Sumisho Air Lease (NYSE: AL) details $11.9B buyout, $20.3B debt load
Sumisho Air Lease Corporation, formerly Air Lease, reports its first Form 10‑Q after a leveraged take‑private completed on April 8, 2026. The company remains one of the largest aircraft lessors, with an owned fleet of 488 aircraft and flight equipment net book value of $23.9 billion as of June 30, 2026.
The merger valued the Class A common stock at $65.00 per share, with total merger consideration of $11.9 billion, including $7.4 billion to common holders and $3.6 billion used to extinguish debt. Funding came from $5.0 billion of new senior notes and term loans plus $5.4 billion of equity from Sumitomo, SMBC Aviation Capital, Apollo and Brookfield, who now hold all voting power through privately held Class C shares.
At June 30, 2026, total assets were $30.5 billion and total debt financing was $20.3 billion, leaving stockholders’ equity of $6.1 billion. The successor period from April 8–June 30, 2026 shows revenue of $575.3 million, interest expense of $249.2 million and a net loss of $7.7 million after $11.1 million in preferred dividends.
The company sold its OEM orderbook to SMBC Aviation Capital for $1.5 billion and now carries $5.1 billion of flight equipment held for sale (86 aircraft), largely under portfolio sale agreements with affiliates of Apollo and Brookfield. Maintenance right assets recognized in purchase accounting total $4.25 billion, and minimum future lease rentals on operating leases are $16.4 billion, providing multi‑year contracted cash flow. Management highlights substantial indebtedness, reliance on lessee performance and large planned asset sales as key ongoing risks.
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Filing Explained
The April 8 merger is complete: former public common equity was replaced by privately held Class C ownership, with $20.3 billion of debt outstanding.
This unaudited Form 10-Q reports the successor company after the
The merger is therefore complete rather than proposed: each outstanding Class A share was converted into a right to receive
As of
Future filings will matter for the preliminary purchase-price allocation, which remains adjustable for up to one year after the merger, and for the debt and aircraft-sale items whose terms or completion status may change.
Key Figures
Total assets: $30,510,048 (thousands)
Debt financing: $20,258,556 (thousands)
Stockholders’ equity: $6,118,868 (thousands)
+5 more
8 metrics
Total assets
$30,510,048 (thousands)
Consolidated balance sheet as of June 30, 2026
Debt financing
$20,258,556 (thousands)
Total debt outstanding as of June 30, 2026 before discounts
Stockholders’ equity
$6,118,868 (thousands)
Successor equity balance as of June 30, 2026
Merger consideration
$11,868,545 (thousands)
Total consideration for common, debt extinguishment and preferred stock
Q2 2026 revenue
$575,272 (thousands)
Successor period April 8–June 30, 2026 revenues and other income
Net loss (Successor Q2)
$7,694 (thousands)
Net loss for period April 8–June 30, 2026
Flight equipment held for sale
$5,113,570 (thousands)
Carrying value of 86 aircraft classified as held for sale at June 30, 2026
Minimum future lease rentals
$16,391,043 (thousands)
Non-cancellable operating lease rentals as of June 30, 2026
Key Terms
Maintenance right asset, Sales-type leases, Orderbook held for sale, Fair value adjustment, +1 more
5 terms
Maintenance right asset financial
"Maintenance right asset (included in Flight equipment subject to operating leases)"
Sales-type leases financial
"Net investment in sales-type leases as of June 30, 2026 - (Successor)"
A sales-type lease is when the owner of an asset treats a long-term lease more like a sale: the owner records the lease as if it sold the asset and recognizes any immediate profit, while the buyer records a financed purchase. Think of it as selling a car but letting the buyer pay over time with the seller recording a sale now. Investors care because it changes reported revenue, profit, and asset balances, which can affect valuation and cash-flow analysis.
Orderbook held for sale financial
"the aircraft orderbook held for sale of $ 1.5 billion, recognized at fair value"
Fair value adjustment financial
"Fair value adjustment upon Merger | ( 313,795 )"
An accounting entry that updates the recorded value of an asset or liability to match its current market worth, like changing a price tag to what a buyer would pay today. It matters to investors because these adjustments change reported profits and balance-sheet strength, can reveal shifts in market conditions or asset quality, and affect valuation ratios used to compare companies and make investment decisions.
Non-GAAP Combined financial
"presentation of the Company’s combined results (“Non-GAAP Combined”) of the Predecessor and Successor"
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FAQ
How did the 2026 merger affect Sumisho Air Lease (AL)?
The merger took Sumisho Air Lease private at $65.00 per share, with total consideration of $11.9 billion. It was funded by $5.0 billion in new debt and $5.4 billion of equity from Sumitomo, SMBC AC, Apollo and Brookfield.
What are Sumisho Air Lease (AL) revenues and earnings for Q2 2026?
For April 8–June 30, 2026, Sumisho Air Lease generated $575.3 million in total revenue and reported a net loss of $7.7 million. Interest expense was $249.2 million, reflecting the higher post‑merger debt load and fair value accretion.
What is Sumisho Air Lease’s (AL) debt level after the merger?
As of June 30, 2026, Sumisho Air Lease had $20.3 billion of total debt financing outstanding. This includes $15.0 billion of senior unsecured securities and $4.2 billion of unsecured term financings, plus revolving and limited secured facilities.
How large is Sumisho Air Lease’s (AL) aircraft portfolio and lease backlog?
The company owns 488 aircraft with net book value of $23.9 billion and has $16.4 billion in minimum future lease rentals. These non‑cancellable operating lease commitments extend through 2030 and beyond, providing multi‑year contracted cash flows.
What aircraft sales is Sumisho Air Lease (AL) planning?
As of June 30, 2026, the company classifies 86 aircraft as held for sale with carrying value of $5.1 billion. Portfolios are slated for sale to affiliates of Apollo and Brookfield, with most transactions expected to close by the first quarter of 2027.
What happened to Sumisho Air Lease’s (AL) OEM orderbook?
On April 8, 2026, SMBC Aviation Capital acquired the undelivered aircraft orderbook for $1.5 billion, equal to pre‑delivery payments plus a premium. After this transaction, Sumisho Air Lease no longer holds an OEM orderbook or related deposit commitments.
Who owns Sumisho Air Lease (AL) after going private?
Post‑merger, Sumisho Air Lease is indirectly owned by Sumisho Air Lease DAC. Voting power is held by Sumitomo (~47.5%), SMBC AC (~4.99%), and funds affiliated with Apollo (~23.75%) and Brookfield (~23.75%) through privately held Class C shares.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended June 30, 2026
OR
For the transition period from to
Commission file number 001-35121
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
Registrant’s telephone number, including area code: (310 ) 553-0555
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| ☒ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
At August 7, 2026, there were 200 shares of Sumisho Air Lease Corporation’s Class C common stock outstanding.
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Sumisho Air Lease Corporation and Subsidiaries
Form 10-Q
For the Quarterly Period Ended June 30, 2026
TABLE OF CONTENTS
| Page | ||||||||||||||
Note About Forward-Looking Statements | 4 | |||||||||||||
PART I—FINANCIAL INFORMATION | ||||||||||||||
Item 1 | Financial Statements | |||||||||||||
Consolidated Balance Sheets—June 30, 2026 and December 31, 2025 (unaudited) | 6 | |||||||||||||
Consolidated Statements of Operations and Other Comprehensive Income—Successor Period from April 8, 2026 through June 30, 2026; Predecessor Periods from April 1, 2026 through April 7, 2026 and January 1, 2026 through April 7, 2026 and Three and Six Months Ended June 30, 2025 (unaudited) | 7 | |||||||||||||
Consolidated Statements of Stockholders’ Equity—Successor Period from April 8, 2026 through June 30, 2026; Predecessor Periods from April 1, 2026 through April 7, 2026 and January 1, 2026 through April 7, 2026 and Three and Six Months Ended June 30, 2025 (unaudited) | 8 | |||||||||||||
Consolidated Statements of Cash Flows—Successor Period from April 8, 2026 through June 30, 2026; Predecessor Periods from April 1, 2026 through April 7, 2026 and Six Months Ended June 30, 2025 | 10 | |||||||||||||
Notes to Consolidated Financial Statements (unaudited) | 12 | |||||||||||||
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 34 | ||||||||||||
Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 55 | ||||||||||||
Item 4 | Controls and Procedures | 56 | ||||||||||||
PART II—OTHER INFORMATION | ||||||||||||||
Item 1 | Legal Proceedings | 56 | ||||||||||||
Item 1A | Risk Factors | 58 | ||||||||||||
Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 58 | ||||||||||||
Item 3 | Defaults Upon Senior Securities | 58 | ||||||||||||
Item 4 | Mine Safety Disclosures | 58 | ||||||||||||
Item 5 | Other Information | 58 | ||||||||||||
Item 6 | Exhibits | 59 | ||||||||||||
Signatures | 61 | |||||||||||||
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NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and other publicly available documents may contain or incorporate statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this Form 10-Q and include statements regarding, among other matters, the state of the airline industry, our ability to access the capital and debt markets, our aircraft sales pipeline and expectations, changes in inflation and interest rates and other macroeconomic conditions and other factors affecting our financial condition or results of operations. Words such as “can,” “could,” “may,” “predicts,” “potential,” “will,” “projects,” “continuing,” “ongoing,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and “should,” and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others:
•we have a significant amount of indebtedness, requiring a substantial portion of our cash flows to be dedicated to debt service payments, and we will require significant capital to satisfy our outstanding debt obligations as they come due;
•despite our substantial indebtedness levels, we may still be able to incur significantly more debt, which could exacerbate the risks associated with our substantial debt;
•changes in our cost of borrowing or interest rate increases may adversely affect our net income and our ability to compete in the marketplace;
•any negative changes in our credit ratings may limit our ability to obtain financing or increase our borrowing costs;
•our senior unsecured securities will be effectively subordinated to our secured debt to the extent of the value of the assets securing such indebtedness;
•the limited covenants applicable to our senior unsecured securities that may not provide protection against some events or developments that may affect our ability to repay such securities or the trading prices for such securities;
•we may be unable to generate sufficient returns on our aircraft investments which may have an adverse impact on our net income;
•failure to complete our planned aircraft sales could affect our net income and credit ratings may lead us to use alternative sources of liquidity;
•if our aircraft become obsolete or experience a decline in customer demand, our ability to lease and sell those aircraft and our results of operations may be negatively impacted and may result in impairment charges;
•potential conflicts of interest may arise from SMBC AC’s role as the exclusive servicer of our aircraft leased to non-U.S. airlines;
•after the Merger, we no longer have an OEM orderbook, which may impact our ability to manage our aircraft portfolio and, if we are unable to obtain new and younger aircraft, it may increase our re-leasing risk and residual value risk;
•aircraft have limited economic useful lives and depreciate over time and we may be required to record an impairment charge or sell aircraft for a price less than its depreciated book value which may impact our financial results;
•we are dependent on the ability of our lessees to perform their payment and other obligations to us under our leases and their failure to do so may materially and adversely affect our financial results and cash flows;
•we may experience increased competition from other aircraft lessors which may impact our ability to execute our long-term strategy;
•our lessees may fail to adequately insure our aircraft or fulfill their indemnity obligations, or we may not be able to adequately insure our aircraft or insurers may not fulfill their policy obligations, which may result in increased costs and liabilities;
•other events affecting our business or the business of our lessees and aircraft manufacturers or their suppliers that are beyond our or their control, such as the threat or realization of epidemic diseases, natural disasters, terrorist attacks, war or armed hostilities between countries or non-state actors; and
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•any additional factors discussed under “Part I — Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025, “Part II — Item 1A. Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 and other Securities and Exchange Commission (“SEC”) filings, including future SEC filings.
All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations. You are therefore cautioned not to place undue reliance on such statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not intend and undertake no obligation to update any forward-looking information to reflect actual results or events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Sumisho Air Lease Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (unaudited)
(In thousands, except share and par value amounts)
| Successor | Predecessor | |||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash | ||||||||||||||
| Flight equipment subject to operating leases | ||||||||||||||
| Less accumulated depreciation | ( | ( | ||||||||||||
| Net investment in sales-type leases | ||||||||||||||
| Deposits on flight equipment purchases | ||||||||||||||
| Flight equipment held for sale | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||
| Accrued interest and other payables | $ | $ | ||||||||||||
| Debt financing, net of discounts and issuance costs | ||||||||||||||
| Security deposits on flight equipment leases | ||||||||||||||
| Maintenance reserves on flight equipment leases | ||||||||||||||
| Rentals received in advance | ||||||||||||||
| Deferred tax liability | ||||||||||||||
| Total liabilities | $ | $ | ||||||||||||
| Stockholders’ Equity | ||||||||||||||
Preferred Stock, $ | $ | $ | ||||||||||||
Class A common stock, $ | ||||||||||||||
Class B Non-Voting common stock, $ | ||||||||||||||
Class C common stock, $ | ||||||||||||||
| Paid-in capital | ||||||||||||||
| (Accumulated deficit)/Retained earnings | ( | |||||||||||||
| Accumulated other comprehensive income/(loss) | ( | |||||||||||||
| Total stockholders’ equity | $ | $ | ||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||||||
(See Notes to Consolidated Financial Statements)
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Sumisho Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (unaudited)
(In thousands, except share and per share amounts)
| Successor | Predecessor | |||||||||||||||||||||||||||||||
| Period from April 8 - June 30, | Period from April 1 - April 7, | Three Months Ended June 30, | Period from January 1 - April 7, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
| 2026 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Revenues and other income | ||||||||||||||||||||||||||||||||
| Rental of flight equipment revenue | ||||||||||||||||||||||||||||||||
| Lease rentals | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Maintenance rentals and other receipts | ||||||||||||||||||||||||||||||||
| Total rental of flight equipment revenue | ||||||||||||||||||||||||||||||||
| Gain on aircraft sales and trading and other income | ||||||||||||||||||||||||||||||||
| Total revenues and other income | ||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||
| Interest | ||||||||||||||||||||||||||||||||
| Amortization of debt discounts and issuance costs | ||||||||||||||||||||||||||||||||
| Amortization of fair value adjustments | ||||||||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||||||||
| Depreciation of flight equipment | ||||||||||||||||||||||||||||||||
| Recoveries of Russian fleet write-off | ( | ( | ||||||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||||||||
| Servicing fees | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||
| Total expenses | ||||||||||||||||||||||||||||||||
| (Loss) Income before taxes | ( | |||||||||||||||||||||||||||||||
| Income tax benefit/(expense) | ( | ( | ( | |||||||||||||||||||||||||||||
| Net (loss)/income | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Preferred stock dividends | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Net (loss)/income attributable to common stockholders | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Other comprehensive income/(loss): | ||||||||||||||||||||||||||||||||
| Unrealized gain/(loss) on foreign currency derivatives | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| Change in fair value of hedged transactions | ( | ( | ||||||||||||||||||||||||||||||
| Total tax (expense)/benefit on other comprehensive income | ( | |||||||||||||||||||||||||||||||
| Other comprehensive income/(loss), net of tax | ( | ( | ( | ( | ||||||||||||||||||||||||||||
| Total comprehensive (loss)/income attributable to common stockholders | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||
| Earnings per share of common stock: | ||||||||||||||||||||||||||||||||
| Basic | n/a | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Diluted | n/a | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Weighted-average shares of common stock outstanding | ||||||||||||||||||||||||||||||||
| Basic | n/a | |||||||||||||||||||||||||||||||
| Diluted | n/a | |||||||||||||||||||||||||||||||
(See Notes to Consolidated Financial Statements)
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Sumisho Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
(In thousands, except share and per share amounts)
| Preferred Stock | Class A Common Stock | Class B Non‑Voting Common Stock | Class C Common Stock | Accumulated Other Comprehensive Income/(Loss) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Paid‑in Capital | Retained Earnings | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 (Predecessor) | $ | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units | — | — | — | — | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends (declared $ | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends (declared on preferred stock) | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax withholdings on stock based-compensation | — | — | ( | ( | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 (Predecessor) | $ | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax | — | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at April 7, 2026 (Predecessor) | $ | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Merger and acquisition accounting adjustments | — | — | ( | ( | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Buyer transaction costs | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Successor common stock | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 8, 2026 - (Successor) | $ | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends (declared on preferred stock) | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2026- (Successor) | $ | $ | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sumisho Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
(In thousands, except share and per share amounts)
| Preferred Stock | Class A Common Stock | Class B Non‑Voting Common Stock | Accumulated Other Comprehensive Income/(Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Predecessor) | Shares | Amount | Shares | Amount | Shares | Amount | Paid‑in Capital | Retained Earnings | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends (declared $ | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends (declared on preferred stock) | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholdings on stock based-compensation | — | — | ( | ( | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends (declared $ | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends (declared on preferred stock) | — | — | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Change in foreign currency translation adjustment and in fair value of hedged transactions, net of tax | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Tax withholdings on stock based-compensation | — | — | ( | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(See Notes to Consolidated Financial Statements)
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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
| Successor | Predecessor | |||||||||||||||||||
| Period from April 8 - June 30, | Period from January 1 - April 7, | Six Months Ended June 30, | ||||||||||||||||||
| 2026 | 2026 | 2025 | ||||||||||||||||||
| Operating Activities | ||||||||||||||||||||
| Net (loss)/income | $ | ( | $ | $ | ||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation of flight equipment | ||||||||||||||||||||
| Recoveries of Russian fleet write-off | ( | |||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||
| Deferred taxes | ( | |||||||||||||||||||
| Amortization of prepaid lease costs and lease intangibles | ||||||||||||||||||||
| Amortization of discounts and debt issuance costs and fair value adjustments | ||||||||||||||||||||
| Foreign currency remeasurement (gain)/loss on sales-type leases | ( | |||||||||||||||||||
| Gain on aircraft sales, trading and other activity | ( | ( | ( | |||||||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||
| Other assets | ( | |||||||||||||||||||
| Accrued interest and other payables | ( | ( | ||||||||||||||||||
| Rentals received in advance | ( | ( | ||||||||||||||||||
| Net cash provided by operating activities | ||||||||||||||||||||
| Investing Activities | ||||||||||||||||||||
| Acquisition of a business | ( | |||||||||||||||||||
| Proceeds from orderbook transfer | ||||||||||||||||||||
| Acquisition of flight equipment | ( | ( | ||||||||||||||||||
| Payments for deposits on flight equipment purchases | ( | ( | ||||||||||||||||||
| Proceeds from aircraft sales, trading and other activity | ||||||||||||||||||||
| Proceeds from settlement of insurance claims | ||||||||||||||||||||
| Acquisition of aircraft furnishings, equipment and other assets | ( | ( | ( | |||||||||||||||||
| Net cash used in investing activities | ( | ( | ( | |||||||||||||||||
| Financing Activities | ||||||||||||||||||||
| Merger-related distribution to Parent | ( | |||||||||||||||||||
| Equity contributions from investors | ||||||||||||||||||||
| Buyer transaction costs | ( | |||||||||||||||||||
| Cash dividends paid on Class A common stock | ( | ( | ||||||||||||||||||
| Cash dividends paid on preferred stock | ( | ( | ( | |||||||||||||||||
| Tax withholdings on stock-based compensation | ( | ( | ||||||||||||||||||
| Net change in unsecured revolving facilities | ||||||||||||||||||||
| Net change in commercial paper balance | ( | ( | ||||||||||||||||||
| Proceeds from debt financings | ||||||||||||||||||||
| Payments in reduction of debt financings | ( | ( | ( | |||||||||||||||||
| Debt issuance costs | ( | ( | ( | |||||||||||||||||
| Security deposits and maintenance reserve receipts | ||||||||||||||||||||
| Security deposits and maintenance reserve disbursements | ( | ( | ( | |||||||||||||||||
| Net cash provided by financing activities | ||||||||||||||||||||
| Net decrease in cash | ( | ( | ( | |||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | $ | |||||||||||||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
| Successor | Predecessor | |||||||||||||||||||
| Period from April 8 - June 30, | Period from January 1 - April 7, | Six Months Ended June 30, | ||||||||||||||||||
| 2026 | 2026 | 2025 | ||||||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||||||
| Supplemental Disclosure of Cash Flow Information | ||||||||||||||||||||
Cash paid during the period for interest, including capitalized interest of $ | $ | $ | $ | |||||||||||||||||
| Cash paid for income taxes | $ | $ | $ | |||||||||||||||||
| Supplemental Disclosure of Noncash Activities | ||||||||||||||||||||
| Buyer furnished equipment, capitalized interest and deposits on flight equipment purchases applied to acquisition of flight equipment and other assets | $ | $ | $ | |||||||||||||||||
| Flight equipment subject to operating leases reclassified to flight equipment held for sale | $ | $ | $ | |||||||||||||||||
| Transfer of flight equipment to investment in sales-type lease | $ | $ | $ | |||||||||||||||||
| Cash dividends declared on Class A common stock, not yet paid | $ | $ | $ | |||||||||||||||||
(See Notes to Consolidated Financial Statements)
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Sumisho Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Company Background and Overview
Sumisho Air Lease Corporation (the “Company”, “SAL”, “we”, “our” or “us”), formerly known as Air Lease Corporation, is one of the largest aircraft leasing companies in the world, with an owned fleet comprised of 488 aircraft as of June 30, 2026. The net book value of flight equipment subject to operating leases was $23.9 billion as of June 30, 2026.
