consolidated Balance Sheets as of:



	June 30, 2020		December 31, 2019
Accounts payable, accrued expenses and other liabilities	$	36,409	$	47,228
Deferred income tax liability	68,340		64,674
Accrued interest payable	39,947		44,694
Lease liability	12,017		12,800
Lease discounts, net of amortization of $45,184 and $44,696, respectively	2,072		2,718

Total accounts payable, accrued expenses and other liabilities	$	158,785	$	172,114

Subsequent Event (Notes)	6 Months Ended
Subsequent Event (Notes)	Jun. 30, 2020
Subsequent Event [Abstract]
Subsequent Events [Text Block]	Subsequent Event On July 30, 2020, the Company successfully executed a $150,000 revolving credit facility at LIBOR plus 2% with Mizuho Bank Ltd, a related party. The agreement has a one-year term with an one-year extension option.

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2020
Accounting Policies [Abstract]
Organization and Basis of Presentation	Aircastle Limited (“Aircastle,” the “Company,” “we,” “us” or “our”) is a Bermuda exempted company that was incorporated on October 29, 2004 under the provisions of Section 14 of the Companies Act of 1981 of Bermuda. Aircastle’s business is acquiring, leasing, managing and selling commercial jet aircraft.
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of Aircastle and all its subsidiaries. Aircastle consolidates two Variable Interest Entities (“VIEs”) of which Aircastle is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. We consolidate VIEs in which we have determined that we are the primary beneficiary. We use judgment when deciding: (a) whether an entity is subject to consolidation as a VIE; (b) who the variable interest holders are; (c) the potential expected losses and residual returns of the variable interest holders; and (d) which variable interest holder is the primary beneficiary. When determining which enterprise is the primary beneficiary, we consider: (1) the entity’s purpose and design; (2) which variable interest holder has the power to direct the activities that most significantly impact the entity’s economic performance; and (3) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. When certain events occur, we reconsider whether we are the primary beneficiary of VIEs. We do not reconsider whether we are a primary beneficiary solely because of operating losses incurred by an entity.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. While Aircastle believes the estimates and related assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates.
Revenue Recognition Leases, Operating [Policy Text Block]	Lease Revenue Recognition We lease flight equipment under net operating leases with lease terms typically ranging from three to seven years. We generally do not offer renewal terms or purchase options in our leases, although certain of our operating leases allow the lessee the option to extend the lease for an additional term. Operating leases with fixed rentals and step rentals are recognized on a straight-line basis over the term of the initial lease, assuming no renewals. Operating lease rentals that adjust based on a London Interbank Offered Rate (“LIBOR”) index are recognized on a straight-line basis over the lease term using the prevailing rate at lease commencement. Changes to rate-based lease rentals are recognized in the statements of income (loss) in the period of change. In certain instances, we may provide lease concessions to customers, generally in the form of lease rental deferrals. While these deferral arrangements affect the timing of lease rental payments, the total amount of lease rental payments required over the lease term is generally the same as that which was required under the original lease agreement. We account for the deferrals as if no modifications to the lease agreements were made and record the deferred rentals as a receivable within Other assets in our consolidated balance sheet. If we determine that the collectability of rental payments is no longer probable (including any deferral thereof), we recognize lease rental revenue using a cash basis of accounting rather than an accrual method. In the period we conclude that collection of lease payments is no longer probable, we recognize any difference between revenue amounts recognized to date under the accrual method and payments that have been collected from the lessee, including security deposit amounts held, as a current period adjustment to lease rental revenue. The COVID-19 virus has had an unprecedented negative impact on the global economy, and in particular on the aviation sector. There has been a dramatic slowdown in air traffic, with many markets in near complete shutdown. According to the International Air Transport Association (“IATA”), as of mid-June 2020, air travel is down to approximately 30% of normal levels and a full recovery to pre-pandemic levels is not expected for several years. Substantially all the world’s airlines are experiencing financial difficulties and liquidity challenges. While we believe the long-term demand for air travel will return to historical trends over time, the near-term impacts of the COVID-19 virus’ economic shock are material; the extent and duration of which cannot currently be determined. Airlines have been seeking to preserve liquidity through a combination of requesting government support, raising debt and equity, delaying or canceling new aircraft orders, furloughing employees, as well as requesting deferrals from lessors. We have agreed to defer near-term lease payments with certain of our airline customers, which they are obliged to repay over time. As of August 1, 2020, we have agreed to defer approximately $99,000 in near-term lease payments, including $61,209 that appear in our Consolidated Balance Sheet as components of Accounts receivable, Net investment in leases, or Other assets as of June 30, 2020. This represents approximately 12% of Lease rental and Direct financing and sales-type lease revenues for the twelve months ended June 30, 2020. Deferrals have been agreed to with 40 airlines, representing 50% of our customer base, and for an average deferral of four months of lease rentals. In a limited number of situations, we have agreed to broader restructurings of contractual terms, for example obtaining better security packages, term extensions, or other valuable considerations in exchange for short-term economic concessions.
Financing Receivable, Held-for-investment [Policy Text Block]	Net Investment in Leases If a lease meets specific criteria at lease commencement or at the effective date of a lease modification, we recognize the lease as a direct financing or sales-type lease. The net investment in direct financing and sales-type leases consists of the lease receivable, estimated unguaranteed residual value of the lease flight equipment at lease-end and, for direct financing leases, deferred selling profit. For sales-type leases, we recognize the difference between the net book value of the aircraft and the net investment in the lease as a gain or loss on sale of flight equipment. Selling profit on a direct financing lease is deferred and amortized over the lease term, and a selling loss is recognized at lease commencement. Interest income on our net investment in leases is recognized as Direct financing and sales-type leases revenue over the lease term in a manner that produces a constant rate of return on the net investment in the lease. The net investment in leases is recorded in the consolidated financial statements net of an allowance for credit losses. The allowance for credit losses is recorded upon the initial recognition of the net investment in the lease based on the Company’s estimate of expected credit losses over the lease term. The allowance reflects the Company’s estimate of lessee default probabilities and loss given default percentages. When determining the credit loss allowance, we consider relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the net investment in the lease. The allowance also considers potential losses due to non-credit risk related to unguaranteed residual values. A provision for credit losses is recorded as a component of Selling, general, and administrative expenses in our Consolidated Statements of Income (Loss) to adjust the allowance for changes to management’s estimate of expected credit losses.
New Accounting Pronouncements, Policy	Recent Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard applies to entities that have contracts, such as debt agreements, lease agreements or derivative instruments, which reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. Entities can elect not to apply certain modification accounting requirements for contract modifications that replace a reference rate affected by reference rate reform. If elected, such contracts are accounted for as a continuation of the existing contract and no reassessments or re-measurements are required. The standard is effective for all entities from March 12, 2020 through December 31, 2022 and does not apply to contract modifications made after December 31, 2022. We have not adopted ASC 848 for this interim period and are currently evaluating the election available to us under the standard and the impact it may have on our financial statements. In April 2020, the FASB Staff issued a question-and-answer document (the “Q&A”) regarding accounting for lease concessions related to the effects of the COVID-19 pandemic. The Q&A provides that entities may elect to apply or not apply the lease modification guidance in ASC 842, “Leases”, for lease concessions provided by lessors as a result of the COVID-19 pandemic. The Company has elected not to apply the lease modification guidance in ASC 842 for such lease concessions – see “Lease Revenue Recognition” above.

