Willis Lease Finance Corporation (NASDAQ: WLFC) posts $1.31 Q2 diluted EPS
Willis Lease Finance Corporation reported first-half 2026 results showing higher activity and a reshaped capital structure. Total revenue was $ 388,363 (in thousands), up from $ 353,234, driven by stronger lease rent, gains on sale of leased equipment, and growing management and advisory fees.
Net income attributable to WLFC was $ 55,251 (in thousands) and diluted earnings per share were $ 2.39 for the six months ended June 30, 2026. Total assets were $ 3,653,176 (in thousands), with debt obligations of $ 2,320,904 (in thousands) and WLFC shareholders’ equity of $ 708,596 (in thousands).
The company issued $ 200.0 million of 2.50% Convertible Senior Notes due 2031 and expanded its revolving credit facility to $ 1.75 billion, now maturing in April 2031. It continued to grow fee-based joint ventures and investment funds that purchased engines, notes and leases from WLFC. After quarter-end, WLFC agreed to acquire WNG II Aircraft Leasing (Cayman) Ltd. and an affiliated manager for a base purchase price of approximately $ 379.3 million, completed a three-for-one stock split, and the Board declared a $ 0.133 quarterly dividend.
Positive
- None.
Negative
- None.
Filing Explained
Convertible notes create potential dilution, while $1.0 billion of equipment purchases remain disclosed future commitments.
Form 10-Q is the company’s unaudited quarterly report; this filing records the completed issuance of
The notes carry a
The company has agreed to acquire the equity interests in certain aircraft-leasing entities for a base price of approximately
The filing also discloses
The next material state changes are conversion of the notes, closing of the acquisition, and fulfillment or revision of the disclosed purchase commitments.
Key Figures
Total revenue: $ 388,363
Net income attributable to WLFC: $ 55,251
Diluted EPS: $ 2.39
+5 more
8 metrics
Total revenue
$ 388,363
Six months ended June 30, 2026 total revenue (in thousands)
Net income attributable to WLFC
$ 55,251
Six months ended June 30, 2026 (in thousands)
Diluted EPS
$ 2.39
Diluted weighted average earnings per common share, six months ended June 30, 2026
Total assets
$ 3,653,176
Total assets as of June 30, 2026 (in thousands)
Debt obligations
$ 2,320,904
Total debt obligations as of June 30, 2026 after unamortized costs (in thousands)
Revolving credit facility commitment
$ 1.75 billion
Committed amount of revolving credit facility, revolving until April 2031
Convertible Senior Notes
$ 200.0 million
Aggregate principal amount of 2.50% Convertible Senior Notes due May 2031
WNG acquisition price
$ 379.3 million
Base purchase price to acquire WNG II Aircraft Leasing (Cayman) Ltd. and an affiliate
Key Terms
variable interest entities, cash flow hedges, Convertible Senior Notes, fair value hierarchy, +1 more
5 terms
variable interest entities financial
"include the following assets of variable interest entities (“VIEs”) that can only be used"
A variable interest entity (VIE) is a business that a company controls through contracts or special arrangements instead of owning a majority of its shares, like steering a puppet without holding its ticket. Investors care because these arrangements can hide who really bears the financial risks and rewards, affect how assets and liabilities appear on financial statements, and create extra legal or enforcement uncertainty that can change the value and risk of an investment.
cash flow hedges financial
"designated as cash flow hedges at inception and recorded at fair value"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
Convertible Senior Notes financial
"issued $200.0 million aggregate principal amount of 2.50% Convertible Senior Notes"
Convertible senior notes are a type of loan that a company issues to investors, which can be turned into company shares later on. They are called "senior" because they are paid back before other debts if the company runs into trouble. This allows investors to earn interest like a loan but also have the chance to own part of the company if its value rises.
fair value hierarchy financial
"Accounting standards establish a fair value hierarchy which requires an entity"
maintenance reserve revenue financial
"Maintenance reserve revenue | 46,456 | 50,743 | 101,968 | 105,602"
Maintenance reserve revenue is money a company receives specifically to cover future upkeep or repairs on an asset, like machinery, vehicles, or leased equipment. Think of it as a repair fund paid in advance by a customer: investors watch it because it boosts cash flow now but may not represent actual profit until the related maintenance work is done, so it affects how you judge a company’s true earnings and future repair costs.
AI-generated analysis. How Rhea-AI works. Not financial advice.
See more from StockTitan in Google Search and AI answers.
Adds StockTitan as a preferred source · opens Google
FAQ
How did Willis Lease Finance (WLFC) perform financially in the first half of 2026?
Willis Lease Finance generated total revenue of $ 388,363 (in thousands) and net income attributable to WLFC of $ 55,251 (in thousands) for the six months ended June 30, 2026, with diluted EPS of $ 2.39.
What is WLFC’s debt and balance sheet position as of June 30, 2026?
As of June 30, 2026, WLFC reported total assets of $ 3,653,176 (in thousands), debt obligations of $ 2,320,904 (in thousands), and WLFC shareholders’ equity of $ 708,596 (in thousands), reflecting a leveraged but equity-supported balance sheet.
What major financing actions did Willis Lease Finance (WLFC) take in 2026?
In 2026 WLFC issued $ 200.0 million of 2.50% Convertible Senior Notes due 2031 and expanded its revolving credit facility commitments from $ 1.0 billion to $ 1.75 billion, extending the facility’s maturity to April 2031 and terminating its WWFL credit facility.
What is the WNG II Aircraft Leasing acquisition announced by WLFC?
On July 10, 2026, a WLFC subsidiary agreed to acquire 100% of WNG II Aircraft Leasing (Cayman) Ltd. and WNG Aircraft Management 3, LLC for a base purchase price of approximately $ 379.3 million, subject to customary closing conditions and purchase price adjustments.
Did WLFC undertake a stock split or dividend action in 2026?
Yes. On July 17, 2026, WLFC effected a three-for-one forward stock split, with trading on a split-adjusted basis from July 21, 2026. On July 29, 2026, the Board declared a $ 0.133 quarterly dividend per common share, payable August 21, 2026.
What significant purchase and service commitments does WLFC have outstanding?
As of June 30, 2026, WLFC had $ 1.0 billion in equipment purchase commitments expected within five fiscal years and Pratt & Whitney overhaul and maintenance obligations estimated between $ 106.6 million and $ 132.1 million by 2030, potentially up to $ 172.7 million by 2035.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission File Number: 001-15369
______________________________________________________________________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code (561 ) 349-9989
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of exchange on which registered | ||||||||||||
______________________________________________________________________
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.
| Large Accelerated Filer | ☐ | ☒ | |||||||||
| Non-Accelerated Filer | ☐ | Smaller Reporting Company | |||||||||
| Emerging Growth Company | |||||||||||
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 ☒
The number of shares of the registrant’s Common Stock outstanding as of July 31, 2026 was 21,144,111 .
Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
INDEX
PART I. | FINANCIAL INFORMATION | 4 | ||||||
Item 1. | Condensed Consolidated Financial Statements (Unaudited) | 4 | ||||||
Condensed Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025 | 4 | |||||||
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025 | 6 | |||||||
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2026 and 2025 | 8 | |||||||
Condensed Consolidated Statements of Redeemable Preferred Stock and Equity for the three and six months ended June 30, 2026 and 2025 | 9 | |||||||
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 | 11 | |||||||
Notes to Condensed Consolidated Financial Statements | 13 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 33 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 43 | ||||||
Item 4. | Controls and Procedures | 43 | ||||||
PART II. | OTHER INFORMATION | 43 | ||||||
Item 1. | Legal Proceedings | 43 | ||||||
Item 1A. | Risk Factors | 43 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 44 | ||||||
Item 3. | Defaults Upon Senior Securities | 44 | ||||||
Item 4. | Mine Safety Disclosures | 44 | ||||||
Item 5. | Other Information | 44 | ||||||
Item 6. | Exhibits | 46 | ||||||
2
Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business, operations, growth strategy and service development efforts, the potential impact of changes in interest rates or inflation, as well as the impact of new or increased tariffs on the Company’s business, operating results and financial condition, and the execution of our quarterly dividend and stock repurchase program. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in or projected by forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “may,” “might,” “should,” “estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,” “outlook,” “believe,” “forecast” and other similar expressions are intended to identify forward-looking statements and information. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 10, 2026, as amended by our Amendment to the Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on March 30, 2026 (together, the “2025 Form 10-K”), this quarterly report on Form 10-Q for the three and six months ended June 30, 2026, and our other reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law. Reference is also made to such risks and uncertainties detailed from time to time in our other filings with the SEC.
3
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
| June 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Equipment held for operating lease, less accumulated depreciation of $ | |||||||||||
| Maintenance rights | |||||||||||
| Equipment held for sale | |||||||||||
Receivables, net of allowances of $ | |||||||||||
| Spare parts inventory | |||||||||||
| Investments | |||||||||||
Property, equipment & furnishings, less accumulated depreciation of $ | |||||||||||
| Intangible assets, net | |||||||||||
Notes receivable, net of allowances of $ | |||||||||||
Investments in sales-type leases, net of allowances of $ | |||||||||||
| Due from affiliates | |||||||||||
| Other assets | |||||||||||
| Total assets (1) | $ | $ | |||||||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY | |||||||||||
| Liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Deferred income taxes | |||||||||||
| Debt obligations | |||||||||||
| Maintenance reserves | |||||||||||
| Security deposits | |||||||||||
| Unearned revenue | |||||||||||
| Due to affiliates | |||||||||||
| Total liabilities (2) | |||||||||||
Redeemable preferred stock ($ | |||||||||||
| Shareholders’ equity: | |||||||||||
Common stock ($ | |||||||||||
| Paid-in capital in excess of par | |||||||||||
| Retained earnings | |||||||||||
Accumulated other comprehensive income (loss), net of income tax expense (benefit) of $ | ( | ||||||||||
Total Willis Lease Finance Corporation (“WLFC”) shareholders’ equity | |||||||||||
4
Table of Contents
| Noncontrolling interests | |||||||||||
Total equity | |||||||||||
| Total liabilities, redeemable preferred stock and equity | $ | $ | |||||||||
_____________________________
(1)Total assets at June 30, 2026 and December 31, 2025, include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs: Restricted cash $161,497 and $530,500 ; Equipment $1,752,419 and $1,892,356 ; Maintenance rights $18,801 and $19,502 ; Notes receivable $67,656 and $139,538 ; Investments in sales-type leases $0 and $15,774 ; and Other assets $9,640 and $9,759 (each respectively).
(2)Total liabilities at June 30, 2026 and December 31, 2025, include the following liabilities of VIEs for which the VIEs’ creditors do not have recourse to Willis Lease Finance Corporation: Debt obligations $1,533,540 and $1,933,119 , respectively. Further, refer to Note 6 of the Condensed Consolidated Financial Statements for details of the Company’s commitments and contingencies.
See accompanying notes to the unaudited condensed consolidated financial statements.
