0001362988-22-000005 | 10-Q | XBRL Viewer

Cover Page - shares	9 Months Ended
Cover Page - shares	Nov. 30, 2021	Jan. 07, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Nov. 30, 2021
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
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	2021
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--02-28
Entity Address, Postal Zip Code	06901
Common Shares
Document Information [Line Items]
Title of 12(b) Security	Common Shares, par value $0.01 per share
Security Exchange Name	NONE
No Trading Symbol Flag	true
Preferred Stock
Document Information [Line Items]
Title of 12(b) Security	Preference Shares, par value $0.01 per share
Security Exchange Name	NONE
No Trading Symbol Flag	true

Consolidated Balance Sheets - USD ($) $ in Thousands	Nov. 30, 2021	Feb. 28, 2021
ASSETS
Cash and cash equivalents	$ 276,289	$ 578,004
Restricted cash and cash equivalents	2,740	2,594
Accounts receivable	73,073	82,572
Flight equipment held for lease, net of accumulated depreciation of $2,365,312 and $2,076,972, respectively	6,542,555	6,492,471
Net investment in leases, net of allowance for credit losses of $1,828 and $864, respectively	191,013	195,376
Unconsolidated equity method investments	36,587	35,377
Other assets	335,420	311,944
Total assets	7,457,677	7,698,338
LIABILITIES
Borrowings from secured financings, net of debt issuance costs and discounts	703,592	768,850
Borrowings from unsecured financings, net of debt issuance costs and discounts	3,872,584	4,366,261
Accounts payable, accrued expenses and other liabilities	200,959	174,267
Lease rentals received in advance	52,887	58,013
Security deposits	72,608	80,699
Maintenance payments	498,995	519,178
Total liabilities	5,401,625	5,967,268
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at November 30, 2021 and no shares issued and outstanding at February 28, 2021	0	0
Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at November 30, 2021 and February 28, 2021	0	0
Additional paid-in capital	1,878,774	1,485,777
Retained earnings	177,278	245,293
Total shareholders’ equity	2,056,052	1,731,070
Total liabilities and shareholders’ equity	$ 7,457,677	$ 7,698,338

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Nov. 30, 2021	Feb. 28, 2021
Statement of Financial Position [Abstract]
Accumulated depreciation on flight equipment held for lease	$ 2,365,312	$ 2,076,972
Allowance for credit losses	$ 1,828	$ 864
Common shares, par value	$ 0.01	$ 0.01
Common shares, shares authorized	250,000,000	250,000,000
Common shares, shares issued	14,048	14,048
Common shares, shares outstanding	14,048	14,048
Preference shares, par value	$ 0.01	$ 0.01
Preference shares, shares authorized	50,000,000	50,000,000
Preferred Stock, Shares Issued	400,000	0
Preferred Stock, Shares Outstanding	400,000	0

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2021	Nov. 30, 2020	Nov. 30, 2021	Nov. 30, 2020
Revenues:
Lease rental revenue	$ 156,088	$ 139,493	$ 425,802	$ 473,566
Direct financing and sales-type lease revenue	2,724	4,839	8,377	14,903
Amortization of lease premiums, discounts and incentives	(8,867)	(5,384)	(20,026)	(17,360)
Maintenance revenue	33,510	24,843	81,204	121,508
Total lease revenue	183,455	163,791	495,357	592,617
Gain on sale of flight equipment	7,420	12,951	17,944	24,181
Other revenue	605	4,169	1,641	17,962
Total revenues	191,480	180,911	514,942	634,760
Operating expenses:
Depreciation	84,526	86,845	250,308	262,806
Interest, net	50,515	59,945	163,965	173,996
Selling, general and administrative (including non-cash share-based payment expense of $0 and $0 for the three months ended, and $0 and $28,049 for the nine months ended November 30, 2021 and 2020, respectively)	17,141	14,403	48,714	70,897
Provision for credit losses	958	742	970	5,255
Impairment of flight equipment	69,111	9,867	110,926	299,551
Maintenance and other costs	8,660	4,207	24,275	14,044
Total operating expenses	230,911	176,009	599,158	826,549
Other income (expense):
Loss on extinguishment of debt	0	(43)	(14,156)	(108)
Merger expenses	0	(450)	0	(32,492)
Other	63	0	57,682	(191)
Total other income (expense)	63	(493)	43,526	(32,791)
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	(39,368)	4,409	(40,690)	(224,580)
Income tax provision	23,504	2,269	22,877	14,738
Earnings of unconsolidated equity method investments, net of tax	465	572	1,210	1,978
Net income (loss)	(62,407)	2,712	(62,357)	(237,340)
Preference share dividends	0	0	(5,658)	0
Earnings available to common shareholders – Basic	(62,407)	2,712	(68,015)	(237,340)
Total comprehensive income (loss) available to common shareholders	$ (62,407)	$ 2,712	$ (68,015)	$ (237,340)

Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2021	Nov. 30, 2020	Nov. 30, 2021	Nov. 30, 2020
Income Statement [Abstract]
Non-cash share based payment expense	$ 0	$ 0	$ 0	$ 28,049