On April 8, 2026 (the “Effective Time”), Air Lease Corporation (the “Acquiree”), a Delaware corporation, completed the previously announced merger (the “Merger”) of Takeoff Merger Sub Inc., a Delaware corporation (the “Acquirer” or “Merger Sub”), with and into Air Lease Corporation, with Air Lease Corporation surviving the Merger as an indirect subsidiary of Sumisho Air Lease Corporation Designated Activity Company, an Irish private limited company (“Parent” or “Sumisho Air Lease DAC”). Air Lease Corporation was renamed Sumisho Air Lease Corporation at the Effective Time. Parent is a holding company established in connection with the Merger and is jointly owned, directly or indirectly, by Sumitomo Corporation, a Japanese corporation (“Sumitomo”), SMBC Aviation Capital Limited, a company incorporated with limited liability in Ireland (“SMBC AC”), investment vehicles affiliated with Apollo managed funds (“Apollo”), and Brookfield (“Brookfield”). After the consummation of the Merger, Sumitomo indirectly holds approximately 47.505 %, SMBC AC indirectly holds approximately 4.99 %, Apollo indirectly holds approximately 23.7525 % and Brookfield indirectly holds approximately 23.7525 % of the outstanding voting power of the Company.
Note 2. Basis of Preparation and Critical Accounting Policies
In connection with the closing of the Merger, the Company elected to apply the acquisition method of accounting. Accordingly, the purchase price of the Merger has been allocated to the Company’s assets and liabilities based upon their estimated fair values at the Effective Time in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. The Company engaged a third-party valuation firm to assist in determination of the fair values of tangible and intangible assets acquired. As used herein, the term “Predecessor” refers to the financial position and results of operations of the Company prior to the Effective Time. The term “Successor” refers to the financial position and results of operations of the Company on or after the Effective Time. Due to the application of the acquisition method of accounting, the results of operations, financial position and cash flows of the Company are not comparable between the Successor and Predecessor periods.
The accompanying unaudited Consolidated Financial Statements include all adjustments, which are in the opinion of management necessary to present fairly the Company’s financial position, results of operations and cash flows at June 30, 2026, and for all periods presented. The results of operations for the Successor period from April 8, 2026 through June 30, 2026 and the Predecessor periods from April 1, 2026 through April 7, 2026 and January 1, 2026 through April 7, 2026 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2026. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited Consolidated Financial Statements and accompanying notes included in the Predecessor’s Annual Report on Form 10-K for the year ended December 31, 2025.
Rental of flight equipment revenue
The Company leases flight equipment principally under operating leases and reports rental income ratably over the life of each lease. Rentals received, but unearned, under the lease agreements are recorded in Rentals received in advance on the Company’s Consolidated Balance Sheets until earned. The difference between the rental income recorded and the cash received under the
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Sumisho Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
provisions of the lease is included in Lease receivables, as a component of Other assets on the Company’s Consolidated Balance Sheets. An allowance for doubtful accounts will be recognized for past-due rentals based on management’s assessment of collectability. Management monitors all lessees with past due lease payments and discusses relevant operational and financial issues facing those lessees in order to determine an appropriate allowance for doubtful accounts. In addition, if collection is not reasonably assured, the Company will not recognize rental income for amounts due under the Company’s lease contracts and will recognize revenue for such lessees on a cash basis.
All of the Company’s lease agreements are triple net leases whereby the lessee is responsible for all taxes, insurance, and aircraft maintenance. In the future, we may incur repair and maintenance expenses for off-lease aircraft. We recognize repair and maintenance expense in our Consolidated Statements of Operations for all such expenditures. In many operating lease contracts, the lessee is obligated to make periodic payments, which are calculated with reference to the utilization of the airframe, engines, and other major life-limited components during the lease. In these leases, we will make a payment to the lessee to compensate the lessee for the cost of the qualifying maintenance event incurred, up to the maximum of the amount of Maintenance Reserves payment made by the lessee during the lease term, net of previous reimbursements. These payments are made upon the lessee’s presentation of invoices evidencing the completion of such qualifying maintenance event.
Any Maintenance Reserves or end of lease payments collected that were not reimbursed to the lessee during the term of the lease for a qualifying maintenance event are recognized as rental revenues at the end of the lease. Leases that contain provisions which require us to pay a portion of a lessee’s major maintenance based on the usage of the aircraft and major life-limited components that were incurred prior to the current lease are recorded as lease incentives based on estimated payments we expect to pay the lessee. These lease incentives are amortized as a reduction of rental revenues over the term of the lease.
Lessee-specific modifications are capitalized as initial direct costs and amortized over the term of the lease as a reduction to rental revenue in our Consolidated Statements of Operations.
Our performance obligation associated with the sale of flight equipment is satisfied upon delivery of the flight equipment to a customer, which is the point in time where control of the underlying flight equipment has transferred to the buyer. Revenue is recognized when the performance obligation is satisfied and control of the aircraft related to the performance obligation is transferred to the purchaser.
Flight equipment
Flight equipment under operating lease is stated at cost less accumulated depreciation. Purchases, major additions and modifications, and interest on deposits during the construction phase are capitalized. The Company generally depreciates passenger aircraft on a straight-line basis over a 25 -year life from the date of manufacture to a 15 % residual value. The Company generally depreciates freighter aircraft on a straight-line basis over a 35 -year life from the date of manufacture to a 15 % residual value. Changes in the assumption of useful lives or residual values for aircraft could have a significant impact on the Company’s results of operations and financial condition.
Major aircraft improvements and modifications incurred during an off-lease period are capitalized and depreciated over the lesser of the remaining life of the flight equipment or the aircraft improvement. In addition, costs paid by us for scheduled maintenance and overhauls are capitalized and depreciated over a period to the next scheduled maintenance or overhaul event. Miscellaneous repairs are expensed when incurred.
The Company’s management evaluates on a quarterly basis the need to perform an impairment test whenever facts or circumstances indicate a potential impairment has occurred. An assessment is performed whenever events or changes in circumstances indicate that the carrying amount of an aircraft may not be recoverable. Recoverability of an aircraft’s carrying amount is measured by comparing the carrying amount of the aircraft to future undiscounted net cash flows expected to be generated by the aircraft. The undiscounted cash flows consist of cash flows from currently contracted leases, future projected lease rates, and estimated residual or scrap values for each aircraft. We develop assumptions used in the recoverability analysis based on our knowledge of active lease contracts, current and future expectations of the global demand for a particular aircraft type, potential for alternative use of aircraft 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 affected by changes in future periods due to changes in contracted lease rates, economic conditions, technology, and airline demand for a particular aircraft type. In the event that an aircraft does not meet the recoverability test and the aircraft’s carrying amount falls below estimated values from third-party industry sources,
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Sumisho Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
the aircraft will be recorded at fair value in accordance with the Company’s Fair Value Policy, resulting in an impairment charge. For more information on the Company’s Fair Value Policy, see Note 1 “Basis of Preparation and Summary of Significant Accounting Policies” included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
In connection with the Merger, the Company performed an analysis of its flight equipment subject to operating leases as of the Effective Time. We determined the fair value of the flight equipment subject to operating lease by obtaining independent appraisals, representing the current market value of the aircraft, adjusted for any lease end maintenance exposure resulting from lease agreement. The fair value at the Effective time is the cost basis for the flight equipment subject to operating leases.
Maintenance Rights
The Company identifies, measures, and accounts for maintenance right assets and liabilities associated with its acquisitions of aircraft with in-place leases. A maintenance right asset represents the fair value of the Company’s contractual right under a lease to receive an aircraft in an improved maintenance condition as compared to the maintenance condition on the acquisition date. A maintenance right liability represents the Company’s obligation to pay the lessee for the difference between the lease end contractual maintenance condition of the aircraft and the actual maintenance condition of the aircraft on the acquisition date. The Company’s aircraft are typically subject to triple-net leases pursuant to which the lessee is responsible for maintenance, which is accomplished through one of two types of provisions in its leases: (i) end of lease return conditions (“EOL Leases”) or (ii) periodic maintenance payments (“MR Leases”).
In connection with the Merger, the Company performed an analysis of its flight equipment subject to operating lease as of the Effective time. We determined the fair value of maintenance right asset by comparing maintenance utility at closing to (i) maintenance utility at lease expiry plus (ii) net maintenance-related cash flows, including reserves and EOL compensation. The resulting amount was discounted to present value using a base discount rate determined by management.
(i) EOL Leases
Under EOL Leases, the lessee is obligated to comply with certain return conditions which require the lessee to perform maintenance on the aircraft or make cash compensation payments at the end of the lease to bring the aircraft into a specified maintenance condition.
Maintenance right assets in EOL Leases represent the difference in value between the contractual right to receive an aircraft in an improved maintenance condition as compared to the maintenance condition on the acquisition date. Maintenance right liabilities exist in EOL Leases if, on the acquisition date, the maintenance condition of the aircraft is greater than the contractual return condition in the lease and the Company is required to pay the lessee in cash for the improved maintenance condition. Maintenance right assets are recorded as a component of Flight equipment subject to operating leases on the Consolidated Balance Sheets.
When the Company has recorded maintenance right assets with respect to EOL Leases, the following accounting scenarios exist: (i) the aircraft is returned at lease expiry in the contractually specified maintenance condition without any cash payment to the Company by the lessee, the maintenance right asset is relieved, and an aircraft improvement is recorded to the extent the improvement is substantiated and deemed to meet the Company’s capitalization policy; (ii) the lessee pays the Company cash compensation at lease expiry in excess of the value of the maintenance right asset, the maintenance right asset is relieved, and any excess is recognized as end of lease income; or (iii) the lessee pays the Company cash compensation at lease expiry that is less than the value of the maintenance right asset, the cash is applied to the maintenance right asset, and the balance of such asset is relieved and recorded as an aircraft improvement to the extent the improvement is substantiated and meets the Company’s capitalization policy. Any aircraft improvement will be depreciated over the remaining useful life of the aircraft in accordance with the Company’s depreciation policy and included in Depreciation of flight equipment on the Company’s Consolidated Statements of Operations.
When the Company has recorded maintenance right liabilities with respect to EOL Leases, the following accounting scenarios exist: (i) the aircraft is returned at lease expiry in the contractually specified maintenance condition without any cash payment by the Company to the lessee, the maintenance right liability is relieved, and end of lease income is recognized; (ii) the Company pays the lessee cash compensation at lease expiry of less than the value of the maintenance right liability, the maintenance right liability is relieved, and any difference is recognized as end of lease income; or (iii) the Company pays the lessee cash compensation at lease expiry in excess of the value of the maintenance right liability, the maintenance right liability is relieved, and the excess amount is recorded as an aircraft improvement to the extent that it meets our capitalization policy.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(ii) MR Leases
Under MR Leases, the lessee is required to make periodic payments to us for maintenance based upon planned usage of the aircraft. When a qualifying maintenance event occurs during the lease term, the Company is required to reimburse the lessee for the costs associated with such an event. At the end of lease, the Company is entitled to retain any cash receipts in excess of the required reimbursements to the lessee.
Maintenance right assets in MR Leases represent the right to receive an aircraft in an improved condition relative to the actual condition on the acquisition date. The aircraft is improved by the performance of a Qualifying Event paid for by the lessee who is reimbursed by the Company from the periodic maintenance payments that it receives. Maintenance right assets are recorded as a component of Flight equipment subject to operating leases on the Consolidated Balance Sheets.
When the Company has recorded maintenance right assets with respect to MR Leases, the following accounting scenarios exist: (i) the aircraft is returned at lease expiry and no Qualifying Event has been performed by the lessee since the acquisition date, the maintenance right asset is offset by the amount of the associated maintenance payment liability, and any excess is recorded as end of lease income; or (ii) the Company has reimbursed the lessee for the performance of a Qualifying Event, the maintenance right asset is relieved, and an aircraft improvement is recorded to the extent that it meets our capitalization policy.
As of June 30, 2026 and December 31, 2025, the Company had maintenance right assets of $4.2 billion and $14.7 million, respectively. As of June 30, 2026 and December 31, 2025, there were no
Lease intangibles, net
Lease intangible, net is stated at fair value at the time of acquisition less accumulated amortization. We determined the fair value of the lease premium based on the present value of the expected cash flows calculated as the difference between the contractual lease payments, adjusted for lessee credit risk, and the lease payments that the aircraft could generate over the remaining lease term based on current market rates. Lease intangibles, net are amortized over the remaining life of each respective lease as a reduction to rental revenue in our Consolidated Statements of Operations. Lease intangibles, net are included in Other Assets on the Consolidated Balance Sheets.
Flight equipment held for sale
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Recent Accounting Pronouncements
In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). In January 2025, the FASB issued Clarifying the Effective Date (“ASU 2025-01”) to add some clarity around the effective date of the guidance. ASU 2024-03 requires disaggregated information for specified categories of expenses, including inventory purchases, employee compensation, depreciation, amortization, and depletion, to be presented in certain expense captions on the face of the income statement. The new standard is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either prospectively, to financial statements issued after the effective date, or retrospectively, to all prior periods presented. The Company is currently evaluating the impact of ASU 2024-03 on its financial statement disclosures.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). The amendments clarify and reorganize existing interim reporting guidance, including the scope of Topic 270 and interim disclosure requirements, and introduce a disclosure principle requiring entities to disclose material events or changes occurring since the most recent annual reporting period. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements and related disclosures.
Note 3. Merger Transaction and Purchase Accounting
As discussed in Note 1, Company Background and Overview, on April 8, 2026, the Company completed the Merger with Takeoff Merger Sub Inc., resulting in the Company becoming an indirect subsidiary of Sumisho Air Lease Corporation DAC. The Merger was accounted for as a business combination, and the assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date.
The Merger was accounted for under the acquisition method of accounting in accordance with ASC 805, with Merger Sub as the accounting acquirer and Air Lease Corporation as the accounting acquiree and as the surviving entity. At the Effective Time, each share of the Class A Common Stock of the Acquiree, par value $0.01 per share (the “Class A Common Stock”), issued and outstanding immediately prior to the Effective Time, other than shares that were canceled or converted into shares of SAL pursuant to the Merger Agreement, was converted into the right to receive $65.00 per share of the Class A Common Stock, in cash, without interest and less any required withholding taxes (the “Merger Consideration”). The aggregate purchase price (the “Total Purchase Price”) has been allocated to the tangible assets and identifiable intangible assets acquired and liabilities assumed based upon their estimated fair values.
The comparability of the Company’s operating results for the period from April 8, 2026 through June 30, 2026 (Successor), January 1, 2026 through April 7, 2026 (Predecessor) and the three- and six-month periods ended June 30, 2025 (Predecessor) was impacted by the Merger. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Factors Affecting Comparability of Financial Results” of this Quarterly Report on Form 10-Q for presentation of the Company’s combined results (“Non-GAAP Combined”) of the Predecessor and Successor periods for the three and six months ended June 30, 2026 in order to compare to the same period in the prior year. The Non-GAAP Combined results are not considered to be prepared in accordance with U.S. GAAP because a different basis of accounting was used with respect to the financial results for the Predecessor as compared to the financial results of the Successor and have not been prepared as pro forma results under applicable regulations. Separate pro forma results under applicable regulations have not been presented because the consolidated financial statements for the Successor and Predecessor periods already substantially reflect the operating results of the combined entity.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Total Purchase Price for the Class A Common Stock was approximately $7.4 billion.
The Merger was funded through a combination of debt financing and equity contributions. The Acquirer raised $5.0 billion in new debt financing, consisting of a $1.0 billion term loan and $4.0 billion from the issuance of senior unsecured notes. These proceeds, together with $5.4 billion in equity contributions from Sumitomo, SMBC AC, and affiliates of Apollo and Brookfield were used to pay the Total Purchase Price and to extinguish $3.6 billion of the Acquiree’s outstanding debt at the Effective Time. Refer to Note 4. Debt Financing for additional details on the Company’s financing arrangements as of June 30, 2026.
The Acquiree’s former board of directors unanimously determined that the Merger represented the best path forward for the Company as it delivered an immediate premium and certainty in cash value to the Company’s Class A common stockholders.
The Merger Agreement provided for, among other things, the treatment of certain outstanding securities of the Acquiree upon the completion of the Merger as follows:
•Outstanding equity awards of Acquiree: At the Effective Time, (i) each outstanding restricted stock unit award of the Acquiree that was subject to only time-based vesting conditions (each, an “Acquiree RSU”) that was vested (but not yet settled) immediately prior to the Effective Time or became vested as of the Effective Time in accordance with its terms was converted into the right to receive an amount in cash, without interest and subject to applicable withholding taxes and other authorized deductions, equal to the product of the Merger Consideration multiplied by the number of shares of the Class A Common Stock subject to such Acquiree RSU, (ii) each outstanding Acquiree RSU that was not covered by clause (i) was converted into the contingent right to receive from Parent or SAL an amount in cash, without interest and subject to applicable withholding taxes and other authorized deductions, equal to the product of the Merger Consideration multiplied by the number of shares of the Class A Common Stock subject to such Acquiree RSU (each, a “Converted RSU Cash Award”), and (iii) each outstanding restricted stock unit award that was subject to performance-based vesting conditions (each, a “Acquiree PSU”) was converted into a contingent right to receive from Parent or SAL an amount in cash, without interest and subject to applicable withholding taxes and other authorized deductions, equal to the product of the Merger Consideration multiplied by the number of shares of the Class A Common Stock issuable pursuant to each such Acquiree PSU determined based upon the greater of the target level of performance and the actual level of performance calculated as of the latest practicable date prior to the Effective Time (each, a “Converted PSU Cash Award”). Each Converted RSU Cash Award and Converted PSU Cash Award is subject to the same vesting terms and conditions as applied to the corresponding Acquiree RSU and Acquiree PSU, respectively, immediately prior to the Effective Time, except that Converted PSU Cash Awards are no longer subject to any performance-based conditions.
•Outstanding preferred stock of Acquiree: At the Effective Time, each share of 4.65 % Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B (“Series B Preferred Stock”), 4.125 % Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C (“Series C Preferred Stock”), and 6.000 % Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series D (“Series D Preferred Stock”), of the Acquiree issued and outstanding immediately prior to the Effective Time remained outstanding and was deemed to be a share of preferred stock of the SAL with the same rights, powers, privileges and voting powers, and restrictions and limitations thereof applicable to such series of preferred stock. The acquisition-date fair value of the assumed preferred stock is included in total consideration transferred. The fair value of the outstanding preferred stock at the acquisition date was estimated using an income approach from a market participant perspective, based on observable yields for comparable non-cumulative, fixed-rate reset perpetual preferred securities issued by investment-grade issuers, which would be categorized as a Level 2 measurement in the fair value hierarchy.
Total Purchase Price
The total consideration transferred was $11.9 billion, which included the Total Purchase Price for the Class A Common Stock of the Acquiree of $7.4 billion, which includes $60.1 million of fair value equity awards relating to pre-combination service settled through payroll subsequent to the Effective Time, cash paid of $3.6 billion related to the extinguishment of a portion of the Acquiree’s debt obligations, and $0.9 billion fair value of the Acquiree’s Series B, Series C, and Series D Preferred Stock assumed, which remained outstanding as preferred stock of the Company with substantially identical rights and preferences. The components of consideration transferred are summarized as follows:
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| (in thousands) | |||||
| Consideration paid or payable to holders of Class A Common Stock of Air Lease Corporation | $ | ||||
| Cash paid to extinguish a portion of Air Lease Corporation’s debt | |||||
| Fair value of Series B, Series C, and Series D preferred stock assumed | |||||
| Total merger consideration | $ | ||||
Fair value of assets acquired and liabilities assumed
To comply with ASC 805, the acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed are recognized on the consolidated balance sheet at fair value as of the acquisition date, with certain exceptions.