5
Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| REVENUE | |||||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | $ | |||||||||||||||||||
| Maintenance reserve revenue | |||||||||||||||||||||||
| Spare parts and equipment sales | |||||||||||||||||||||||
| Interest revenue | |||||||||||||||||||||||
| Gain on sale of leased equipment | |||||||||||||||||||||||
| Gain on sale of financial assets | |||||||||||||||||||||||
| Maintenance services revenue | |||||||||||||||||||||||
| Management and advisory fees | |||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Depreciation and amortization expense | |||||||||||||||||||||||
| Cost of spare parts and equipment sales | |||||||||||||||||||||||
| Cost of maintenance services | |||||||||||||||||||||||
| Write-down of equipment | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Technical expense | |||||||||||||||||||||||
| Net finance costs: | |||||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Loss on debt extinguishment | |||||||||||||||||||||||
| Total net finance costs | |||||||||||||||||||||||
| Total expenses | |||||||||||||||||||||||
| Income from operations | |||||||||||||||||||||||
| Gain on sale of business | |||||||||||||||||||||||
| Income from investments | |||||||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Net income attributable to noncontrolling interests | |||||||||||||||||||||||
| Net income attributable to WLFC | |||||||||||||||||||||||
| Preferred stock dividends | |||||||||||||||||||||||
| Accretion of preferred stock issuance costs | |||||||||||||||||||||||
| Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average income per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted weighted average income per common share | $ | $ | $ | $ | |||||||||||||||||||
6
Table of Contents
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
7
Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Currency translation adjustment | |||||||||||||||||||||||
| Unrealized gain (loss) on derivative instruments | ( | ( | |||||||||||||||||||||
| Reclassification of gain on derivative instruments to interest expense | ( | ||||||||||||||||||||||
| Share of unrealized gain (loss) on derivative instruments at equity method investees | ( | ( | |||||||||||||||||||||
| Net gain (loss) recognized in other comprehensive income | ( | ( | |||||||||||||||||||||
| Tax expense (benefit) related to items of other comprehensive income | ( | ( | |||||||||||||||||||||
| Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive income attributable to non-controlling interests | ( | ( | |||||||||||||||||||||
| Comprehensive income attributable to WLFC | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
8
Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Redeemable Preferred Stock and Equity
Three months ended June 30, 2026 and 2025
(In thousands)
(Unaudited)
| Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total WLFC Shareholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2026 | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to WLFC | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recallable return of capital | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from derivative instruments, net of tax expense of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net unrealized loss from derivative instruments | — | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive Income | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
| Balances at March 31, 2025 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized loss from derivative instruments, net of tax benefit of $ | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balances at June 30, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
9
Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Redeemable Preferred Stock and Equity
Six months ended June 30, 2026 and 2025
(In thousands)
(Unaudited)
| Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total WLFC Shareholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2025 | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to WLFC | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recallable return of capital | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from derivative instruments, net of tax expense of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net realized gain from derivative instruments, net of tax expense of $ | — | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net unrealized loss from derivative instruments | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at June 30, 2026 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of par | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balances at December 31, 2024 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized gain from currency translation adjustment, net of tax expense of $ | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Net unrealized loss from derivative instruments, net of tax benefit of $ | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Shares issued under stock compensation plans | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of restricted stock in satisfaction of withholding tax | — | — | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense, net of forfeitures | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Accretion of preferred shares issuance costs | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Common stock cash dividends paid ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends ($ | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Balances at June 30, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
10
Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Six months ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization expense | |||||||||||
| Gain on sale of leased equipment | ( | ( | |||||||||
| Stock-based compensation expense | |||||||||||
| Loss on debt extinguishment | |||||||||||
| Income from investments | ( | ( | |||||||||
| Accretion of deferred costs and note discounts | |||||||||||
| Write-down of equipment | |||||||||||
| Payments received on sales-type leases | |||||||||||
| Gain on derivative instruments | ( | ||||||||||
| Gain on sale of financial assets | ( | ( | |||||||||
| (Gain) loss on disposal of property, equipment and furnishings | ( | ||||||||||
| Allowances and provisions | ( | ||||||||||
| Gain on sale of business | ( | ||||||||||
| Amortization of contract asset | |||||||||||
| Deferred income taxes | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Receivables | ( | ( | |||||||||
| Inventory | |||||||||||
| Other assets | |||||||||||
| Due from affiliates | ( | ||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Maintenance reserves | |||||||||||
| Security deposits | ( | ||||||||||
| Unearned revenue | ( | ( | |||||||||
| Due to affiliates | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of equipment held for operating lease and for sale | ( | ( | |||||||||
| Proceeds from sale of equipment (net of selling expenses) | |||||||||||
| Proceeds from sale of notes receivable (net of selling expenses) | |||||||||||
| Issuance of notes receivable | ( | ||||||||||
| Purchase of investments and contributions to joint ventures | ( | ( | |||||||||
| Proceeds from sale of investments in sales-type leases | |||||||||||
| Purchase of property, equipment and furnishings | ( | ( | |||||||||
| Payments received on notes receivable | |||||||||||
| Proceeds from sale of business (net of cash and cash equivalents sold with business) | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Principal payments on debt obligations | ( | ( | |||||||||
| Proceeds from debt obligations | |||||||||||
| Cancellation of restricted stock units in satisfaction of withholding tax | ( | ( | |||||||||
| Debt issuance costs | ( | ( | |||||||||
| Common stock cash dividends paid | ( | ( | |||||||||
| Debt extinguishment payments | ( | ||||||||||
| Preferred stock dividends | ( | ( | |||||||||
| Contributions from non-controlling interest holders | |||||||||||
| Proceeds from shares issued under stock compensation plans | |||||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
11
Table of Contents
| (Decrease) increase in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Net cash paid for (refunded): | |||||||||||
| Interest | $ | $ | |||||||||
| Income Taxes | $ | ( | $ | ||||||||
| Supplemental disclosures of non-cash activities: | |||||||||||
| Transfers from Equipment held for operating lease to Equipment held for sale | $ | $ | |||||||||
| Transfers from Equipment held for operating lease to Spare parts inventory | $ | $ | |||||||||
| Transfers from Equipment held for sale to Equipment held for operating lease | $ | $ | |||||||||
| Transfers from Notes receivable to Equipment held for operating lease | $ | $ | |||||||||
| Transfers from Notes receivable to Equipment held for sale | $ | $ | |||||||||
| Contributions to joint ventures | $ | $ | |||||||||
| Proceeds from sale of business | $ | $ | |||||||||
| Additions to Equipment held for operating lease (1) | $ | $ | |||||||||
| Accretion of preferred stock issuance costs | $ | $ | |||||||||
_____________________________
1.During the six months ended June 30, 2025, the Company engaged in an exchange transaction with a third party in which the Company sold aircraft engines in exchange for aircraft engines. This transaction was accounted for under Accounting Standards Codification (“ASC”) 805 and ASC 845 and resulted in $4.6 million in non-cash additions to equipment held for operating lease for the associated total gain.
See accompanying notes to the unaudited condensed consolidated financial statements.
12
Table of Contents
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2026
(Unaudited)
Unless the context requires otherwise, references to the “Company,” “WLFC,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to Willis Lease Finance Corporation and its subsidiaries.
1. Summary of Significant Accounting Policies
The significant accounting policies of the Company were described in Note 1 to the Audited Consolidated Financial Statements included in the Company’s 2025 Form 10-K. There have been no significant changes in the Company’s significant accounting policies for the six months ended June 30, 2026.
In March and April 2026, the Company commenced operations as the general partner of two investment fund partnerships. The Company accounts for its investments in these investment fund partnerships under the equity method of accounting and recognizes management and advisory fees in accordance with its existing revenue recognition policies.
(a) Basis of Presentation
The accompanying Unaudited Condensed Consolidated Financial Statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), consistent in all material respects with those applied in the 2025 Form 10-K, for interim financial information and in accordance with the rules and regulations of the SEC. Therefore, they do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the 2025 Form 10-K. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the Condensed Consolidated Balance Sheets, Statements of Income, Statements of Comprehensive Income, Statements of Redeemable Preferred Stock and Shareholders’ Equity, and Statements of Cash Flows for such interim periods presented. Operating results for interim periods are not necessarily indicative of the results that can be expected for a full year.
On July 17, 2026, the Company effected a three -for-one forward stock split through an amendment to its Certificate of Incorporation. Trading on a split-adjusted basis commenced on July 21, 2026. All share and per share amounts, as well as common stock and additional paid-in capital balances, presented in these Condensed Consolidated Financial Statements have been retroactively adjusted to reflect the stock split.
Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. These reclassifications had no effect on the reported total revenue, income from operations, or net income. The following is a summary of the changes to the presentation in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2025:
•Management and advisory fees primarily consist of fees earned from the Company’s investment fund partnerships in its role as general partner and fees related to servicing the Willis Mitsui & Company Engine Support Limited (“WMES”) and third-party lease portfolios, including ongoing management and transactional services such as marketing and procurement. In prior periods, servicing fees were included in “Other revenue.” For the three and six months ended June 30, 2025, $2.6 4.6
In accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. In preparing these Unaudited Condensed Consolidated Financial Statements, management has made its best estimates and judgments of certain amounts included therein, giving due consideration to materiality. These estimates and judgments are based on historical experience and other assumptions that management believes are reasonable and take into account the economic implications of factors such as changes in interest rates, inflation, and new or increased tariffs on the Company’s critical and significant accounting estimates.
13
Table of Contents
The application of these accounting policies requires the use of judgment and assumptions regarding matters that are inherently uncertain; accordingly, actual results may differ materially from those estimates. Significant estimates reflected in the accompanying Unaudited Condensed Consolidated Financial Statements include, among others, those related to intangible assets, long-lived assets, equipment held for sale, allowances for doubtful accounts and credit losses, inventory, deferred in-substance fixed payment use fees included in “Unearned revenue” on the Condensed Consolidated Balance Sheets, the Company’s share of earnings or losses from equity method investments based on net asset value, which reflects changes in the fair value of the underlying investments, and income taxes.
Given the uncertainty surrounding future changes in interest rates, inflation, potential new or increased tariffs, and broader macroeconomic and geopolitical conditions, the Company will continue to evaluate the nature and extent of such impacts on its business, results of operations, and financial condition.
(b) Principles of Consolidation
The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, as well as VIEs, for which the Company is the primary beneficiary, in accordance with consolidation guidance. The Company evaluates all entities in which it has an economic interest to determine whether such entities are VIEs or voting interest entities (“VOEs”).
For entities determined to be VIEs, the Company consolidates the entity if it has a controlling financial interest, defined as the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. For entities determined to be VOEs, the Company consolidates the entity when it has a controlling financial interest, generally evidenced by ownership of a majority of the voting interests. Intercompany transactions and balances have been eliminated in consolidation.
(c) Risks and Uncertainties
The Company continues to monitor global macroeconomic and geopolitical conditions, including changes in interest rates, inflation, tariffs, ongoing conflicts, and the price of jet fuel, which may contribute to market volatility and potential disruptions to global aviation operations.
The duration and scope of these conflicts, including the potential for further regional escalation, remain uncertain and could adversely affect the global economy, financial markets, and our customers, which in turn could impact the Company. The ultimate extent of any such impacts will depend on future developments that are highly uncertain and not reasonably estimable at this time, and such impacts could persist for an extended period.
Other than what has been reflected in the Unaudited Condensed Consolidated Financial Statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities. Actual results could differ from those estimates and any such differences may be material to the Unaudited Condensed Consolidated Financial Statements.
(d) Recent Accounting Pronouncements
Recent Accounting Pronouncements Adopted by the Company
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The ASU provides public entities with a practical expedient when estimating expected credit losses for accounts receivable and contract assets. The practical expedient assumes that current conditions of the balance sheet do not change for the remaining life of the asset. The Company adopted ASU 2025-05 as of January 1, 2026 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Pronouncements To Be Adopted by the Company
14
Table of Contents
In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement Expenses.” The ASU requires public entities, on both an interim and annual basis, to disclose additional disaggregated information about specific expense categories in the notes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company expects to adopt this accounting standard update for the year ended December 31, 2027 and is currently evaluating the potential effects on the consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-10, “Accounting for Government Grants Received by Business Entities.” The ASU provides guidance on the recognition, measurement, presentation, and disclosure of government grants. The ASU is effective for fiscal years beginning after December 15, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting this new pronouncement.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” The amendments in this ASU are effective for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting this new pronouncement.
In May 2026, the FASB issued ASU 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818).” The ASU establishes new guidance for the accounting and disclosure of environmental credits and environmental credit obligations. The ASU is effective for public business entities for fiscal years beginning after December 15, 2027, including interim reporting periods within those fiscal years, with early adoption permitted. Based on the Company’s current operations, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements or related disclosures.
(e) Government Grant Income
Historically, there was no specific guidance in GAAP that addresses the recognition and measurement of government assistance received by a business entity. In the absence of authoritative GAAP guidance, the Company considered the application of other authoritative accounting guidance by analogy and concluded that the guidance outlined in International Accounting Standard 20 – Accounting for Government Grants and Disclosures of Government Assistance (“IAS 20”) was the most appropriate. Under IAS 20, grant income is recognized to the extent that there is reasonable assurance that the Company will comply with the conditions attached to the grant, and the grant will be received.
During the six months ended June 30, 2026, the Company received approximately $1.0 million in government grant proceeds related to its hangar construction project at Teesside International Airport. The Company was awarded the grant in May 2025, the primary intent of which is job creation. As of June 30, 2026, all proceeds received were recorded as a liability in “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets, as the associated conditions for recognition had not yet been met. During the year ended December 31, 2025, the Company received approximately $1.7 million in grant proceeds related to the same project. As of June 30, 2026, approximately $1.5 million of such proceeds remained recorded as a liability for the same reason. These amounts will be recognized as a reduction of personnel expenses within “General and administrative expenses” as qualifying jobs are created.
Additionally, with respect to the Company’s sustainable aviation fuel project, which was suspended in December 2025, the Company recognized approximately $1.6 million of government grant income during the six months ended June 30, 2026, recorded as a reduction of “General and administrative expenses” in the Condensed Consolidated Statements of Income. The timing of recognition was based on the terms of the grant agreement and communications with the grantor.
2. Equipment Held for Operating Lease and Notes Receivable
As of June 30, 2026, the Company had $2,783.4 million of equipment held in our operating lease portfolio, $89.3 million of notes receivable, and $83.6 million of maintenance rights, which represented 334 engines, 22 aircraft, one marine vessel, and other leased parts and equipment. As of December 31, 2025, the Company had $2,801.7 million of equipment held in our operating lease portfolio, $139.9 million of notes receivable, $30.6 million of maintenance rights, and $16.6 million of investments in sales-type leases, which represented 363 engines, 20 aircraft, one marine vessel and other leased parts and equipment.
