WILLIS LEASE FINANCE CORP

Previous wording

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 Form 10-K for the fiscal year ended December 31, 2023 (the “2023 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 potential impacts of the current high interest rate and inflationary environment 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.

Current wording

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 Form 10-K for the fiscal year ended December 31, 2024 (the “2024 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 potential impacts of the current high interest rate and inflationary environment 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.

Previous wording

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 September 30, 2024, the majority of our leases were operating leases, with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by Accounting Standards Codification (“ASC”) 842 and investments in sales-type leases. As of September 30, 2024, we had 66 lessees in 34 countries. Our portfolio is continually changing due to equipment acquisitions and sales. As of September 30, 2024, we had $2,435.6 million of equipment held in our operating lease portfolio, $175.4 million of notes receivable, $31.5 million of maintenance rights, and $23.2 million of investments in sales-type leases, which represented 348 engines, 16 aircraft, one marine vessel, and other leased parts and equipment. As of September 30, 2024, we also managed 234 engines, aircraft and related equipment on behalf of other parties.

Current wording

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 March 31, 2025, the majority of our leases were operating leases, with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by Accounting Standards Codification (“ASC”) 842 and investments in sales-type leases. As of March 31, 2025, we had 68 lessees in 38 countries. Our portfolio is continually changing due to equipment acquisitions and sales. As of March 31, 2025, we had $2,597.8 million of equipment held in our operating lease portfolio, $179.3 million of notes receivable, $25.2 million of maintenance rights, and $17.3 million of investments in sales-type leases, which represented 347 engines, 15 aircraft, one marine vessel, and other leased parts and equipment. As of March 31, 2025, we also managed 282 engines, aircraft and related equipment on behalf of other parties.

Previous wording

Our wholly-owned and vertically-integrated subsidiary Willis Asset Management Limited (“Willis Asset Management”) is focused on the engine management and consulting business. Willis Aeronautical Services, Inc. (“Willis Aero”) 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.

Current wording

Our wholly-owned and vertically-integrated subsidiary Willis Asset Management Limited is focused on the engine management and consulting business. 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.

Previous wording

Given the uncertainty in the rapidly changing market and economic conditions related to the current high interest rate and inflationary environment, we will continue to evaluate the nature and extent of the impact to the Company’s business and financial position. The ultimate extent of the current high interest rate and inflationary environment on the Company will depend on future developments, and such effects could exist for an extended period of time.

Current wording

Given the uncertainty in the rapidly changing market and economic conditions related to the current high interest rate and inflationary environment as well as the impact of new or increased tariffs, we will continue to evaluate the nature and extent of the impact to the Company’s business and financial position. The ultimate extent of the current high interest rate and inflationary environment as well as the impact of new or increased tariffs on the Company will depend on future developments, and such effects could exist for an extended period of time.

Previous wording

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 $11.3 million, or 21.2%, to $64.9 million in the three months ended September 30, 2024 from $53.6 million for the three months ended September 30, 2023. 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 the average lease rate factor.

Current wording

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 $14.9 million, or 28.1%, to $67.7 million in the three months ended March 31, 2025 from $52.9 million for the three months ended March 31, 2024. 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 lease rate factor, offset by a slight decrease in average utilization (based on net book value) of equipment held in our operating lease portfolio.

Previous wording

Two customers accounted for approximately 11% each of total lease rent revenue of the Company, during the three months ended September 30, 2024, and one customer accounted for approximately 16% of total lease rent revenue during the three months ended September 30, 2023.

Current wording

Two customers accounted for approximately 14% and 10% of total lease rent revenue of the Company, during the three months ended March 31, 2025, and two customers accounted for approximately 13% and 12% of total lease rent revenue during the three months ended March 31, 2024.