The Company completed the valuation analyses necessary to assess the preliminary fair values of the assets acquired and liabilities assumed and the amount of goodwill recognized as of the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed, if any. These fair values were based on management’s estimates and assumptions; however, the determination of fair values of assets acquired and liabilities assumed is preliminary and is subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the Effective Time. Due to (i) the timing of the Effective Time and (ii) the complexity of income tax estimates, management continues to evaluate its estimates and assumptions utilized to calculate fair values of flight equipment, other assets, goodwill, income taxes, and accrued and other liabilities as new information is obtained. Preliminary amounts reflected in the fair values of assets acquired and liabilities assumed will be adjusted to reflect new information obtained, as necessary, up to one year following the Effective Time with a corresponding adjustment to goodwill.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the preliminary allocation of the Total Purchase Price to the estimated fair values of the assets acquired and liabilities assumed as of the Effective time:
| (in thousands) | April 8, 2026 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | |||||||
| Flight equipment subject to operating leases | ||||||||
| Net investment in sales-type leases | ||||||||
| Flight equipment held for sale | ||||||||
Other assets(1) | ||||||||
| Estimated fair value of total assets acquired | $ | |||||||
| Liabilities | ||||||||
| Accrued interest and other payables | $ | |||||||
| Debt financing, net of discounts and issuance costs | ||||||||
| Security deposits on flight equipment leases | ||||||||
| Maintenance reserves on flight equipment leases | ||||||||
| Rentals received in advance | ||||||||
| Deferred tax liability | ||||||||
| Estimated fair value of total liabilities assumed | $ | |||||||
| Fair value of identifiable net assets | $ | |||||||
| Goodwill attributable to Air Lease Corporation | $ | |||||||
(1) Includes other intangible assets consisting of lease intangibles, net of $ | ||||||||
The purchase price allocation remains preliminary primarily with respect to flight equipment valuations, maintenance rights assets and liabilities, lease intangible assets and liabilities, deferred income taxes, preferred stock and certain working capital balances. Any measurement period adjustments identified during the one-year period following the acquisition date will be recorded retrospectively to the acquisition date. The Company will disclose the nature and amount of any measurement-period adjustments recognized in subsequent periods, including the effects on the Consolidated Statement of Operations and Comprehensive Income of the current period that would have been recognized in previous periods if the adjustments had been recognized as of the Effective Time.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Acquired Intangible Assets and Liabilities
The following table summarizes the intangible assets acquired and intangible liabilities assumed as part of the preliminary purchase price allocation:
| (in thousands) | |||||
| Maintenance right asset (included in Flight equipment subject to operating leases) | $ | ||||
Lease intangibles, net (included in Other Assets(1)) | |||||
| (1) A favorable orderbook contract intangible asset was recognized at its acquisition-date fair value as a component of the orderbook held for sale (see “Orderbook Acquisition by Related Party” below) and was not subject to amortization, as it was classified as held for sale upon initial recognition and was derecognized upon the Orderbook Acquisition by SMBC AC immediately following the Effective Time. Accordingly, this intangible asset did not remain outstanding as of June 30, 2026 and is not reflected in the Company's intangible asset balance as of the Successor period. | |||||
The Company recognized intangible assets and liabilities for acquired leases with contractual rental rates that were above or below market rental rates at the Effective Time. Lease intangibles, net are amortized as a reduction of or an addition to rental of flight equipment revenue over the remaining non-cancellable lease terms of the respective leases, which range from approximately one to 14 years, resulting in a weighted-average remaining amortization period of approximately 7.98 years as of the Effective Time.
The Company recognized a favorable orderbook contract intangible in connection with the orderbook, representing the fair value of favorable OEM purchase contract terms relative to current market terms for equivalent delivery positions, as further described below under “Orderbook Acquisition by Related Party.” As this intangible asset was classified as held for sale at initial recognition and was transferred to SMBC AC immediately following the Effective Time, it was not amortized and did not affect the Company’s results of operations following the Effective Time.
In connection with the fair value adjustments recorded in purchase accounting as of the Effective Time, the Company will accrete the discounted acquisition-date fair values of its debt obligations, security deposits on flight equipment leases and maintenance reserves on flight equipment leases, including the fair value adjustment attributable to lessor contributions, to their respective contractual values. This accretion will be recognized as a component of interest expense in the Company’s consolidated statements of operations and other comprehensive income:
(i)for debt obligations recorded at fair value in purchase accounting, over the remaining contractual term of the related debt using the effective interest method,
(ii)for maintenance reserves on flight equipment leases, over the period through the expected dates of the underlying maintenance events, and;
(iii)for security deposits on flight equipment leases, over the period during which the Company expects to refund the related deposits.
Acquisition-Related Costs
For the period from January 1, 2026 through April 7, 2026 (Predecessor), the Company incurred pre-acquisition transaction costs of approximately $9.2 million. For the period from April 8, 2026 through June 30, 2026 (Successor), the Company incurred approximately $122.2 million in transaction costs incurred by the Investors through Parent as part of their acquisition of the Company, which is included in opening retained earnings on the Successors’ Consolidated Balance Sheet.
In addition to the transaction costs that were expensed in either the Predecessor or Successor periods, the Company incurred and paid investment banking success fees totaling approximately $64.1 million. These fees were contingent upon the successful completion of the Merger and did not include any future service requirements. As such, these costs are not reflected in either the Predecessor or Successor Consolidated Statements of Operations and Other Comprehensive Income as they are not directly attributable to either period but instead were contingent on the business combination.
Immediately prior to the Effective Time, certain bridge financing costs incurred by the Parent on behalf of the Investors, including SMBC AC, totaling $47.0 million, for financing that was not utilized, were pushed down to the Company at the Effective
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Time. Since these costs related to financing costs that were ultimately not used to effectuate the Merger, and the costs were not the direct expenses of the Acquirer or Acquiree, such costs were recorded as a Merger and acquisition accounting adjustment to Parent at the Effective Time and reflected as a reduction of paid-in capital within the Consolidated Balance Sheet as of June 30, 2026.
The Company incurred $14.3 million of retention-related compensation costs in connection with the Merger, of which $9.2 million was recognized as compensation expense during the Predecessor period prior to the Effective Time and $3.1 million was recognized during the Successor period ended June 30, 2026, within Selling, general and administrative expenses in the Consolidated Statements of Operations and Other Comprehensive Income. The remaining unrecognized compensation cost will be recognized over the applicable requisite service periods.
Liability-Classified Converted Awards
In connection with the Merger, the Company’s unvested outstanding equity awards at the Effective Time, consisting of Acquiree RSUs and Acquiree PSUs, were converted into cash-settled liability-classified awards of the Company. The Converted RSU Cash Awards and Converted PSU Cash are classified as liabilities under ASC 718, Stock Compensation because they will be settled in cash equal to the Merger Consideration rather than through the issuance of shares of the Company. Vested awards (including those accelerated upon the change in control and separation in service) were canceled for immediate cash payment at the Effective Time. Unvested awards were converted into cash-settled awards subject to their original time-based vesting schedules. Outstanding Acquiree PSUs were converted into cash-settled awards at the greater of target or actual performance, with all performance and market conditions removed and subject to their original time-based vesting schedules.
During the Successor period, the Company recognized $26.3 million in Stock-based compensation expense on the Consolidated Statements of Operations and Comprehensive Income, which has been or is expected to be settled in cash. Cash paid to settle liability-classified awards was $66.3 million for the Successor period, which reflects payments related to both amounts recognized in acquisition accounting and post-combination compensation expense. Refer to Note 15, Stock-based Compensation and Other Compensation for additional details on the Company’s long-term incentive program.
Orderbook Acquisition by Related Party
On April 8, 2026, in connection with the closing of the Merger, SMBC AC acquired the Company’s outstanding orderbook for undelivered aircraft (the “Orderbook Acquisition”). Upon consummation of the Orderbook Acquisition, SMBC AC became the sole holder of the rights to acquire the undelivered aircraft comprising the orderbook. The cash consideration paid by SMBC AC of $1.5 billion for the Orderbook Acquisition equals the amount of pre-delivery payments that the Company paid to original equipment manufacturers in the aggregate for the undelivered aircraft as of the Effective Time plus a premium.
SMBC AC is an entity that is 34 % indirectly owned by Sumitomo, which holds 47.5 % of the Company’s voting equity. As a result, following the Effective Time, SMBC AC is a related party of the Company due to Sumitomo’s significant influence over both SMBC AC and the Company.
The assets and liabilities associated with the Orderbook Acquisition were first recognized as part of the Merger under ASC 805, classified as orderbook held for sale at the Effective Time, while the contractual obligation to transfer the Orderbook to SMBC AC was recognized as a liability immediately following the Effective Time by Parent and its consolidated subsidiaries, including Merger Sub, in exchange for the cash consideration of $1.5 billion. Upon the transfer of the Orderbook to SMBC AC, the Company extinguished its transfer obligation liability. As the cash received from SMBC AC was equal to the acquisition-date fair value of the orderbook-related net assets transferred, no gain or loss was recognized immediately following the Effective Time, and no receivable or transfer obligation balance remained outstanding as of June 30, 2026.
Following the Orderbook Acquisition, SMBC AC continues to act as exclusive servicer to the Company, in respect of the Company’s aircraft leased to non-U.S. airlines under the Servicing Agreement entered into following the closing of the Merger. Refer to Note 17, Servicing Agreement for additional details. The transaction did not include contingent consideration, indemnification assets, reacquired rights, non-controlling interests, or material acquired contingencies.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4. Debt Financing
The Company’s consolidated debt as of June 30, 2026 and December 31, 2025 is summarized below (in thousands):
| Successor | Predecessor | |||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Unsecured | ||||||||||||||
| Senior unsecured securities | $ | $ | ||||||||||||
| Term financings | ||||||||||||||
| Commercial paper | ||||||||||||||
| Revolving Credit Facility | ||||||||||||||
| Other revolving credit facilities | ||||||||||||||
| Total unsecured debt financing | ||||||||||||||
| Secured | ||||||||||||||
| Term financings | ||||||||||||||
| Export credit financing | ||||||||||||||
| Total secured debt financing | ||||||||||||||
| Total debt financing | ||||||||||||||
| Less: Debt discounts and issuance costs | ( | ( | ||||||||||||
Less: Fair value adjustment | ( | |||||||||||||
| Debt financing, net of discounts and issuance costs | $ | $ | ||||||||||||
As of June 30, 2026, management of the Company believes it is in compliance in all material respects with the covenants in its debt agreements, including minimum consolidated stockholders’ equity, minimum consolidated unencumbered assets, and an interest coverage ratio test included in certain debt agreements. At June 30, 2026 and December 31, 2025, the composite interest rate (excluding amortization of debt discounts and issuance costs) was 4.33 % and 4.15 %, respectively.
Senior unsecured securities (including Medium-Term Note Program)
As of June 30, 2026 and December 31, 2025, the Company had $15.0 billion and $13.9 billion in senior unsecured securities outstanding, respectively.
In connection with the Merger, on March 24, 2026, Merger Sub issued $800.0 million aggregate principal amount of 4.400 % Senior Notes due 2028, $1.2 billion aggregate principal amount of 4.500 % Senior Notes due 2029, $1.5 billion aggregate principal amount of 4.850 % Senior Notes due 2031 and $500.0 million aggregate principal amount of 5.500 % Senior Notes due 2036 (collectively, the “Notes”) pursuant to an indenture, dated as of March 24, 2026, among Merger Sub and Computershare Trust Company, N.A., as trustee. Upon consummation of the Merger and in accordance with the indenture governing the Notes and related agreements, the Notes became the Company’s obligations.
On April 8, 2026, in connection with the completion of the Merger, the Company notified the New York Stock Exchange (“NYSE”) of the completion of the Merger and requested that trading in the 3.700 % Medium-Term Notes, Series A, due April 15, 2030 (the “Euro Medium-Term Notes”) be suspended and the Euro Medium-Term Notes be withdrawn from listing on the NYSE.
The Company did not redeem any medium term notes in connection with the closing of the Merger.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Unsecured syndicated revolving credit facility
As of December 31, 2025, the Company did not have any amounts outstanding under its prior unsecured syndicated credit facility (the “Legacy Revolving Credit Facility”). Borrowings under the Legacy Revolving Credit Facility were used to finance the Company’s working capital needs in the ordinary course of business and for other general corporate purposes. The Company repaid in full all outstanding loans and other amounts due under its Legacy Revolving Credit Facility in an aggregate amount of $3.0 billion at the closing of the Merger.
In connection with the Merger, the Company assumed the revolving credit agreement entered into among Merger Sub, the several banks and other financial institutions or entities from time to time as parties thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, dated November 14, 2025, as amended by the First Amendment, dated March 25, 2026 (as amended, the “Revolving Credit Agreement”). As a result of the Merger, the benefits and obligations of Merger Sub under the Revolving Credit Agreement became the Company’s obligations as the surviving corporation in the Merger. The Revolving Credit Agreement provides the Company access to up to $3.5 billion in revolving loans (the “Revolving Credit Facility”) for working capital purposes and other general corporate purposes. The Revolving Credit Facility bears interest at Adjusted Term SOFR (as defined in the Revolving Credit Agreement) plus a margin of 1.25 % and matures on April 8, 2029. The Company is required to pay a facility fee of 0.20 % per year in respect of total commitments under the Revolving Credit Facility. The interest rate and facility fees are subject to changes in the Company’s credit ratings. As of June 30, 2026, the Company had $400.0 million outstanding under the Revolving Credit Facility.
Other unsecured revolving credit facilities
As of June 30, 2026, and December 31, 2025, the Company had $450.0 million and $300.0 million outstanding, respectively, under its other unsecured revolving credit facilities. Borrowings under the facility outstanding as of June 30, 2026, bear interest at Adjusted Term SOFR (as defined in the facility) plus 1.05 % and the facility has an outside termination date of April 7, 2028 unless terminated earlier. The facility is not guaranteed and is available at the sole discretion of the lender, who may modify or terminate the facility at any time.
Unsecured term financings
As of June 30, 2026 and December 31, 2025, the outstanding balance on the Company’s unsecured term financings was $4.2 billion and $3.8 billion, respectively.
In connection with the Merger, the Merger Sub entered into a term loan credit agreement by and among Merger Sub, the several banks and other financial institutions or entities from time to time as parties thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, as amended by the First Amendment to the Term Loan Credit Agreement, dated as of March 25, 2026 (as amended, the “Acquisition Term Loan Agreement”), pursuant to which the lenders provided a $1.0 billion term loan (the “Acquisition Term Loan”), which was used to fund a portion of the consideration in the Merger. The Acquisition Term Loan bears interest at Adjusted Term SOFR (as defined in the Acquisition Term Loan Agreement) plus a margin of 1.25 % subject to adjustment based on the Company’s credit rating and matures on October 8, 2027. As a result of the Merger, the obligations of Merger Sub under the Acquisition Term Loan became obligations of the Company as the surviving corporation in the Merger. The Company repaid $350.4 million in other unsecured debt financings in connection with the Merger.
In July 2026, the Company entered into and funded $650.0 million unsecured term loan, which bears interest at a floating rate of one-month Term SOFR plus a margin of 0.90 % and matures on July 22, 2027. Under the terms of the loan agreement, the Company may request an increase in the lender commitments by an additional $600.0 million, subject to an outside funding date of October 27, 2026. The term loan contains customary covenants and events of default consistent with the Company’s Revolving Credit Facility. As of August 10, 2026, the additional capacity of $600.0 million remain unfunded.
In addition, in July 2026, the Company entered into a $500.0 million unsecured term loan, which bears interest at a floating rate of three-month Term SOFR plus a margin of 0.90 % and matures on December 30, 2026. The term loan contains customary covenants and events of default consistent with the Company’s Revolving Credit Facility.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Secured debt financings
As of June 30, 2026, the Company had an outstanding balance of $167.4 million in secured debt financings, and had pledged two aircraft as collateral, with a net book value of $244.2 million. As of December 31, 2025, the Company had an outstanding balance of $493.6 million in secured debt financings and had pledged ten aircraft as collateral, with a net book value of $728.6 million. All of the Company’s secured obligations as of June 30, 2026 and December 31, 2025 were recourse in nature. The Company repaid $254.2 million in secured debt financings in connection with the Merger.
Commercial paper program
On January 21, 2025, the Company established a commercial paper program under which it could issue unsecured commercial paper up to a total of $2.0 billion outstanding at any time, with maturities of up to 397 days from the date of issue. The net proceeds from the issuance of commercial paper were used for general corporate purposes, which included, among other things, the purchase of commercial aircraft and the repayment of existing indebtedness. As of June 30, 2026, the Company did not have any commercial paper outstanding. As of December 31, 2025, the Company had an outstanding balance of $1.4 billion, with a weighted average interest rate of 4.26 % and a weighted average maturity of less than one month .
Maturities
Maturities of debt outstanding as of June 30, 2026 are as follows (in thousands):
| Years ending December 31, | |||||
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 5. Flight equipment subject to operating leases
The following table summarizes the activities for the Company’s flight equipment subject to operating leases for the six months ended June 30, 2026:
| (in thousands) | |||||
| Net book value as of December 31, 2025 - (Predecessor) | $ | ||||
| Purchase of flight equipment | |||||
| Depreciation of flight equipment | ( | ||||
| Flight equipment subject to operating leases reclassified to flight equipment held for sale | ( | ||||
| Transfer of flight equipment to investment in sales-type lease | ( | ||||
| Net book value as of April 7, 2026 - (Predecessor) | $ | ||||
| Purchase of parts capitalized to flight equipment | |||||
| Fair value adjustment upon Merger | ( | ||||
| Depreciation of flight equipment | ( | ||||
| Flight equipment subject to operating leases reclassified to flight equipment held for sale | ( | ||||
| Net book value as of June 30, 2026 - (Successor) | $ | ||||
| Accumulated depreciation as of June 30, 2026 - (Successor) | $ | ( | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6. Flight Equipment Held for Sale
As of June 30, 2026, the Company had 86 aircraft, with a carrying value of $5.1 billion, which were classified as held for sale. The Company expects that the majority of the 86 aircraft currently classified as flight equipment held for sale will be sold by the end of the first quarter of 2027, with a majority of them expected to close in the back half of this period. As of December 31, 2025, the Company had 12 aircraft, with a carrying value of $529.0 million, which were classified as held for sale.
During the Predecessor period from January 1, 2026 through April 7, 2026, the Company transferred 19 aircraft from flight equipment subject to operating leases to flight equipment held for sale and completed the sale of eight aircraft from its held for sale portfolio. During the Successor period from April 8, 2026 through June 30, 2026, the Company transferred 70 aircraft from flight equipment subject to operating leases to flight equipment held for sale and completed the sale of seven aircraft from its held for sale portfolio. The Company ceases recognition of depreciation expense once an aircraft is classified as held for sale.
On April 8, 2026, in connection with the closing of the Merger, the Company assumed non-binding letters of intent entered into by the Parent to sell aircraft portfolios to two parties. As of June 30, 2026, the Company had 36 aircraft held for sale with a carrying value of $2.3 billion to be sold to Perseus Asset Management Limited, which is a related party to the Company as an affiliate of Apollo, and 32 aircraft held for sale with a carrying value of $2.1 billion to be sold to Castlelake, L.P., which is a related party to the Company as an affiliate of Brookfield. The Company currently expects the sales of the aircraft pertaining to these agreements to be completed by the end of the first quarter of 2027, with a majority of them expected to close in the back half of this period. Binding sales agreements related to these portfolio sales were entered into during the second and third quarters of 2026.
The following table summarizes the activities of the Company’s flight equipment held for sale for the six months ended June 30, 2026 based on carrying value:
| (in thousands) | |||||
| Flight equipment held for sale as of December 31, 2025 - (Predecessor) | $ | ||||
| Flight equipment subject to operating leases reclassified to flight equipment held for sale | |||||
| Aircraft sales | ( | ||||
| Flight equipment held for sale as of April 7, 2026 - (Predecessor) | $ | ||||
| Fair value adjustment upon Merger | |||||
| Flight equipment subject to operating leases reclassified to flight equipment held for sale | |||||
| Other fair value adjustments | ( | ||||
| Aircraft sales | ( | ||||
| Flight equipment held for sale as of June 30, 2026 - (Successor) | $ | ||||
Note 7. Commitments and Contingencies
As of December 31, 2025, the Company had made non-refundable deposits on flight equipment purchases of $1.1 billion, which were subject to manufacturer performance commitments. As a result of the Orderbook Acquisition on April 8, 2026, the Company no longer has an orderbook or any non-refundable deposits on flight equipment purchases as of June 30, 2026.
On April 8, 2026, in connection with the closing of the Merger, SMBC AC acquired the Company’s rights to the outstanding orderbook for undelivered aircraft. The consideration paid by SMBC AC for the Orderbook Acquisition equaled the amount of pre-delivery payments that the Company had made to original equipment manufacturers in the aggregate for the undelivered aircraft as of April 8, 2026 plus a premium.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 8. Net Investment in Sales-type Leases
As of June 30, 2026, the Company had sales-type leases for 17 aircraft and one engine. As of December 31, 2025, the Company had sales-type leases for 16 aircraft and one engine.