15
Table of Contents
The following table disaggregates equipment held for operating lease by asset class (in thousands):
| June 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Gross Value | Accumulated Depreciation | Net Book Value | Gross Value | Accumulated Depreciation | Net Book Value | ||||||||||||||||||||||||||||||
| Engines and related equipment | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Aircraft and airframes | ( | ( | |||||||||||||||||||||||||||||||||
| Marine vessel | ( | ( | |||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||
Notes Receivable and Investments in Sales-Type Leases
During the three months ended June 30, 2026 and 2025, the Company recorded interest revenue related to the notes receivable and investments in sales-type leases of $1.2 million and $3.6 million, respectively, and $4.0 million and $7.6 million during the six months ended June 30, 2026 and 2025, respectively. During the three and six months ended June 30, 2026, certain of these assets were sold to one of the Company’s unconsolidated investment fund partnerships, for which the Company recognizes its share of earnings under the equity method. The effective interest rates on the Company’s notes receivable and investments in sales-type leases ranged from 7.6 % to 12.2 % as of June 30, 2026 and 6.0 % to 12.2 % as of June 30, 2025.
3. Investments
Joint Ventures
In 2011, the Company entered into an agreement with Mitsui & Co., Ltd. to form a joint venture, Willis Mitsui & Company Engine Support Limited (“WMES”), a Dublin-based Irish limited company that acquires and leases jet engines. Each partner holds a 50 % interest, and the Company uses the equity method in recording investment activity. As of June 30, 2026, WMES owned a lease portfolio of 75 engines and two aircraft, and other parts and equipment with a net book value of $713.8 million.
In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to form a joint venture, CASC Willis Lease Company Limited (“CASC Willis”), a Shanghai-based Chinese limited company that acquires and leases jet engines to Chinese airlines. Each partner holds a 50 % interest, and the Company uses the equity method in recording investment activity. As of June 30, 2026, CASC Willis owned a lease portfolio of six engines with a net book value of $51.5 million.
In March 2025, the Company entered into an agreement with independent MRO (Maintenance, Repair and Overhaul) provider, Global Engine Maintenance, to form Willis Global Engine Testing (“WGET”), a joint venture established to develop an engine test facility in West Palm Beach, Florida. The Company has a 70 % membership interest in WGET; however, WGET is a VIE for which the Company is not the primary beneficiary, as decision-making authority over the activities that most significantly impact economic performance is shared between the partners. Accordingly, WGET is not consolidated, and the Company uses the equity method in recording investment activity. The Company’s maximum exposure to loss is limited to its investment of $4.1 million. In 2025, WGET entered into a contract for the design of the engine test facility. The Company anticipates its portion of the remaining committed amount, which will be funded through future contributions, to be approximately $22.4 million.
The following table presents a roll forward of the Company’s investments in joint ventures:
| (in thousands) | ||||||||||||||||||||||||||
| Investments in joint ventures as of December 31, 2025 | $ | |||||||||||||||||||||||||
| Income from joint ventures | ||||||||||||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||||||||||||
| Other comprehensive gain from joint ventures | ||||||||||||||||||||||||||
| Contributions | ||||||||||||||||||||||||||
| Investments in joint ventures as of June 30, 2026 | $ | |||||||||||||||||||||||||
As of June 30, 2026 and as of December 31, 2025, the currency translation adjustment balance was $0.7 million and $1.4 million, respectively.
16
Table of Contents
“Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $2.0 million and $1.8 million during the three months ended June 30, 2026 and 2025, respectively, and $3.9 million and $3.0 million during the six months ended June 30, 2026 and 2025, respectively, related to the servicing of engines for the WMES lease portfolio. Additionally, “Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $0.2 No
During the six months ended June 30, 2026, the Company sold five engines to WMES for a total of $55.3 million, which resulted in a total gain of $15.3 million for the Company. During the six months ended June 30, 2025, the Company sold three engines and one airframe to WMES for $32.2 million, which resulted in a total gain of $1.6 million for the Company. Additionally, during the six months ended June 30, 2025, the Company sold one engine to WMES for $21.1 million, which resulted in a trading profit of $1.4 million for the Company.
During the six months ended June 30, 2026, the Company did no t purchase any engines from WMES. During the six months ended June 30, 2025, the Company purchased an engine from WMES for $7.2 million.
During the six months ended June 30, 2026, the Company did no t purchase or sell any engines to CASC Willis. During the six months ended June 30, 2025, the Company sold one engine to CASC Willis for $6.1 million, which resulted in no gain or loss for the Company.
The Company subleased two WMES engines to a third party, with WMES as head lessor. During the six months ended June 30, 2026, one lease continued on a noncancellable three-month term and the other continued on a month-to-month basis. Lease expense for the head lease, recorded in “Technical expense,” was $0.7 million and $0.7 million for the three months ended June 30, 2026 and 2025, respectively, and $1.4 million and $1.3 million for the six months ended June 30, 2026 and 2025, respectively.
During the six months ended June 30, 2026, the Company paid WMES $1.4 million for fleet management services.
During the six months ended June 30, 2026, the Company made capital contributions of $29.5 million to WMES.
Investment Fund Partnerships
In December 2025, the Company entered into investment fund partnerships with Liberty Mutual Investments (“LMI”) and Blackstone Credit & Insurance (“BXCI”) (together, the “Funds”), referred to as the LMI Fund and the BXCI Fund, respectively. The LMI Fund is expected to invest up to $600 million in loan and loan-like aircraft engine financings and is supported by a warehouse debt facility, while the BXCI Fund is expected to deploy over $1 billion in assets similar to our lease portfolio, including current and next-generation aircraft engines, and is also supported by a warehouse debt facility.
The Company holds a general partnership interest in each Fund but is not the majority owner. The Company holds ownership interests of approximately 10.0 % and 17.5 % in the LMI Fund and the BXCI Fund, respectively. The limited partners retain substantive kick-out rights, including the ability to liquidate the Funds by simple majority vote. Accordingly, under ASC 810, Consolidation, each Fund is a voting interest entity that the Company does not consolidate, and the Company accounts for its investments under the equity method.
The LMI Fund commenced operations in March 2026, and the BXCI Fund commenced operations in April 2026.
The following table presents a roll forward of the Company’s investments in funds:
| (in thousands) | |||||
| Investments in funds as of December 31, 2025 | $ | ||||
| Investment income | |||||
| Other comprehensive loss from funds | ( | ||||
| Contributions | |||||
| Investments in funds as of June 30, 2026 | $ | ||||
17
Table of Contents
During the six months ended June 30, 2026, the Company sold 12 notes receivable and investments in sales-type leases to the LMI Fund, for a total of $104.0 million, which resulted in a total gain of $0.6 million for the Company. Also during the six months ended June 30, 2026, the Company sold 14 aircraft engines to the BXCI Fund, for a total of $216.2 million, which resulted in a total gain of $33.3 million for the Company.
The Company, as general partner of the Funds, earns management and advisory fees for providing asset management, administrative, and other advisory services to the Funds, which may also include reimbursement of costs incurred by the Company on behalf of the Funds. The Company also earns management fees for managing assets owned by third parties. Revenue is recognized over time as the related services are performed because the customer simultaneously receives and consumes the benefits of the Company’s performance. Reimbursements of eligible expenses are recognized when the underlying costs are incurred and the Company has a right to consideration. For the three and six months ended June 30, 2026, management and advisory fee income was $2.8 million and $7.7 million, respectively, and included in “Management and advisory fees” in the Company’s Condensed Consolidated Statements of Income. These amounts reflected a combination of management and advisory fees earned by the Company and reimbursement of in-period expenses paid by the Company on behalf of the Funds. For the six months ended June 30, 2026, there was $3.2 million in amounts due from the Funds and included in “Due from affiliates” in the Company’s Condensed Consolidated Balance Sheets. Additionally, there was $1.4 million in amounts due to the Funds and included in “Due to affiliates” in the Company’s Condensed Consolidated Balance Sheets.
In connection with the Funds, the Company’s maximum exposure to loss consists of the Company’s investment of $10.6 million and unfunded capital commitments of $35.3 million. A portion of the Company’s capital commitments is expected to be funded by certain executives and employees through participation arrangements with the Company totaling $10.0 million; however, the Company remains the primary obligor for the full amount of its commitment.
18
Table of Contents
4. Debt Obligations
Debt obligations consisted of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | |||||||||||
Credit facility at a floating rate of interest of one-month term Secured Overnight Financing Rate (“SOFR”) plus | $ | $ | |||||||||
WEST IX Series A 2025 term notes payable at a fixed rate of interest of | |||||||||||
WEST IX Series B 2025 term note payable at a fixed rate of interest of | |||||||||||
WEST VIII Series A 2025 term notes payable at a fixed rate of interest of | |||||||||||
WEST VIII Series B 2025 term note payable at a fixed rate of interest of | |||||||||||
WEST VII Series A 2023 term notes payable at a fixed rate of interest of | |||||||||||
WEST VI Series A 2021 term notes payable at a fixed rate of interest of | |||||||||||
WEST VI Series B 2021 term notes payable at a fixed rate of interest of | |||||||||||
WEST VI Series C 2021 term notes payable at a fixed rate of interest of | |||||||||||
WEST V Series A 2020 term notes payable at a fixed rate of interest of | |||||||||||
WEST V Series B 2020 term notes payable at a fixed rate of interest of | |||||||||||
WEST V Series C 2020 term notes payable at a fixed rate of interest of | |||||||||||
WEST III Series A 2017 term notes payable at a fixed rate of interest of | |||||||||||
WEST III Series B 2017 term notes payable at a fixed rate of interest of | |||||||||||
Willis Warehouse Facility LLC (“WWFL”) credit facility was terminated during the six months ended June 30, 2026 | |||||||||||
Convertible senior notes at a fixed rate of interest of | |||||||||||
Other fixed-rate engine notes (interest between | |||||||||||
| Less: unamortized debt issuance costs and note discounts | ( | ( | |||||||||
| Total debt obligations | $ | $ | |||||||||
One-month term SOFR was 3.68 % and 3.87 % as of June 30, 2026 and December 31, 2025, respectively.
Certain notes payable totaling $167.0 million as of June 30, 2026 relate to failed sale-leaseback transactions secured by eight engines. During the six months ended June 30, 2026, the Company entered into two such transactions totaling $45.0 million. The Company has options to repurchase the underlying engines at predetermined prices ranging from $14.7 million to $19.3 million per engine, exercisable between July 2031 and March 2034.
19
Table of Contents
In May 2026, the Company issued $200.0 million aggregate principal amount of 2.50 % Convertible Senior Notes due in May 2031. The notes are senior unsecured obligations of the Company and bear interest at a rate of 2.50 % per annum, payable semi-annually beginning in November 2026. The notes are initially convertible at a rate of 11.1606 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $89.60 per share, subject to customary anti-dilution adjustments and the terms and conditions of the indenture. The net proceeds from the offering were used to temporarily repay borrowings under the Company’s revolving credit facility until deployed for general corporate purposes. In connection with the offering, the Company amended its revolving credit agreement (Amendment No. 4) to permit the issuance of the notes and related transactions, as well as to make certain conforming revisions.
In March 2026, the Company terminated its WWFL credit facility as well as amended and extended its existing revolving credit facility (Amendment No. 3), increasing total commitments from $1.0 billion to $1.75 billion and extending the maturity to April 2031.
In February 2026, the Company entered into Amendment No. 2 to the Credit Agreement. Amendment No. 2 among other things, excludes certain amounts from inclusion in “Total Debt” (as defined in the Credit Agreement) that is used for purposes of calculating the “Maximum Leverage Ratio” (as defined in the Credit Agreement).
Principal outstanding at June 30, 2026 is expected to be repayable as follows:
| Year | (in thousands) | |||||||
| 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
Virtually all of the Company’s debt requires ongoing compliance with certain financial covenants, including debt and tangible net worth ratios, minimum interest coverage ratios, and other eligibility criteria including asset type, customer and geographic concentration restrictions. The Company also has certain negative financial covenant obligations that relate to such items as liens, advances, changes in business, sales of assets, dividends and stock repurchases. Compliance with these covenants is tested either monthly, quarterly or annually, as required, and the Company was in full compliance with all financial covenant requirements at June 30, 2026.
5. Derivative Instruments
The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, predominantly one-month term SOFR, with $437.0 million and $732.7 million of variable rate borrowings at June 30, 2026 and December 31, 2025, respectively. As a matter of policy, management does not use derivatives for speculative purposes. As of June 30, 2026, the Company had one interest rate swap agreement, with a total notional amount of $50.0 million. During 2021, the Company entered into four fixed-rate interest swap agreements, each having notional amounts of $100.0 million, two of which matured during the year ended December 31, 2024 and two of which matured during the six months ended June 30, 2026. During 2024, the Company entered into three fixed-rate interest swap agreements, each having notional amounts of $50.0 million, two of which were terminated during the year ended December 31, 2025 and one of which was terminated during the six months ended June 30, 2026. During 2024, the Company also entered into one fixed-rate interest swap agreement, which had a notional amount of $75.0 million, was partially terminated during the year ended December 31, 2025, and was fully terminated during the six months ended June 30, 2026. During 2025, the Company entered into one fixed-rate interest swap agreement, having a notional amount of $50.0 million, and with a remaining term of 40 months as of June 30, 2026. The derivative instruments were each designated as cash flow hedges at inception and recorded at fair value.