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair value assets and liabilities measured on recurring basis



			Fair Value Measurements at June 30, 2020 Using Fair Value Hierarchy
	Fair Value as of June 30, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	319,032	$	319,032	$	—	$	—	Market
Restricted cash and cash equivalents	5,354		5,354		—		—		Market
Derivative assets	2		—		2		—		Market
Total	$	324,388	$	324,386	$	2	$	—



			Fair Value Measurements at December 31, 2019 Using Fair Value Hierarchy
	Fair Value as of December 31, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Technique
Assets:
Cash and cash equivalents	$	140,882	$	140,882	$	—	$	—	Market
Restricted cash and cash equivalents	14,561		14,561		—		—		Market
Derivative assets	115		—		115		—		Market
Total	$	155,558	$	155,443	$	115	$	—

Carrying amounts and fair values of financial instruments

The carrying amounts and fair values of our financial instruments at June 30, 2020 and December 31, 2019 were as follows:



	June 30, 2020				December 31, 2019
	Carrying Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	650,000	$	636,118	$	150,000	$	150,000
Unsecured Term Loan	215,000		208,985		215,000		215,000
ECA Financings	45,443		47,660		147,644		150,805
Bank Financings	937,605		935,547		993,593		1,010,482
Senior Notes	3,300,000		3,193,612		3,600,000		3,787,268

Lease Rental Revenues and Flight Equipment Held for Lease (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Annual future minimum lease rentals receivable

Minimum future annual lease rentals contracted to be received under our existing operating leases of flight equipment at June 30, 2020 were as follows:



Year Ending December 31,	Amount⁽¹⁾
Remainder of 2020	$	391,123
2021	665,509
2022	582,359
2023	502,207
2024	390,977
Thereafter	460,916
Total	$	2,993,091



Year Ending December 31,	Amount
Remainder of 2020	$	924
2021	1,892
2022	1,806
2023	1,696
2024	1,727
Thereafter	6,113
Total	$	14,158

Geographic concentration of lease rental revenue earnings

Geographic concentration of lease rental revenue earned from flight equipment held for lease was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
Region	2020		2019		2020		2019
Asia and Pacific	44	%	44	%	43	%	43	%
Europe	29	%	28	%