Consolidated Statements of Cash Flows (Unaudited) $ in Thousands	3 Months Ended		6 Months Ended	9 Months Ended
	Nov. 30, 2021 USD ($)	Nov. 30, 2020 USD ($)	Aug. 31, 2020 USD ($)	Nov. 30, 2021 USD ($)	Nov. 30, 2020 USD ($)
Cash flows from operating activities:
Net income (loss)	$ (62,407)	$ 2,712		$ (62,357)	$ (237,340)
Adjustments to reconcile net loss to net cash and restricted cash provided by operating activities:
Depreciation	84,526	86,845		250,308	262,806
Amortization of deferred financing costs				12,483	10,642
Amortization of lease premiums, discounts and incentives	8,867	5,384		20,026	17,360
Deferred income taxes				8,998	12,109
Non-cash share-based payment expense	0	0		0	28,049
Collections on net investment in leases				11,727	12,953
Security deposits and maintenance payments included in earnings				(58,480)	(107,732)
Gain on sale of flight equipment	(7,420)	(12,951)		(17,944)	(24,181)
Loss on extinguishment of debt	0	43		14,156	108
Impairment of flight equipment	69,111	9,867		110,926	299,551
Provision for credit losses	958	742		970	5,255
Other				(1,210)	(1,991)
Changes in certain assets and liabilities:
Accounts receivable				4,059	(55,946)
Other assets				(23,305)	(40,780)
Accounts payable, accrued expenses and other liabilities				7,205	(1,875)
Lease rentals received in advance				(6,127)	(54,608)
Net cash and restricted cash provided by operating activities				271,435	124,380
Cash flows from investing activities:
Acquisition and improvement of flight equipment				(533,741)	(134,263)
Proceeds from sale of flight equipment				127,584	113,588
Aircraft purchase deposits and progress payments, net of deposits returned and aircraft sales deposits				(11,361)	(4,083)
Other				(64)	(594)
Net cash and restricted cash used in investing activities				(417,582)	(25,352)
Cash flows from financing activities:
Repurchase of shares				0	(25,536)
Parent contribution at Merger				0	25,536
Proceeds from Issuance of Preferred Stock and Preference Stock	(365)			393,347	0
Proceeds from secured and unsecured debt financings				0	1,193,871
Repayments of secured and unsecured debt financings				(566,885)	(1,027,164)
Debt extinguishment costs				(13,372)	(108)
Deferred financing costs				(5,170)	(6,358)
Security deposits and maintenance payments received				63,012	63,443
Security deposits and maintenance payments returned				(20,696)	(48,162)
Dividends paid				(5,658)	(24,025)
Net cash and restricted cash (used in) provided by financing activities				(155,422)	151,497
Net (decrease) increase in cash and restricted cash:				(301,569)	250,525
Cash and restricted cash at beginning of period	279,029	421,962	$ 171,437	580,598	171,437
Cash and restricted cash at end of period	279,029	421,962	421,962	279,029	421,962
Cash and cash equivalents	276,289		416,621	276,289
Restricted cash and cash equivalents	2,740		5,341	2,740
Unrestricted and restricted cash and cash equivalents	$ 279,029	$ 421,962	421,962	$ 279,029	$ 421,962
Supplemental disclosures of cash flow information:
Cash paid for interest, net of amounts capitalized			176,284
Cash paid for income taxes			1,244
Supplemental disclosures of non-cash investing activities:
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets assumed in asset acquisitions			29,869
Advance lease rentals, security deposits, maintenance payments, other liabilities and other assets settled in sale of flight equipment			45,443
Transfers from flight equipment held for lease to Net investment in leases and Other assets			$ 6,584

Consolidated Statements of Shareholder's Equity Statement - USD ($) $ in Thousands	Total	Common Shares	Preferred Stock	Additional Paid-In Capital	Retained Earnings (Deficit)
Preferred Stock, Shares Outstanding			0
Balance, shares at Feb. 29, 2020		75,076,794
Balance at Feb. 29, 2020	$ 2,036,189	$ 751	$ 0	$ 1,456,977	$ 578,461
Amortization of share-based payments	28,049			28,049
Net income (loss)	(26,539)
Parent contribution at Merger	25,536			25,536
Balance, shares at May. 31, 2020		14,048
Balance at May. 31, 2020	2,037,699	$ 0	0	1,485,777	551,922
Balance, shares at Feb. 29, 2020		75,076,794
Balance at Feb. 29, 2020	2,036,189	$ 751	0	1,456,977	578,461
Net income (loss)	(237,340)
Parent contribution at Merger	25,536
Balance, shares at Nov. 30, 2020		14,048
Balance at Nov. 30, 2020	1,826,898	$ 0	$ 0	1,485,777	341,121
Proceeds from Issuance of Preferred Stock and Preference Stock	0
Preferred Stock, Shares Outstanding			0
Balance, shares at May. 31, 2020		14,048
Balance at May. 31, 2020	2,037,699	$ 0	$ 0	1,485,777	551,922
Net income (loss)	(213,513)
Balance, shares at Aug. 31, 2020		14,048
Balance at Aug. 31, 2020	1,824,186	$ 0	$ 0	1,485,777	338,409
Preferred Stock, Shares Outstanding			0
Net income (loss)	2,712
Balance, shares at Nov. 30, 2020		14,048
Balance at Nov. 30, 2020	$ 1,826,898	$ 0	$ 0	1,485,777	341,121
Preferred Stock, Shares Outstanding			0
Preferred Stock, Shares Issued	0
Preferred Stock, Shares Outstanding	0		0
Balance, shares at Feb. 28, 2021	14,048	14,048
Balance at Feb. 28, 2021	$ 1,731,070	$ 0	$ 0	1,485,777	245,293
Net income (loss)	(9,753)
Balance, shares at May. 31, 2021		14,048
Balance at May. 31, 2021	$ 1,721,317	$ 0	0	1,485,777	235,540
Balance, shares at Feb. 28, 2021	14,048	14,048
Balance at Feb. 28, 2021	$ 1,731,070	$ 0	0	1,485,777	245,293
Net income (loss)	(62,357)
Parent contribution at Merger	$ 0
Balance, shares at Nov. 30, 2021	14,048	14,048
Balance at Nov. 30, 2021	$ 2,056,052	$ 0	$ 0	1,878,774	177,278
Proceeds from Issuance of Preferred Stock and Preference Stock	393,347
Dividends, Preferred Stock	(5,658)
Preferred Stock, Shares Outstanding			0
Balance, shares at May. 31, 2021		14,048
Balance at May. 31, 2021	1,721,317	$ 0	$ 0	1,485,777	235,540
Net income (loss)	9,803
Balance, shares at Aug. 31, 2021		14,048
Balance at Aug. 31, 2021	2,118,824	$ 0	$ 0	1,879,139	239,685
Proceeds from Issuance of Preferred Stock and Preference Stock	393,362			393,362
Dividends, Preferred Stock	(5,658)				(5,658)
Preferred Stock, Shares Issued			400
Preferred Stock, Shares Outstanding			400
Net income (loss)	$ (62,407)
Balance, shares at Nov. 30, 2021	14,048	14,048
Balance at Nov. 30, 2021	$ 2,056,052	$ 0	$ 0	1,878,774	$ 177,278
Proceeds from Issuance of Preferred Stock and Preference Stock	$ (365)			$ (365)
Preferred Stock, Shares Issued	400,000
Preferred Stock, Shares Outstanding	400,000		400