The following table displays the total notional amount of the Company’s outstanding fixed-rate interest swap agreements:
20
Table of Contents
| Derivatives in Cash Flow Hedging Relationships | As of June 30, | As of December 31, | ||||||||||||
| 2026 | 2025 | |||||||||||||
| (in thousands) | ||||||||||||||
| Interest rate contracts | $ | $ | ||||||||||||
The Company evaluated the effectiveness of the swap agreements to hedge the interest rate risk associated with its variable rate debt and concluded at the swap inception dates that each swap was highly effective in hedging that risk. The Company evaluates the effectiveness of the hedging relationships on an ongoing basis and concluded there was no ineffectiveness in the hedges for the period ended June 30, 2026.
The Company estimates the fair value of derivative instruments using a discounted cash flow technique. Valuation of the derivative instruments requires certain assumptions for underlying variables and the use of different assumptions would result in a different valuation. Management believes it has applied assumptions consistently during the period. The Company applies hedge accounting and accounts for the change in fair value of its cash flow hedges through other comprehensive income for all derivative instruments that are effective and for which the related forecasted transaction is probable of occurring.
The following table displays the total pre-tax (gain) loss reclassified from accumulated other comprehensive income (“AOCI”) to earnings as a result of the terminations of the interest rate derivative instruments described above, as these forecasted transactions were no longer probable of occurring:
| Derivatives in Cash Flow Hedging Relationships | As of June 30, | As of December 31, | ||||||||||||||||||
| Location of (Gain) Loss | 2026 | 2025 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest rate contracts | Interest expense | $ | ( | $ | ||||||||||||||||
The following table displays the total fair value of the Company’s outstanding fixed-rate interest swap agreements in the Condensed Consolidated Balance Sheets:
| Derivative Assets | ||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships | As of June 30, | As of December 31, | ||||||||||||||||||
| Balance Sheet Location | 2026 | 2025 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest rate contracts | Other assets | $ | $ | |||||||||||||||||
| Derivative Liabilities | ||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships | As of June 30, | As of December 31, | ||||||||||||||||||
| Balance Sheet Location | 2026 | 2025 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Interest rate contracts | Accounts payable and accrued expenses | $ | $ | |||||||||||||||||
The Company recorded an adjustment to interest expense of $(37 ) thousand and $(2.5 ) million during the three months ended June 30, 2026 and 2025, respectively, from derivative investments. The Company recorded an adjustment to interest expense of $(0.9 ) million and $(4.9 ) million during the six months ended June 30, 2026 and 2025, respectively, from derivative investments.
21
Table of Contents
Effect of Derivative Instruments on Earnings in the Condensed Consolidated Statements of Income and of Comprehensive Income
The following table provides additional information about the financial statement effects related to the cash flow hedges for the three and six months ended June 30, 2026 and 2025:
| Derivatives in Cash Flow Hedging Relationships | Amount of Unrealized Gain (Loss) Recognized in OCI on Derivatives (Effective Portion) | |||||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Interest rate contracts | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
| Total | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings when it is determined to be improbable that the forecasted transaction will occur. The ineffective portion of the hedges, if any, is recorded in earnings in the current period.
Counterparty Credit Risk
The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The counterparties for the interest rate swaps are large financial institutions that possess investment grade credit ratings. Based on these ratings, the Company believes that the counterparties are credit-worthy and that their continuing performance under the hedging agreements is probable and does not require the counterparties to provide collateral or other security to the Company.
6. Commitments, Contingencies, Guarantees and Indemnities
Other obligations
Other obligations, such as certain purchase obligations are not recognized as liabilities in the consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. As of June 30, 2026, the Company had $1.0 billion in purchase commitments of equipment that are expected to be satisfied within five fiscal years. The purchase obligations are subject to escalation based on the closing date of each transaction. Our purchase agreements generally contain terms that allow the Company to defer or cancel purchase commitments in certain situations. These deferrals or cancellations would not result in penalties or increased costs other than any potential increase due to the normal year-over-year change in engine list prices, which is akin to ordinary inflation.
In December 2020, the Company entered into definitive agreements for the purchase of 25 Pratt & Whitney aircraft engines. In connection with the purchase agreements, the Company is obligated to perform certain future overhaul and maintenance services, which are currently estimated to aggregate between $106.6 million and $132.1 million by 2030. If such services are not completed by that date, performance may extend through 2035, with total costs not expected to exceed $172.7 million.
7. Income Taxes
22
Table of Contents
Income tax expense for the three and six months ended June 30, 2026 was $7.8 million and $19.6 million, respectively. The effective tax rate for the three and six months ended June 30, 2026 was 20.5 % and 26.1 %, respectively. Income tax expense for the three and six months ended June 30, 2025 was $13.9 million and $22.3 million, respectively. The effective tax rate for the three and six months ended June 30, 2025 was 18.7 % and 22.4 %, respectively. The Company’s effective tax rates differed from the U.S. federal statutory rate of 21.0% primarily due to executive compensation exceeding $1.0 million as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and a worthless stock deduction recognized on the Company’s foreign sustainable aviation fuel subsidiary, which resulted in an ordinary tax loss.
The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur. The Company’s tax rate is subject to change based on changes in the mix of assets leased to domestic and foreign lessees, the proportion of revenue generated within and outside of each state, the amount of executive compensation exceeding $1.0 million as defined in Section 162(m) of the Code, and numerous other factors, including changes in tax law.
H.R. 1., also known as the One Big Beautiful Bill Act (“OBBBA”), was enacted on July 4, 2025. The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions. Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act. The effective tax rate for the three and six months ended June 30, 2026 considers the enactment of OBBBA, which did not have a material impact to income tax expense. OBBBA is not expected to materially impact our 2026 annual effective tax rate.
8. Fair Value Measurements
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties in contrast to a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:
•Cash and cash equivalents, restricted cash, receivables, and accounts payable: The amounts reported in the accompanying Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature.
•Notes receivable: The carrying amount of the Company’s outstanding balance on its Notes receivable as of June 30, 2026 and December 31, 2025 was estimated to have a fair value of approximately $91.9 million and $138.6 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).
•Investments in sales-type leases: The Company had no investments in sales-type leases outstanding as of June 30, 2026. The carrying amount of the Company’s outstanding balance on its Investments in sales-type leases as of December 31, 2025 was estimated to have a fair value of approximately $16.9 million, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).
23
Table of Contents
•Debt obligations: The carrying amount of the Company’s outstanding balance on its Debt obligations as of June 30, 2026 and December 31, 2025 was estimated to have a fair value of approximately $2,033.9 million and $2,419.8 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).
Assets Measured and Recorded at Fair Value on a Recurring Basis and a Nonrecurring Basis
As of June 30, 2026 and December 31, 2025, the Company measured the fair value of its interest rate swaps based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data. The Company estimates the fair value of derivative instruments using a discounted cash flow technique. The net fair value of the interest rate swaps as of June 30, 2026 was $0.9 million, representing an asset and reflected within “Other assets” on the Condensed Consolidated Balance Sheets. The net fair value of the interest rate swaps as of December 31, 2025 was $0.1 million, representing an asset of $0.4 million and a liability of $0.3 million, and reflected within “Other assets” and “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets, respectively. The Company recorded an adjustment to interest expense of $(37 ) thousand and $(2.5 ) million during the three months ended June 30, 2026 and 2025, respectively, from derivative investments. The Company recorded an adjustment to interest expense of $(0.9 ) million and $(4.9 ) million during the six months ended June 30, 2026 and 2025, respectively, from derivative investments.
Goodwill is assessed for impairment annually, at each year end by comparing the fair values of the reporting units to their carrying amounts. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.
During the six months ended June 30, 2026, the Company recognized an $8.0 million finite-lived intangible asset in connection with an acquisition of leased aircraft. The intangible asset represents the value assigned to favorable lease contracts associated with the acquired aircraft and is amortized on a straight-line basis over the remaining noncancelable lease terms of the related leases, which have a weighted-average remaining useful life of approximately one year . Amortization expense is recognized within lease rent expense in the Condensed Consolidated Statements of Income. The carrying amount of the favorable lease contract intangible asset was $8.0 million at June 30, 2026.
The Company evaluates the favorable lease contract asset recognized for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If the carrying amount is determined to be unrecoverable, an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value.
On a quarterly basis, management monitors the lease portfolio for events which may indicate that a particular asset may need to be evaluated for potential impairment. These events may include a decision to part-out or sell an asset, knowledge of specific damage to an asset, or supply/demand events which may impact the Company’s ability to lease an asset in the future. On an annual basis, even absent any such ‘triggering event’, the Company evaluates the carrying value of the assets in our lease portfolio to determine if any impairment exists.
The Company determines fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g., an offer to purchase), estimated future cash flows, changes in market conditions, and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. The Company uses Level 2 inputs to measure write-downs of equipment held for lease and equipment held for sale.
| Write-down of Equipment | |||||||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Equipment held for lease | $ | $ | $ | $ | |||||||||||||||||||
| Equipment held for sale | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
24
Table of Contents
9. Earnings Per Share
Basic earnings per common share is computed by dividing net income, less preferred stock dividends and accretion of preferred stock issuance costs, by the weighted average number of common shares outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is determined using the applicable method prescribed by U.S. GAAP, including the treasury stock method for restricted stock awards and non-qualified stock options and the if-converted method for convertible securities, as applicable. Common stock equivalents are not included in diluted earnings per share when their inclusion is anti-dilutive. Additionally, redeemable preferred stock is not convertible and does not affect dilutive shares.
Potentially dilutive securities for the three and six months ended June 30, 2026 included restricted stock awards, a non-qualified stock option, and the Company’s 2.50 % Convertible Senior Notes due 2031. The Convertible Senior Notes were evaluated using the if-converted method and were excluded from the computation of diluted earnings per common share for the three and six months ended June 30, 2026 because the average market price of the Company’s common stock did not exceed the conversion price during the period and, accordingly, the assumed conversion would have been anti-dilutive. There were approximately 537,000 and 333,000 anti-dilutive weighted shares excluded from the computations of diluted weighted average earnings per common share for the three and six months ended June 30, 2025.
The following table presents the calculation of basic and diluted earnings per share (in thousands, except per share data):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
| Potentially dilutive common shares | |||||||||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||||||||
| Basic weighted average earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted weighted average earnings per common share | $ | $ | $ | $ | |||||||||||||||||||
10. Equity
Common Stock Repurchase
In December 2024, the Board of Directors (the “Board”) approved the renewal of the existing common stock repurchase plan which allows for repurchases of up to $60.0 million of the Company’s common stock, extending the plan through December 31, 2026. Repurchased shares are immediately retired. During the six months ended June 30, 2026 and 2025, no 39.6 million of common stock was available to purchase shares under the plan.
Redeemable Preferred Stock
The rights and privileges of the Series A Preferred Stock are described below:
Voting Rights: Holders of the Series A Preferred Stock do not have general voting rights.
25
Table of Contents
Dividends: The Company’s Series A Preferred Stock accrues quarterly dividends at the rate per annum of 8.35 % per share. During the six months ended June 30, 2026 and 2025, the Company paid total preferred stock dividends of $2.7 3.0 1.1 million in preferred stock dividends accrued but not paid, or approximately $0.11 per share of the Series A Preferred Stock.
Liquidation Preference: The holders of the Series A Preferred Stock have preference in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the corporation, including a merger or consolidation. Upon such liquidation event, the Preferred Stockholders are entitled to be paid out of the assets of the Company available for distribution to its stockholders after payment of all the Company’s indebtedness and other obligations and before any payment shall be made to the holders of common stock or any other class or series of stock ranking on liquidation junior to the Preferred Stock an amount equal to $6.667 per share, plus any declared but unpaid dividends.
Redemption: The Series A Preferred Stock has no stated maturity date. The holders of the Series A Preferred Stock have the option to require the Company to redeem all or any portion of the Series A Preferred Stock for cash upon occurrence of any of the following: (i) a material breach of the Stock Purchase Agreement, (ii) changes in the ownership structure of the Company, including by means of a change of control transaction, (iii) incurrence of operating loss or ordinary loss by the Company for two consecutive fiscal years, (iv) the Company’s surplus is less than its liquidation value at certain specified measurement dates, (v) occurrence of a merger, consolidation, or sale of greater than 50% of the Company’s assets, or (vi) the occurrence of liquidity events as set forth in the Stock Purchase Agreement. The redemption price is $6.667 per share plus dividends accrued but not paid. The Company is accreting the Series A Preferred Stock to redemption value over the period from the date of issuance to the date first callable by the Series A Preferred stockholders (September 27, 2031), such that the carrying amount of the security will equal the redemption amount at the earliest redemption date.