The following table summarizes the activities of the Company’s net investment in sales-type leases for the six months ended June 30, 2026 based on carrying value:
| (in thousands) | |||||
| Net investment in sales-type leases as of December 31, 2025 - (Predecessor) | $ | ||||
| Flight equipment subject to operating leases reclassified to net investment in sales-type leases | |||||
| Principal payments | ( | ||||
| Foreign exchange adjustment gain/(loss) | ( | ||||
| Net investment in sales-type leases as of April 7, 2026 - (Predecessor) | $ | ||||
| Fair value adjustment upon Merger | ( | ||||
| Principal payments | ( | ||||
| Foreign exchange adjustment gain/(loss) | ( | ||||
| Net investment in sales-type leases as of June 30, 2026 - (Successor) | $ | ||||
Net investment in sales-type leases is included in the Company’s Consolidated Balance Sheets based on the present value of fixed payments under the contract and the residual value of the underlying asset, discounted at the rate implicit in the lease. The Company’s investment in sales-type leases consisted of the following as of June 30, 2026:
| Successor | |||||
| June 30, 2026 | |||||
| (in thousands) | |||||
| Future minimum lease payments to be received | $ | ||||
| Estimated residual values of leased flight equipment | |||||
| Less: Unearned income | ( | ||||
| Net Investment in Sales-type Leases | $ | ||||
As of June 30, 2026, future minimum lease payments to be received on sales-type leases were as follows:
| Years ending December 31, | (in thousands) | ||||
2026 (excluding the six months ended June 30, 2026) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 9. Rental Income
As of June 30, 2026, minimum future rentals on non-cancellable operating leases of flight equipment in the Company’s owned fleet as of June 30, 2026 are as follows:
| Years ending December 31, | (in thousands) | ||||
2026 (excluding the six months ended June 30, 2026) | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 10. Earnings Per Share
As of the Effective Time of the Merger, the Company became an indirect subsidiary of Parent, which indirectly owns 200 common shares of the Company’s Class C common stock. As a result, all of the Company’s outstanding Class C common stock is privately held, and the Company has no publicly traded common stock. As such, the Company has elected not to present earnings per share for the Successor period.
Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if the effect of including these shares would be anti-dilutive. The Company’s two classes of common stock, prior to the Merger, Class A voting common stock and Class B non-voting common stock, had equal rights to dividends and income, and therefore, basic and diluted earnings per share are the same for each class of common stock. As of June 30, 2026, the Company did not
Diluted earnings per share takes into account the vesting of restricted stock units using the treasury stock method. For the Predecessor period from April 1, 2026 through April 7, 2026 and January 1, 2026 through April 7, 2026, the Company did not 569,360 and 1,033,419 shares related to restricted stock units for which the performance metric had yet to be achieved as of April 7, 2026 and June 30, 2025, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table sets forth the reconciliation of the Predecessor’s basic and diluted earnings per share of Class A common stock (in thousands, except share and per share amounts):
| Predecessor | ||||||||||||||||||||||||||||||||
| Period from April 1 - April 7, | Three Months Ended June 30, | Period from January 1 - April 7, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Basic earnings per share: | ||||||||||||||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Preferred stock dividends | ( | ( | ( | |||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Denominator | ||||||||||||||||||||||||||||||||
| Weighted-average common shares outstanding | ||||||||||||||||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Diluted earnings per share: | ||||||||||||||||||||||||||||||||
| Numerator | ||||||||||||||||||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Preferred stock dividends | ( | ( | ( | |||||||||||||||||||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| Denominator | ||||||||||||||||||||||||||||||||
| Number of shares used in basic computation | ||||||||||||||||||||||||||||||||
| Weighted-average effect of dilutive securities | ||||||||||||||||||||||||||||||||
| Number of shares used in per share computation | ||||||||||||||||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | ||||||||||||||||||||||||||||
Note 11. Other Assets
Other assets consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):
| Successor | Predecessor | ||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
| Lease incentives, net | $ | $ | |||||||||||||||
| Straight-line rent receivables and prepaid expenses | |||||||||||||||||
| Lease intangibles, net | |||||||||||||||||
| Lease receivables | |||||||||||||||||
| Buyer furnished equipment | |||||||||||||||||
| Investments in managed vehicles | |||||||||||||||||
| Capitalized interest | |||||||||||||||||
| Other assets | |||||||||||||||||
Total Other assets(1) | $ | $ | |||||||||||||||
(1) In connection with the Merger, the Company recorded preliminary purchase price adjustments related to certain items in the Other assets balance as of April 8, 2026, including decreases of $ | |||||||||||||||||
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Sumisho Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 12. Accrued Interest and Other Payables
Accrued interest and other payables consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):
| Successor | Predecessor | ||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
| Purchase deposits on aircraft sales | $ | $ | |||||||||||||||
| Lessor contributions | |||||||||||||||||
| Servicing fee payable | |||||||||||||||||
| Accounts payable and accrued expenses | |||||||||||||||||
| Accrued interest | |||||||||||||||||
| Other liabilities | |||||||||||||||||
Total Accrued Interest and Other Payables(1) | $ | $ | |||||||||||||||
(1) In connection with the Merger, the Company recorded preliminary purchase price adjustments related to certain items in the accrued interest and other payables balance as of April 8, 2026, including an increase of $ | |||||||||||||||||
Note 13. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring and Non-recurring Basis
The Company has three cross-currency swaps related to its Canadian dollar and Euro Medium-Term Notes. The fair value of these swaps as a foreign currency derivative are categorized as a Level 2 measurement in the fair value hierarchy and are measured on a recurring basis. As of June 30, 2026, the estimated fair value of the Company’s foreign currency swaps were, in the aggregate, derivative assets of $32.9 million and derivative liabilities of $15.0 million, respectively. As of December 31, 2025, the estimated fair value of the Company’s foreign currency swaps were, in the aggregate, derivative assets of $46.4 million and derivative liabilities of $2.3 million, respectively. Derivative assets are included in Other assets and derivative liabilities are included in Accrued interest and other payables on the Company’s Consolidated Balance Sheets.
Financial Instruments Not Measured at Fair Values
The fair value of debt financing is estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities, which would be categorized as a Level 2 measurement in the fair value hierarchy. The estimated fair value of debt financing as of June 30, 2026, was $20.0 billion compared to a book value of $20.3 billion. The estimated fair value of debt financing as of December 31, 2025, was $19.7 billion compared to a book value of $19.9 billion.
The following financial instruments are not measured at fair value on the Company’s Consolidated Balance Sheets at June 30, 2026, but require disclosure of their fair values: cash and cash equivalents and restricted cash. The estimated fair value of such instruments at June 30, 2026 and December 31, 2025 approximates their carrying value as reported on the Consolidated Balance Sheets. The fair value of all these instruments would be categorized as Level 1 in the fair value hierarchy.
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Sumisho Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 14. Stockholders’ Equity
In connection with the Merger, on April 8, 2026, each share of the Company’s Class A common stock was converted into the right to receive the Merger Consideration, other than shares that were canceled or converted into shares of the surviving corporation pursuant to the Merger Agreement. The Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock (each as defined below) remained outstanding after the Merger. The Company notified the NYSE of the completion of the Merger and requested that trading in the Class A Common Stock be suspended and the Class A Common Stock be withdrawn from listing on the NYSE which was effective on April 18, 2026. Following the Merger, the Company was authorized to issue up to 1,000 shares of Class C common stock, $0.01 par value. As of June 30, 2026, the Company had 200
Following the Merger, the Company was authorized to issue up to 1,000,000 shares of preferred stock, $0.01 par value. As of each of June 30, 2026 and December 31, 2025, the Company had 300,000 300.0 1,000 300,000 300.0 1,000 300,000 300.0 1,000
The following table summarizes the Company’s preferred stock issued and outstanding as of June 30, 2026 (in thousands, except for share amounts and percentages):
| Shares Issued and Outstanding as of June 30, 2026 | Liquidation Preference as of June 30, 2026(1) | Issue Date | Dividend Rate in Effect at June 30, 2026(2) | Next dividend rate reset date | Dividend rate after reset date | ||||||||||||||||||||||||||||||||||||
| Series B | $ | March 2, 2021 | June 15, 2031 | 5 Yr U.S. Treasury plus | |||||||||||||||||||||||||||||||||||||
| Series C | October 13, 2021 | December 15, 2026 | 5 Yr U.S. Treasury plus | ||||||||||||||||||||||||||||||||||||||
| Series D | September 24, 2024 | December 15, 2029 | 5 Yr U.S. Treasury plus | ||||||||||||||||||||||||||||||||||||||
| Total | $ | ||||||||||||||||||||||||||||||||||||||||
(1) The Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock each have a redemption price of $ | |||||||||||||||||||||||||||||||||||||||||
(2) Dividends on preferred stock are discretionary and non-cumulative. When declared, dividends on the Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are reset every | |||||||||||||||||||||||||||||||||||||||||
(3) With respect to the Series D Preferred Stock, the dividend rate during any reset period is subject to a floor of | |||||||||||||||||||||||||||||||||||||||||
Note 15. Stock-based Compensation and Other Compensation
Stock-based Compensation and Restricted Cash Awards
On May 3, 2023, the Class A common stockholders of the Company approved the Air Lease Corporation 2023 Equity Incentive Plan (the “2023 Plan”). As of April 7, 2026, the number of shares of common stock available for new award grants under the 2023 Plan was approximately 3,278,351 . Following the Merger, the 2023 Plan remains in effect and as permitted under the terms of the 2023 Plan, the Company is permitted to grant cash-based awards, among other awards.
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Sumisho Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Company recorded $26.3 million, $5.4 million and $30.3 million of stock-based compensation expense related to Converted RSU Cash Awards and Converted PSU Cash Awards for the Successor period from April 8, 2026 through June 30, 2026, and RSUs for the Predecessor period from January 1, 2026 through April 7, 2026 and the six months ended June 30, 2025, respectively.
Stock-based compensation cost for RSUs is measured at the grant date based on fair value and recognized over the vesting period, with performance based RSUs, including book value and TSR RSUs, assuming a target level of achievement that is subsequently adjusted for actual performance following the end of the performance period. Prior to the Merger, the fair value of time-based and book value RSUs was determined based on the closing market price of the Company’s Class A common stock on the date of grant, while the fair value of RSUs that vest based on the attainment of TSR goals were determined at the grant date using a Monte Carlo simulation model. Included in the Monte Carlo simulation model were certain assumptions regarding a number of highly complex and subjective variables, such as expected volatility, risk-free interest rate and expected dividends. To appropriately value the award, the risk-free interest rate was estimated for the time period from the valuation date until the vesting date and the historical volatilities were estimated based on a historical timeframe equal to the time from the valuation date until the end date of the performance period.
During the Predecessor period from January 1, 2026 through April 7, 2026, the Company issued 146,329 additional shares of Class A common stock underlying 41,212 TSR RSUs and 105,117 book value RSUs granted in 2023 for which the performance period ended December 31, 2025 and for which the actual number of RSUs vested was greater than the target level of achievement. The following table summarizes the activities for the Company’s unvested RSUs for the Predecessor period from January 1, 2026 through April 7, 2026:
| Unvested Restricted Stock Units | ||||||||||||||
| Number of Shares | Weighted-Average Grant-Date Fair Value | |||||||||||||
Unvested at December 31, 2025 - (Predecessor) | $ | |||||||||||||
Granted(1) | $ | |||||||||||||
Vested (2) | ( | $ | ||||||||||||
| Forfeited/canceled | $ | |||||||||||||
Unvested at April 7, 2026 - (Predecessor) | $ | |||||||||||||
| (1) Consists of additional shares of Class A common stock issued in connection with the vesting of book value RSUs and TSR RSUs granted in 2023 for which the performance period ended on December 31, 2025 and for which the actual level of achievement was greater than the target level of achievement. | ||||||||||||||
(2) Consists of an aggregate of | ||||||||||||||
As of April 7, 2026, there was $18.6 million of unrecognized compensation expense related to unvested stock-based payments granted to employees.
In connection with the Merger, each Acquiree RSU was converted into the contingent right to receive an amount in cash equal to the Merger Consideration. Each Acquiree RSU was converted into a contingent right to receive an amount in cash equal to the product of the Merger Consideration multiplied by the number of shares issuable based upon the greater of the target level of performance and the actual level of performance calculated as of the latest practicable date prior to the Merger. Converted RSU Cash Award and Converted PSU Cash Award is subject to the same vesting terms and conditions as applied corresponding Acquiree RSU and Acquiree PSU, respectively, immediately prior to the Effective Time, except that Converted PSU Cash Awards are no longer subject to any performance-based conditions.
As described in more detail in Note 3, “Merger Transaction and Purchase Accounting,” in connection with the Merger, all outstanding but unvested RSUs as of the Effective Time were converted in Converted RSU Cash Awards and Converted PSU Cash Awards. As a result during the Successor period, the Company recognized total compensation expense of $26.3 million related to the Converted RSU Cash Awards and Converted PSU Cash Awards on the consolidated statements of operations and comprehensive income/(loss), comprised of (i) $11.1 million of stock-based compensation expense recognized at the Effective Time, and (ii) $15.2 million of compensation expense associated with the liability-classified, Converted RSU Cash Awards and Converted PSU Cash
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Awards, which is expected to be settled in cash. The increase in stock-based compensation was primarily driven by the acceleration of certain Converted RSU Cash Awards and Converted PSU Cash Awards resulting from the previously disclosed workforce reduction. Cash paid to settle Converted RSU Cash Awards and Converted PSU Cash Awards accelerated during the Successor period was $66.3 million, which includes $45.6 million of purchase consideration settled post-Effective time and $20.7 million compensation related expense. As of June 30, 2026, total unrecognized compensation costs related to unvested Converted RSU Cash Awards and Converted PSU Cash Awards was $4.9 million, which is expected to be recognized over a weighted-average remaining period of 0.55 years. As of June 30, 2026, the Company recorded $21.2 million related to the Converted RSU Cash Awards and Converted PSU Cash Awards in accrued interest and other payables on the Consolidated Balance Sheets.
Other Compensation Arrangements
For the six months ended June 30, 2025, the Company recorded a $9.2 million payroll expense accrual resulting from the retirement of its former Chairman from his executive role, payable in substantially equal installments in accordance with the Company’s normal payroll practices through May 2027. The additional payroll expense was included in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations, while the liability is included in Accrued interest and other payables on the Company’s Consolidated Balance Sheets.
For the period from April 8, 2026 to June 30, 2026, the Company incurred approximately $53.3 million in costs related to the previously disclosed workforce reduction, which includes, among other things, severance payments based on the applicable employee’s length of service with the Company and the continuation of benefits for a specified time period post-termination. The Company continues to expect to incur additional costs in the third quarter of 2026 and the estimate above excludes any potential income tax effects.
Note 16. Aircraft Under Management
As of June 30, 2026, the Company managed 38 aircraft across three aircraft management platforms. The Company managed 24 aircraft through the Blackbird investment funds, 12 aircraft through its Thunderbolt platform and two aircraft on behalf of a financial institution.
The Blackbird investment funds invest in commercial jet aircraft and lease them to airlines throughout the world. The Company provides management services to these funds for a fee. As of June 30, 2026, the Company’s non-controlling interests in each fund were 9.5 % and are accounted for under the equity method of accounting. The Company’s investments in these funds aggregated $49.2 million and $79.5 million as of June 30, 2026 and December 31, 2025, respectively, and are included in Other assets on the Consolidated Balance Sheets.
The Thunderbolt platform facilitates the sale of mid-life aircraft to investors while allowing the Company to continue the management of these aircraft for a fee. The Company has non-controlling interests in the two entities in the platform of approximately 5.0 %, which are accounted for under the cost method of accounting. The Company’s total investment in aircraft sold through its Thunderbolt platform was $6.7 million and $8.6 million as of June 30, 2026 and December 31, 2025, respectively, and are included in Other assets on the Consolidated Balance Sheets.
Finally, the Company also manages two aircraft for a financial institution for a fee. The Company does not have any equity interest in this financial institution nor ownership of these aircraft.
In connection with the Merger, the Company continues to manage the aircraft management platforms above; however, certain services for the aircraft and leases are subserviced by SMBC AC.
Note 17. Servicing Agreement
On April 8, 2026, in connection with the closing of the Merger, SMBC AC entered into a Servicing Agreement with Parent, guaranteed by the Company, to act as exclusive servicer to the Company, in respect of its aircraft leased to non-U.S. airlines (the “Servicing Agreement”). The remaining aircraft leased to U.S. airlines as of the closing of the Merger will continue to be serviced by the Company. Under the Servicing Agreement, SMBC AC is responsible for the provision of technical and lease administration services, including aircraft marketing, aircraft trading, technical asset management and risk management for the aircraft leased to non-U.S. airlines. The Servicing Agreement contains provisions to address potential conflicts of interest and also requires SMBC AC, as
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Sumisho Air Lease Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
servicer, to act in accordance with a prescribed standard of care. Pursuant to the Servicing Agreement, Parent will pay or procure the payment, which the Company guarantees, to SMBC AC of customary fees for services rendered thereunder, which relate to the leasing, acquisition and sale of aircraft subject to the Servicing Agreement. During the Successor period of April 8, 2026 to June 30, 2026, the Company incurred $6.9 million in fees and expenses payable to SMBC AC pursuant to the Servicing Agreement. As of June 30, 2026, the Company had payables due to SMBC AC of $111.6 million, of which $104.7 million relates to estimated servicing fees associated with aircraft classified as held for sale, which were considered as costs to sell under purchase accounting in determining the fair value of such aircraft.
Note 18. Subsequent Events
On August 6, 2026, the Company’s board of directors approved quarterly cash dividends for the Company’s Series B, Series C and Series D preferred stock. The following table summarizes the details of the dividends that were declared:
| Title of each class | Cash dividend per share | Record Date | Payment Date | Total dividends | ||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Series B Preferred Stock | $ | August 31, 2026 | September 15, 2026 | $ | ||||||||||||||||||||||
| Series C Preferred Stock | $ | August 31, 2026 | September 15, 2026 | $ | ||||||||||||||||||||||
| Series D Preferred Stock | $ | August 31, 2026 | September 15, 2026 | $ | ||||||||||||||||||||||
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Overview
Sumisho Air Lease Corporation (the “Company”, “SAL”, “we”, “our” or “us”) is one of the largest aircraft leasing companies in the world, with an owned fleet comprised of 488 aircraft as of June 30, 2026. The net book value of flight equipment subject to operating leases was $23.9 billion as of June 30, 2026 with a weighted average age of 4.8 years and a weighted average remaining lease term of 7.0 years.
We believe that a key factor which has underpinned our success has been our disciplined approach to asset investment. We have consistently invested in liquid and new technology aircraft which display the strongest long-term value retention characteristics. These include the Airbus A220 family, Airbus A320ceo/neo family, Airbus A330neo family, Airbus A350 family, Boeing 737 NG/MAX family and Boeing 787 family of aircraft.
Our focus on aircraft liquidity is designed to ensure that our portfolio remains in demand with the largest number of operators, in the most jurisdictions globally, maximizing the options available to lease or re-lease aircraft at any given point in time. This focus has resulted in our fleet1, by carrying value as of June 30, 2026, comprised of approximately 85% new technology2 aircraft. The high-quality and in-demand nature of our portfolio is also reflected in the 99.5% utilization rate of our fleet for the six months ended June 30, 2026.
On April 8, 2026 (the “Effective Time”) we completed the previously announced merger (the “Merger”) of Takeoff Merger Sub Inc., a Delaware corporation (“Merger Sub”), with and into Air Lease Corporation, with Air Lease Corporation surviving the Merger as an indirect subsidiary of Sumisho Air Lease Corporation Designated Activity Company, an Irish private limited company (“Parent”). Parent is a holding company established in connection with the Merger and is jointly owned, directly or indirectly, by Sumitomo Corporation, a Japanese corporation (“Sumitomo”), SMBC Aviation Capital Limited, a company incorporated with limited liability in Ireland (“SMBC AC”), investment vehicles affiliated with Apollo managed funds (“Apollo”) and Brookfield (“Brookfield”). The Merger was effected pursuant to an Agreement and Plan of Merger, dated as of September 1, 2025 (the “Merger Agreement”), by and among Air Lease Corporation, Parent and Merger Sub. We notified the NYSE of the completion of the Merger and requested that trading in the Class A Common Stock be suspended and the Class A Common Stock be withdrawn from listing on the NYSE which was effective on April 18, 2026.
In connection with the closing of the Merger, SMBC AC acquired our outstanding orderbook for undelivered aircraft (the “Orderbook Acquisition”) and became servicer to the majority of our fleet.
In connection with the closing of the Merger, we elected to apply the acquisition method of accounting. Accordingly, the purchase price of the Merger has been allocated to our assets and liabilities based upon their estimated fair values at the Effective Time in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. We engaged a third-party valuation firm to assist in determination of the fair values of tangible and intangible assets acquired. As used herein, the term “Predecessor” refers to our financial position and results of operations prior to the Effective Time. The term “Successor” refers to our financial position and results of operations on and after the Effective Time. Due to the application of the acquisition method of accounting, our results of operations, financial position and cash flows are not comparable between the Successor and Predecessor periods.
1 References throughout this Quarterly Report on Form 10-Q to “our fleet” refer to the aircraft included in flight equipment subject to operating leases, flight equipment held for sale and aircraft classified as net investment in sales-type leases unless the context indicates otherwise.