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References + Details

Summary of Significant Accounting Policies	9 Months Ended
Summary of Significant Accounting Policies	Nov. 30, 2021
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 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 based on 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 February 28, 2021. 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 November 30, 2021, 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, including any Variable Interest Entity (“VIE”) of which Aircastle is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Risk and Uncertainties In the normal course of business, Aircastle encounters several significant types of economic risk including credit, market, aviation industry and capital market risks. Credit risk is the risk of a lessee’s inability or unwillingness to make contractually required payments and to fulfill its other contractual obligations to Aircastle. Market risk reflects the change in the value of financings due to changes in interest rate spreads or other market factors, including the value of collateral underlying financings. Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of early lease terminations and depress lease rates and the value of the Company’s aircraft. Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities. 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. COVID-19 Pandemic COVID-19 has had an unprecedented negative impact on the aviation sector, resulting in a dramatic slowdown in air traffic. While there have been some improvements in certain markets recently, according to IATA, as of November 30, 2021, air travel was still down to approximately 53% compared to normal levels and a full recovery to pre-pandemic levels is not expected for several years. Substantially all the world’s airlines have experienced financial difficulties and liquidity challenges, including many of our customers. While we believe long-term demand for air travel will return to historical trends over time, the near-term impacts of COVID-19’s economic shock are material; the extent and duration of those impacts cannot currently be determined. Even as the airline industry begins to recover, airlines continue to seek support from their respective governments, raise debt and equity, delay or cancel new aircraft orders, furlough employees, request concessions from lessors, and in certain cases, seek judicial protection. As of January 7, 2022, our total deferrals, net of repayments, were $87,219. These deferrals have been granted to nineteen customers for an average of six to twelve months of lease rentals and represent 15% of Lease rental and Direct financing and sales-type lease revenues for the twelve months ended November 30, 2021. Of the total deferrals, $81,797 is included in Accounts receivable or Other assets as of November 30, 2021, with the balance representing future lease payments. Approximately 87% of our total deferrals as of January 7, 2022, have been agreed to as part of broader lease restructurings. These generally include term extensions, better security packages, or other valuable consideration in exchange for near-term economic concessions. Many have repayment terms that extend beyond twelve months and in a limited number of situations, we have agreed to broader lease restructurings that do not include the full repayment of all of lease payments. If air traffic remains depressed and our customers are unable to obtain sufficient funds from private, governmental or other sources, we may need to grant additional deferrals to certain customers or extend the period of repayment for deferrals we have already made. We may ultimately not be able to collect all the amounts we have deferred. As of January 7, 2022, six of our customers are subject to judicial insolvency proceedings or similar protection. These customers lease 21 aircraft, which represent 13% of our net book value of flight equipment (including Flight equipment held for lease and Net investment in leases, or “net book value”) and 12% of our Lease rental and direct financing and sales-type lease revenue as of and for the twelve months ended November 30, 2021. We are actively engaged in these judicial proceedings to protect our economic interests. However, the outcome of these proceedings is uncertain and could result in these customers negotiating reductions in aircraft lease rentals, rejecting their leases or taking other actions that could adversely impact us or the value of our aircraft. Based on historic experience, the judicial process can take up to twelve to eighteen months to be resolved. As a result of these proceedings, lease rental revenue for certain customers may be recognized on a cash basis of accounting rather than the accrual method depending on the customers’ lease security arrangements. LATAM, our second largest customer, is included in the above group and 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 November 30, 2021. We have signed restructured leases for all thirteen of our LATAM aircraft, subject only to LATAM emerging from the Chapter 11 process. During the second quarter of 2021, the Company entered into claims sale and purchase agreements with a third party for the sale of certain unsecured claims filed by various Aircastle entities against LATAM Airlines Group S.A. and certain of its subsidiaries in the Chapter 11 case captioned LATAM Airlines Group S.A., et al., Case No. 20-11254 (JLG) (Jointly Administered) (the “LATAM Bankruptcy”). The allowed amount of our unsecured claims was approved by the Bankruptcy Court and proceeds from the sales of these claims in the amount of $55,213 were received during the second quarter of 2021 and recognized in Other income (expense). 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. 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. Should we determine that the collectability of rental payments is no longer probable (including any deferral thereof), we will 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. Impairment of Flight Equipment We perform an annual recoverability assessment of all aircraft in our fleet, on an aircraft-by-aircraft basis. A recoverability assessment is also 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 an aircraft type’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 and maintenance payments, transition costs, estimated down time, and estimated residual or scrap values for an aircraft. 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 continue to closely monitor the impact of COVID-19 on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to 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 deterioration. Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform Topic 848 (“ASC 848”), in response to the market transition from the LIBOR and other interbank offered rates (“IBORs”) to alternative reference rates. U.S. GAAP requires entities to evaluate whether a contract modification, such as the replacement or change of a reference rate, results in the establishment of a new contract or continuation of an existing contract. ASC 848 allows an entity to elect not to apply certain modification accounting requirements to contracts affected by reference rate reform. The standard provides this temporary election through December 31, 2022, and cannot be applied to contract modifications that occur after December 31, 2022. Reference rate reform will primarily impact our lease and debt arrangements for which floating-rate lease rentals and interest expense are based on LIBOR. As of November 30, 2021, less than 1% of our fleet have floating-rate lease rentals and, for the three and nine months ended November 30, 2021, 4% of our interest expense was derived from floating-rate debt which is referenced to LIBOR. We have not adopted ASC 848 and are currently evaluating the election available to us under the standard. Effective, March 1, 2021, the Company adopted FASB ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The guidance aims to simplify the accounting for income taxes by removing certain exceptions to the general principles within the current guidance and by clarifying and amending the current guidance. The guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020. This adoption did not have a material impact on our consolidated financial statements.

Fair Value Measurements

9 Months Ended

Nov. 30, 2021

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.

The following tables set forth our financial assets as of November 30, 2021 and February 28, 2021 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 November 30, 2021 Using Fair Value Hierarchy
	Fair Value as of November 30, 2021		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	$	276,289	$	276,289	$	—	$	—	Market
Restricted cash and cash equivalents	2,740		2,740		—		—		Market

Total	$	279,029	$	279,029	$	—	$	—


			Fair Value Measurements at February 28, 2021 Using Fair Value Hierarchy
	Fair Value as of February 28, 2021		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	$	578,004	$	578,004	$	—	$	—	Market
Restricted cash and cash equivalents	2,594		2,594		—		—		Market


Total	$	580,598	$	580,598	$	—	$	—

Our cash and cash equivalents, and 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 the fair value hierarchy.