11. Stock-Based Compensation Plans
The components of stock-based compensation expense were as follows:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| 2023 Incentive Stock Plan | $ | $ | $ | $ | |||||||||||||||||||
| Employee Stock Purchase Plan | |||||||||||||||||||||||
| Total Stock Compensation Expense | $ | $ | $ | $ | |||||||||||||||||||
Under the 2023 Incentive Stock Plan (the “2023 Plan”), stock-based compensation is generally in the form of restricted stock awards (“RSAs”). The RSAs are subject to either service-based vesting, which is typically between one and four years , in which a specific period of continued employment must pass before an award vests, or performance-based vesting, which is typically between one and three years . The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. As it relates to performance-based awards, accrual of compensation expense is based on the probable outcome of the performance condition. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date fair value of the award tranche that is actually vested at that date.
In November 2025, the Compensation Committee of the Board of Directors approved the grant of a non-qualified stock option to our Executive Chairman, to purchase up to 900,000 shares of the Company’s common stock. The option award vests in four equal annual installments and has a six-year term. The expense associated with this option is recognized on a straight-line basis over the vesting period.
As of June 30, 2026, the Company had granted 8,531,064 shares under the 2023 Plan and had 1,623,813 shares available for future issuance. The fair value of the RSAs equaled the stock price at the grant date.
26
Table of Contents
The following table summarizes the restricted stock activity during the six months ended June 30, 2026:
| Shares | |||||
| Balance of unvested shares as of December 31, 2025 | |||||
| Shares granted | |||||
| Shares forfeited | ( | ||||
| Shares vested | ( | ||||
| Balance of unvested shares as of June 30, 2026 | |||||
Under the Employee Stock Purchase Plan (“ESPP”), as amended and restated effective November 2021, 1,275,000 shares of common stock have been reserved for issuance. Eligible employees may designate no more than 10 % of their base cash compensation to be deducted each pay period for the purchase of common stock under the ESPP. Participants may purchase the lesser of 3,000 shares or $25,000 of common stock in any one calendar year. Each January 31 and July 31, shares of common stock are purchased with the employees’ payroll deductions from the immediately preceding six months at a price per share of 85 % of the lesser of the market price of the common stock on the purchase date or the market price of the common stock on the date of entry into an offering period. During the six months ended June 30, 2026 and 2025, 6,714 and 4,593 shares of common stock, respectively, were issued under the ESPP. The Company issues new shares through its transfer agent upon an employee stock purchase.
12. Reportable Segments
The Company has two reportable segments: (i) Leasing and Related Operations, which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines, and other aircraft equipment, the selective purchase and resale of commercial aircraft engines and other aircraft equipment, service and maintenance related businesses, and asset management and servicing activities, and (ii) Spare Parts Sales, which involves the purchase and resale of after-market engine parts, whole engines, engine modules, and portable aircraft components.
The Company’s Chief Operating Decision Maker (“CODM”) is Austin Willis, Chief Executive Officer. The CODM uses segment income (loss) from operations to evaluate the operating performance of each reportable segment, assess trends affecting each business, and make decisions regarding the allocation of resources, including capital investments and operational priorities. Although the Company believes there are synergies between its two reportable segments, the segments are managed separately because each requires different business strategies.
Prior period segment information is presented on a comparable basis to the basis on which current period segment information is presented and reviewed by the CODM.
27
Table of Contents
The following tables present a summary of the reportable segments (in thousands):
| Three months ended June 30, 2026 | Leasing and Related Operations | Spare Parts Sales | Eliminations | Total | ||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||||||||
| Spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||||||||
| Gain on sale of financial assets | ||||||||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||||||||
| Other revenue | ( | |||||||||||||||||||||||||
| Total revenue | ( | |||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||||
| Cost of spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Cost of maintenance services | ( | |||||||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Technical expense | ||||||||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Loss on debt extinguishment | ||||||||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||||||||
| Total expenses | ( | |||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
28
Table of Contents
| Three months ended June 30, 2025 | Leasing and Related Operations | Spare Parts Sales | Eliminations | Total | ||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||||||||
| Spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||||||||
| Other revenue | ( | |||||||||||||||||||||||||
| Total revenue | ( | |||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||||
| Cost of spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Cost of maintenance services | ( | |||||||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Technical expense | ( | |||||||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||||||||
| Total expenses | ( | |||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
29
Table of Contents
| Six months ended June 30, 2026 | Leasing and Related Operations | Spare Parts Sales | Eliminations | Total | ||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||||||||
| Spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||||||||
| Gain on sale of financial assets | ||||||||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||||||||
| Other revenue | ( | |||||||||||||||||||||||||
| Total revenue | ( | |||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||||
| Cost of spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Cost of maintenance services | ( | |||||||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Technical expense | ( | |||||||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Loss on debt extinguishment | ||||||||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||||||||
| Total expenses | ( | |||||||||||||||||||||||||
| Income (loss) from operations | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
30
Table of Contents
| Six months ended June 30, 2025 | Leasing and Related Operations | Spare Parts Sales | Eliminations | Total | ||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||
| Lease rent revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Maintenance reserve revenue | ||||||||||||||||||||||||||
| Spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Interest revenue | ||||||||||||||||||||||||||
| Gain on sale of leased equipment | ||||||||||||||||||||||||||
| Gain on sale of financial assets | ||||||||||||||||||||||||||
| Maintenance services revenue | ||||||||||||||||||||||||||
| Management and advisory fees | ||||||||||||||||||||||||||
| Other revenue | ( | |||||||||||||||||||||||||
| Total revenue | ( | |||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||
| Depreciation and amortization expense | ||||||||||||||||||||||||||
| Cost of spare parts and equipment sales | ( | |||||||||||||||||||||||||
| Cost of maintenance services | ( | |||||||||||||||||||||||||
| Write-down of equipment | ||||||||||||||||||||||||||
| General and administrative | ||||||||||||||||||||||||||
| Technical expense | ( | |||||||||||||||||||||||||
| Net finance costs: | ||||||||||||||||||||||||||
| Interest expense | ||||||||||||||||||||||||||
| Total finance costs | ||||||||||||||||||||||||||
| Total expenses | ( | |||||||||||||||||||||||||
| Income from operations | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Leasing and Related Operations | Spare Parts Sales | Eliminations | Total | |||||||||||||||||||||||
| Total assets as of June 30, 2026 | $ | $ | $ | $ | ||||||||||||||||||||||
| Total assets as of December 31, 2025 | $ | $ | $ | $ | ||||||||||||||||||||||
13. Related Party Transactions
Joint Ventures
“Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $2.0 million and $1.8 million during the three months ended June 30, 2026 and 2025, respectively, and $3.9 million and $3.0 million during the six months ended June 30, 2026 and 2025, respectively, related to the servicing of engines for the WMES lease portfolio. Additionally, “Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $0.2 No
During the six months ended June 30, 2026, the Company sold five engines to WMES for a total of $55.3 million, which resulted in a total gain of $15.3 million for the Company. During the six months ended June 30, 2025, the Company sold three engines and one airframe to WMES for $32.2 million, which resulted in a total gain of $1.6 million for the Company. Additionally, during the six months ended June 30, 2025, the Company sold one engine to WMES for $21.1 million, which resulted in a trading profit of $1.4 million for the Company.
During the six months ended June 30, 2026, the Company did no t purchase any engines from WMES. During the six months ended June 30, 2025, the Company purchased an engine from WMES for $7.2 million.
31
Table of Contents
During the six months ended June 30, 2026, the Company did no t purchase or sell any engines to CASC Willis. During the six months ended June 30, 2025, the Company sold one engine to CASC Willis for $6.1 million, which resulted in no gain or loss for the Company.
The Company subleased two WMES engines to a third party, with WMES as head lessor. During the six months ended June 30, 2026, one lease continued on a noncancellable three-month term and the other continued on a month-to-month basis. Lease expense for the head lease, recorded in “Technical expense,” was $0.7 million and $0.7 million for the three months ended June 30, 2026 and 2025, respectively, and $1.4 million and $1.3 million for the six months ended June 30, 2026 and 2025, respectively.
During the six months ended June 30, 2026, the Company paid WMES $1.4 million for fleet management services.
During the six months ended June 30, 2026, the Company made capital contributions of $29.5 million to WMES.
Investment Fund Partnerships
During the six months ended June 30, 2026, the Company sold 12 notes receivable and investments in sales-type leases to the LMI Fund, for a total of $104.0 million, which resulted in a total gain on sale of financial assets of $0.6 million for the Company. Also during the six months ended June 30, 2026, the Company sold 14 aircraft engines to the BXCI Fund, for a total of $216.2 million, which resulted in a total gain of $33.3 million for the Company. The LMI Fund and the BXCI Fund are considered related parties as the Company serves as general partner.
14. Subsequent Events
On July 10, 2026, the Company entered into an agreement to acquire 100 % of the equity interests in certain aircraft leasing entities for a base purchase price of approximately $379.3 million. The transaction includes a portfolio of leased aircraft and engines held through various special-purpose entities and, as part of the related financing structure, certain acquired aircraft and engine assets will be transferred to designated borrower entities following closing.
On July 17, 2026, the Company effected a three -for-one forward stock split through an amendment to its Certificate of Incorporation. Trading on a split-adjusted basis commenced on July 21, 2026.
On July 29, 2026, the Board of Directors of the Company declared a quarterly dividend of $0.133 per share on the Company’s outstanding common stock. The dividend is payable on August 21, 2026 to stockholders of record at the close of business on August 11, 2026.
32
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and notes thereto included under Part I, Item 1 of this Quarterly Report on Form 10-Q. In addition, reference should be made to our Audited Consolidated Financial Statements and notes thereto and related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2025 Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs, including the potential impact of changes in interest rates or inflation, as well as the impact of new or increased tariffs on our business, results of operations and financial condition. Our actual results may differ materially from those contained in or implied by any forward-looking statements. The financial information included in this discussion and in our consolidated financial statements may not be indicative of our consolidated financial position, operating results, changes in equity and cash flows in the future. See “Special Note Regarding Forward-Looking Statements” included earlier in this report.
Overview
Our core business is acquiring and leasing commercial aircraft and aircraft engines and related aircraft equipment pursuant to operating leases, all of which we sometimes collectively refer to as “equipment.” As of June 30, 2026, the majority of our leases were operating leases, with the exception of certain sale-leaseback transactions that do not meet lease criteria and are therefore classified as notes receivable under the guidance provided by Accounting Standards Codification (“ASC”) 842, Leases, and investments in sales-type leases. As of June 30, 2026, we had 73 lessees in 42 countries. Our portfolio is continually changing due to equipment acquisitions and sales. As of June 30, 2026, we had $2,783.4 million of equipment held in our operating lease portfolio, $89.3 million of notes receivable, and $83.6 million of maintenance rights, which represented 334 engines, 22 aircraft, one marine vessel, and other leased parts and equipment. As of June 30, 2026, we also managed 145 engines, one airframe, and related equipment on behalf of other parties.
Willis Aeronautical Services, Inc. is a wholly-owned and vertically-integrated subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment of aircraft and engines. Additionally, through Willis Engine Repair Center®, Jet Centre by Willis, and Willis Aviation Services Limited, the Company’s service offerings include Part 145 engine maintenance, aircraft line and base maintenance, aircraft disassembly, parking and storage, airport fixed base operator (“FBO”) and ground and cargo handling services.
We actively manage our portfolio and structure our leases to maximize the residual values of our leased assets. Our leasing business focuses on popular Stage IV commercial jet engines manufactured by CFMI, General Electric, Pratt & Whitney, Rolls Royce and International Aero Engines.
Risks and Uncertainties
Given the uncertainty surrounding future changes in interest rates, inflation, potential new or increased tariffs, and broader macroeconomic and geopolitical conditions, the Company will continue to evaluate the nature and extent of such impacts on its business, results of operations, and financial condition. The ultimate extent of any such impacts will depend on future developments that are highly uncertain and not reasonably estimable at this time, and such impacts could persist for an extended period. Currently, we do not believe these tariffs have a material impact on our business.
Recent Developments
On July 10, 2026, a subsidiary of the Company entered into an agreement to acquire 100% of the equity interests in WNG II Aircraft Leasing (Cayman) Ltd. and WNG Aircraft Management 3, LLC from WNG Capital affiliates for a base purchase price of approximately $379.3 million, which amount will be adjusted downward to take into account basic rent received, maintenance reserves received, cash security deposits and other revenue received from and after an agreed upon historical economic closing date, in addition to other potential purchase price adjustments. The transaction includes a portfolio of commercial aircraft and spare aircraft engines. Completion of the acquisition is subject to the satisfaction or waiver of customary closing conditions, and no assurances can be given that all such conditions will be met.
On July 17, 2026, the Company effected a three-for-one forward stock split through an amendment to its Certificate of Incorporation. Trading on a split-adjusted basis commenced on July 21, 2026. All information in this Quarterly Report on 10-Q has been adjusted for the stock split.
33
Table of Contents
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Form 10-K.