2 New technology aircraft are defined as A220 family, A320neo family, A330neo family, A350 family, Boeing 737 MAX family and Boeing 787 family aircraft types.
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Second Quarter Overview
The comparability of our operating results for the period from April 8, 2026 through June 30, 2026 (Successor), April 1, 2026 through April 7, 2026 (Predecessor) and the three months ended June 30, 2025 (Predecessor) was impacted by the Merger. Although U.S. GAAP requires that we report our results for the Predecessor period before the Merger and the Successor period after the Merger separately, our operating results for the three months ended June 30, 2026 are shown by combining the results of the Predecessor and Successor periods (“Non-GAAP Combined”) in order to compare to the same period in the prior year. See ”Results of Operations—Factors Affecting Comparability of Financial Results” below for further discussion.
During the three months ended June 30, 2026, we purchased one aircraft from Boeing and sold nine aircraft. We ended the second quarter with a total of 488 aircraft in our owned fleet. As of June 30, 2026, the net book value of our flight equipment subject to operating leases was $23.9 billion, compared to $29.1 billion as of December 31, 2025. On April 8, 2026, the carrying value of our flight equipment was adjusted to reflect the fair value adjustments recorded as part of the purchase price allocation in connection with the Merger. In addition, during the Successor period from April 8, 2026 through June 30, 2026, approximately $4.5 billion of aircraft assets were reclassified to flight equipment held for sale, resulting in a corresponding decrease in the net book value of flight equipment subject to operating leases. The weighted average fleet age and weighted average remaining lease term of flight equipment subject to operating leases as of June 30, 2026 was 4.8 years and 7.0 years, respectively. Our managed fleet was comprised of 38 aircraft as of June 30, 2026 compared to 45 aircraft as of December 31, 2025. We have a globally diversified customer base comprised of 97 airlines in 51 countries as of June 30, 2026.
We finance our business with our available cash balances and internally generated funds, which includes cash flows from our leases, as well as aircraft sales and debt financing activities. We ended the second quarter of 2026 with available liquidity of $3.5 billion, which was comprised of unrestricted cash of $368.6 million and approximately $3.1 billion in undrawn balances under our unsecured revolving credit facility. We ended the second quarter of 2026 with total debt outstanding of $20.3 billion, of which 74.1% was at a fixed rate and 99.2% was unsecured, and in the aggregate, our composite cost of funds was 4.33%.
Our rental of flight revenues for the Non-GAAP Combined three months ended June 30, 2026, decreased by approximately 10.0%, to $611.1 million, as compared to $678.7 million for the three months ended June 30, 2025. The decrease is primarily due to a lower weighted average net book value of our flight equipment subject to operating leases, resulting from the sale of our orderbook and continued sales activity, and a decrease in our end of lease revenue recognized. The net book value of our flight equipment subject to operating leases decreased to $23.9 billion as of June 30, 2026 from a net book value of $29.1 billion as of June 30, 2025. During the Non-GAAP Combined three months ended June 30, 2026, we recognized $2.7 million in end-of-lease revenue, as compared to $20.3 million recognized during the three months ended June 30, 2025.
Our gain on aircraft sales and trading and other income decreased to $30.1 million compared to $53.0 million for the three months ended June 30, 2025. The decrease was mainly driven by lower gains on aircraft sales due to the impact of acquisition accounting and lower management fee revenue due to a decrease in the number of managed aircraft from the prior year period. As a result of the application of the acquisition method of accounting, the carrying values of our flight equipment held for sale as of the date of the Merger were adjusted to fair value. As a result, we did not record any gains on aircraft sales for the seven aircraft sold between the April 8, 2026 closing of the Merger through June 30, 2026. During the Predecessor period from April 1, 2026 through April 7, 2026, we sold two aircraft to third parties resulting in $12.7 million in gains compared to $16.7 million in gains from the sale of four aircraft for the three months ended June 30, 2025. Sales proceeds for the nine aircraft sold during the Non-GAAP Combined three months ended June 30, 2026 were $423.2 million.
Excluding the $344 million insurance recovery related to our Russian fleet in the three months ended June 30, 2025, total operating expenses increased 6.9% to $630 million for the Non-GAAP Combined three months ended June 30, 2026, compared to $589.0 million in the prior-year period. The increase was primarily driven by $64.8 million of non-recurring merger-related expenses included in selling, general and administrative expenses, an increase in interest expense due to the amortization of fair value adjustments resulting from purchase accounting, and an increase in our composite cost of funds, partially offset by lower depreciation expense resulting from purchase accounting fair value adjustments to our fleet.
During the Non-GAAP Combined three months ended June 30, 2026, we reported a net income attributable to common stockholders of $7.2 million, compared to net income attributable to common stockholders of $374.1 million for the three months ended June 30, 2025. The year-over-year decline was primarily driven by the absence of the $344 million insurance recovery related to
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our Russian fleet recognized in the prior-year period, lower total revenues, as well as higher selling, general and administrative expenses and increased interest expense.
During the Non-GAAP Combined three months ended June 30, 2026, adjusted net income before income taxes decreased to $126.4 million from $157.4 million for the three months ended June 30, 2025. The decline was primarily driven by lower revenues and an increase in interest expense due to the increase in our composite cost of funds.
Adjusted net income before income taxes is a measure of financial and operational performance that is not defined by GAAP. See “—Non-GAAP Financial Measures” below for further information on adjusted net income and reconciliation to the most closely related GAAP measures.
Our Fleet
We continue to own one of the youngest fleets among aircraft lessors, including some of the most fuel-efficient commercial jet aircraft available. Our flight equipment subject to operating leases, based on net book value as of June 30, 2026 was $23.9 billion as of June 30, 2026, compared to $29.1 billion as of December 31, 2025. On April 8, 2026, the carrying value of our flight equipment was adjusted to reflect the fair value adjustments recorded as part of the purchase price allocation in connection with the Merger. In addition, during the Successor period from April 8, 2026 through June 30, 2026, approximately $4.5 billion of aircraft assets were reclassified to flight equipment held for sale, resulting in a corresponding decrease in the net book value of flight equipment subject to operating leases. As of June 30, 2026, we had a total of 488 aircraft in our owned fleet and our weighted average fleet age and weighted average remaining lease term of our flight equipment subject to operating leases were 4.8 years and 7.0 years, respectively. We also managed 38 aircraft as of June 30, 2026.
Our portfolio metrics as of June 30, 2026 and December 31, 2025 are as follows:
| Successor | Predecessor | ||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
Net book value of flight equipment subject to operating leases(1) | $ | 23.9 | billion | $ | 29.1 | billion | |||||||||||||||||||||||||||||||||||||||||
Weighted-average fleet age(2) | 4.8 years | 4.9 years | |||||||||||||||||||||||||||||||||||||||||||||
Weighted-average remaining lease term(2) | 7.0 years | 7.2 years | |||||||||||||||||||||||||||||||||||||||||||||
Owned fleet(3) | 488 | 490 | |||||||||||||||||||||||||||||||||||||||||||||
Managed fleet(4) | 38 | 45 | |||||||||||||||||||||||||||||||||||||||||||||
Aircraft on order(1) | — | 218 | |||||||||||||||||||||||||||||||||||||||||||||
Total | 526 | 753 | |||||||||||||||||||||||||||||||||||||||||||||
Current fleet contracted rentals | $ | 16.4 | billion | $ | 19.6 | billion | |||||||||||||||||||||||||||||||||||||||||
Committed fleet rentals(1) | $ | — | $ | 9.3 | billion | ||||||||||||||||||||||||||||||||||||||||||
Total committed rentals | $ | 16.4 | billion | $ | 28.9 | billion | |||||||||||||||||||||||||||||||||||||||||
| (1) On April 8, 2026, in connection with the closing of the Merger, SMBC AC acquired our rights to the outstanding orderbook for undelivered aircraft and committed fleet rentals for such aircraft have been subsequently transferred to SMBC AC. In addition, the carrying value of flight equipment was adjusted to reflect purchase accounting fair value adjustments recorded as part of the purchase price allocation. For further discussion of the Merger see Note 3 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. | |||||||||||||||||||||||||||||||||||||||||||||||
| (2) Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease. | |||||||||||||||||||||||||||||||||||||||||||||||
| (3) As of June 30, 2026 and December 31, 2025, our owned fleet count included 86 and 12 aircraft classified as flight equipment held for sale, respectively, and 17 and 16 aircraft classified as net investments in sales-type leases, respectively. | |||||||||||||||||||||||||||||||||||||||||||||||
| (4) Following the Merger, we continue to manage our managed fleet; however, certain services for these aircraft and leases are subserviced by SMBC AC. | |||||||||||||||||||||||||||||||||||||||||||||||
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The following table sets forth the net book value and percentage of the net book value of our flight equipment subject to operating leases in the indicated regions based on each airline’s principal place of business as of June 30, 2026 and December 31, 2025 (in thousands, except percentages):
| Successor | Predecessor | |||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||||
| Region | Net Book Value(1) | % of Total | Net Book Value | % of Total | ||||||||||||||||||||||
| Europe | $ | 9,430,599 | 39.5 | % | $ | 11,356,104 | 39.1 | % | ||||||||||||||||||
| Asia Pacific | 8,561,742 | 35.9 | % | 10,602,176 | 36.5 | % | ||||||||||||||||||||
| Central America, South America, and Mexico | 2,659,818 | 11.1 | % | 3,114,662 | 10.7 | % | ||||||||||||||||||||
| U.S. and Canada | 1,782,581 | 7.4 | % | 1,726,042 | 5.9 | % | ||||||||||||||||||||
| The Middle East and Africa | 1,446,463 | 6.1 | % | 2,254,646 | 7.8 | % | ||||||||||||||||||||
| Total | $ | 23,881,203 | 100.0 | % | $ | 29,053,630 | 100.0 | % | ||||||||||||||||||
| (1) On April 8, 2026, the carrying value of flight equipment subject to operating leases was adjusted to reflect purchase accounting fair value adjustments recorded as part of the purchase price allocation. For further discussion of the Merger see Note 3 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. | ||||||||||||||||||||||||||
The following table sets forth our top five lessees by net book value as of June 30, 2026 and December 31, 2025:
| Successor | Predecessor | ||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
| Lessee | % of Total | Lessee | % of Total | ||||||||||||||
| Air France-KLM Group | 6.5 | % | Virgin Atlantic | 6.1 | % | ||||||||||||
| ITA | 6.1 | % | Korean Air | 6.0 | % | ||||||||||||
| Virgin Atlantic | 6.0 | % | Air France-KLM Group | 5.9 | % | ||||||||||||
| Aeromexico | 5.8 | % | Aeromexico | 5.5 | % | ||||||||||||
| Korean Air | 5.4 | % | ITA | 5.2 | % | ||||||||||||
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The following table sets forth the number of aircraft in our owned fleet by aircraft type as of June 30, 2026 and December 31, 2025:
| Successor | Predecessor | ||||||||||||||||||||||||||||
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Aircraft type | Number of Aircraft | % of Total | Number of Aircraft | % of Total | |||||||||||||||||||||||||
| Airbus A220-100 | 9 | 1.8 | % | 8 | 1.6 | % | |||||||||||||||||||||||
| Airbus A220-300 | 34 | 7.0 | % | 33 | 6.7 | % | |||||||||||||||||||||||
| Airbus A320-200 | 14 | 2.9 | % | 17 | 3.5 | % | |||||||||||||||||||||||
| Airbus A320-200neo | 20 | 4.1 | % | 23 | 4.7 | % | |||||||||||||||||||||||
| Airbus A321-200 | 17 | 3.5 | % | 17 | 3.5 | % | |||||||||||||||||||||||
| Airbus A321-200neo | 110 | 22.5 | % | 109 | 22.2 | % | |||||||||||||||||||||||
Airbus A330-200(1) | 13 | 2.7 | % | 13 | 2.7 | % | |||||||||||||||||||||||
| Airbus A330-300 | 5 | 1.0 | % | 5 | 1.0 | % | |||||||||||||||||||||||
| Airbus A330-900neo | 28 | 5.7 | % | 28 | 5.7 | % | |||||||||||||||||||||||
| Airbus A350-900 | 17 | 3.5 | % | 17 | 3.5 | % | |||||||||||||||||||||||
| Airbus A350-1000 | 8 | 1.6 | % | 8 | 1.6 | % | |||||||||||||||||||||||
| Boeing 737-800 | 34 | 7.0 | % | 38 | 7.8 | % | |||||||||||||||||||||||
| Boeing 737-8 MAX | 76 | 15.6 | % | 71 | 14.5 | % | |||||||||||||||||||||||
| Boeing 737-9 MAX | 35 | 7.2 | % | 35 | 7.1 | % | |||||||||||||||||||||||
| Boeing 777-200ER | 1 | 0.2 | % | 1 | 0.2 | % | |||||||||||||||||||||||
| Boeing 777-300ER | 23 | 4.7 | % | 23 | 4.7 | % | |||||||||||||||||||||||
| Boeing 787-9 | 25 | 5.1 | % | 26 | 5.3 | % | |||||||||||||||||||||||
| Boeing 787-10 | 18 | 3.7 | % | 17 | 3.5 | % | |||||||||||||||||||||||
| Embraer E190 | 1 | 0.2 | % | 1 | 0.2 | % | |||||||||||||||||||||||
Total(2) | 488 | 100.0 | % | 490 | 100.0 | % | |||||||||||||||||||||||
(1) As of each of June 30, 2026 and December 31, 2025, aircraft count includes three Airbus A330-200 aircraft classified as freighters. | |||||||||||||||||||||||||||||
| (2) As of June 30, 2026 and December 31, 2025, our owned fleet count included 86 and 12 aircraft classified as flight equipment held for sale, respectively, and 17 and 16 aircraft classified as net investments in sales-type leases, respectively. | |||||||||||||||||||||||||||||
Aircraft Industry
We believe that the overall airline operating environment remains favorable for us and the broader commercial aircraft leasing
industry. Factors such as population growth, the size of the global middle class, air travel demand, and improved global economic health and development positively affect the long-term performance of the commercial aircraft leasing industry. Passenger traffic volume has historically expanded at a faster rate than global gross domestic product (“GDP”) growth, in part due to the expansion of the global middle class and the ease and affordability of air travel, which we expect to continue over time.
As global air traffic volumes remain elevated and aircraft production volumes remain constrained, we are experiencing strong demand for our aircraft through new lease requests and lease extension requests.
While global macroeconomic and geopolitical conditions could have an incremental negative impact on traffic expectations, we continue to expect that the need for airlines to replace aging aircraft will support demand for newer, more fuel-efficient aircraft. Factors and trends including increased airline financing needs, OEM supply chain and delivery challenges and backlogs, and environmental sustainability objectives impact the commercial aircraft leasing industry in the short-term and may increase the demand for our aircraft. As a result, we believe many airlines will look to lessors to fulfill these needs.
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We expect that lease rates will remain strong as the supply and demand environment for commercial aircraft remains tight and our funding advantage relative to our airline customers widens. Lease rates are influenced by several factors above and beyond interest rates, including aircraft demand, supply technicals, supply chain disruptions, environmental initiatives and other factors that may result in a change in lease rates regardless of the interest rate environment and therefore, are difficult to project or forecast. We believe the still elevated interest rates and the sustained tightness in the credit markets may result in a shortfall in available capital to finance aircraft purchases, which could increase the demand for leasing.
Airline reorganizations, liquidations, or other forms of bankruptcies occurring in the industry have in the past and may in the future include some of our aircraft customers. As of the date of this filing, we do not have aircraft leased to airlines subject to insolvency proceedings. Such events have resulted and may in the future result in the early return of aircraft or changes in our lease terms. Our airline customers are facing higher operating costs as a result of persistently elevated interest rates, inflation, tariffs, foreign currency risk, and increases in fuel costs, as well as delays and cancellations caused by the global air traffic control system and airports. Strong air traffic demand has provided a counterbalance to these increased costs.
Elevated fuel costs as a product of geopolitical conflicts in the Middle East are currently weighing on global airline financial performance. Airline flight schedules have been disrupted as a result, and a number of airlines have announced reduced capacity and increases to airfares and fees. Depending on the duration of these conflicts, our airline customers could experience further operational challenges, resulting in financial losses, reduced aircraft demand, and increased airline bankruptcies.
We are also monitoring the impact of tariffs on our business, which have not had a negative impact on our profitability to date. While we currently do not expect tariffs to have a material impact on our business, particularly following the Orderbook Acquisition, tariffs could impact our business in a number of ways and the level of impact is unknown due to the uncertainty surrounding tariffs currently.
We believe the aircraft leasing industry has remained resilient over time across a variety of global economic conditions and remain optimistic about the long-term fundamentals of our business. We believe leasing will continue to be an attractive form of aircraft financing for airlines because less cash and financing is required for the airlines and it provides fleet flexibility while eliminating residual value risk for lessees.
Liquidity and Capital Resources
Overview
We ended the second quarter of 2026 with available liquidity of $3.5 billion, which was comprised of unrestricted cash of $368.6 million and approximately $3.1 billion in undrawn balances under our unsecured revolving credit facility.
We finance our business operations using our available cash balances and internally generated funds, which includes cash flows from our leases, as well as aircraft sales and debt financing activities. We aim to maintain investment-grade credit metrics and focus our debt financing strategy on funding our business primarily on an unsecured basis with mostly fixed-rate debt issued in the public bond market. Unsecured financing provides us with operational flexibility when selling or transitioning aircraft from one airline to another. We also have the ability to seek debt financing secured by our assets, as well as financings supported through government-guaranteed export credit agencies for future aircraft acquisitions. We have also issued preferred stock in the past and have outstanding preferred stock with an aggregate stated amount of $900.0 million as of June 30, 2026. Our access to a variety of financing alternatives and the global capital markets, including capital raises through unsecured public notes denominated in U.S. dollars or various foreign currencies, private capital, bank debt, secured debt and preferred stock issuances serves as a key advantage in managing our liquidity.
We ended the second quarter of 2026 with total debt outstanding of $20.3 billion, of which 74.1% was at a fixed rate and 99.2% was unsecured, and in the aggregate, our composite cost of funds was 4.33%.
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While we expect to opportunistically acquire aircraft in the future, our focus following the Merger will be on portfolio optimization and deleveraging. Our aim is to bring leverage in-line with our longer-term adjusted debt-to-equity target of 3.0x. As of June 30, 2026, our debt-to-equity ratio was 3.3x while our adjusted debt-to-equity ratio was 3.5x. See “—Non-GAAP Financial Measures” below for further information on adjusted debt-to-equity ratio and reconciliation to the most closely related GAAP measure. We believe we will achieve this by capitalizing on the strength of the secondary trading market for aircraft sales. We have $5.1 billion of aircraft in our sales pipeline3, which includes $5.1 billion of aircraft classified as held for sale as of June 30, 2026 and $25.4 million of aircraft subject to letters of intent4. We currently expect the sales of the aircraft in our sales pipeline to be completed by the end of the first quarter of 2027, with a majority of them expected to close in the back half of this period.
Material Cash Sources and Requirements
We believe that we have sufficient liquidity from available cash balances, cash generated from ongoing operations and available commitments under our unsecured revolving credit facility to satisfy the operating requirements of our business through at least the next 12 months. Our material cash sources include:
•Unrestricted cash: We ended the second quarter of 2026 with $368.6 million in unrestricted cash.
•Lease cash flows: We ended the second quarter of 2026 with $16.4 billion in contracted minimum rental payments on the aircraft in our existing fleet. These rental payments are a primary driver of our short and long-term operating cash flow. As of June 30, 2026, our minimum future rentals on non-cancellable operating leases for the next 12 months was $2.2 billion. For further detail on our minimum future rentals for the remainder of 2026 and thereafter, see “Notes to Consolidated Financial Statements” under “Item 1. Financial Statements” in this Quarterly Report on Form 10-Q.
•Aircraft sales: As stated above, following the Merger, we are focused on portfolio optimization and deleveraging and aircraft sales are an important aspect of achieving these goals. We continue to see robust demand in the secondary market to support our aircraft sales program. We have $5.1 billion of aircraft in our sales pipeline, which includes approximately $5.1 billion of aircraft classified as flight equipment held for sale as of June 30, 2026 and $25.4 million of aircraft subject to letters of intent. We currently expect the sales of the aircraft in our sales pipeline to be completed by the end of the first quarter of 2027, with a majority of them expected to close in the back half of this period.
•Unsecured revolving credit facility: In connection with the Merger, we assumed the revolving credit agreement entered into among Merger Sub, the several banks and other financial institutions or entities from time to time as parties thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, dated November 14, 2025, as amended by a first amendment, dated March 25, 2026 (as amended, the “Revolving Credit Agreement). The Revolving Credit Agreement provides us access to up to $3.5 billion in revolving loans (the “Revolving Credit Facility”) for working capital purposes and other general corporate purposes. We had $400.0 million outstanding under the Revolving Credit Facility as of June 30, 2026 and no amounts outstanding as of August 10, 2026.