For the three and nine months ended November 30, 2021, 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 the carrying amounts of these 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 changes in circumstances indicate the fair value is less than its carrying value and the decline is other-than-temporary.

Aircraft Valuation

Impairment of Flight Equipment

During the three months ended November 30, 2021, the Company recorded transactional impairment charges totaling $69,111 related to two narrow-body and one wide-body aircraft on lease to Garuda Indonesia, resulting from the lessee’s default on its lease obligations. The Company recognized $24,268 of maintenance revenue for these three aircraft.

During the nine months ended November 30, 2021, the Company recorded impairment charges totaling $110,926, of which $107,705 were transactional impairments, primarily related to six narrow-body and one wide-body aircraft. The impairment charges resulted from early lease terminations, scheduled lease expiration and a lessee default. The Company recognized $61,414 of maintenance revenue for these seven aircraft.

During the three months ended November 30, 2020, the Company recorded transactional impairment charges totaling $9,867, primarily related to the scheduled lease expirations of two narrow-body aircraft. The Company recognized $15,200 of maintenance revenue for these two aircraft.

During the nine months ended November 30, 2020, the Company recorded impairment charges totaling $299,551, of which $256,510 were transactional impairments, primarily related to thirteen narrow-body and five wide-body aircraft. The Company recognized $107,448 of maintenance and security deposits into revenue for these eighteen aircraft. The impairment charges were attributable to early lease terminations, scheduled lease expirations, lessee defaults, judicial insolvency proceedings, or as a result of our annual recoverability assessment.

Annual Recoverability Assessment

We performed our annual recoverability assessment of all our aircraft during the third quarter of 2021. No impairments were recorded as a result of our annual recoverability assessment – see the discussion above for further detail regarding transactional impairment charges recorded during the three and nine months ended November 30, 2021.

Although we have completed our annual recoverability assessment, we will continue to closely monitor the impact of COVID-19 on our customers, air traffic, lease rental rates, and aircraft valuations, and have and will continue to perform additional customer and aircraft specific reviews should changes in facts and circumstances arise that may impact the recoverability of our aircraft. We have and 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 the COVID-19 pandemic and value deterioration.

The recoverability assessment is a comparison of the carrying value of each aircraft to its estimated undiscounted 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, including those related to our customers that have entered judicial insolvency proceedings, we may revise our cash flow assumptions and record future impairment charges. While we believe that the estimates and related assumptions used in our recoverability assessments 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 and amounts borrowed under financings. The fair value of cash and 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 November 30, 2021 and February 28, 2021 were as follows:


	November 30, 2021				February 28, 2021
	Carrying Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	—	$	—	$	—	$	—
Unsecured Term Loan	215,000		211,728		215,000		210,290
Export Credit Agency (“ECA”) Financings	23,455		24,173		36,423		37,942
Bank Financings	684,436		706,651		738,353		740,086
Senior Notes	3,700,000		3,906,613		4,200,000		4,402,722

All our financial instruments are classified as Level 2 except for 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

9 Months Ended

Nov. 30, 2021

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 November 30, 2021 were as follows:


Year Ending February 28/29,	Amount(1)
Remainder of 2021	$	160,213
2022	608,279
2023	555,461
2024	423,515
2025	277,974
Thereafter	722,000
Total	$	2,747,442

_______________

(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 November 30,				Nine Months Ended November 30,
Region	2021		2020		2021		2020
Asia and Pacific	27	%	37	%	31	%	40	%
Europe	31	%	34	%	34	%	31	%
Middle East and Africa	5	%	6	%	5	%	7	%
North America	15	%	12	%	15	%	11	%
South America	22	%	11	%	15	%	11	%

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 November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
	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	34%	4	31%	5	34%	4	29%

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 November 30,								Nine Months Ended November 30,
	2021				2020				2021				2020
Country	Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue
Canada(1)	$	—	—	%	$	24,338	13	%	$	—	—	%	$	—	—	%
India(2)	23,051		12	%	22,455		12	%	63,569		12	%	75,951		12	%
Indonesia(3)	26,581		14	%	—		—	%	—		—	%	—		—	%
Mexico(4)	—		—	%	—		—	%	—		—	%	85,711		14	%

_______________

(1)For the three months ended November 30, 2020, total revenue attributable to Canada included maintenance and other revenue, including early lease termination fees and security deposits recognized into revenue, totaling $19,260. Total revenue attributable to Canada was less than 10% for the three and nine months ended November 30, 2021 and for the nine months ended November 30, 2020

(2)For the three and nine months ended November 30, 2021, total revenue attributable to India included maintenance revenue totaling $3,609 and $5,608, respectively. For the three and nine months ended November 30, 2020, total revenue attributable to India included maintenance and other revenue, including early lease termination fees and security deposits recognized into revenue, totaling $6,080 and $16,251, respectively.

(3)For the three months ended November 30, 2021, total revenue attributable to Indonesia included maintenance revenue totaling $24,268. Total revenue attributable to Indonesia was less than 10% for the nine months ended November 30, 2021 and for the three and nine months ended November 30, 2020.

(4)For the nine months ended November 30, 2020, total revenue attributable to Mexico included maintenance and other revenue, including early lease termination fees and security deposits recognized into revenue, totaling $79,912. Total revenue attributable to Mexico was less than 10% for the three and nine months ended November 30, 2021 and for the three months ended November 30, 2020.

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:


	November 30, 2021				February 28, 2021
Region	Number of Aircraft		Net Book Value %		Number of Aircraft		Net Book Value %
Asia and Pacific	74		32	%	79		37	%
Europe	99		31	%	92		27	%
Middle East and Africa	10		4	%	11		4	%
North America	35		16	%	28		12	%
South America	24		12	%	26		13	%
Off-lease	13	(1)	5	%	16	(2)	7	%
Total	255		100	%	252		100	%

_______________

(1)Of the thirteen off-lease aircraft at November 30, 2021, we have two narrow-body aircraft and three wide-body aircraft which we are currently marketing for lease or sale.

(2)Of the sixteen off-lease aircraft at February 28, 2021, we have three wide-body aircraft which we are currently marketing for lease or sale.

The following table sets forth the 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:


	November 30, 2021				February 28, 2021
Country	Net Book Value		Net Book Value %	Number of Lessees	Net Book Value		Net Book Value %	Number of Lessees
India	$	696,703	10%	3	$	756,514	11%	3

At November 30, 2021 and February 28, 2021, the amounts of lease incentive liabilities recorded in maintenance payments on our Consolidated Balance Sheets were $19,832 and $14,673, respectively.