Results of Operations
Three months ended June 30, 2026 compared to the three months ended June 30, 2025
Revenue is summarized as follows:
| Three months ended June 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Lease rent revenue | $ | 77,137 | $ | 72,268 | 6.7 | % | |||||||||||
| Maintenance reserve revenue | 46,456 | 50,743 | (8.4) | % | |||||||||||||
| Spare parts and equipment sales | 21,180 | 30,354 | (30.2) | % | |||||||||||||
| Interest revenue | 1,183 | 3,649 | (67.6) | % | |||||||||||||
| Gain on sale of leased equipment | 32,038 | 27,582 | 16.2 | % | |||||||||||||
| Gain on sale of financial assets | 154 | — | nm | ||||||||||||||
| Maintenance services revenue | 8,983 | 8,031 | 11.9 | % | |||||||||||||
| Management and advisory fees | 5,524 | 2,588 | 113.4 | % | |||||||||||||
| Other revenue | 1,362 | 287 | 374.6 | % | |||||||||||||
| Total revenue | $ | 194,017 | $ | 195,502 | (0.8) | % | |||||||||||
Lease Rent Revenue. Lease rent revenue consists of rental income from long-term and short-term engine leases, aircraft leases, and other leased parts and equipment. Lease rent revenue increased by $4.9 million, or 6.7%, to $77.1 million in the three months ended June 30, 2026, from $72.3 million for the three months ended June 30, 2025. The increase is due to an increase in the average size of the portfolio as compared to that of the prior year period.
At June 30, 2026, the Company had $2,783.4 million of equipment held in our operating lease portfolio, $89.3 million of notes receivable, and $83.6 million of maintenance rights. At June 30, 2025, the Company had $2,606.6 million of equipment held in our operating lease portfolio, $171.8 million of notes receivable, $34.7 million of maintenance rights, and $16.8 million of investments in sales-type leases. Average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) was approximately 85.0% and 87.2% for the three months ended June 30, 2026 and 2025, respectively.
Two customers accounted for approximately 11%, each, of the Company’s total lease rent revenue during the three months ended June 30, 2026, and two customers accounted for approximately 13% and 10%, each, of the Company’s total lease rent revenue during the three months ended June 30, 2025.
Maintenance Reserve Revenue. Maintenance reserve revenue decreased $4.3 million, or 8.4%, to $46.5 million for the three months ended June 30, 2026, from $50.7 million for the three months ended June 30, 2025. We recognized $7.5 million in long-term maintenance revenue for the three months ended June 30, 2026, compared to $0.5 million in long-term maintenance revenue recognized in the prior comparable period as the maintenance reserves and end-of-lease payments for engines coming off lease exceeded those in the prior comparable period. Long-term maintenance revenue is influenced by end-of-lease compensation and the realization of long-term maintenance reserves associated with engines coming off lease. Engines on lease with “non-reimbursable” usage fees generated $39.0 million of short-term maintenance revenues, compared to $50.2 million in the comparable prior period. Short-term maintenance revenues are a proxy for flight time of our portfolio of engines.
34
Table of Contents
Spare Parts and Equipment Sales. Spare parts and equipment sales decreased by $9.2 million, or 30.2%, to $21.2 million for the three months ended June 30, 2026, compared to $30.4 million for the three months ended June 30, 2025. Spare parts sales were $11.1 million and $9.2 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $1.8 million, or 19.7%, compared to the same period in 2025. The increase in spare parts sales reflects variations in the timing of sales to third-party customers and is not reflective of intra-company sales as the parts business provides used serviceable material across the broader Willis platform. Equipment sales for the three months ended June 30, 2026 were $10.1 million for the sale of two engines and one airframe. The trading profit on the sales of these engines was $5.0 million, representing a 49% margin. Equipment sales for the three months ended June 30, 2025 were $21.1 million for the sale of one engine.
Interest Revenue. Interest revenue decreased by $2.5 million, or 67.6%, for the three months ended June 30, 2026, as compared to that of the three months ended June 30, 2025. The decrease was due to a lower balance of notes receivable and sales-type leases outstanding during the respective periods, partially attributable to the Company’s sale of 12 notes receivable and sales-type leases to the Company’s investment fund partnership with Liberty Mutual Investments (“LMI”) (“LMI Fund”) during the six months ended June 30, 2026.
Gain on Sale of Leased Equipment. During the three months ended June 30, 2026, we sold 21 engines and other parts and equipment from the lease portfolio for $224.8 million less economic closing adjustments, resulting in a net gain of $32.0 million. During the three months ended June 30, 2025, we sold 14 engines, two airframes, and other parts and equipment from the lease portfolio for $91.1 million less economic closing adjustments, resulting in a net gain of $27.6 million.
Gain on Sale of Financial Assets. During the three months ended June 30, 2026, we sold one note receivable to the LMI Fund, for a net gain of $0.2 million. There was no gain on sale of financial assets during the three months ended June 30, 2025.
Maintenance Services Revenue. Maintenance services revenue predominantly represent fleet management, engine and aircraft storage and repair services, and revenue related to FBO services provided to third parties, such as refueling, maintenance, and hangar services. Maintenance services revenue increased by $1.0 million, or 11.9%, to $9.0 million for the three months ended June 30, 2026, from $8.0 million for the three months ended June 30, 2025. The increase reflects growth in engine and aircraft storage and repair services partially offset by the lack of fleet management revenues in the current period due to the sale of that business in 2025.
Management and Advisory Fees. Management and advisory fees increased by $2.9 million to $5.5 million for the three months ended June 30, 2026, from $2.6 million for the three months ended June 30, 2025, primarily driven by $2.8 million of fees earned from the LMI Fund and the Blackstone Credit & Insurance (“BXCI”) (“BXCI Fund”) in the Company’s role as general partner. The LMI Fund and the BXCI Fund commenced operations in March and April 2026, respectively. Accordingly, the Company’s results for the three months ended June 30, 2026 reflect only a partial period of operations associated with the BXCI Fund, including reimbursements received for formation and other costs incurred by the Company.
Depreciation and Amortization Expense. Depreciation and amortization expense increased by $1.5 million, or 5.5%, to $29.1 million for the three months ended June 30, 2026, compared to $27.6 million for the three months ended June 30, 2025. The increase is primarily due to an increase in the size of our lease portfolio and the timing of placing acquired engines on lease.
Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales decreased by $13.0 million, or 46.3%, to $15.1 million for the three months ended June 30, 2026, compared to $28.1 million for the three months ended June 30, 2025. Cost of spare parts sales were $9.9 million and $8.3 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $1.6 million, or 19.4%, reflecting the increase in spare parts sales. Cost of equipment sales were $5.1 million and $19.8 million for the three months ended June 30, 2026 and 2025, respectively, reflecting the decrease in equipment sales.
Cost of Maintenance Services. Cost of maintenance services predominately represent the costs of fleet management, engine and aircraft storage and repair services, and the management of fixed base operator services provided to third parties. Cost of maintenance services increased by $1.7 million, or 20.1%, to $10.4 million for the three months ended June 30, 2026, compared to $8.6 million for the three months ended June 30, 2025, reflecting the increase in maintenance services revenue.
Write-down of Equipment. There was $4.9 million in write-downs of equipment for the three months ended June 30, 2026, reflecting the write-down of four engines. There was $11.5 million in write-downs of equipment for the three months ended June 30, 2025, reflecting the write-down of six engines.
35
Table of Contents
General and Administrative Expenses. General and administrative expenses increased by $5.1 million, or 10.2%, to $55.6 million for the three months ended June 30, 2026, compared to $50.4 million for the three months ended June 30, 2025. The increase was primarily driven by the prior comparable period including $6.3 million in government grant receipts for the now discontinued sustainable aviation fuel project, along with the current period including a $2.7 million increase in legal fees primarily related to the Company’s financing and strategic initiatives. These increases were partially offset by a $3.4 million decrease in personnel costs, primarily reflecting a $4.0 million reduction in share-based compensation resulting from changes made to the structuring of new employee equity awards following the appreciation in the Company’s stock price. General and administrative costs for the three months ended June 30, 2026 also included $1.6 million of costs which were recharged to the LMI Fund and BXCI Fund, with the associated revenue of $1.6 million included in Management and Advisory Fees.
Technical Expense. Technical expense consists of the non-capitalized cost of engine repairs, engine thrust rental fees, outsourced technical support services, sublease engine rental expense, engine storage and freight costs. Technical expense increased by $2.4 million to $9.9 million for the three months ended June 30, 2026, compared to $7.5 million for the three months ended June 30, 2025, primarily due to an increased level of engine repair activity as compared to that of the prior period.
Net Finance Costs. Net finance costs increased $1.5 million, or 4.6%, to $35.1 million for the three months ended June 30, 2026, compared to $33.6 million for the three months ended June 30, 2025. The increase was primarily attributable to a $5.4 million loss on debt extinguishment recognized in the current period, with no comparable loss in the prior period, resulting from the Company’s refinancing and capital restructuring activities. Interest expense also increased by $6.9 million and $5.1 million on the Willis Engine Structured Trust VIII (“WEST VIII”) and Willis Engine Structured Trust IX (“WEST IX”) notes payable, respectively, which were issued in June 2025 and December 2025. These increases were partially offset by a $6.3 million decrease in interest expense on the Company’s revolving credit facility, reflecting a lower average outstanding balance during the three months ended June 30, 2025. Interest expense also declined by $5.4 million for Willis Engine Structured Trust VII (“WEST VII”) and $3.9 million for Willis Warehouse Facility LLC (“WWFL”), as those notes payable were paid down or terminated.
Gain on Sale of Business. During the three months ended June 30, 2025, Willis Asset Management Limited (“WAML”), a wholly-owned subsidiary of the Company entered into a Share Purchase Agreement (the “SPA”), by and between WAML and WMES. Pursuant to the SPA, WAML sold the entire issued share capital of Bridgend Asset Management Limited (“BAML”), a United Kingdom-based aviation consultancy business, to WMES for a total purchase price of $45.0 million subject to certain working capital adjustments. The transaction closed on June 30, 2025, resulting in a gain on sale of business of approximately $43.0 million for the Company.
Income Tax Expense. Income tax expense was $7.8 million for the three months ended June 30, 2026, compared to income tax expense of $13.9 million for the three months ended June 30, 2025. The effective tax rate for the second quarter of 2026 was 20.5%, compared to 18.7% in the prior year period. The Company’s effective tax rate differed from the U.S. federal statutory rate of 21.0% primarily due to executive compensation exceeding $1.0 million as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and a worthless stock deduction recognized on the Company’s foreign sustainable aviation fuel subsidiary, which resulted in an ordinary tax loss. The effective tax rate variance in the prior year period was also impacted by the sale of the Company’s entire issued share capital of BAML, for which no statutory tax was due on the gain recognized.
36
Table of Contents
Six months ended June 30, 2026 compared to the six months ended June 30, 2025
Revenue is summarized as follows:
| Six months ended June 30, | |||||||||||||||||
| 2026 | 2025 | % Change | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Lease rent revenue | $ | 154,522 | $ | 140,007 | 10.4 | % | |||||||||||
| Maintenance reserve revenue | 101,968 | 105,602 | (3.4) | % | |||||||||||||
| Spare parts and equipment sales | 42,867 | 48,594 | (11.8) | % | |||||||||||||
| Interest revenue | 3,971 | 7,583 | (47.6) | % | |||||||||||||
| Gain on sale of leased equipment | 49,997 | 32,019 | 56.1 | % | |||||||||||||
| Gain on sale of financial assets | 592 | 378 | 56.6 | % | |||||||||||||
| Maintenance services revenue | 18,752 | 13,617 | 37.7 | % | |||||||||||||
| Management and advisory fees | 13,419 | 4,551 | 194.9 | % | |||||||||||||
| Other revenue | 2,275 | 883 | 157.6 | % | |||||||||||||
| Total revenue | $ | 388,363 | $ | 353,234 | 9.9 | % | |||||||||||
Lease Rent Revenue. Lease rent revenue increased by $14.5 million, or 10.4%, to $154.5 million for the six months ended June 30, 2026, compared to $140.0 million for the six months ended June 30, 2025. The increase is due to an increase in the average size of the portfolio as compared to that of the prior year period as well as an increase in average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) of equipment held in our operating lease portfolio.
At June 30, 2026, the Company had $2,783.4 million of equipment held in our operating lease portfolio, $89.3 million of notes receivable, and $83.6 million of maintenance rights. At June 30, 2025, the Company had $2,606.6 million of equipment held in our operating lease portfolio, $171.8 million of notes receivable, $34.7 million of maintenance rights, and $16.8 million of investments in sales-type leases. Average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) was approximately 85.4% and 83.6% for the six months ended June 30, 2026 and 2025, respectively.
Two customers accounted for approximately 11%, each, of the Company’s total lease rent revenue during the six months ended June 30, 2026, and two customers accounted for approximately 13% and 10% of the Company’s total lease rent revenue during the six months ended June 30, 2025.
Maintenance Reserve Revenue. Maintenance reserve revenue decreased $3.6 million, or 3.4%, to $102.0 million for the six months ended June 30, 2026 from $105.6 million for the six months ended June 30, 2025. Long-term maintenance revenue was $19.9 million for the six months ended June 30, 2026, compared to $10.1 million in the prior year period as the maintenance reserves and end-of-lease payments for engines coming off lease exceeded those in the prior comparable period. Long-term maintenance revenue is influenced by end-of-lease compensation and the realization of long-term maintenance reserves associated with engines coming off lease. Engines on lease with “non-reimbursable” usage fees generated $82.1 million of short-term maintenance revenues compared to $95.5 million in the comparable prior period. Short-term maintenance revenues are a proxy for flight time of our portfolio of engines.