•Senior unsecured securities: We have historically been a frequent issuer in the investment grade capital markets, opportunistically issuing unsecured notes, primarily through our Medium-Term Note Program at attractive cost of funds and other senior unsecured securities. In addition, in connection with the Merger, at the Effective Time, we assumed $4.0 billion aggregate principal amount of senior notes issued by Merger Sub prior to the closing of the Merger.
•Unsecured bank facilities: We have historically entered into new unsecured credit facilities from time to time as a means to supplement our liquidity and sources of funding. These loans are typically pre-payable without penalty at any time offering us significant flexibility in different rate environments.
•Other sources: In addition to the above, we generate liquidity through cash received from security deposits and maintenance reserves from our lease agreements, other sources of debt financings (including secured bank term loans, export credit and private placements, and other unsecured revolving credit facilities), as well as issuances of preferred stock.
In general, increases and reductions in the Federal Funds Rate should affect the interest rate on our Revolving Credit Facility and our new and existing borrowings that bear interest at a floating rate.
3 Aircraft in our sales pipeline is as of June 30, 2026, and includes letters of intent and sale agreements signed through August 10, 2026.
4 While our management’s historical experience is that non-binding letters of intent for aircraft sales generally lead to binding contracts, we cannot be certain that we will ultimately execute binding sales agreements for all or any of the aircraft subject to letters of intent or predict the timing of closing for any such aircraft sales.
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Historically, there has also been a lag between a rise in interest rates and subsequent increases in lease rates. We have experienced increasing lease rates on new lease agreements and lease extensions since 2023, which are serving to partially offset increased borrowing costs. We believe the strong lease rates we have experienced will continue as airlines adjust to a persistently elevated interest rate environment, which will continue to support our funding advantage relative to our airline customers. In addition, lease rates are influenced by several factors above and beyond interest rates, including supply technicals driven by aircraft demand, supply chain disruptions, environmental initiatives and other factors that may result in a change in lease rates regardless of the interest rate environment.
As of June 30, 2026, we were in compliance in all material respects with the covenants contained in our debt agreements. While a ratings downgrade would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it could increase the interest rate applicable to certain of our financings. Our liquidity plans are subject to a number of risks and uncertainties, including those described in “Part II — Item 1A. Risk Factors” on Form 10-Q for the quarter ended March 31, 2026.
Our material cash requirements are primarily comprised of debt service payments, payments to SMBC AC, as the servicer under the Servicing Agreement, and general operating expenses. See Note 17 of Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information on our servicing agreement. The amount of our cash requirements depends on a variety of factors, including the ability of our lessees to meet their contractual obligations with us, the timing of aircraft sales from our fleet, the timing and amount of our debt service obligations, potential aircraft acquisitions, and the general economic environment in which we operate.
Our material cash requirements as of June 30, 2026, are as follows (in thousands):
| Last 6 months of 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | ||||||||||||||||||||||||||||||||||||||
| Debt obligations | $ | 3,224,591 | $ | 5,021,836 | $ | 3,851,192 | $ | 2,617,990 | $ | 2,104,086 | $ | 3,438,861 | $ | 20,258,556 | ||||||||||||||||||||||||||||||
Servicing fees(1) | 84,547 | 128,277 | 63,858 | 59,409 | 55,542 | 216,894 | 608,527 | |||||||||||||||||||||||||||||||||||||
Interest payments on debt outstanding(2) | 413,417 | 732,113 | 471,237 | 299,396 | 225,765 | 259,670 | 2,401,598 | |||||||||||||||||||||||||||||||||||||
| Total | $ | 3,722,555 | $ | 5,882,226 | $ | 4,386,287 | $ | 2,976,795 | $ | 2,385,393 | $ | 3,915,425 | $ | 23,268,681 | ||||||||||||||||||||||||||||||
(1) Future servicing fees includes estimated contractual servicing fees based on lease agreements for our owned and managed aircraft and sales agreements related to held for sale aircraft, each as in effect as of June 30, 2026. | ||||||||||||||||||||||||||||||||||||||||||||
(2) Future interest payments on floating rate debt are estimated using floating rates in effect at June 30, 2026, which is inclusive of any cross-currency hedging arrangements, and assumes no additional interest amounts, which may become due upon the occurrence of certain events described in the applicable indenture governing our senior unsecured securities, become due. | ||||||||||||||||||||||||||||||||||||||||||||
The above table does not include any tax payments we may pay nor any dividends we may pay on our preferred stock or common stock, in each case, when and if declared by our board of directors. See “—Preferred Equity” below for additional information on our preferred stock.
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Cash Flows
The comparability of our operating results for the period from April 8, 2026 through June 30, 2026 (Successor), January 1, 2026 through April 7, 2026 (Predecessor) and six-month periods ended June 30, 2025 (Predecessor) was impacted by the Merger. Although U.S. GAAP requires that we report our results for the Predecessor period before the Merger and the Successor period after the Merger separately, our operating results for the six months ended June 30, 2026 are shown by combining the results of the Predecessor and Successor periods (“Non-GAAP Combined”) in order to compare to the same period in the prior year. See ”Results of Operations–—Factors Affecting Comparability of Financial Results” below for further discussion. The following table summarizes our cash flows for the periods presented (in thousands):
| Successor | Predecessor | Non-GAAP Combined | ||||||||||||||||||||||||
| Period from April 8 - June 30, | Period from January 1 - April 7, | Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2026 | 2026 | 2025 | 2026 | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 134,385 | $ | 480,868 | $ | 861,957 | $ | 615,253 | ||||||||||||||||||
| Net cash used in investing activities | $ | (9,410,419) | $ | (618,337) | $ | (972,368) | $ | (10,028,756) | ||||||||||||||||||
| Net cash provided by financing activities | $ | 9,193,739 | $ | 120,447 | $ | 93,309 | $ | 9,314,186 | ||||||||||||||||||
During the Non-GAAP Combined six months ended June 30, 2026, net cash provided by operating activities decreased primarily due to a $248.3 million increase in cash tax payments compared to the six months ended June 30, 2025, driven by significantly higher projected aircraft sales in 2026, partially offset by movements in our working capital. The net cash used in investing activities increased substantially as a result of the $11.1 billion cash outflow associated with the Merger, partially offset by proceeds from sales, trading and other activity. Net cash provided by financing activities increased primarily due to $5.4 billion of equity contributions from our Investors and $5.0 billion of proceeds from the issuance of new debt, which were used in part to fund the Merger.
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Debt
Our debt financing at June 30, 2026 and December 31, 2025 is summarized below (in thousands):
| Successor | Predecessor | |||||||||||||
| June 30, 2026 | December 31, 2025 | |||||||||||||
| Unsecured | ||||||||||||||
| Senior unsecured securities | $ | 15,019,280 | $ | 13,860,558 | ||||||||||
| Term financings | 4,221,900 | 3,846,800 | ||||||||||||
| Commercial paper | — | 1,361,400 | ||||||||||||
| Revolving Credit Facility | 400,000 | — | ||||||||||||
| Other revolving credit facilities | 450,000 | 300,000 | ||||||||||||
| Total unsecured debt financing | 20,091,180 | 19,368,758 | ||||||||||||
| Secured | ||||||||||||||
| Term financings | — | 318,348 | ||||||||||||
| Export credit financing | 167,376 | 175,238 | ||||||||||||
| Total secured debt financing | 167,376 | 493,586 | ||||||||||||
| Total debt financing | 20,258,556 | 19,862,344 | ||||||||||||
| Less: Debt discounts and issuance costs | (65,036) | (132,215) | ||||||||||||
Less: Fair value adjustment | (196,741) | — | ||||||||||||
| Debt financing, net of discounts and issuance costs | $ | 19,996,779 | $ | 19,730,129 | ||||||||||
| Selected interest rates and ratios: | ||||||||||||||
Composite interest rate(1) | 4.33 | % | 4.15 | % | ||||||||||
Composite interest rate on fixed-rate debt(1) | 4.15 | % | 3.91 | % | ||||||||||
| Percentage of total debt at a fixed-rate | 74.14 | % | 76.85 | % | ||||||||||
(1) This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs. | ||||||||||||||
Senior unsecured securities (including Medium-Term Note Program)
As of June 30, 2026 and December 31, 2025, we had $15.0 billion and $13.9 billion in senior unsecured securities outstanding, respectively, which includes our medium term notes issued under our indenture, dated as of November 20, 2018. We did not repay any medium term notes in connection with the closing of the Merger. Our outstanding senior unsecured securities as of June 30, 2026 include an aggregate of $4.0 billion principal amount of notes issued by Merger Sub and assumed by us upon closing of the Merger.
In connection with the Merger, on March 24, 2026, Merger Sub issued $800.0 million aggregate principal amount of 4.400% Senior Notes due 2028, $1.2 billion aggregate principal amount of 4.500% Senior Notes due 2029, $1.5 billion aggregate principal amount of 4.850% Senior Notes due 2031 and $500.0 million aggregate principal amount of 5.500% Senior Notes due 2036 (collectively, the “Notes”) pursuant to an indenture, dated as of March 24, 2026, among Merger Sub and Computershare Trust Company, N.A., as trustee. Upon consummation of the Merger and in accordance with the indenture governing the Notes and related agreements, the Notes became our obligations. The indenture that governs the Notes requires us to comply with certain covenants, including restrictions on our ability to (i) incur liens on assets and (ii) merge, consolidate or transfer all or substantially all of our assets. The indenture governing the Notes contains customary events of default. In the case of an event of default, the lenders may require repayment of all outstanding borrowings. In connection with the issuance of the Notes, Merger Sub entered into a registration rights agreement (the “Registration Rights Agreement”), which became our obligation upon consummation of the Merger whereby we agreed to use our commercially reasonable efforts to file and cause to become effective a registration statement for a registered offer to exchange the Notes for new notes, with terms substantially identical in all material respects to the Notes. Under certain circumstances, we may be required to file a shelf registration statement to allow for resales of the Notes. We may be obligated to pay additional interest on the Notes if we fail to comply with obligations under the Registration Rights Agreement.
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All of our fixed rate senior unsecured notes may be redeemed at our option in part or in full at any time and from time to time prior to maturity at the redemption prices (including any “make-whole” premium) specified in such senior unsecured notes. Our senior unsecured notes also require us to offer to purchase all of the notes at a purchase price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest if a “change of control repurchase event” (as defined in the applicable indenture or supplemental indenture) occurs.
On April 8, 2026, in connection with the completion of the Merger, we notified the New York Stock Exchange (“NYSE”) of the completion of the Merger and requested that trading in the 3.700% Medium-Term Notes, Series A, due April 15, 2030 (the “Euro Medium-Term Notes”) be suspended and the Euro Medium-Term Notes be withdrawn from listing on the NYSE.
We did not redeem any medium term notes in connection with the closing of the Merger.
Unsecured syndicated revolving credit facility
Prior to the Merger, we had an unsecured revolving credit facility (the “Legacy Revolving Credit Facility”). We terminated and repaid in full all outstanding loans and other amounts due under our Legacy Revolving Credit Facility in an aggregate amount of $3.0 billion at the closing of the Merger.
In connection with the Merger, we assumed the Revolving Credit Agreement entered into among Merger Sub, the several banks and other financial institutions or entities from time to time as parties thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, dated November 14, 2025, as amended by the First Amendment, dated March 25, 2026 (as amended, the “Revolving Credit Agreement”). As a result of the Merger, the benefits and obligations of Merger Sub under the Revolving Credit Agreement became our obligations as the surviving corporation in the Merger. The Revolving Credit Agreement provides us access to up to $3.5 billion in revolving loans for working capital purposes and other general corporate purposes. The Revolving Credit Facility bears interest at Adjusted Term SOFR (as defined in the Revolving Credit Agreement) plus a margin of 1.25% and matures on April 8, 2029. We are required to pay a facility fee of 0.20% per year in respect of total commitments under the Revolving Credit Facility. The interest rate and facility fees are subject to changes in our credit ratings. The Revolving Credit Agreement contains certain covenants and undertakings, subject to customary exceptions and qualifications, including (but not limited to) (i) maintenance of consolidated stockholder’s equity at or above $2.5 billion, (ii) maintenance of consolidated unencumbered assets at or above 125% of consolidated unsecured indebtedness and (iii) maintenance of interest coverage ratio at or above 1.50x, in each case as such terms are more particularly defined in the definitive documentation. The Revolving Credit Agreement contains customary events of default. In the case of an event of default, the lenders may terminate the commitments under the Revolving Credit Facility and require immediate repayment of all outstanding borrowings. We had $400.0 million outstanding under the Revolving Credit Facility as of June 30, 2026.
Other unsecured revolving credit facilities
As of June 30, 2026, and December 31, 2025, we had $450.0 million and $300.0 million outstanding, respectively, under our other unsecured revolving credit facilities. Borrowings under the facility outstanding as of June 30, 2026 bear interest at Adjusted Term SOFR (as defined in the facility) plus 1.05% and the facility has an outside termination date of April 7, 2028 unless terminated earlier. The facility is not guaranteed and is available at the sole discretion of the lender, who may modify or terminate the facility at any time.
Unsecured term financings
As of June 30, 2026 and December 31, 2025, the outstanding balance on our unsecured term financings was $4.2 billion and $3.8 billion, respectively.
In connection with the Merger, Merger Sub entered into a term loan credit agreement by and among Merger Sub, the several banks and other financial institutions or entities from time to time as parties thereto and Sumitomo Mitsui Banking Corporation, as administrative agent, as amended by the First Amendment to the Term Loan Credit Agreement, dated as of March 25, 2026 (as amended, the “Acquisition Term Loan Agreement”), pursuant to which the lenders provided a $1.0 billion term loan (the “Acquisition Term Loan”), which was used to fund a portion consideration in the Merger. The Acquisition Term Loan bears interest at Adjusted Term SOFR (as defined in the Acquisition Term Loan Agreement) plus a margin of 1.25% subject to adjustment based on our credit rating and matures on October 8, 2027. As a result of the Merger, the obligations of Merger Sub under the Acquisition Term Loan became our obligations as the surviving corporation in the Merger. There was $1.0 billion outstanding under the Acquisition Term Loan as of June 30, 2026. We repaid $350.4 million in other unsecured debt financings in connection with the Merger.
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In July 2026, we entered into and funded $650.0 million unsecured term loan, which bears interest at a floating rate of one- Term SOFR plus a margin of 0.90% and matures on July 22, 2027. Under the terms of the loan agreement, we may request an increase in the lender commitments by an additional $600.0 million, subject to an outside funding date of October 27, 2026. The term loan contains customary covenants and events of default consistent with the our Revolving Credit Facility. As of August 10, 2026, the additional capacity of $600.0 million remain unfunded.
In addition, in July 2026, we entered into a $500.0 million unsecured term loan, which bears interest at a floating rate of three-month Term SOFR plus a margin of 0.90% and matures on December 30, 2026. The term loan contains customary covenants and events of default consistent with the our Revolving Credit Facility.
Such unsecured term financings, including the Acquisition Term Loan Agreement, generally contain covenants and undertakings, subject to customary exceptions and qualifications, including (but not limited to): (i) maintenance of consolidated stockholder’s equity at or above $2.5 billion, (ii) maintenance of consolidated unencumbered assets at or above 125% of consolidated unsecured indebtedness and (iii) maintenance of interest coverage ratio at or above 1.50x, in each case as such terms are more particularly defined in the definitive documentation. The agreement governing our unsecured term financings also include customary events of default. In the case of an event of default, the lenders may require repayment of all outstanding borrowings.
Secured debt financings
As of June 30, 2026, we had an outstanding balance of $167.4 million in secured debt financings, and had pledged two aircraft as collateral, with a net book value of $244.2 million. As of December 31, 2025, we had an outstanding balance of $493.6 million in secured debt financings and had pledged ten aircraft as collateral with a net book value of $728.6 million. All of our secured obligations as of June 30, 2026 and December 31, 2025 were recourse in nature. We repaid $254.2 million in secured debt financings in connection with the Merger.
Commercial paper program
On January 21, 2025, we established a commercial paper program under which we could issue unsecured commercial paper up to a total of $2.0 billion outstanding at any time, with maturities of up to 397 days from the date of issue. The net proceeds from the issuance of commercial paper have been used for general corporate purposes, which included, among other things, the purchase of commercial aircraft and the repayment of existing indebtedness. As of June 30, 2026 we did not have an outstanding balance under the commercial paper program.
Preferred equity
The following table summarizes our preferred stock issued and outstanding as of June 30, 2026 (in thousands, except for share amounts and percentages):
| Shares Issued and Outstanding as of June 30, 2026 | Liquidation Preference as of June 30, 2026(1) | Issue Date | Dividend Rate in Effect at June 30, 2026(2) | Next Dividend Rate Reset Date | Dividend Rate After Reset Date | ||||||||||||||||||||||||||||||||||||
| Series B | 300,000 | $ | 300,000 | March 2, 2021 | 8.334% | June 15, 2031 | 5 Yr U.S. Treasury plus 4.076% | ||||||||||||||||||||||||||||||||||
| Series C | 300,000 | 300,000 | October 13, 2021 | 4.125% | December 15, 2026 | 5 Yr U.S. Treasury plus 3.149% | |||||||||||||||||||||||||||||||||||
| Series D | 300,000 | 300,000 | September 24, 2024 | 6.00% | December 15, 2029 | 5 Yr U.S. Treasury plus 2.560%(3) | |||||||||||||||||||||||||||||||||||
| Total | 900,000 | $ | 900,000 | ||||||||||||||||||||||||||||||||||||||
(1) The Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock each have a redemption price of $1,000.00 per share, plus any declared and unpaid dividends to, but excluding, the redemption date without accumulation of any undeclared dividends. | |||||||||||||||||||||||||||||||||||||||||
(2) Dividends on preferred stock are discretionary and non-cumulative. When declared, dividends on the Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are reset every five years and payable quarterly in arrears. | |||||||||||||||||||||||||||||||||||||||||
| (3) With respect to the Series D Preferred Stock, the dividend rate during any reset period is subject to a floor of 6.00%. | |||||||||||||||||||||||||||||||||||||||||
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For more information regarding our preferred stock issued and outstanding, see Note 6 of Notes to Consolidated Financial Statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2025.
The following table summarizes the quarterly cash dividends that we paid during the six months ended June 30, 2026 on our outstanding Series B, Series C and Series D Preferred Stock (in thousands):
| Payment Date | |||||||||||||||||
| Successor | Predecessor | ||||||||||||||||
| Title of Each Class | June 15, 2026 | March 15, 2026 | |||||||||||||||
| Series B Preferred Stock | $3,487 | $3,487 | |||||||||||||||
| Series C Preferred Stock | $3,094 | $3,094 | |||||||||||||||
| Series D Preferred Stock | $4,500 | $4,500 | |||||||||||||||
Off‑balance Sheet Arrangements
We have not established any unconsolidated entities for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. We have, however, from time to time established subsidiaries or trusts for the purpose of leasing aircraft or facilitating borrowing arrangements which are included in our balance sheet.
We have non-controlling interests in two investment funds in which we own 9.5% of the equity of each fund. We account for our interest in these funds under the equity method of accounting due to our level of influence and involvement in the funds. Also, we manage certain aircraft that we have sold through our Thunderbolt platform. In connection with the sale of certain aircraft portfolios through our Thunderbolt platform, we hold non-controlling interests of approximately 5.0% in two entities. These investments are accounted for under the cost method of accounting.
In connection with the Merger, we continue to manage the aircraft management platforms above; however, certain services for the aircraft and leases are subserviced by SMBC AC.
For more information regarding our aircraft under management, see Note 16 of Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Credit Ratings
Our investment-grade corporate and long-term debt credit ratings help us to lower our cost of funds and broaden our access to attractively priced capital. In connection with the Merger, our investment grade credit ratings were affirmed, through a formal rating
assessment process, by the relevant rating agencies. The following table summarizes our current credit ratings:
| Rating Agency | Long-term Debt | Short-Term Rating | Corporate Rating | Outlook | Date of Last Long-term Debt and Corporate Ratings Action | |||||||||||||||||||||||||||
Kroll Bond Ratings | A- | K-1 | A- | Stable | April 8, 2026 | |||||||||||||||||||||||||||
Standard and Poor’s | BBB | A-2 | BBB | Stable | April 8, 2026 | |||||||||||||||||||||||||||
Fitch Ratings | BBB | F-3 | BBB | Negative | May 8, 2026 | |||||||||||||||||||||||||||
While a ratings downgrade would not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it could increase the interest rate applicable to certain of our financings.