Net Investment in Leases

9 Months Ended

Nov. 30, 2021

Leases [Abstract]

Net Investment in Leases

At November 30, 2021 and February 28, 2021, our net investment in leases consisted of fifteen and fifteen aircraft, respectively. The components of our net investment in leases at November 30, 2021 and February 28, 2021, were as follows:


	November 30, 2021		February 28, 2021
Lease receivable	$	55,645	$	67,075
Unguaranteed residual value of flight equipment	137,196		129,165
Net investment leases	192,841		196,240
Allowance for credit losses	(1,828)		(864)
Net investment in leases, net of allowance	$	191,013	$	195,376

The activity in the allowance for credit losses related to our net investment in leases for the nine months ended November 30, 2021 is as follows:


	Amount
Balance at February 28, 2021	$	864
Provision for credit losses	970
Write-offs	(6)

Balance at November 30, 2021	$	1,828

At November 30, 2021, future lease payments on net investment in leases are as follows:


Year Ending February 28/29,	Amount
Remainder of 2021	$	4,073
2022	14,380
2023	9,539
2024	8,609
2025	7,680
Thereafter	21,682
Total lease payments to be received	65,963
Present value of lease payments - lease receivable	(55,645)
Difference between undiscounted lease payments and lease receivable	$	10,318

Unconsolidated Equity Method Investment (Notes)

9 Months Ended

Nov. 30, 2021

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 $301,862 at November 30, 2021.


	Amount
Investment in joint venture at February 28, 2021	$	35,377

Earnings from joint venture, net of tax	1,210
Investment in joint venture at November 30, 2021	$	36,587

On December 9, 2021, we entered into a loan agreement to provide the joint venture with a $1,500 unsecured loan facility, which bears interest at a rate of LIBOR plus 2% and is payable on December 9, 2022. This transaction was approved by our management as an arm’s length transaction under our related party policy.

Secured and Unsecured Debt Financings

9 Months Ended

Nov. 30, 2021

Debt Disclosure [Abstract]

Secured and Unsecured Debt Financings

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


	At November 30, 2021					At February 28, 2021
Debt Obligation	Outstanding Borrowings		Number of Aircraft	Interest Rate	Final Stated Maturity	Outstanding Borrowings
Secured Debt Financings:
ECA Financings	$	23,455	1	3.49%	11/30/24	$	36,423
Bank Financings(1)	684,436		31	2.19% to 4.55%	06/17/23 to 03/06/25	738,353
Less: Debt issuance costs and discounts	(4,299)		—			(5,926)
Total secured debt financings, net of debt issuance costs and discounts	703,592		32			768,850

Unsecured Debt Financings:
Senior Notes due 2022	—			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 2025	650,000			5.25%	08/11/25	650,000
Senior Notes due 2026	650,000			4.25%	06/15/26	650,000
Senior Notes due 2028	750,000			2.85%	01/26/28	750,000
Unsecured Term Loans	215,000			1.58%	02/27/22 to 02/27/24	215,000
Revolving Credit Facilities	—			N/A	12/27/21 to 04/26/25	—
Less: Debt issuance costs and discounts	(42,416)					(48,739)
Total unsecured debt financings, net of debt issuance costs and discounts	3,872,584					4,366,261

Total secured and unsecured debt financings, net of debt issuance costs and discounts	$	4,576,176				$	5,135,111

(1)The borrowings under these financings at November 30, 2021 have a weighted-average fixed rate of interest of 3.21%.

Unsecured Debt Financings:

Revolving Credit Facilities

During the nine months ended November 30, 2021, we entered into various amendments for one of our unsecured revolving credit facilities that, among other things, expanded the size of the facility and split the commitment into two tranches. As a result, the existing $300,000 commitment was expanded to $365,000, with $135,000 and $230,000 of the commitment allocated to Tranche A and Tranche B, respectively. Tranche A matured on the facility’s previously stated maturity date of December 27, 2021 and Tranche B will mature on February 28, 2023.

On April 26, 2021, we entered into an amendment that increased the size of one of our revolving credit facilities from $800,000 to $1,000,000. The stated maturity date for $900,000 of the total commitment was extended to April 26, 2025, and the remaining $100,000 commitment will mature on the facility’s previously stated maturity date of June 27, 2022.

On April 26, 2021, we entered into an amendment that reduced the size of our revolving credit facility with Mizuho Bank Ltd., a related party, from $150,000 to $50,000 and extended its maturity date to July 30, 2022. Mizuho Bank, Ltd. is now a lender for our $1,000,000 revolving credit facility with a commitment in the amount of $100,000.

On December 6, 2021, the Company entered into a $100,000 senior unsecured revolving credit facility with Mizuho Marubeni Leasing America Corporation, a related party. The facility bears interest at a rate of LIBOR plus 1.625%, matures on December 6, 2023, and requires the Company to have a minimum of $20,000 revolving credit outstanding throughout the term of the facility. This transaction was approved by our Audit Committee as an arm’s length transaction under our related party policy.

As of November 30, 2021, we had no borrowings outstanding under our revolving credit facilities and had $1,415,000 available for borrowing.

Senior Notes due 2022

On July 30, 2021, we redeemed all of the $500,000 outstanding aggregate principal amount of our 5.5% Senior Notes due 2022, including $12,604 of accrued interest and a $13,314 call premium.

As of November 30, 2021, we were in compliance with all applicable covenants in our financings.