Spare Parts and Equipment Sales. Spare parts and equipment sales decreased by $5.7 million, or 11.8%, to $42.9 million for the six months ended June 30, 2026 compared to $48.6 million in the prior year period. Spare parts sales were $21.3 million and $25.3 million for the six months ended June 30, 2026 and 2025, respectively, a decrease of $3.9 million, or 15.6%, compared to the same period in 2025. The decrease in spare parts sales reflects variations in the timing of sales to third-party customers and is not reflective of intra-company sales as the parts business provides used serviceable material across the broader Willis platform. Equipment sales for the six months ended June 30, 2026 were $21.5 million for the sale of five engines and one airframe, and equipment sales for the six months ended June 30, 2025 were $23.3 million for the sale of two engines.
Interest Revenue. Interest revenue decreased by $3.6 million, or 47.6%, to $4.0 million for the six months ended June 30, 2026 compared to $7.6 million for the six months ended June 30, 2025. The decrease was due to a lower balance of notes receivable and sales-type leases outstanding during the respective periods, partially attributable to the Company’s sale of 12 notes receivable and sales-type leases to the Company’s investment fund partnership with LMI during the six months ended June 30, 2026.
37
Table of Contents
Gain on Sale of Leased Equipment. During the six months ended June 30, 2026, we sold 35 engines and other parts and equipment from the lease portfolio for $284.8 million less economic closing adjustments, resulting in a net gain of $50.0 million. During the six months ended June 30, 2025, we sold 21 engines, three airframes, and other parts and equipment from the lease portfolio for $138.8 million less economic closing adjustments, resulting in a net gain of $32.0 million.
Gain on Sale of Financial Assets. During the six months ended June 30, 2026, we sold 12 notes receivable and investments in sales-type lease assets for a net gain of $0.6 million. During the six months ended June 30, 2025, we sold two investments in sales-type lease assets for a net gain of $0.4 million.
Maintenance Services Revenue. Maintenance services revenue increased by $5.1 million, or 37.7%, to $18.8 million for the six months ended June 30, 2026, from $13.6 million for the six months ended June 30, 2025. The increase reflects growth in engine and aircraft storage and repair services partially offset by the lack of fleet management revenues in the current period due to the sale of that business in 2025.
Management and Advisory Fees. Management and advisory fees increased by $8.9 million to $13.4 million for the six months ended June 30, 2026, from $4.6 million for the six months ended June 30, 2025, primarily driven by $7.7 million of fees earned from the LMI Fund and the BXCI Fund in the Company’s role as general partner. The LMI Fund and the BXCI Fund commenced operations in March and April 2026, respectively. Accordingly, the Company’s results for the six months ended June 30, 2026 reflect only a partial period of operations associated with these funds, including reimbursements received for formation and other costs incurred by the Company.
Depreciation and Amortization Expense. Depreciation and amortization expense increased by $6.7 million, or 12.7%, to $59.2 million for the six months ended June 30, 2026 compared to $52.6 million for the six months ended June 30, 2025. The increase is primarily due to an increase in the size of our lease portfolio and the timing of placing acquired engines on lease.
Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales decreased by $13.9 million, or 32.0%, to $29.5 million for the six months ended June 30, 2026 compared to $43.4 million for the six months ended June 30, 2025. Cost of spare parts sales were $18.7 million and $22.2 million for the six months ended June 30, 2026 and 2025, respectively, a decrease of $3.5 million, or 15.6%, reflecting the decrease in spare parts sales. Cost of equipment sales were $10.8 million and $21.3 million for the six months ended June 30, 2026 and June 30, 2025, respectively.
Cost of Maintenance Services. Cost of maintenance services increased by $5.3 million, or 37.7%, to $19.2 million for the six months ended June 30, 2026, compared to $14.0 million for the six months ended June 30, 2025, reflecting the increase in maintenance services revenue.
Write-down of Equipment. Write-down of equipment was $6.1 million for the six months ended June 30, 2026, reflecting the write-down of five engines. Write-down of equipment was $13.6 million for the six months ended June 30, 2025, reflecting the write-down of 11 engines.
General and Administrative Expenses. General and administrative expenses increased by $14.0 million, or 14.3%, to $112.2 million for the six months ended June 30, 2026 compared to $98.1 million for the six months ended June 30, 2025. The increase was primarily driven by a $9.1 million rise in personnel costs, including a $2.8 million increase in share-based compensation and a $6.6 million increase in wages. The higher share-based compensation reflects appreciation in the market value of the Company’s equity, as well as equity awards granted to new personnel to support the Company’s continued growth. The increase in wages was primarily attributable to higher headcount supporting the Company’s expanding operations. General and administrative expenses also increased due to a $4.8 million rise in legal fees primarily related to financing and strategic initiatives. These increases were partially offset by a $7.1 million decrease in consulting fees, primarily resulting from the Company’s decision to discontinue its sustainable aviation fuel project. General and administrative costs for the six months ended June 30, 2026 also included $6.5 million of costs which were recharged to the LMI Fund and BXCI Fund, with the associated revenue of $6.5 million included in Management and Advisory Fees.
Technical Expense. Technical expense increased by $5.9 million, or 42.9%, to $19.6 million for the six months ended June 30, 2026 compared to $13.7 million for the six months ended June 30, 2025, primarily due to an increased level of engine repair activity as compared to that of the prior period.
38
Table of Contents
Net Finance Costs. Net finance costs increased by $9.1 million, or 13.9%, to $74.8 million for the six months ended June 30, 2026 compared to $65.7 million for the six months ended June 30, 2025. The increase was primarily attributable to a $12.4 million loss on debt extinguishment recognized in the current period, with no comparable loss in the prior year period, resulting from the Company’s refinancing and capital restructuring activities. Interest expense also increased by $15.2 million and $10.1 million on the WEST VIII and WEST IX notes payable, respectively, which were issued in June 2025 and December 2025. In addition, derivative-related receipts decreased to $0.9 million from $4.9 million in the prior year period, primarily because certain interest rate swap positions were either terminated or matured. These increases were partially offset by a $10.3 million decrease in interest expense on the Company’s revolving credit facility, reflecting a lower average outstanding balance during the six months ended June 30, 2026. Interest expense also declined by $9.0 million for WEST VII, $6.5 million for WWFL, and $5.4 million for Willis Engine Structured Trust IV (“WEST IV”), as those notes payable were paid down or terminated.
Gain on Sale of Business. During the six months ended June 30, 2025, WAML, a wholly-owned subsidiary of the Company entered into a SPA, by and between WAML and WMES. Pursuant to the SPA, WAML sold the entire issued share capital of BAML, a United Kingdom-based aviation consultancy business, to WMES for a total purchase price of $45.0 million subject to certain working capital adjustments. The transaction closed on June 30, 2025, resulting in a gain on sale of business of approximately $43.0 million for
the Company.
Income Tax Expense. Income tax expense was $19.6 million for the six months ended June 30, 2026 compared to $22.3 million for the six months ended June 30, 2025. The effective tax rate for the six months ended June 30, 2026 was 26.1% compared to 22.4% in the prior year period. The Company’s effective tax rate differed from the U.S. federal statutory rate of 21.0% primarily due to executive compensation exceeding $1.0 million as defined in Section 162(m) of the Code, and a worthless stock deduction recognized on the Company’s foreign sustainable aviation fuel subsidiary, which resulted in an ordinary tax loss. The effective tax rate variance in the prior year period was also impacted by the sale of the Company’s entire issued share capital of BAML, for which no statutory tax was due on the gain recognized.
NON-GAAP FINANCIAL MEASURES
Adjusted EBITDA
We analyze our financial data to evaluate the health of our business and assess our performance. As appropriate, in addition to income or loss from operations under GAAP, we use Adjusted EBITDA, a non-GAAP financial measure, to evaluate our business. We believe that this non-GAAP financial measure provides meaningful supplemental information regarding our performance as it excludes certain items that may not be indicative of our recurring operating results. We also believe that investors, in addition to management, benefit from referring to this non-GAAP financial measure in assessing our performance, when viewed together with our GAAP results. While items excluded from Adjusted EBITDA may be recurring in nature and should not be disregarded in evaluating performance, it can be useful to exclude such items as they can vary significantly between periods and or not be indicative of current or future operating results.
Because non-GAAP financial measures are not standardized, our calculation of Adjusted EBITDA may differ from similarly titled non-GAAP measures, if any, reported by other companies. This non-GAAP financial measure should not be considered in insolation from, or as a substitute for, financial information performed in accordance with GAAP.
We define Adjusted EBITDA as net income attributable to common shareholders, excluding (i) income tax expense, (ii) interest expense, (iii) preferred stock dividends/costs, (iv) loss on debt extinguishment, (v) depreciation and amortization expense, (vi) stock compensation expense, (vii) write-down of equipment, (viii) acquisition, financing and divestitures related expenses, and (ix) other items not indicative of our ongoing operating performance.
Adjusted EBITDA was approximately $120.7 million and $116.1 million for the three months ended June 30, 2026 and 2025, respectively, and $244.6 million and $219.4 million for the six months ended June 30, 2026 and 2025, respectively. The increases in Adjusted EBITDA were primarily driven by the changes noted in the Results of Operations section above. See below for the reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income attributable to common shareholders.
39
Table of Contents
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 28,745 | $ | 58,955 | $ | 52,406 | $ | 74,431 | |||||||||||||||
| Add: Income tax expense | 7,828 | 13,920 | 19,583 | 22,305 | |||||||||||||||||||
| Add: Interest expense | 29,689 | 33,569 | 62,322 | 65,663 | |||||||||||||||||||
| Add: Preferred stock dividends/costs | 1,423 | 1,422 | 2,845 | 2,815 | |||||||||||||||||||
| Add: Loss on debt extinguishment | 5,421 | — | 12,448 | — | |||||||||||||||||||
| Add: Depreciation and amortization expense | 29,068 | 27,550 | 59,246 | 52,574 | |||||||||||||||||||
| Add: Stock compensation expense | 12,703 | 16,751 | 26,455 | 23,658 | |||||||||||||||||||
| Add: Write-down of equipment | 4,910 | 11,458 | 6,059 | 13,567 | |||||||||||||||||||
| Add: Acquisition, financing and divestitures related expenses | 2,560 | 662 | 4,802 | 828 | |||||||||||||||||||
| Less: Other (1) | (1,610) | (48,226) | (1,581) | (36,449) | |||||||||||||||||||
| Adjusted EBITDA | $ | 120,737 | $ | 116,061 | $ | 244,585 | $ | 219,392 | |||||||||||||||
________________________________________________________
1.During the three and six months ended June 30, 2026, the Company recognized non-recurring project expenses of $(1.6) million and $(1.6) million, respectively, related to its sustainable aviation fuel project. The negative expense recognized during the three-month and six-month periods reflect government grant proceeds recognized in the second quarter of 2026. During the three and six months ended June 30, 2025, the Company recognized non-recurring project expenses of $(5.3) million and $6.5 million, respectively, related to its sustainable aviation fuel project, for which the Company subsequently decided to cease further investment. The negative expense recognized during the three-month period reflects government grant proceeds received in the second quarter of 2025. Additionally, during the three and six months ended June 30, 2025, the Company recognized $43.0 million in relation to the gain on sale of the BAML business.
Financial Position, Liquidity and Capital Resources
Liquidity
At June 30, 2026, the Company had $10.7 million of cash and cash equivalents and $161.5 million of restricted cash. We fund our operations primarily from cash provided by our leasing activities. We finance our growth through borrowings secured primarily by our equipment lease portfolio. Cash of approximately $803.0 million and $851.1 million for the six months ended June 30, 2026 and 2025, respectively, was derived from our borrowing activities. In these same time periods, $1,182.9 million and $309.6 million, respectively, was used to pay down related debt. At June 30, 2026, the Company had approximately $1.3 billion of unused borrowing capacity on its credit facility.
For any interest rate swaps that we enter into, we will be exposed to risk in the event of non-performance of the interest rate hedge counter-parties. We may hedge additional amounts of our floating rate debt in the future.
Cash Flows Discussion
Cash flows provided by operating activities were $134.2 million and $145.2 million for the six months ended June 30, 2026 and 2025, respectively. The $11.0 million, or 7.6%, decrease in operating cash flows was primarily driven by a period over period $9.9 million decrease in accounts payable and accrued expenses, as well as a period over period $8.1 million decrease in maintenance reserves. Cash flows from operations are driven significantly by payments made under our lease agreements, which comprise lease revenue, security deposits and maintenance reserves, and are offset by interest expense and general and administrative costs. Cash received as maintenance reserve payments for some of our engines on lease are partially restricted by our debt arrangements. The lease revenue stream, in the short term, is at fixed rates while a portion of our debt is at variable rates. If interest rates increase, it is unlikely we could increase lease rates in the short term, and this would cause a reduction in our earnings and operating cash flows. Revenue and maintenance reserves are also affected by the amount of equipment off lease. The average utilization rate (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) for the six months ended June 30, 2026 and 2025 was approximately 85.4% and 83.6%, respectively. If there is an increase in off-lease rates or deterioration in lease rates that are not offset by reductions in interest rates, there will be a negative impact on earnings and cash flows from operations.