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Results of Operations
Factors Affecting Comparability of Financial Results
As noted above, the Merger was accounted for using the acquisition method of accounting. Under the acquisition method of accounting, we have up to one year from the Effective Time to obtain the information necessary to finalize the fair values of the assets acquired and liabilities assumed. As of June 30, 2026, the purchase accounting allocation remained preliminary. The application of acquisition accounting resulted in certain adjustments that affect the comparability of our results of operations to those of our Predecessor, including changes in the carrying values of assets acquired and liabilities assumed and the related depreciation and amortization expense, as well transaction expenses associated with the Merger. Refer to Note 3 Merger Transaction and Purchase Accounting, to the accompanying Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding the preliminary allocation of consideration transferred to the assets acquired and liabilities assumed.
The comparability of our operating results for the period from April 8, 2026 through June 30, 2026 (Successor), January 1, 2026 through April 7, 2026 (Predecessor) and the three- and six-month periods ended June 30, 2025 (Predecessor) was impacted by the Merger. Although U.S. GAAP requires that we report our results for the Predecessor period before the Merger and the Successor period after the Merger separately, our operating results for the three and six months ended June 30, 2026 are shown by combining the results of the Predecessor and Successor periods (“Non-GAAP Combined”) in order to compare to the same period in the prior year. The combined results for the three months ended June 30, 2026 represent the sum of the reported amounts for the Predecessor period from April 1, 2026 through April 7, 2026 and the Successor period from April 8, 2026 through June 30, 2026. The combined results for the six months ended June 30, 2026 represent the sum of the reported amounts for the Predecessor period from January 1, 2026 through April 7, 2026 and the Successor period from April 8, 2026 through June 30, 2026. The combined results of operations included in our discussion below are not considered to be prepared in accordance with U.S. GAAP because a different basis of accounting was used with respect to the financial results for the Predecessor as compared to the financial results of the Successor and have not been prepared as pro forma results under applicable regulations. The Non-GAAP Combined results do not reflect the actual results we would have achieved had the Merger occurred at the beginning of fiscal 2026 and are not necessarily indicative of future results. Accordingly, the results for the combined three- and six-month periods ended June 30, 2026 (prepared on a Non-GAAP basis) and the three- and six-month periods ended June 30, 2025 (prepared on a GAAP basis) may not be comparable.
The following discussion and analysis should be read together with our Consolidated Financial Statements and the related notes thereto included in Item 1 of this Quarterly Report on Form 10-Q, as well as Air Lease Corporation’s (Predecessor) Annual Report on Form 10-K for the year ended December 31, 2025.
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The following tables present the Company’s operating results for the Successor period from April 8, 2026 through June 30, 2026, the Predecessor periods from April 1, 2026 through April 7, 2026 and January 1, 2026 through April 7, 2026, the non-GAAP combined three- and six-month periods ended June 30, 2026, and the three and six months ended June 30, 2025 (in thousands, except per share amounts and percentages):
| Successor | Predecessor | Non-GAAP Combined | Non-GAAP Combined | ||||||||||||||||||||||||||||||||||||||||||||
| Period from April 8 - June 30, | Period from April 1 - April 7, | Three Months Ended June 30, | Period from January 1 - April 7, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||||
| 2026 | 2026 | 2025 | 2026 | 2025 | 2026 | 2026 | |||||||||||||||||||||||||||||||||||||||||
| Revenues and other income | |||||||||||||||||||||||||||||||||||||||||||||||
| Rental of flight equipment revenue | |||||||||||||||||||||||||||||||||||||||||||||||
| Lease rentals | $ | 556,216 | $ | 51,147 | $ | 647,661 | $ | 717,822 | $ | 1,284,893 | $ | 607,363 | $ | 1,274,038 | |||||||||||||||||||||||||||||||||
| Maintenance rentals and other receipts | 2,739 | 914 | 31,048 | 8,155 | 39,185 | 3,653 | 10,894 | ||||||||||||||||||||||||||||||||||||||||
| Total rental of flight equipment revenue | 558,955 | 52,061 | 678,709 | 725,977 | 1,324,078 | 611,016 | 1,284,932 | ||||||||||||||||||||||||||||||||||||||||
| Gain on aircraft sales and trading and other income | 16,317 | 13,743 | 52,987 | 79,050 | 145,900 | 30,060 | 95,367 | ||||||||||||||||||||||||||||||||||||||||
| Total revenues and other income | 575,272 | 65,804 | 731,696 | 805,027 | 1,469,978 | 641,076 | 1,380,299 | ||||||||||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest | 215,231 | 16,112 | 209,087 | 217,956 | 417,661 | 231,343 | 433,187 | ||||||||||||||||||||||||||||||||||||||||
| Amortization of debt discounts and issuance costs | 3,386 | 937 | 13,217 | 13,345 | 27,212 | 4,323 | 16,731 | ||||||||||||||||||||||||||||||||||||||||
| Amortization of fair value adjustments | 30,596 | — | — | — | — | 30,596 | 30,596 | ||||||||||||||||||||||||||||||||||||||||
| Interest expense | 249,213 | 17,049 | 222,304 | 231,301 | 444,873 | 266,262 | 480,514 | ||||||||||||||||||||||||||||||||||||||||
| Depreciation of flight equipment | 195,906 | 23,953 | 304,288 | 333,736 | 603,307 | 219,859 | 529,642 | ||||||||||||||||||||||||||||||||||||||||
| Recoveries of Russian fleet write-off | — | — | (344,002) | — | (675,940) | — | — | ||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 105,927 | 4,261 | 49,851 | 64,452 | 109,199 | 110,188 | 170,379 | ||||||||||||||||||||||||||||||||||||||||
| Servicing fees and expenses | 6,935 | — | — | — | — | 6,935 | 6,935 | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 26,299 | 309 | 12,674 | 5,405 | 30,290 | 26,608 | 31,704 | ||||||||||||||||||||||||||||||||||||||||
| Total expenses | 584,280 | 45,572 | 245,115 | 634,894 | 511,729 | 629,852 | 1,219,174 | ||||||||||||||||||||||||||||||||||||||||
| (Loss) Income before taxes | (9,008) | 20,232 | 486,581 | 170,133 | 958,249 | 11,224 | 161,125 | ||||||||||||||||||||||||||||||||||||||||
| Income tax benefit/(expense) | 1,314 | 5,732 | (101,414) | (18,274) | (197,249) | 7,046 | (16,960) | ||||||||||||||||||||||||||||||||||||||||
| Net (loss)/income | $ | (7,694) | $ | 25,964 | $ | 385,167 | $ | 151,859 | $ | 761,000 | $ | 18,270 | $ | 144,165 | |||||||||||||||||||||||||||||||||
| Preferred stock dividends | (11,081) | — | (11,081) | (11,081) | (22,163) | (11,081) | (22,162) | ||||||||||||||||||||||||||||||||||||||||
| Net (loss)/income attributable to common stockholders | $ | (18,775) | $ | 25,964 | $ | 374,086 | $ | 140,778 | $ | 738,837 | $ | 7,189 | $ | 122,003 | |||||||||||||||||||||||||||||||||
| Other financial data | |||||||||||||||||||||||||||||||||||||||||||||||
| Pre-tax margin | (1.6)% | 30.7% | 66.5% | 21.1% | 65.2% | 1.8% | 11.7% | ||||||||||||||||||||||||||||||||||||||||
Adjusted net income before income taxes(1) | $ | 104,917 | $ | 21,529 | $ | 157,389 | $ | 186,908 | $ | 326,878 | $ | 126,446 | $ | 291,825 | |||||||||||||||||||||||||||||||||
Adjusted pre-tax margin(1) | 18.2% | 32.7% | 21.5% | 23.2% | 22.2% | 19.7% | 21.1% | ||||||||||||||||||||||||||||||||||||||||
__________________________________________
(1)See “—Non-GAAP Financial Measures” below for further information on adjusted net income and adjusted pre-tax margin and reconciliations to the most closely related GAAP measures.
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Comparison of the Combined Successor and Predecessor Periods for the Three Months Ended June 30, 2026 to the Three Months Ended June 30, 2025
Lease rentals
Our rental of flight revenues for the Non-GAAP Combined three months ended June 30, 2026, decreased by approximately 6%, to $607.4 million, which included amortization expense related to initial direct costs and lease intangibles of $2.6 million as compared to $647.7 million, which included amortization expense related to initial direct costs of $22.7 million for the three months ended June 30, 2025. The decrease is primarily due to a lower weighted average net book value of our flight equipment subject to operating leases, resulting from the sale of our orderbook and continued sales activity. The net book value of our flight equipment subject to operating leases decreased to $23.9 billion as of June 30, 2026 from a net book value of $29.1 billion as of June 30, 2025. While we expect to opportunistically acquire aircraft in the future, following the Merger, our focus will be on portfolio optimization and deleveraging. We believe we will achieve this by capitalizing on the strength of the secondary trading market for aircraft sales. As such, we do not expect any significant growth in our lease rentals as we continue to optimize our fleet.
Maintenance rentals and other receipts
During the Non-GAAP Combined three months ended June 30, 2026, we recorded $3.7 million in maintenance rentals and other receipts as compared to $31.0 million for the three months ended June 30, 2025. The decrease is primarily due to lower end of lease revenue recognized. During the Non-GAAP Combined three months ended June 30, 2026, we recognized $2.7 million in end of lease revenue, as compared to $20.3 million recognized during the three months ended June 30, 2025.
Gain on aircraft sales and trading and other income
Our gain on aircraft sales and trading and other income decreased to $30.1 million compared to $53.0 million for the three months ended June 30, 2025. The decrease was mainly driven by lower gains on aircraft sales due to the impact of acquisition accounting and lower management fee revenue due to a decrease in the number of managed aircraft from the prior year period. As a result of the application of the acquisition method of accounting, the carrying values of our flight equipment held for sale as of the date of the Merger were adjusted to fair value. As a result, we did not record any gains on aircraft sales for the seven aircraft sold between the April 8, 2026 closing of the Merger through June 30, 2026. During the Predecessor period from April 1, 2026 through April 7, 2026, we sold two aircraft to third parties resulting in $12.7 million in gains compared to $16.7 million in gains from the sale of four aircraft for the three months ended June 30, 2025. Sales proceeds for the nine aircraft sold during the Non-GAAP Combined three months ended June 30, 2026 were $423.2 million.
Interest expense
During the Non-GAAP Combined three months ended June 30, 2026, we recorded $266.3 million for interest expense, which included amortization of fair value adjustments of $30.6 million, compared to $222.3 million for the three months ended June 30, 2025. The increase was primarily attributable to the amortization of fair value adjustments resulting from purchase accounting, together with an increase in our composite cost of funds from 4.28% as of June 30, 2025 to 4.33% as of June 30, 2026.
Depreciation expense
During the Non-GAAP Combined three months ended June 30, 2026, we recorded $219.9 million in depreciation expense of flight equipment compared to $304.3 million for the three months ended June 30, 2025. During the Successor period from April 8, 2026 through June 30, 2026, approximately $4.5 billion of aircraft assets were reclassified to flight equipment held for sale. We cease recognition of depreciation expense once an aircraft is classified as held for sale resulting in a decrease in our depreciation expense for the period. To comply with the acquisition method of accounting, assets acquired, including our flight equipment subject to operating leases, should be recognized on the consolidated balance sheet at fair value as of the acquisition date, with certain exceptions. We completed the valuation analyses necessary to assess the preliminary fair values of the assets acquired which impacted our depreciation expense post-Merger. Going forward, we expect depreciation expense to continue to track the net book value of our flight equipment subject to operating leases.
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Recoveries of Russian fleet write-off
During the three months ended June 30, 2025, we recognized a net benefit of $344.0 million from the settlement of insurance claims with certain insurers under our C&P Policy comprised of $339.4 million in cash insurance settlement proceeds and a $4.6 million benefit related to our equity interest in our managed fleet. We did not have any corresponding insurance settlements during the Non-GAAP Combined three months ended June 30, 2026.
Stock-based compensation expense
During the Non-GAAP Combined three months ended June 30, 2026, we recorded stock-based compensation expense of $26.6 million compared to $12.7 million for the three months ended June 30, 2025. The increase in stock-based compensation was primarily driven by the acceleration of certain RSUs resulting from the previously disclosed workforce reduction.
Selling, general and administrative expenses
During the Non-GAAP Combined three months ended June 30, 2026, we recorded selling, general and administrative expenses of $110.2 million, compared to $49.9 million for the three months ended June 30, 2025. Selling, general and administrative expenses increased primarily due to non-recurring merger related expenses of $64.8 million for the three months ended June 30, 2026. Selling, general and administrative expenses represented 17.2% and 6.8% as a percentage of total revenue for the Non-GAAP Combined three months ended June 30, 2026 and June 30, 2025, respectively. Excluding merger-related costs, selling, general and administrative expenses represented 7.1% for the Non-GAAP Combined three months ended June 30, 2026.
Servicing fees
On April 8, 2026, in connection with the closing of the Merger, SMBC AC entered into a Servicing Agreement with Parent, guaranteed by the Company, to act as exclusive servicer to the Company, in respect of its aircraft leased to non-U.S. airlines. Under the Servicing Agreement, SMBC AC is responsible for the provision of technical and lease administration services, including aircraft marketing, aircraft trading, technical asset management and risk management for the aircraft leased to non-U.S. airlines. During the Successor period of April 8, 2026 to June 30, 2026, the Company incurred $6.9 million in fees pursuant to the Servicing Agreement.
Taxes
Our blended effective tax rate for the Non-GAAP Combined three months ended June 30, 2026 was 62.8% compared to 20.8% for the three months ended June 30, 2025. The blended rate was significantly influenced by the application of Successor and Predecessor reporting following the Merger. The resulting effective tax rate was significantly distorted and is not indicative of the Company’s expected long-term effective tax rate. The effective tax rate for the Successor period from April 8, 2026 through June 30, 2026 was 14.59%.
Net income attributable to common stockholders
During the Non-GAAP Combined three months ended June 30, 2026, we reported a net income attributable to common stockholders of $7.2 million, compared to net income attributable to common stockholders of $374.1 million for the three months ended June 30, 2025. The year-over-year decline was primarily driven by lower revenues, including the absence of the $344 million insurance recovery related to our Russian fleet recognized in the prior-year period, as well as higher selling, general and administrative expenses and increased interest expense. Collectively, these factors resulted in the decrease in net income attributable to common stockholders.
Adjusted net income before income taxes
During the Non-GAAP Combined three months ended June 30, 2026, adjusted net income before income taxes decreased to $126.4 million from $157.4 million for the three months ended June 30, 2025. The decline was primarily driven by lower revenues and an increase in interest expense due to the increase in our composite cost of funds.
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Adjusted net income before income taxes is a measure of financial and operational performance that is not defined by GAAP. See “—Non-GAAP Financial Measures” below for further information on adjusted net income and reconciliation to the most closely related GAAP measures.
Comparison of the Combined Successor and Predecessor Periods for the Six Months Ended June 30, 2026 to the Six Months Ended June 30, 2025
Lease rentals
During the Non-GAAP Combined six months ended June 30, 2026, we recorded $1.27 billion in lease rental revenue, which included amortization expense related to initial direct costs and lease intangibles of $23.6 million, as compared to $1.28 billion in lease rental revenue, which included amortization expense related to initial direct costs of $45.4 million for the six months ended June 30, 2025. The decrease is primarily due to a lower weighted average net book value of our flight equipment subject to operating leases, resulting from the sale of our orderbook and continued sales activity. The net book value of our flight equipment subject to operating leases decreased to $23.9 billion as of June 30, 2026 from a net book value of $29.1 billion as of June 30, 2025. While we expect to opportunistically acquire aircraft in the future, following the Merger, our focus will be on portfolio optimization and deleveraging. We believe we will achieve this by capitalizing on the strength of the secondary trading market for aircraft sales. As such, we do not expect any significant growth in our lease rentals as we continue to optimize our fleet.
Maintenance rentals and other receipts
During the Non-GAAP Combined six months ended June 30, 2026, we recorded $10.9 million in maintenance rentals and other receipts as compared to $39.2 million for the six months ended June 30, 2025. The decrease is primarily due to lower end of lease revenue recognized. During the Non-GAAP Combined six months ended June 30, 2026, we recognized $2.7 million in end of lease revenue, as compared to $20.3 million recognized during the six months ended June 30, 2025.
Gain on aircraft sales and trading and other income
During the Non-GAAP Combined six months ended June 30, 2026, Gain on aircraft sales and trading and other income decreased to $95.4 million compared to $145.9 million for the six months ended June 30, 2025. The decrease was mainly driven by lower gains on aircraft sales due to the impact of acquisition accounting and lower management fee revenue due to a decrease in the number of managed aircraft from the prior year period. As a result of the application of the acquisition method of accounting, the carrying values of our flight equipment held for sale as of the date of the Merger were adjusted to fair value. As a result, we did not record any gains on aircraft sales for the seven aircraft sold between the April 8, 2026 closing of the Merger through June 30, 2026. During the Predecessor period from January 1, 2026 through April 7, 2026, we sold eight aircraft to third parties and entered into one sales-type lease transaction resulting in $66.0 million in gains compared to $85.2 million in gains from the sale of 20 aircraft and from one sales-type lease transaction for the six months ended June 30, 2025. Sales proceeds for the nine aircraft sold during the Non-GAAP Combined six months ended June 30, 2026 was $698.1 million.
Interest expense
During the Non-GAAP Combined six months ended June 30, 2026, we recorded $480.5 million for interest expense, which included amortization of fair value adjustments of $30.6 million, compared to $444.9 million for the six months ended June 30, 2025. The increase was primarily attributable to the amortization of fair value adjustments resulting from purchase accounting, together with an increase in our composite cost of funds from 4.28% as of June 30, 2025 to 4.33% as of June 30, 2026.
Depreciation expense
During the Non-GAAP Combined six months ended June 30, 2026, we recorded $529.6 million in depreciation expense of flight equipment compared to $603.3 million for the six months ended June 30, 2025. During the Successor period from April 8, 2026 through June 30, 2026, approximately $4.5 billion of aircraft assets were reclassified to flight equipment held for sale. We cease recognition of depreciation expense once an aircraft is classified as held for sale resulting in a decrease in our depreciation expense for the period. To comply with the acquisition method of accounting, assets acquired, including our flight equipment subject to operating leases, should be recognized on the consolidated balance sheet at fair value as of the acquisition date, with certain exceptions. We completed the valuation analyses necessary to assess the preliminary fair values of the assets acquired which impacted our
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depreciation expense post-Merger. Going forward, we expect depreciation expense to continue to track the net book value of our flight equipment subject to operating leases.
Recoveries of Russian fleet write-off
During the six months ended June 30, 2025, we recognized a net benefit of $675.9 million from the settlement of insurance claims with certain insurers under our C&P Policy comprised of $667.9 million in cash insurance settlement proceeds and an $8.0 million benefit related to our equity interest in our managed fleet. We did not have any corresponding insurance settlements during the Non-GAAP Combined six months ended June 30, 2026.
Selling, general and administrative expenses
During the Non-GAAP Combined six months ended June 30, 2026, we recorded selling, general and administrative expenses of $170.4 million, compared to $109.2 million for the six months ended June 30, 2025. Selling, general and administrative expenses increased primarily due to non-recurring merger related expenses of $73.8 million for the six months ended June 30, 2026. Selling, general and administrative expenses represented 12.3% and 7.4% as a percentage of total revenue for the Non-GAAP Combined six months ended June 30, 2026 and six months ended June 30, 2025, respectively. Excluding merger-related costs, selling, general and administrative expenses represented 7.0% of total revenue for the Non-GAAP Combined six months ended June 30, 2026.
Servicing fees
On April 8, 2026, in connection with the closing of the Merger, SMBC AC entered into a Servicing Agreement with Parent, guaranteed by the Company, to act as exclusive servicer to the Company, in respect of its aircraft leased to non-U.S. airlines. Under the Servicing Agreement, SMBC AC is responsible for the provision of technical and lease administration services, including aircraft marketing, aircraft trading, technical asset management and risk management for the aircraft leased to non-U.S. airlines. During the Successor period of April 8, 2026 to June 30, 2026, the Company incurred $6.9 million in fees pursuant to the Servicing Agreement.
Taxes
Our blended effective tax rate for the Non-GAAP Combined six months ended June 30, 2026 was 10.53% compared to 20.58%
for the six months ended June 30, 2025. The blended rate was significantly influenced by the application of Successor and Predecessor reporting following the Merger. The resulting effective tax rate was significantly distorted and is not indicative of the Company’s expected long-term effective tax rate. The effective tax rate for the Successor period from April 8, 2026 through June 30, 2026 was 14.59%.
Net income attributable to common stockholders
During the Non-GAAP Combined six months ended June 30, 2026, we reported net income attributable to common stockholders of $122.0 million, compared to net income attributable to common stockholders of $738.8 million, for the six months ended June 30, 2025. The year-over-year decline was primarily driven by lower revenues, including the absence of the $675.9 million insurance recovery related to our Russian fleet recognized in the prior-year period, as well as higher selling, general and administrative expenses and increased interest expense as discussed above. Collectively, these factors resulted in the decrease in net income attributable to common stockholders.