Shareholders’ Equity	9 Months Ended
Shareholders’ Equity	Nov. 30, 2021
Shareholders’ Equity and Share Based Payment [Abstract]
Shareholders’ Equity	Shareholders' Equity On June 8, 2021, the Company issued 400 shares of 5.250% Series A Cumulative Redeemable Perpetual Preference Shares, $0.01 par value, with a liquidation preference of $1,000 per share (the “Preference Shares”). The Preference Shares are perpetual and have no maturity date. Dividends on the Preference Shares, when, as and if declared by the Company’s board of directors are payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 2021. Dividends will be payable: (i) from the date of original issue to, but excluding September 15, 2026 (the “original reset date”) at a fixed rate per annum of 5.250%; (ii) from, and including, the original reset date to, but excluding, September 15, 2031 (the “2031 reset date”), at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 4.410%; (iii) from, and including, the 2031 reset date to, but excluding, September 15, 2046 (the “2046 reset date”), during each reset period at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 4.660%; and (iv) from, and including, the 2046 reset date, during each reset period at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 5.410%. Dividends on the Preference Shares will accumulate daily and be cumulative from, and including, the date of original issuance of the Preference Shares. The Company may not redeem the Preference Shares before the date that is 90-days prior to the original reset date. The Company may, at its option, redeem the Preference Shares, in whole or in part, from time to time during the period beginning 90-days prior to each reset date and ending on such reset date at a redemption price in cash equal to $1,000 per Preference Share, plus all accumulated and unpaid dividends (whether or not declared) to, but excluding, such redemption date. In addition, the Company may redeem the Preference Shares, in whole but not in part, at the Company’s option under certain other limited conditions. Except with respect to certain amendments to the terms of the Preference Shares, in the case of certain dividend non-payments and as otherwise required by applicable law, the Preference Shares do not have voting rights. On August 19, 2021, the Company’s Board of Directors approved a quarterly dividend for the Company’s Preference Shares in the amount of $5,658, which was paid on September 15, 2021.

Related Party Disclosures	9 Months Ended
Related Party Disclosures	Nov. 30, 2021
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions On April 26, 2021, the Company entered into an amendment that reduced the size and extended the term of our unsecured revolving credit facility with Mizuho Bank Ltd., a related party – see Note 6 for additional information. On December 6, 2021, the Company entered into a $100,000 senior unsecured revolving credit facility with Mizuho Marubeni Leasing America Corporation, a related party – see Note 6 for additional information. This transaction was approved by our Audit Committee as an arm’s length transaction under our related party policy. During the three and nine months ended November 30, 2021, the Company incurred $951 and $2,866, respectively, in fees to Marubeni as part of its intra-company service agreement, whereby Marubeni provides certain management and administrative services to the Company. The Company also entered into a parts management services and supply agreement with an affiliate of Marubeni under which we purchased parts totaling $2,682 and $4,640 during the three and nine months ended November 30, 2021, respectively

Income Taxes

9 Months Ended

Nov. 30, 2021

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 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 nine months ended November 30, 2021 and 2020 were as follows:


	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
U.S. operations	$	6,218	$	15,291	$	14,408	$	28,188
Non-U.S. operations	(45,586)		(10,882)		(55,098)		(252,768)
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	$	(39,368)	$	4,409	$	(40,690)	$	(224,580)

Our aircraft-owning subsidiaries generally earn income from sources outside the U.S. and typically are not subject to U.S. federal, state or local income taxes. The aircraft owning subsidiaries resident in Ireland 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 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. The CARES Act did not materially impact the Company’s effective tax rate for the nine months ended November 30, 2021.

The Company’s effective tax rates (“ETRs”) for the three and nine months ended November 30, 2021 and 2020 were (59.7)% and 51.5%, and (56.2)%, and (6.6)%, respectively. The movement in the ETR is primarily caused by changes in the mix of the Company’s pre-tax earnings/(losses) in its taxable and non-tax jurisdictions. The nine months ended November 30, 2021 included income from the sale of unsecured claims related to the LATAM Bankruptcy and certain impairment charges, which were recorded in a low tax jurisdiction. Further, the nine months ended November 30, 2020 included discrete items related to stock compensation and the impact of the CARES act.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Interest, Net

9 Months Ended

Nov. 30, 2021

Interest Income (Expense), Net [Abstract]

Interest Net

Interest, Net

The following table shows the components of interest, net:


	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
Interest on borrowings and other liabilities	$	47,152	$	56,087	$	153,287	$	163,821


Amortization of deferred financing fees and debt discount	4,099		3,929		12,483		10,642
Interest expense	51,251		60,016		165,770		174,463
Less: Interest income	(448)		(71)		(1,160)		(467)
Less: Capitalized interest	(288)		—		(645)		—

Interest, net	$	50,515	$	59,945	$	163,965	$	173,996

Commitments and Contingencies

9 Months Ended

Nov. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Rent expense, primarily for the corporate offices and sales and marketing offices, was $405 and $1,213 for the three and nine months ended November 30, 2021, and $413 and $1,213 for the three and nine months ended November 30, 2020, respectively.

As of November 30, 2021, 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 February 28/29,	Amount
Remainder of 2021	$	486
2022	1,768
2023	1,703
2024	1,735
2025	1,766
Thereafter	4,358
Total	$	11,816

At November 30, 2021, we had commitments to acquire 27 aircraft for $964,292.

Commitments, including $76,675 of remaining progress payments, contractual price escalations and other adjustments for these aircraft, at November 30, 2021, net of amounts already paid, are as follows:


Year Ending February 28/29,	Amount
Remainder of 2021	$	183,051
2022	410,296
2023	277,763
2024	61,189
2025	31,993
Thereafter	—

Total	$	964,292

Other Assets

9 Months Ended

Nov. 30, 2021

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:


	November 30, 2021		February 28, 2021
Deferred income tax asset	$	617	$	637
Lease incentives and lease premiums, net of amortization of $78,182 and $75,126, respectively	55,013		75,169
Flight equipment held for sale	46,854		53,289
Aircraft purchase deposits and Embraer E-2 progress payments	67,246		52,092


Right-of-use asset(1)	7,473		8,056
Deferred rent receivable	58,625		69,103
Other assets	99,592		53,598

Total other assets	$	335,420	$	311,944

______________

(1)Net of lease incentives and tenant allowances.