40
Table of Contents
Cash flows used in investing activities were $78.2 million for the six months ended June 30, 2026 and primarily reflected $401.9 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period), $42.5 million for the issuance of notes receivable, and $39.6 million for the purchase of investments and contributions to joint ventures, partially offset by proceeds from sale of equipment (net of selling expenses) of $302.8 million, proceeds from sale of notes receivable (net of selling expenses) of $88.4 million, and proceeds from sale of investments of sales-type leases of $15.5 million. Cash flows used in investing activities were $2.2 million for the six months ended June 30, 2025 and primarily reflected $154.9 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $17.1 million for the purchase of property, equipment and furnishings, which was primarily related to leasehold improvements, partially offset by proceeds from sale of equipment (net of selling expenses) of $141.9 million and proceeds from sale of business of $23.1 million.
Cash flows used in financing activities were $430.7 million for the six months ended June 30, 2026 and primarily reflected $1,182.9 million in principal payments, $27.9 million in cancellation of restricted stock units in satisfaction of withholding tax, $11.5 million in debt issuance costs, and $6.2 million in common stock cash dividends paid, partially offset by $803.0 million in proceeds from debt obligations. Cash flows provided by financing activities were $507.1 million for the six months ended June 30, 2025 and primarily reflected $851.1 million in proceeds from debt obligations, partially offset by $309.6 million in principal payments and $18.7 million in cancellation of restricted stock in satisfaction of withholding tax.
Cash Dividends
During the six months ended June 30, 2026 and June 30, 2025, the Company paid cash dividends of $6.2 million and $3.7 million, respectively, to shareholders of common stock.
Preferred Stock Dividends
The Company’s Series A Preferred Stock accrues quarterly dividends at the rate per annum of 8.35% per share. During each of the six months ended June 30, 2026 and 2025, the Company paid total preferred stock dividends of $2.7 million and $3.0 million, respectively.
Debt Obligations and Covenant Compliance
At June 30, 2026, debt obligations consisted of loans totaling $2,320.9 million, net of unamortized issuance costs and note discounts, payable with interest rates varying between approximately 2.5% and 8.0%. Substantially all of our assets are pledged to secure our obligations to creditors. For further information on our debt instruments, see Note 4 “Debt Obligations” in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Virtually all of our debt requires our ongoing compliance with certain financial covenants including debt/equity ratios, minimum tangible net worth and minimum interest coverage ratios, and other eligibility criteria including customer and geographic concentration restrictions. Under our revolving credit facility, we can borrow no more than 85% of an engine’s net book value and 65% of the net book value of an airframe, spare parts or other assets. Therefore, we must have other available funds for the balance of the purchase price of any new equipment to be purchased. Our revolving credit facility, certain indentures and other debt related agreements also contain cross-default provisions. If we do not comply with the covenants or eligibility requirements, we may not be permitted to borrow additional funds and accelerated payments may become necessary. Additionally, much of the debt is secured by engines and aircraft, and to the extent that engines or aircraft are sold, repayment of that portion of the debt could be required.
At June 30, 2026, we were in compliance with the covenants specified in our revolving credit facility, including the Interest Coverage Ratio requirement of at least 2.25 to 1.00, and the Total Leverage Ratio requirement of not greater than 4.25 to 1.00. The Interest Coverage Ratio, as defined in the credit facility, is the ratio of earnings before interest, taxes, depreciation and amortization and other one-time charges to consolidated interest expense. The Total Leverage Ratio, as defined in the credit facility, is the ratio of total indebtedness to tangible net worth. At June 30, 2026, we were in compliance with the covenants specified in the WEST III, WEST V, WEST VI, WEST VII, WEST VIII, and WEST IX indentures and servicing and other debt related agreements.
Off-Balance Sheet Arrangements
As of June 30, 2026, we had no material off-balance sheet arrangements or obligations that have or are reasonably likely to have a current or future effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
41
Table of Contents
Contractual Obligations and Commitments
Repayments of our gross debt obligations primarily consist of scheduled installments due under term loans and are funded by the use of unrestricted cash reserves and from cash flows from ongoing operations. The table below summarizes our contractual commitments at June 30, 2026:
| Payment due by period (in thousands) | |||||||||||||||||||||||||||||
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||||||||||||
| Debt obligations | $ | 2,352,269 | $ | 71,848 | $ | 604,957 | $ | 827,375 | $ | 848,089 | |||||||||||||||||||
| Interest payments under debt obligations | 326,264 | 78,808 | 136,105 | 103,026 | 8,325 | ||||||||||||||||||||||||
| Purchase obligations | 1,394,331 | 425,874 | 542,004 | 426,453 | — | ||||||||||||||||||||||||
| Operating lease obligations | 26,957 | 4,566 | 7,225 | 2,316 | 12,850 | ||||||||||||||||||||||||
| Total | $ | 4,099,821 | $ | 581,096 | $ | 1,290,291 | $ | 1,359,170 | $ | 869,264 | |||||||||||||||||||
From time to time we enter into contractual commitments to purchase engines directly from original equipment manufacturers. We are currently committed to purchasing 27 additional new LEAP-1A engines and 15 additional new LEAP-1B engines for an aggregate total of $782.0 million by 2030. Further, we are currently committed to purchasing nine engines and four aircraft for approximately $256.7 million in 2026. The purchase obligations are subject to escalation based on the closing date of each transaction. Our purchase agreements generally contain terms that allow the Company to defer or cancel purchase commitments in certain situations. These deferrals or conversions would not result in penalties or increased costs other than any potential increase due to the normal year-over-year change in engine list prices, which is akin to ordinary inflation.
In December 2020, the Company entered into definitive agreements for the purchase of 25 Pratt & Whitney aircraft engines. In connection with the purchase agreements, the Company is obligated to perform certain future overhaul and maintenance services, which are currently estimated to aggregate between $106.6 million and $132.1 million by 2030. If such services are not completed by that date, performance may extend through 2035, with total costs not expected to exceed $172.7 million.
We have estimated the interest payments due under debt obligations by applying the interest rates applicable at June 30, 2026 to the remaining debt, adjusted for the estimated debt repayments identified in the table above. Actual interest payments made will vary due to changes in the rates.
We believe our equity base, cash on hand, internally generated funds and existing debt facilities are sufficient to maintain our level of operations for the next twelve months. The level of internally generated funds could decline if the amount of equipment off-lease increases, there is a decrease in availability under our existing debt facilities, or there is a significant increase in borrowing costs. Such decline would impair our ability to sustain our current level of operations. We continue to discuss additions to our capital base with our commercial and investment banks. If we are not able to access additional capital, our ability to continue to grow our asset base consistent with historical trends will be impaired and our future growth would be limited to that which can be funded from internally generated capital.
Recent Accounting Pronouncements
The most recent adopted accounting pronouncements and accounting pronouncements to be adopted by the Company are described in Note 1 to our Unaudited Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
42
Table of Contents
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Our primary market risk exposure is that of interest rate risk. A change in interest rates would affect our cost of borrowing. Increases in interest rates, which may cause us to raise the implicit rates charged to our customers, could result in a reduction in demand for our leases. Alternatively, we may price our leases based on market rates so as to keep the fleet on-lease and suffer a decrease in our operating margin due to interest costs that we are unable to pass on to our customers. As of June 30, 2026, $437.0 million of our outstanding debt is variable rate debt. We estimate that for every one percent increase or decrease in interest rates on our variable rate debt, net of our interest rate swaps, our annual interest expense would increase or decrease by $3.9 million.
We hedge a portion of our borrowings from time to time, effectively fixing the rate of these borrowings. This hedging activity, which at times is required by our borrowing facilities, helps protect us against reduced margins on longer term fixed rate leases. Such hedging activities may limit our ability to participate in the benefits of any decrease in interest rates but may also protect us from increases in interest rates. Furthermore, since lease rates tend to vary with interest rate levels, it is possible that we can adjust lease rates for the effect of changes in interest rates at the termination of leases. Other financial assets and liabilities are at fixed rates.
We are also exposed to currency devaluation risk. Substantially all of our leases require payment in U.S. dollars. During the six months ended June 30, 2026 and 2025, 65% and 71%, respectively, of our lease rent revenues came from non-United States domiciled lessees. If these lessees’ currency devalues against the U.S. dollar, the lessees could potentially encounter difficulty in making their lease payments.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. In accordance with Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness and design of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, our CEO and CFO have concluded that as of June 30, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
(b) Inherent limitations on controls. Management, including the CEO and CFO, does not expect that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.
(c) Changes in internal control over financial reporting. There has been no change in our internal control over financial reporting during our fiscal quarter ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Investors should carefully consider the risks in the “Risk Factors” in Part 1: Item 1A of our 2025 Form 10-K, filed with the SEC on March 10, 2026, and our other filings with the SEC. These risks are not the only ones facing the Company. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business operations. Any of these risks could adversely affect our business, cash flows, financial condition and results of operations. The trading price of our common stock could fluctuate due to any of these risks, and investors may lose all or part of their investment. In assessing these risks, investors should also refer to the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q. There have been no material changes in our risk factors from those discussed in our 2025 Form 10-K.
43
Table of Contents
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities. In December 2024, the Board of Directors approved the renewal of the existing common stock repurchase plan which allows for repurchases of up to $60.0 million of the Company’s common stock, extending the plan through December 31, 2026. Repurchased shares are immediately retired. No shares were repurchased during the six months ended June 30, 2026 under the plan. Share repurchase activity during the three months ended June 30, 2026 was as follows (in thousands):
| Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | d) Approximate Dollar Value of Shares that May Yet be Purchased under the Plans of Programs | ||||||||||||||||||||||
| April 1, 2026 through April 30, 2026 | — | — | — | $ | 39,595 | |||||||||||||||||||||
| May 1, 2026 through May 31, 2026 | — | — | — | $ | 39,595 | |||||||||||||||||||||
| June 1, 2026 through June 30, 2026 | — | — | — | $ | 39,595 | |||||||||||||||||||||
| Total | — | — | — | $ | 39,595 | |||||||||||||||||||||
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the quarter ended June 30, 2026, none of the Company’s Section 16 officers or directors (as defined in Rule 16a-1 under the Exchange Act) informed us of the adoption , modification, or termination
| Name & Title | Date Adopted | Character of Trading Arrangement (1) | Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement | Duration (2) | Other Material Items | Date Terminated | ||||||||||||||
Up to | N/A | N/A | ||||||||||||||||||
(1) Except as indicated by footnote, each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).
(2) Except as indicated by footnote, each trading arrangement permitted or permits transactions through and including the earlier to occur of (a) the completion of all purchases or sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permitted or only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.
(3) Charles F. Willis, IV’s trading plan provides for the sale of up to 600,000 shares of the Company’s common stock, subject to price and volume limits.
44
Table of Contents
45
Table of Contents
Item 6.
EXHIBITS
| Exhibit Number | Description | |||||||
| 3.1 | Amended and Restated Certificate of Incorporation, dated March 12, 1998, as amended by the Certificate of Amendment to the Certificate of Incorporation, dated April 28, 1998, and further amended by the Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated May 22, 2024 (incorporated by reference to Exhibit 3.1 to the Annual Report on Form 10-K filed on March 30, 2026). | |||||||
| 3.2 | Certificate of Amendment to the Certificate of Incorporation, dated July 17, 2026 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on July 17, 2026). | |||||||
| 4.1 | Base Indenture, dated May 18, 2026, by and between Willis Lease Finance Corporation and U.S. Bank Trust Company, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on May 18, 2026). | |||||||
| 4.2 | Supplemental Indenture, dated May 18, 2026, by and between Willis Lease Finance Corporation and U.S. Bank Trust Company, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on May 18, 2026). | |||||||
| 4.3 | Form of 2.50% Convertible Senior Note due 2031 (incorporated by reference to Exhibit A to 4.2 to the Current Report on Form 8-K filed with the SEC on May 18, 2026). | |||||||
| 10.1 | Amendment No. 4 to Revolving Credit Facility, by and among the Company, the guarantors party thereto, the lenders party thereto and Bank of America, N.A., in its capacity as administrative agent (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 18, 2026). | |||||||
| 31.1* | Certification of Austin C. Willis, pursuant to Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 31.2* | Certification of Scott B. Flaherty, pursuant to Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||||
| 32.1** | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
| 101.INS | 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 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Redeemable Preferred Stock and Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
________________________________________________________
* Filed herewith.
** Furnished herewith.
# Portions of this exhibit have been omitted in accordance with Item 601(b)(10)(iv) of Regulation S-K.
46
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: August 4, 2026
| Willis Lease Finance Corporation | ||||||||
| By: | /s/ Scott B. Flaherty | |||||||
| Scott B. Flaherty | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
47