FTAI Aviation Ltd.

FTAI Aviation Ltd. is a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. The company repairs and rebuilds engines in its maintenance facilities and with its joint venture partners, and sells or leases the engines to airlines and asset owners around the world. The company's primary business model is to sell or lease engines via exchange through its proprietary Maintenance, Repair and Exchange (MRE) model which is reported under its Aerospace Products segment. The company also owns and manages a portfolio of on- and off-lease aircraft and engines through its Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, the company launched its Strategic Capital Initiative, which consists of an asset management business that manages third-party capital to invest in on-lease aircraft and engines. The company expects its primary investment activities to be through its Strategic Capital Initiative going forward.

The business of acquiring, managing and marketing aviation assets is highly competitive. Market competition for acquisition opportunities includes traditional aviation companies, commercial and investment banks, as well as a growing number of non-traditional participants, such as hedge funds, private equity funds, and other private investors. Additionally, the markets for the company's products and services are competitive, and the company faces competition from a number of sources, including engine and aircraft parts manufacturers, aircraft and aircraft engine lessors, airline and aircraft services and repair companies, and aircraft spare parts distributors. Some of these competitors may have longer operating histories, greater financial resources and lower costs of capital than the company.

The company's primary business model is to sell or lease engines via exchange through its proprietary Maintenance, Repair and Exchange (MRE) model which is reported under its Aerospace Products segment. The company also owns and manages a portfolio of on- and off-lease aircraft and engines through its Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, the company launched its Strategic Capital Initiative, which consists of an asset management business that manages third-party capital to invest in on-lease aircraft and engines. The company expects its primary investment activities to be through its Strategic Capital Initiative going forward. The company's customers and lessees primarily consist of global operators of transportation networks and global industrial companies, including airlines.

The Aerospace Products segment, through the company's maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines. The company's engine, module and parts sales are facilitated through a dedicated commercial maintenance program, designed to focus on modular and parts repair and refurbishment of CFM56-7B and CFM56-5B engines. In addition, other serviceable used modules and parts are sold through the company's exclusive partnership, who is responsible for the teardown, repair, marketing and sales of parts from the company's CFM56 engine pool. The company also holds a 25% ¹ interest in the Advanced Engine Repair JV which focuses on developing new cost savings programs for engine repairs. On December 30, 2025, the company announced the launch of FTAI Power, a platform focused on converting CFM56 engines to power turbines. For the year ended December 31, 2025, Aerospace products revenue was $1,600,456 thousand ² and MRE Contract revenue was $335,788 thousand ³.

As of December 31, 2025, in the Aviation Leasing segment, the company owns and manages 290 ⁴ aviation assets, consisting of 47 ⁵ commercial aircraft and 243 ⁶ engines, including eight aircraft and seventeen engines that were still located in Russia. As of December 31, 2025, 37 ⁷ of the company's commercial aircraft and 143 ⁸ of its engines were leased to operators or other third parties. The company's aviation equipment was approximately 77% ⁹ utilized during the three months ended December 31, 2025, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of its aviation leasing equipment, excluding airframes. The company's aircraft currently have a weighted average remaining lease term of 44 ¹⁰ months, and its engines currently on-lease have an average remaining lease term of 38 ¹¹ months. For the year ended December 31, 2025, Lease income was $235,210 thousand ¹², Maintenance revenue was $218,499 thousand ¹³, and Asset sales revenue was $106,945 thousand ¹⁴.

On May 28, 2024, the company entered into definitive agreements with the Former Manager and Master GP to internalize the company's management function. In connection with the termination of the Management Agreement, the company paid the Former Manager $150.0 million ¹⁵ (the Cash Consideration), the compensation accrued and payable, but not yet paid, under the Management Agreement, and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; issued to the Former Manager the Share Consideration; and purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the company, in exchange for $30 thousand ¹⁶. On December 30, 2024, the company announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The first partnership under the initiative (the 2025 Partnership) focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion ¹⁷ of equity commitments. The 2025 Partnership agreed to acquire 45 ¹⁸ on-lease narrowbody aircraft from the company for an estimated net purchase price of $549 million ¹⁹ and signed an agreement through which the company's MRE business exclusively provides replacement aircraft engines and modules for the life of the partnership. The company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors. During the year ended December 31, 2025, the company invested $291.5 million ²⁰ in the 2025 Partnership. On June 5, 2025, the company invested $10.5 million ²¹ for a 50% ²² interest in QuickTurn Europe. The company had 985 ²³ full-time employees and independent contractors as of December 31, 2025.

Total revenues for the year ended December 31, 2025 were $2,507,409 thousand ²⁴, compared to $1,734,901 thousand ²⁵ for the year ended December 31, 2024. Net income for the year ended December 31, 2025 was $501,064 thousand ²⁶, compared to $8,682 thousand ²⁷ for the year ended December 31, 2024. Net income attributable to shareholders for the year ended December 31, 2025 was $477,494 thousand ²⁸, compared to a net loss attributable to shareholders of $(32,079) thousand ²⁹ for the year ended December 31, 2024. Diluted earnings per share for the year ended December 31, 2025 was $4.60 ³⁰, compared to $(0.32) ³¹ for the year ended December 31, 2024. Adjusted EBITDA (non-GAAP) for the year ended December 31, 2025 was $1,190,922 thousand ³², compared to $862,050 thousand ³³ for the year ended December 31, 2024.