Accounts Payable, Accrued Expenses and Other Liabilities

9 Months Ended

Nov. 30, 2021

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:


	November 30, 2021		February 28, 2021
Accounts payable, accrued expenses and other liabilities	$	61,368	$	43,088
Deferred income tax liability	84,101		75,124
Accrued interest payable	44,554		43,676
Lease liability	10,231		11,003
Lease discounts, net of amortization of $45,557 and $44,887, respectively	705		1,376


Total accounts payable, accrued expenses and other liabilities	$	200,959	$	174,267

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Nov. 30, 2021
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, including any Variable Interest Entity (“VIE”) of which Aircastle is the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation. Risk and Uncertainties In the normal course of business, Aircastle encounters several significant types of economic risk including credit, market, aviation industry and capital market risks. Credit risk is the risk of a lessee’s inability or unwillingness to make contractually required payments and to fulfill its other contractual obligations to Aircastle. Market risk reflects the change in the value of financings due to changes in interest rate spreads or other market factors, including the value of collateral underlying financings. Aviation industry risk is the risk of a downturn in the commercial aviation industry which could adversely impact a lessee’s ability to make payments, increase the risk of early lease terminations and depress lease rates and the value of the Company’s aircraft. Capital market risk is the risk that the Company is unable to obtain capital at reasonable rates to fund the growth of its business or to refinance existing debt facilities.
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]	COVID-19 Pandemic COVID-19 has had an unprecedented negative impact on the aviation sector, resulting in a dramatic slowdown in air traffic. While there have been some improvements in certain markets recently, according to IATA, as of November 30, 2021, air travel was still down to approximately 53% compared to normal levels and a full recovery to pre-pandemic levels is not expected for several years. Substantially all the world’s airlines have experienced financial difficulties and liquidity challenges, including many of our customers. While we believe long-term demand for air travel will return to historical trends over time, the near-term impacts of COVID-19’s economic shock are material; the extent and duration of those impacts cannot currently be determined. Even as the airline industry begins to recover, airlines continue to seek support from their respective governments, raise debt and equity, delay or cancel new aircraft orders, furlough employees, request concessions from lessors, and in certain cases, seek judicial protection. As of January 7, 2022, our total deferrals, net of repayments, were $87,219. These deferrals have been granted to nineteen customers for an average of six to twelve months of lease rentals and represent 15% of Lease rental and Direct financing and sales-type lease revenues for the twelve months ended November 30, 2021. Of the total deferrals, $81,797 is included in Accounts receivable or Other assets as of November 30, 2021, with the balance representing future lease payments. Approximately 87% of our total deferrals as of January 7, 2022, have been agreed to as part of broader lease restructurings. These generally include term extensions, better security packages, or other valuable consideration in exchange for near-term economic concessions. Many have repayment terms that extend beyond twelve months and in a limited number of situations, we have agreed to broader lease restructurings that do not include the full repayment of all of lease payments. If air traffic remains depressed and our customers are unable to obtain sufficient funds from private, governmental or other sources, we may need to grant additional deferrals to certain customers or extend the period of repayment for deferrals we have already made. We may ultimately not be able to collect all the amounts we have deferred. As of January 7, 2022, six of our customers are subject to judicial insolvency proceedings or similar protection. These customers lease 21 aircraft, which represent 13% of our net book value of flight equipment (including Flight equipment held for lease and Net investment in leases, or “net book value”) and 12% of our Lease rental and direct financing and sales-type lease revenue as of and for the twelve months ended November 30, 2021. We are actively engaged in these judicial proceedings to protect our economic interests. However, the outcome of these proceedings is uncertain and could result in these customers negotiating reductions in aircraft lease rentals, rejecting their leases or taking other actions that could adversely impact us or the value of our aircraft. Based on historic experience, the judicial process can take up to twelve to eighteen months to be resolved. As a result of these proceedings, lease rental revenue for certain customers may be recognized on a cash basis of accounting rather than the accrual method depending on the customers’ lease security arrangements. LATAM, our second largest customer, is included in the above group and 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 November 30, 2021. We have signed restructured leases for all thirteen of our LATAM aircraft, subject only to LATAM emerging from the Chapter 11 process. During the second quarter of 2021, the Company entered into claims sale and purchase agreements with a third party for the sale of certain unsecured claims filed by various Aircastle entities against LATAM Airlines Group S.A. and certain of its subsidiaries in the Chapter 11 case captioned LATAM Airlines Group S.A., et al., Case No. 20-11254 (JLG) (Jointly Administered) (the “LATAM Bankruptcy”). The allowed amount of our unsecured claims was approved by the Bankruptcy Court and proceeds from the sales of these claims in the amount of $55,213 were received during the second quarter of 2021 and recognized in Other income (expense).
New Accounting Pronouncements, Policy	Recent Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04, Reference Rate Reform Topic 848 (“ASC 848”), in response to the market transition from the LIBOR and other interbank offered rates (“IBORs”) to alternative reference rates. U.S. GAAP requires entities to evaluate whether a contract modification, such as the replacement or change of a reference rate, results in the establishment of a new contract or continuation of an existing contract. ASC 848 allows an entity to elect not to apply certain modification accounting requirements to contracts affected by reference rate reform. The standard provides this temporary election through December 31, 2022, and cannot be applied to contract modifications that occur after December 31, 2022. Reference rate reform will primarily impact our lease and debt arrangements for which floating-rate lease rentals and interest expense are based on LIBOR. As of November 30, 2021, less than 1% of our fleet have floating-rate lease rentals and, for the three and nine months ended November 30, 2021, 4% of our interest expense was derived from floating-rate debt which is referenced to LIBOR. We have not adopted ASC 848 and are currently evaluating the election available to us under the standard. Effective, March 1, 2021, the Company adopted FASB ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes. The guidance aims to simplify the accounting for income taxes by removing certain exceptions to the general principles within the current guidance and by clarifying and amending the current guidance. The guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020. This adoption did not have a material impact on our consolidated financial statements.

Fair Value Measurements (Tables)

9 Months Ended

Nov. 30, 2021

Fair Value Disclosures [Abstract]

Fair value assets and liabilities measured on recurring basis


			Fair Value Measurements at November 30, 2021 Using Fair Value Hierarchy
	Fair Value as of November 30, 2021		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	$	276,289	$	276,289	$	—	$	—	Market
Restricted cash and cash equivalents	2,740		2,740		—		—		Market

Total	$	279,029	$	279,029	$	—	$	—


			Fair Value Measurements at February 28, 2021 Using Fair Value Hierarchy
	Fair Value as of February 28, 2021		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	$	578,004	$	578,004	$	—	$	—	Market
Restricted cash and cash equivalents	2,594		2,594		—		—		Market


Total	$	580,598	$	580,598	$	—	$	—

Carrying amounts and fair values of financial instruments

The carrying amounts and fair values of our financial instruments at November 30, 2021 and February 28, 2021 were as follows:


	November 30, 2021				February 28, 2021
	Carrying Amount of Liability		Fair Value of Liability		Carrying Amount of Liability		Fair Value of Liability
Credit Facilities	$	—	$	—	$	—	$	—
Unsecured Term Loan	215,000		211,728		215,000		210,290
Export Credit Agency (“ECA”) Financings	23,455		24,173		36,423		37,942
Bank Financings	684,436		706,651		738,353		740,086
Senior Notes	3,700,000		3,906,613		4,200,000		4,402,722

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

9 Months Ended

Nov. 30, 2021

Leases [Abstract]

Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity

Minimum future annual lease rentals contracted to be received under our existing operating leases of flight equipment at November 30, 2021 were as follows:


Year Ending February 28/29,	Amount(1)
Remainder of 2021	$	160,213
2022	608,279
2023	555,461
2024	423,515
2025	277,974
Thereafter	722,000
Total	$	2,747,442

_______________

(1)Reflects impact of lessee lease rental deferrals.