Adjusted net income before income taxes
During the Non-GAAP Combined six months ended June 30, 2026, we recorded adjusted net income before income taxes of $291.8 million, compared to adjusted net income before income taxes of $326.9 million, for the six months ended June 30, 2025. Our adjusted net income decreased due to decrease in revenues as discussed above and higher interest expense due to the increase in our composite cost of funds.
Adjusted net income before income taxes is a measure of financial and operational performance that is not defined by GAAP. See “—Non-GAAP Financial Measures” below for further information on adjusted net income and reconciliation to the most closely related GAAP measures.
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Non-GAAP Financial Measures
To supplement our unaudited condensed consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our operating performance. We believe that these non-GAAP financial measures provide investors with useful information about our financial performance and liquidity, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important measures used by our management for financial and operational decision-making. These non-GAAP measures should not be considered in isolation of, or as a substitute or an alternative to, measures prepared and presented in accordance with GAAP.
Adjusted debt-to-equity ratio
We define adjusted debt-to-equity ratio as adjusted debt divided by adjusted equity. Adjusted debt is defined as debt financing, net of discounts and issuance costs minus cash and cash equivalents plus a 50% equity credit with respect to our then outstanding preferred equity. Adjusted equity is defined as total stockholders’ equity minus a 50% equity credit with respect to our then outstanding preferred equity. Management believes that adjusted debt-to-equity ratio may further assist investors in their understanding of our capital structure and leverage.
We are not providing a reconciliation for our non-GAAP adjusted debt-to-equity ratio target, as we are unable to provide a meaningful calculation or estimation of reconciling items without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of items that would impact GAAP debt-to-equity ratio that have not yet occurred, are out of our control or cannot be reasonably predicted.
The following table shows the reconciliation of our adjusted debt-to-equity ratio to GAAP debt-to-equity ratio (in thousands, except ratios):
| Successor | |||||
| June 30, 2026 | |||||
| Debt financing, net of discounts and issuance costs | $ | 19,996,779 | |||
| Adjusted for: | |||||
| Cash and cash equivalents | (368,606) | ||||
| 50% credit for preferred stock | 450,000 | ||||
| Adjusted Debt | $ | 20,078,173 | |||
| Total stockholders’ equity | $ | 6,118,868 | |||
| Adjusted for: | |||||
| 50% credit for preferred stock | (450,000) | ||||
| Adjusted Equity | $ | 5,668,868 | |||
| Debt-to-equity ratio | 3.3 to 1 | ||||
| Adjusted debt-to-equity ratio | 3.5 to 1 | ||||
Adjusted Net Income Before Income Taxes and Adjusted Pre-Tax Margin
We define adjusted net income before income taxes as net (loss)/income attributable to common stockholders excluding the effects of certain non-cash items and other items that we do not believe are indicative of our ongoing operations, such as retirement compensation, merger related costs, recoveries related to our former Russian fleet, and certain other items. We define adjusted pre-tax margin as adjusted net (loss)/income before income taxes divided by total revenues. Adjusted net income before income taxes and adjusted pre-tax margin are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net (loss)/income attributable to common stockholders and pre-tax margin, or any other performance measures derived in accordance with GAAP. Adjusted net income before income taxes and adjusted pre-tax margin are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations.
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Management and our board of directors use adjusted net income before income taxes and adjusted pre-tax margin to assess our consolidated financial and operating performance. Management believes these measures are helpful in evaluating the operating performance of our ongoing operations and identifying trends in our performance, because they remove the effects of certain non-cash items, and other items that we do not believe are indicative of our ongoing operations. Adjusted net income before income taxes and adjusted pre-tax margin, however, should not be considered in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Adjusted net income before income taxes and adjusted pre-tax margin do not reflect our cash expenditures or changes in our cash requirements for our working capital needs. In addition, our calculation of adjusted net income before income taxes and adjusted pre-tax margin may differ from the adjusted net income before income taxes and adjusted pre-tax margin, or analogous calculations of other companies in our industry, limiting their usefulness as a comparative measure.
The following table shows the reconciliation of adjusted net income before income taxes which is the numerator for adjusted pre-tax margin (in thousands, except percentages):
| Successor | Predecessor | Non-GAAP Combined | Non-GAAP Combined | |||||||||||||||||||||||||||||||||||||||||
| Period from April 8 - June 30, | Period from April 1 - April 7, | Three Months Ended June 30, | Period from January 1 - April 7, | Six Months Ended June 30, | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2026 | 2025 | 2026 | 2025 | 2026 | 2026 | ||||||||||||||||||||||||||||||||||||||
| Reconciliation of the numerator for adjusted pre-tax margin (net (loss)/income attributable to common stockholders to adjusted net income before income taxes): | ||||||||||||||||||||||||||||||||||||||||||||
| Net (loss)/income attributable to common stockholders | $ | ( | $ | $ | $ | $ | $ | 7,189 | $ | 122,003 | ||||||||||||||||||||||||||||||||||
| Amortization of debt discounts and issuance costs | 4,323 | 16,731 | ||||||||||||||||||||||||||||||||||||||||||
| Amortization of fair value adjustments | 30,596 | 30,596 | ||||||||||||||||||||||||||||||||||||||||||
| Recoveries of Russian fleet write-off | — | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | 26,608 | 31,704 | ||||||||||||||||||||||||||||||||||||||||||
| Retirement compensation expense | — | — | — | — | 9,230 | — | — | |||||||||||||||||||||||||||||||||||||
| Merger related costs | 64,725 | 51 | — | 9,106 | — | 64,776 | 73,831 | |||||||||||||||||||||||||||||||||||||
| Income tax (benefit)/expense | (1,314) | (5,732) | 101,414 | 18,274 | 197,249 | (7,046) | 16,960 | |||||||||||||||||||||||||||||||||||||
| Adjusted net income before income taxes | $ | 104,917 | $ | 21,529 | $ | 157,389 | $ | 186,908 | $ | 326,878 | $ | 126,446 | $ | 291,825 | ||||||||||||||||||||||||||||||
| Denominator for adjusted pre-tax margin: | ||||||||||||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | 641,076 | $ | 1,380,299 | |||||||||||||||||||||||||||||||||||
Adjusted pre-tax margin(a) | 18.2 | % | 32.7 | % | 21.5 | % | 23.2 | % | 22.2 | % | 19.7 | % | 21.1 | % | ||||||||||||||||||||||||||||||
| (a) Adjusted pre-tax margin is adjusted net income before income taxes divided by total revenues. | ||||||||||||||||||||||||||||||||||||||||||||
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Critical Accounting Estimates
Our critical accounting estimates reflecting management’s estimates and judgments are described in our Annual Report on Form 10-K for the year ended December 31, 2025. We have reviewed recently adopted accounting pronouncements and determined that the adoption of such pronouncements is not expected to have a material impact on our Consolidated Financial Statements. See to Note 2 and Note 3 of the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information about critical accounting policies and estimates related to the election of acquisition accounting in connection with the Merger. The allocation of the Total Purchase Price to the Company’s assets and liabilities requires the use of significant judgments to determine the inputs used to calculate preliminary estimated fair values, including long-term projections and discount rates. These fair value estimates may differ materially based upon the finalization of third-party appraisals and other valuation analyses used in connection with the acquisition accounting, which are expected no later than one year from the closing of the Merger.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of changes in the value of a financial instrument, caused by fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.
Interest Rate Risk
The nature of our business exposes us to market risk arising from changes in interest rates. Changes, both increases and decreases, in our cost of borrowing, as reflected in our composite interest rate, directly impact our net income. Lease rates, and therefore our revenue from a lease, are generally fixed over the life of our leases. We have some exposure to changing interest rates as a result of our floating-rate debt, primarily from our Revolving Credit Facility, other revolving credit facilities and unsecured term loans. As of June 30, 2026 and December 31, 2025, we had $5.2 billion and $4.6 billion in floating-rate debt outstanding, respectively. Additionally, we have outstanding preferred stock with an aggregate stated amount of $900.0 million as of June 30, 2026, which will reset the dividends to a new fixed rate based on the then-applicable treasury rate after five years from initial issuance and every five years thereafter. If interest rates remain elevated, we would be obligated to make higher interest payments to the lenders of our floating-rate debt, and higher dividend payments to the holders of our preferred stock. If we incur significant fixed-rate debt in the future, increased interest rates prevailing in the market at the time of the incurrence of such debt would also increase our interest expense. If the composite interest rate on our outstanding floating rate debt was to increase by 1.0%, we would expect to incur additional annual interest expense on our existing indebtedness of approximately $52.4 million and $46.0 million as of June 30, 2026 and December 31, 2025, respectively, each on an annualized basis, which would put downward pressure on our operating margins.
Foreign Exchange Rate Risk
We attempt to minimize currency and exchange risks by entering into aircraft purchase agreements and a majority of lease agreements and debt agreements with U.S. dollars as the designated payment currency. Thus, most of our revenue and expenses are denominated in U.S. dollars. Approximately 0.3% of our lease revenues were denominated in foreign currency as of June 30, 2026 and December 31, 2025. Additionally, some of our net investments in sales-type leases, which represent 0.5% and 0.7% of our total assets as of June 30, 2026 and December 31, 2025, respectively, were denominated in foreign currency. These investments are not currently hedged and require remeasurement as of the end of each period, exposing us to fluctuations in exchange rates that could impact our financial results and cash flows. During the six months ended June 30, 2026, we incurred a $7.4 million loss resulting from currency fluctuation based on these investments. We periodically assess our unhedged foreign currency risk and may employ hedging strategies in the future to mitigate any potential adverse effects.
Approximately 6.6% and 6.8% of our debt obligations were denominated in foreign currency as of June 30, 2026 and December 31, 2025, respectively; however, the exposure of such debt has been effectively hedged. As our principal currency is the U.S. dollar, fluctuations in the U.S. dollar as compared to other major currencies should not have a significant impact on our future operating results. However, many of our lessees are exposed to currency risk due to the fact that they earn revenues in their local currencies while a significant portion of their liabilities and expenses are denominated in U.S. dollars, including their lease payments to us, as well as fuel, debt service, and other expenses. For the six months ended June 30, 2026, more than 95% of our revenues were derived from customers who have their principal place of business outside the U.S. and most leases designated payment currency as U.S. dollars. The ability of our lessees to make lease payments to us in U.S. dollars may be adversely impacted in the event of an appreciating U.S. dollar.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC, and such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer (collectively, the “Certifying Officers”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives as the Company’s controls are designed to do, and management necessarily was required to apply its judgment in evaluating the risk related to controls and procedures.
We have evaluated, under the supervision and with the participation of management, including the Certifying Officers, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of June 30, 2026. Based on that evaluation, our Certifying Officers have concluded that our disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control Over Financial Reporting
On April 8, 2026, Air Lease Corporation completed the previously announced merger of Takeoff Merger Sub Inc. with and into Air Lease Corporation, with Air Lease Corporation surviving the merger as an indirect subsidiary of Sumisho Air Lease Corporation Designated Activity Company. Management is currently evaluating the impact of the Merger on the Company’s internal control over financial reporting. Other than the changes associated with the Merger and management’s ongoing evaluation of the related impact on internal control over financial reporting, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 15, 2025, the Company filed with the SEC a preliminary proxy statement on Schedule 14A (the “Preliminary Proxy Statement”) in connection with the special meeting of our Class A common stockholders held on December 18, 2025 (the “Special Meeting”) to, among other things, adopt and approve the Merger Agreement. On November 4, 2025, we filed with the SEC a definitive proxy statement on Schedule 14A (the “Definitive Proxy Statement”).
On November 12, 2025, plaintiff Brooke E. Bingham (the “Plaintiff”), a purported stockholder of the Company, filed a putative class action lawsuit captioned Bingham v. Air Lease Corporation, C.A. No. 2025-1308-BWD (the “Delaware Complaint”) in the Court of Chancery of the State of Delaware (the “Delaware Court”), naming as defendants the Company and members of the Board (together, the “Defendants”). The Delaware Complaint alleged, among other things, that the Board violated its fiduciary duties under Delaware law by failing to disclose purportedly material information regarding the Merger in the Definitive Proxy Statement. The Plaintiff also filed a motion for expedited proceedings and a motion for a preliminary injunction.
On November 24, 2025, two purported Class A common stockholders of the Company filed separate lawsuits against the Company and each member of our board of directors in the Supreme Court of the State of New York in New York County (the “New York Complaints” and together with the Delaware Complaint, the “Complaints”). The New York Complaints assert claims under New York common law for negligent misrepresentation and concealment and general negligence, concerning the Definitive Proxy Statement. The New York Complaints also sought to enjoin the Merger until supplemental disclosures to the Definitive Proxy Statement were made.
In addition, subsequent to the Preliminary Proxy Statement filing, the Company also received eleven demand letters from counsel representing purported Class A common stockholders of the Company. These demand letters alleged that the Preliminary Proxy Statement or the Definitive Proxy Statement violated applicable federal or state law and contained materially misleading and/or
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incomplete disclosures. These demand letters requested that the Company issue supplemental disclosures to the Definitive Proxy Statement.
On November 28, 2025, in order to reduce the risk of the Complaints delaying the Special Meeting or the closing of the Merger, and to minimize the nuisance and expense of defending against any litigation, and without admitting any liability or wrongdoing, the Company filed a Current Report on Form 8-K to update and supplement the Definitive Proxy Statement with additional disclosures relating to the Merger (the “Supplemental Disclosures”). Thereafter, the attorneys representing the Class A common stockholders who filed the Complaints acknowledged that the Supplemental Disclosures mooted the claims raised in the Complaints in their entirety and confirmed that they would seek a mootness fee in connection with the Supplemental Disclosures.
On December 4, 2025, the Delaware Court granted a stipulation and proposed order voluntarily dismissing the Delaware Complaint and retaining jurisdiction solely for the purpose of adjudicating the anticipated application of the Plaintiff’s counsel for an award of attorneys’ fees and reimbursement of expenses in connection with the Delaware Complaint (the “Fee and Expense Application”). Following negotiations, the Company, while denying any and all liability on behalf of the Defendants and maintaining that the Proxy complies fully with all applicable laws, decided it was in its and its stockholders’ best interests to pay the Plaintiff’s counsel $450,000 in attorneys’ fees and expenses to resolve the Fee and Expense Application. The Delaware Court has not been asked to review, and will pass no judgment on, the payment of these attorneys’ fees and expenses.
The New York Complaints remain pending as the mootness fee demand is resolved. The Company continues to believe that the disclosures in the Definitive Proxy Statement comply fully with all applicable laws, and denies the allegations in the Complaints and believes they are without merit. Nevertheless, resolution of these matters may involve payments by the Company to the Class A common stockholders’ attorneys that filed the New York Complaints and/or submitted the demand letters.
From time to time, we may be involved in litigation and claims incidental to the conduct of our business in the ordinary course. Our industry is also subject to scrutiny by government regulators, which could result in enforcement proceedings or litigation related to regulatory compliance matters. We are not presently a party to any material enforcement proceedings or litigation related to regulatory compliance matters. We maintain insurance policies in amounts and with the coverage and deductibles we believe are adequate, based on the nature and risks of our business, historical experience and industry standards.
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ITEM 1A. RISK FACTORS
There have been no material changes in our risk factors from those discussed under “Part I—Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2025 and under “Part II—Item 1A. Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
Rule 10b5-1 Trading Arrangements and Non-Rule 10b5-1 Trading Arrangements
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ITEM 6. EXHIBITS
| Incorporated by Reference | ||||||||||||||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | |||||||||||||||||||||||||||
| 2.1 | Agreement and Plan of Merger, dated as of September 1, 2025, by and among Air Lease Corporation, Sumisho Air Lease Corporation Designated Activity Company (formerly known as Gladiatora Designated Activity Company) and Takeoff Merger Sub Inc. | 8-K | 001-35121 | 2.1 | September 2, 2025 | |||||||||||||||||||||||||||
| 3.1 | Amended and Restated Certificate of Incorporation of Sumisho Air Lease Corporation | 8-K | 001-35121 | 3.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 3.2 | Fifth Amended and Restated Bylaws of Sumisho Air Lease Corporation | 8-K | 001-35121 | 3.2 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.1 | Indenture, dated as of March 24, 2026, by and between Takeoff Merger Sub Inc. and Computershare Trust Company, N.A. | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.2 | Registration Rights Agreement, dated as of March 24, 2026, by and among Takeoff Merger Sub Inc., SMBC Nikko Securities America, Inc., Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC. | 8-K | 001-35121 | 4.2 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.3 | Form of Rule 144A Initial Note (2028 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.4 | Form of Regulation S Initial Note (2028 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.5 | Form of Rule 144A Initial Note (2029 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.6 | Form of Regulation S Initial Note (2029 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.7 | Form of Rule 144A Initial Note (2031 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.8 | Form of Regulation S Initial Note (2031 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.9 | Form of Rule 144A Initial Note (2036 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.10 | Form of Regulation S Initial Note (2036 Notes) (included in Exhibit 4.1) | 8-K | 001-35121 | 4.1 | April 8, 2026 | |||||||||||||||||||||||||||
| 4.11 | Certain instruments defining the rights of holders of long-term debt of Sumisho Air Lease Corporation and all of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed are being omitted pursuant to paragraph (b)(4)(iii)(A) of Item 601 of Regulation S-K. Sumisho Air Lease Corporation agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request. | |||||||||||||||||||||||||||||||
| 10.1† | Servicing Agreement, dated as of April 8, 2026, by and among SMBC Aviation Capital Limited, Sumisho Air Lease Corporation DAC and Sumisho Air Lease Corporation | 10-Q | 001-35121 | 10.1 | May 7, 2026 | |||||||||||||||||||||||||||
| 10.2§ | Handover Side Letter to Servicing Agreement, dated as of July 16, 2026, by and between SMBC Aviation Capital Limited and Sumisho Air Lease Corporation DAC. | Filed herewith | ||||||||||||||||||||||||||||||
| 10.3§ | Form of Grant Notice and Standard Terms and Conditions for 2023 Equity Incentive Plan Cash Awards (Time-Based Vesting). | 10-Q | 001-35121 | 10.2 | May 7, 2026 | |||||||||||||||||||||||||||
| 10.4§ | Sumisho Air Lease Corporation Annual 2026 Cash Bonus Plan. | 8-K | 001-35121 | 10.1 | April 17, 2026 | |||||||||||||||||||||||||||
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| Incorporated by Reference | ||||||||||||||||||||||||||||||||
| Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | |||||||||||||||||||||||||||
| 10.5† | First Amendment to Term Loan Credit Agreement, dated as of March 25, 2026, by and among Sumisho Air Lease Finance Corporation, Takeoff Merger Sub Inc., Sumitomo Mitsui Banking Corporation and the lenders party thereto. | 8-K | 001-35121 | 10.3 | April 8, 2026 | |||||||||||||||||||||||||||
| 10.6† | First Amendment to Revolving Credit Agreement, dated as of March 25, 2026, by and among Sumisho Air Lease Finance Corporation, Takeoff Merger Sub Inc., Sumitomo Mitsui Banking Corporation and the lenders party thereto. | 8-K | 001-35121 | 10.4 | April 8, 2026 | |||||||||||||||||||||||||||
| 10.7§ | Form Indemnification Agreement | 8-K | 001-35121 | 10.5 | April 8, 2026 | |||||||||||||||||||||||||||
| 10.8§ | Employment Agreement between ALC Aircraft Limited and David Swan, dated May 2026. | Filed herewith | ||||||||||||||||||||||||||||||
| 10.9§ | Offer of Employment between Sumisho Air Lease Corporation and Sabrina Lemmens, dated April 8, 2026. | Filed herewith | ||||||||||||||||||||||||||||||
| 10.10§ | Form of Tax Equalization Agreement (CEO, CCO, CFO). | Filed herewith | ||||||||||||||||||||||||||||||
| 31.1 | Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||||||||||||||||||||||||||||
| 31.2 | Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith | ||||||||||||||||||||||||||||||
| 32.1 | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Furnished herewith | ||||||||||||||||||||||||||||||
| 32.2 | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Furnished herewith | ||||||||||||||||||||||||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |||||||||||||||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents | |||||||||||||||||||||||||||||||
| 104 | The cover page from Sumisho Air Lease Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL and contained in Exhibit 101 | |||||||||||||||||||||||||||||||
† The Company has omitted portions of the referenced exhibit pursuant to Item 601(b) of Regulation S-K because it (a) is not material and (b) is the type that the Company treats as private or confidential.
§ Management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SUMISHO AIR LEASE CORPORATION | |||||
| August 10, 2026 | /s/ Noriyuki Hiruta | ||||
| Noriyuki Hiruta | |||||
| Chief Executive Officer, President and Secretary | |||||
| (Principal Executive Officer) | |||||
| August 10, 2026 | /s/ Sabrina Lemmens | ||||
| Sabrina Lemmens | |||||
| Chief Financial Officer | |||||
| (Principal Financial Officer and Principal Accounting Officer) | |||||
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