The company's primary growth vector is its Strategic Capital Initiative, launched on December 30, 2024, in collaboration with third-party institutional investors. The first partnership under the initiative, the 2025 Partnership, focuses on acquiring 737NG and A320ceo aircraft and completed its fundraise in October 2025 with $2.0 billion ³⁴ of equity commitments. The 2025 Partnership, and follow-on partnerships, is the primary buyer of all future on-lease 737NG and A320ceo aircraft. The company, as the Servicer, provides aircraft management services to the 2025 Partnership and receives customary, market-based compensation for providing such services. The company also made a minority capital commitment and will make additional commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors. The company expects its primary investment activities to be through its Strategic Capital Initiative going forward.

Another growth vector is the expansion of the company's Aerospace Products segment through acquisitions and joint ventures. In 2024, the company acquired Lockheed Martin Commercial Engine Solutions (LMCES) to establish permanent engine and module manufacturing capabilities. In 2025, the company acquired Pacific Aerodynamic Inc. (Pac Aero), a specialist in CFM56 compressor blade and vane repairs, expanding its repair capabilities, and the MRE business of AerotechOPS (ATOPS), expanding its MRE business in Miami. On June 5, 2025, the company invested $10.5 million ³⁵ for a 50% ³⁶ interest in QuickTurn Europe, a 200,000 ³⁷ square-foot CFM56 engine maintenance repair and overhaul facility located at the Rome Fiumicino Airport, established to expand the company's global engine maintenance capabilities and meet increasing demand for MRE services. On December 30, 2025, the company announced the launch of FTAI Power, a platform focused on converting CFM56 engines to power turbines.The company's operational outlook includes its maintenance facilities in the United States, Canada and Europe. The company currently performs maintenance, repair and exchange activities at its maintenance facilities in the United States, Canada and Europe. The company's maintenance facilities could become unavailable either temporarily or permanently due to labor disruptions or other circumstances beyond its control. The company's ability to manage its operational footprint is critical to the success of its Aerospace Products segment. The company had 985 ³⁸ full-time employees and independent contractors as of December 31, 2025, with approximately 71% ³⁹ of its 494 ⁴⁰ full-time employees in Canada covered by collective bargaining agreements.40 per share ⁴¹ for the quarter ended December 31, 2025, payable on March 23, 2026.

The company faces structural headwinds from the cyclical nature of the commercial aviation industry, which is historically cyclical and has been negatively affected in the past by geopolitical events, natural disasters, pandemics, supply chain disruptions, labor issues, environmental concerns, lack of capital, cost inflation, and weak or volatile economic conditions. The company also faces headwinds from the potential for oversupply of specific assets, which could depress lease rates and asset values and result in decreased utilization of the company's assets. The company's business is affected by the availability and price of component parts used to maintain or repair its engines, and supply chains could be disrupted by external events such as natural disasters, extreme weather events, pandemics, labor disputes, governmental actions such as tariffs and legislative or regulatory changes.

The company faces constraints from the concentration of its assets in CFM56-5B, CFM56-7B and V2500 engines and related parts. If the market demand for such engines and related parts declines, or if they are redesigned or replaced by their manufacturer or experience design or technical problems, the value and rates relating to such assets may decline, and the company may be unable to lease or sell such engines or related parts on favorable terms. The company also faces constraints from its exposure to Russia, with eight aircraft and seventeen engines still located in Russia as of December 31, 2025, and an insured value of $210.7 million ⁴² for the aircraft and engines that remain in Russia.

The company's business is highly dependent on the commercial aviation industry, which is historically cyclical and has been negatively affected by geopolitical events, pandemics, and economic downturns, and any future downturn could materially reduce revenues and asset values. The company has a high concentration of CFM56-5B, CFM56-7B and V2500 engines and related parts, and a decline in market demand or technical problems specific to these assets could materially adversely affect the business. As of December 31, 2025, the company had $3.4 billion ⁴³ of indebtedness outstanding, and its ability to generate sufficient cash flow to service this debt is subject to general economic and other factors beyond its control. The company's Strategic Capital Initiative involves risks including market risk, liquidity risk, and conflicts of interest in allocating investment opportunities between the company and its partnerships. The company has exposure to Russia, with eight aircraft and seventeen engines still located there as of December 31, 2025, and an insured value of $210.7 million ⁴⁴ for those assets, and the timing and amount of any insurance recoveries are uncertain.

Management's message emphasizes the company's position as a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines. The strategic priorities emphasized for the period ahead include the growth of the Strategic Capital Initiative, which allows the company to maintain an asset-light business model while partnerships actively acquire on-lease narrowbody aircraft at scale, with the 2025 Partnership completing its fundraise in October 2025 with $2.0 billion ⁴⁵ of equity commitments. Another key priority is the expansion of the Aerospace Products segment through acquisitions and joint ventures, including the acquisition of LMCES, Pac Aero, ATOPS, and the investment in QuickTurn Europe. The company also announced the launch of FTAI Power, a platform focused on converting CFM56 engines to power turbines. Management highlights the internalization of management on May 28, 2024, after which the company no longer pays management fees or incentive distributions to the Former Manager and Master GP. The filing states that management believes adequate capital and borrowings are available from various sources to fund the company's commitments to the extent required.