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 November 30,				Nine Months Ended November 30,
Region	2021		2020		2021		2020
Asia and Pacific	27	%	37	%	31	%	40	%
Europe	31	%	34	%	34	%	31	%
Middle East and Africa	5	%	6	%	5	%	7	%
North America	15	%	12	%	15	%	11	%
South America	22	%	11	%	15	%	11	%

Total	100	%	100	%	100	%	100	%

Schedule of Revenue by Major Customers by Reporting Segments [Table Text Block]


	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
	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	34%	4	31%	5	34%	4	29%

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]


	Three Months Ended November 30,								Nine Months Ended November 30,
	2021				2020				2021				2020
Country	Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue		Revenue		% of Total Revenue
Canada(1)	$	—	—	%	$	24,338	13	%	$	—	—	%	$	—	—	%
India(2)	23,051		12	%	22,455		12	%	63,569		12	%	75,951		12	%
Indonesia(3)	26,581		14	%	—		—	%	—		—	%	—		—	%
Mexico(4)	—		—	%	—		—	%	—		—	%	85,711		14	%

_______________

Geographic concentration of net book value of flight equipment held for lease

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:


	November 30, 2021				February 28, 2021
Region	Number of Aircraft		Net Book Value %		Number of Aircraft		Net Book Value %
Asia and Pacific	74		32	%	79		37	%
Europe	99		31	%	92		27	%
Middle East and Africa	10		4	%	11		4	%
North America	35		16	%	28		12	%
South America	24		12	%	26		13	%
Off-lease	13	(1)	5	%	16	(2)	7	%
Total	255		100	%	252		100	%

_______________

(1)Of the thirteen off-lease aircraft at November 30, 2021, we have two narrow-body aircraft and three wide-body aircraft which we are currently marketing for lease or sale.

(2)Of the sixteen off-lease aircraft at February 28, 2021, we have three wide-body aircraft which we are currently marketing for lease or sale.

Schedule of Disclosure on Geographic Areas, Long-Lived Assets in Individual Foreign Countries by Country [Table Text Block]


	November 30, 2021				February 28, 2021
Country	Net Book Value		Net Book Value %	Number of Lessees	Net Book Value		Net Book Value %	Number of Lessees
India	$	696,703	10%	3	$	756,514	11%	3

Net Investment in Leases (Tables)

9 Months Ended

Nov. 30, 2021

Leases [Abstract]

Schedule of Components of Net Investment in Leases

The components of our net investment in leases at November 30, 2021 and February 28, 2021, were as follows:


	November 30, 2021		February 28, 2021
Lease receivable	$	55,645	$	67,075
Unguaranteed residual value of flight equipment	137,196		129,165
Net investment leases	192,841		196,240
Allowance for credit losses	(1,828)		(864)
Net investment in leases, net of allowance	$	191,013	$	195,376

Sales-type and Direct Financing Leases, Lease Receivable, Maturity

The activity in the allowance for credit losses related to our net investment in leases for the nine months ended November 30, 2021 is as follows:


	Amount
Balance at February 28, 2021	$	864
Provision for credit losses	970
Write-offs	(6)

Balance at November 30, 2021	$	1,828

At November 30, 2021, future lease payments on net investment in leases are as follows:


Year Ending February 28/29,	Amount
Remainder of 2021	$	4,073
2022	14,380
2023	9,539
2024	8,609
2025	7,680
Thereafter	21,682
Total lease payments to be received	65,963
Present value of lease payments - lease receivable	(55,645)
Difference between undiscounted lease payments and lease receivable	$	10,318

Unconsolidated Equity Method Investment (Tables)

9 Months Ended

Nov. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments


	Amount
Investment in joint venture at February 28, 2021	$	35,377

Earnings from joint venture, net of tax	1,210
Investment in joint venture at November 30, 2021	$	36,587

Secured and Unsecured Debt Financings (Tables)

9 Months Ended

Nov. 30, 2021

Debt Disclosure [Abstract]

Outstanding amounts of secured and unsecured term debt financings

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


	At November 30, 2021					At February 28, 2021
Debt Obligation	Outstanding Borrowings		Number of Aircraft	Interest Rate	Final Stated Maturity	Outstanding Borrowings
Secured Debt Financings:
ECA Financings	$	23,455	1	3.49%	11/30/24	$	36,423
Bank Financings(1)	684,436		31	2.19% to 4.55%	06/17/23 to 03/06/25	738,353
Less: Debt issuance costs and discounts	(4,299)		—			(5,926)
Total secured debt financings, net of debt issuance costs and discounts	703,592		32			768,850

Unsecured Debt Financings:
Senior Notes due 2022	—			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 2025	650,000			5.25%	08/11/25	650,000
Senior Notes due 2026	650,000			4.25%	06/15/26	650,000
Senior Notes due 2028	750,000			2.85%	01/26/28	750,000
Unsecured Term Loans	215,000			1.58%	02/27/22 to 02/27/24	215,000
Revolving Credit Facilities	—			N/A	12/27/21 to 04/26/25	—
Less: Debt issuance costs and discounts	(42,416)					(48,739)
Total unsecured debt financings, net of debt issuance costs and discounts	3,872,584					4,366,261

Total secured and unsecured debt financings, net of debt issuance costs and discounts	$	4,576,176				$	5,135,111

(1)The borrowings under these financings at November 30, 2021 have a weighted-average fixed rate of interest of 3.21%.

Income Taxes (Tables)

9 Months Ended

Nov. 30, 2021

Income Tax Disclosure [Abstract]

Sources of income from continuing operations before income taxes


	Three Months Ended November 30,				Nine Months Ended November 30,
	2021		2020		2021		2020
U.S. operations	$	6,218	$	15,291	$	14,408	$	28,188
Non-U.S. operations	(45,586)		(10,882)		(55,098)		(252,768)
Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments