Aircastle Limited 2025 10-K Review

Introduction

Warren.AI 💰 7.8 / 10

Aircastle Limited ("Aircastle" or the "Company") is a Bermuda-incorporated aircraft investor, lessor and asset manager that acquires, leases, and sells commercial jet aircraft to airlines around the globe. With a modern, well-diversified fleet and an investment-grade capital structure, Aircastle serves as a leading secondary market participant in the aircraft leasing sector. In this 10-K review, we summarize key highlights from the Company’s 2025 fiscal year filing, assess financial performance, liquidity, and risk factors, and conclude with an investment score.

---

1. Business Overview (Item 1)

What Aircastle Does
Aircastle acquires commercial jetliners through purchase-leasebacks, direct buy-and-leases, and transactions in the resale market. It manages the entire aircraft life cycle:

• Technical & Asset Management: Lease and technical oversight through offices in Stamford (CT), Dublin (Ireland) & Singapore.
• Remarketing & Disposition: Sales with leases attached or on a parts-out basis.
• Financing: Strong relationships with banks, export credit agencies, unsecured bond markets, securitization and JOLCO structures.

Portfolio Statistics

• Fleet: 273 aircraft (owned & managed joint venture), leased to 77 carriers in 47 countries.
• Net Book Value (NBV): $7.9 billion (↑ 9% vs. FY2024).
• Average Age / Lease Term: 9.1 years old, 5.4 years remaining.
• Utilization: 99% in FY2025.
• Net Book Value by Type: 45% next-gen narrow-body, 46% current-gen narrow-body, 7% wide-body, 2% freighters.

Competitive Strengths

1. Diversified & Modern Fleet
2. Disciplined Acquisition & Broad Sourcing Network
3. Proven Sales & Disposition Expertise
4. Strong Capital Access & Investment-Grade Rating
5. Conservative Leverage & Unencumbered Asset Base
6. Experienced Management
7. Global Scale & Platform Efficiency

---

2. Financial Performance (Items 7 & 8)

Key Income Statement Items (FY2025 vs. FY2024)

• Total Revenues: $821.0 M vs. $855.4 M (↓ 4.1%)
  • Lease rentals: $652.4 M vs. $603.6 M (↑ 8.0%)
  • Maintenance revenue: $90.5 M vs. $132.2 M (↓ 31.5%)
  • Gain on sales: $77.2 M vs. $121.6 M (↓ 36.5%)
  • Other revenue: $1.3 M vs. $1.9 M
• Total Operating Expenses: $735.0 M vs. $756.6 M (↓ 2.9%)
  • Depreciation: $355.7 M vs. $348.2 M
  • Net interest: $247.9 M vs. $229.1 M (↑ 8.2%)
  • SG&A: $86.4 M vs. $82.1 M
  • Impairment: $19.4 M vs. $55.2 M
  • Credit provision: $8.7 M vs. $12.1 M
• Net Income: $123.6 M vs. $83.3 M (↑ 48.5%)
• Net Profit Margin: 15.1% vs. 9.7%
• EPS: $6,933 per common share (based on 17,840 shares).

Key Balance Sheet & Cash Flow

• Total Assets: $8.51 B vs. $7.68 B
• Debt (net): $4.96 B vs. $4.70 B
• Shareholders’ Equity: $2.53 B vs. $2.13 B
• Leverage (Debt/Total Capitalization): 66%
• Credit Facilities: $2.1 B undrawn revolver.
• Cash Flow from Ops: $464.0 M vs. $370.3 M (↑ 25.3%)
• CapEx: $1.6 B acquisitions, $565.9 M proceeds from 27 sales
• Liquidity: $2.7 B (cash + revolver + projected operations & sales)

Segment & Yield
Single reportable segment—aircraft leasing & management.

• Portfolio yield: 9.4% (FY2025), 9.2% (FY2024).

---

3. Cash-Based LTI & Adjusted EBITDA

Adjusted EBITDA: $789.9 M vs. $759.5 M (↑ 4.0%).
EBITDA margin: ~96%.
Aircastle uses Adjusted EBITDA to gauge operational performance, excluding non-cash impairments and debt extinguishments.

2022–24 Cash LTI Awards

• Vest based on 3-year Book Equity IRR hurdles (min 50% of target, max 150%).
• FY2022 Book Equity IRR: 2.9% (128% payout); FY2023: 3.9% (148% payout); FY2024: 5.3% (132%–150% payouts).
• Cliff vesting on 2/28/25, 2/28/26, 2/28/27.

---

4. Risk Factors (Item 1A)

1. Credit Risk: Airline defaults, restructurings & repossessions.
2. Residual Value Risk: Fleet oversupply, obsolescence of older aircraft & engines.
3. Geographic & Lessee Concentration: Emerging market exposures & currency controls.
4. Regulatory & ESG: Emissions regulations, sustainable aviation fuel mandates & noise restrictions.
5. Market & Industry: Fuel volatility, recessionary cycles & global crises (COVID-19, Russia-Ukraine, Middle East conflicts).
6. Competition: Global lessors, well-funded private equity entrants & OEM order-books.

---

5. Board & Management

Leadership: CEO Michael Inglese (CEO since 2017; CFO since 2007).
Board Composition: Mix of Marubeni/Mizuho-nominated and independent Directors.
Governance: Investment-grade rating with strong Access to Secured/Unsecured Debt.
Insider & Related Party: Marubeni Aviation Corp. & MM Air Ltd. each own 50%.

---

6. Investment Considerations

Strengths:

• Premier portfolio of modern narrow-body aircraft.
• Conservative leverage & strong liquidity.
• Proven track record in leasing, remarketing & capital markets.
• Diversified across 77 lessees & 47 countries.

Risks:

• Airline credit exposures & currency controls.
• ESG transition costs and emissions regulations.
• Residual value & obsolescence pressures on older aircraft.
• Geopolitical & regulatory headwinds.

Investment Score: 7.8/10
4b0 Projects medium-high return potential in line with the recovery and long-term growth of global air travel.
600 Offers broad industry expertise and robust financing capacity, offset by risk factors from cyclicality and credit.

---

Net Profit FY2025:

$123.6 million

Title: “Aircastle 2025 10-K: Strong Cash Flow & Growth in a Challenging Market”

Key Takeaways

• A modern fleet up 9% in NBV, diversified across 47 countries.
• Net income +48% to $123.6 M and record operating cash flow of $464 M.
• $2.7 B liquidity cushion, $2.0 B undrawn revolver and disciplined leverage (66% debt/cap).
• Investment grade financial profile, with a 9.4% yield on aircraft assets.

Verdict: Aircastle is well-positioned to capitalize on long-term air travel demand, with conservative financial guardrails offsetting credit cycle and residual risk.

Subscribe for more in-depth 10-K analyses & investment scores!