Previous wording

At September 30, 2024, the Company had $2,435.6 million of equipment held in our operating lease portfolio, $175.4 million of notes receivable, $31.5 million of maintenance rights, and $23.2 million of investments in sales-type leases. At September 30, 2023, the Company had $2,171.0 million of equipment held in our operating lease portfolio, $94.0 million of notes receivable, $13.4 million of maintenance rights, and $5.5 million of investments in sales-type leases. Average utilization (based on net book value) was approximately 83% and 85% for the three months ended September 30, 2024 and 2023, respectively.

Current wording

At March 31, 2025, the Company had $2,597.8 million of equipment held in our operating lease portfolio, $179.3 million of notes receivable, $25.2 million of maintenance rights, and $17.3 million of investments in sales-type leases. At March 31, 2024, the Company had $2,130.3 million of equipment held in our operating lease portfolio, $97.9 million of notes receivable, $9.2 million of maintenance rights, and $33.0 million of investments in sales-type leases. Average utilization (based on net book value) was approximately 80% and 84% for the three months ended March 31, 2025 and 2024, respectively. Utilization for the month ended March 31, 2025 was 86%.

Previous wording

Maintenance Reserve Revenue. Maintenance reserve revenue increased $12.1 million, or 32.0%, to $49.8 million for the three months ended September 30, 2024 from $37.7 million for the three months ended September 30, 2023. 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. We recognized $1.2 million in long-term maintenance revenue for the three months ended September 30, 2024, compared to $3.3 million in long-term maintenance revenue recognized in the comparable prior period. Engines on lease with “non-reimbursable” usage fees generated $48.5 million of short-term maintenance revenues, compared to $34.4 million in the comparable prior period. These short-term maintenance revenues are a proxy for flight time of our portfolio of engines.

Current wording

Maintenance Reserve Revenue. Maintenance reserve revenue increased $11.0 million, or 25.0%, to $54.9 million for the three months ended March 31, 2025 from $43.9 million for the three months ended March 31, 2024. 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. We recognized $9.6 million in long-term maintenance revenue for the three months ended March 31, 2025, compared to $6.3 million in long-term maintenance revenue recognized in the comparable prior period. Engines on lease with “non-reimbursable” usage fees generated $45.3 million of short-term maintenance revenues, compared to $37.6 million in the comparable prior period, an increase of $7.7 million or 20.6%. The increase in short-term maintenance reserve revenue was influenced by an increase in the number of engines on short-term lease conditions, and the systematic, contractual increase in the hourly and cyclical usage rates on our engines.

Previous wording

Spare Parts and Equipment Sales. Spare parts and equipment sales increased by $7.5 million, or 223.4%, to $10.9 million for the three months ended September 30, 2024 compared to $3.4 million for the three months ended September 30, 2023. The increase in spare parts sales for the three months ended September 30, 2024 reflects the demand for surplus material that we are seeing as operators extend the lives of their current generation engine portfolios. Equipment sales for the three months ended September 30, 2024 were $1.0 million for the sale of one engine. There were no equipment sales for the three months ended September 30, 2023.

Current wording

Spare Parts and Equipment Sales. Spare parts and equipment sales increased by $15.0 million, or 454.7%, to $18.2 million for the three months ended March 31, 2025, compared to $3.3 million for the three months ended March 31, 2024. The increase in spare parts sales for the three months ended March 31, 2025 reflects the demand for surplus material that we are seeing as operators extend the lives of their current generation engine portfolios. In addition, the increase includes a discrete $7.0 million sale. Equipment sales for the three months ended March 31, 2025 were $2.2 million for the sale of one engine. There were no equipment sales for the three months ended March 31, 2024.

Previous wording

Interest Revenue. Interest revenue increased by $1.3 million, or 62.0%, to $3.4 million for the three months ended September 30, 2024, from $2.1 million for the three months ended September 30, 2023. The increase primarily reflects an increase in notes receivable related to failed sale-leasebacks in which the Company was the buyer-lessor and on sales-type leases.

Current wording

Interest Revenue. Interest revenue increased by $1.7 million, or 73.4%, to $3.9 million for the three months ended March 31, 2025, from $2.3 million for the three months ended March 31, 2024. The increase primarily reflects an increase in notes receivable related to failed sale-leasebacks in which the Company was the buyer-lessor.

Previous wording

Gain on Sale of Leased Equipment. During the three months ended September 30, 2024, we sold 13 engines and other parts and equipment from the lease portfolio for a net gain of $9.5 million. During the three months ended September 30, 2023, we sold one engine, one airframe, and other parts and equipment from the lease portfolio for a net gain of $0.8 million.

Current wording

Gain on Sale of Leased Equipment. During the three months ended March 31, 2025, we sold seven engines, one airframe, and other parts and equipment from the lease portfolio for a net gain of $4.4 million. During the three months ended March 31, 2024, we sold eight engines from the lease portfolio for a net gain of $9.2 million.

Previous wording

Maintenance Services Revenue. Maintenance services revenues predominately represent fleet management, engine and aircraft storage and repair services, and revenue related to fixed base operator services provided to third parties, such as refueling, maintenance, and hangar services. Maintenance services revenue decreased by $0.3 million, or 4.0%, to $5.9 million for the three months ended September 30, 2024, from $6.2 million for the three months ended September 30, 2023.

Current wording

Maintenance Services Revenue. Maintenance services revenues predominately represent fleet management, engine and aircraft storage and repair services, and revenue related to fixed base operator services provided to third parties, such as refueling, maintenance, and hangar services. Maintenance services revenue remained relatively flat for the three months ended March 31, 2025, as compared to that for the three months ended March 31, 2024.

Previous wording

Other Revenue. Other revenue increased by $1.6 million, or 29.6%, to $6.8 million for the nine months ended September 30, 2024 from $5.3 million for the nine months ended September 30, 2023. Other revenue consists primarily of managed service fee revenue related to the servicing of engines for the WMES lease portfolio. The increase for the nine months ended September 30, 2024 compared to the prior year period primarily reflects increased managed service revenue.

Current wording

Other Revenue. Other revenue increased by $0.2 million, or 9.0%, to $2.6 million for the three months ended March 31, 2025 from $2.3 million for the three months ended March 31, 2024. Other revenue consists primarily of managed service fee revenue related to the servicing of engines for the Willis Mitsui & Company Engine Support Limited (“WMES”) lease portfolio. The increase compared to that of the prior year period primarily reflects increased managed service revenue. These services include management of the WMES lease portfolio, which occurs on an ongoing basis, as well as marketing, which occurs on a transactional basis.

Previous wording

Depreciation and Amortization Expense. Depreciation and amortization expense increased by $0.6 million, or 2.4%, to $23.7 million for the three months ended September 30, 2024 compared to $23.1 million for the three months ended September 30, 2023. The increase is primarily due to an increase in the size of our lease portfolio.

Current wording

Depreciation and Amortization Expense. Depreciation and amortization expense increased by $2.5 million, or 11.3%, to $25.0 million for the three months ended March 31, 2025, compared to $22.5 million for the three months ended March 31, 2024. The increase is primarily due to an increase in the size of our lease portfolio.

Previous wording

Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales increased by $6.8 million, or 337.8%, to $8.9 million for the three months ended September 30, 2024 compared to $2.0 million for the three months ended September 30, 2023, reflecting the increase in spare parts and equipment sales. Cost of equipment sales were $0.1 million for the three months ended September 30, 2024. There were no equipment or cost of equipment sales for the three months ended September 30, 2023.

Current wording

Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales increased by $12.6 million, or 466.5%, to $15.3 million for the three months ended March 31, 2025, compared to $2.7 million for the three months ended March 31, 2024, reflecting the increase in spare parts and equipment sales. Cost of equipment sales were $1.5 million for the three months ended March 31, 2025. There were no equipment or cost of equipment sales for the three months ended March 31, 2024.

Previous wording

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 $0.8 million, or 14.7%, to $6.4 million for the three months ended September 30, 2024, compared to $5.6 million for the three months ended September 30, 2023. The increase is primarily related to an increase in personnel costs, as a result of expansion of our aircraft tear down and repair services business, as well as an increase in facility related costs.

Current wording

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 remained relatively flat for the three months ended March 31, 2025, as compared to that for the three months ended March 31, 2024.

Previous wording

Write-down of Equipment. There was $0.6 million in write-downs of equipment for the three months ended September 30, 2024, reflecting the write-down of three engines. Write-down of equipment was $0.7 million for the three months ended September 30, 2023, reflecting the write-down of one engine and two airframes.

Current wording

Write-down of Equipment. There was $2.1 million in write-downs of equipment for the three months ended March 31, 2025, reflecting the write-down of five engines. Write-down of equipment was $0.3 million for the three months ended March 31, 2024, reflecting the write-down one airframe.

Previous wording

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 decreased by $3.6 million to $5.2 million for the three months ended September 30, 2024 compared to $8.7 million for the three months ended September 30, 2023, primarily due to a lower level of engine repair activity as compared to that of the prior period.

Current wording

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 decreased by $2.0 million to $6.2 million for the three months ended March 31, 2025, compared to $8.3 million for the three months ended March 31, 2024, primarily due to a lower level of engine repair activity as compared to that of the prior period.

Previous wording

Net Finance Costs. Net finance costs increased $8.8 million, or 46.0%, to $27.8 million for the three months ended September 30, 2024, compared to $19.1 million for the three months ended September 30, 2023, primarily due to a higher level of debt obligations, including increased borrowing costs. Additionally, derivative-related receipts were $3.0 million for the three months ended September 30, 2024, as compared to $6.3 million for the three months ended September 30, 2023 as certain interest rate swap positions ran off. These increases were offset by a decrease in interest expense associated with our credit facility that matures in June 2025 due to principal payments made and a decrease in the outstanding balance of the credit facility.

Current wording

Net Finance Costs. Net finance costs increased $9.1 million, or 39.5%, to $32.1 million for the three months ended March 31, 2025, compared to $23.0 million for the three months ended March 31, 2024, primarily due to an overall higher level of debt obligations and a higher weighted average borrowing cost. Interest expense associated with the Company’s credit facility increased by $5.2 million for the three months ended March 31, 2025, due to an increase in the average outstanding balance of the credit facility for the three months ended March 31, 2025, as compared to that of the prior year period. Further, there was additional interest expense of $3.6 million for the three months ended March 31, 2025 associated with Willis Warehouse Facility LLC (“WWFL”), as the senior secured warehouse facility was not entered into until May 2024. Additionally, derivative-related receipts were $2.4 million for the three months ended March 31, 2025, as compared to $3.1 million for the three months ended March 31, 2024, as certain interest rate swap positions ran off.

Previous wording

Income Tax Expense. Income tax expense was $10.4 million for the three months ended September 30, 2024 compared to income tax expense of $5.7 million for the three months ended September 30, 2023. The effective tax rate for the third quarter of 2024 was 30.1% compared to 28.1% 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”).

Current wording

Income Tax Expense. Income tax expense was $8.4 million for the three months ended March 31, 2025, compared to income tax expense of $9.0 million for the three months ended March 31, 2024. The effective tax rate for the first quarter of 2025 was 33.2%, compared to 30.2% 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”).

Previous wording

At September 30, 2024, the Company had $5.8 million of cash and cash equivalents and $99.3 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 $518.9 million and $159.8 million for the nine months ended September 30, 2024 and 2023, respectively, was derived from our borrowing activities. In these same time periods, $331.2 million and $221.9 million, respectively, was used to pay down related debt.

Current wording

At March 31, 2025, the Company had $32.4 million of cash and cash equivalents and $116.7 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 $135.0 million and $70.0 million for the three months ended March 31, 2025 and 2024, respectively, was derived from our borrowing activities. In these same time periods, $169.4 million and $138.8 million, respectively, was used to pay down related debt.

Previous wording

Cash flows provided by operating activities were $216.4 million and $169.0 million for the nine months ended September 30, 2024 and 2023, respectively. The $47.5 million, or 28.1%, increase in operating cash flows was primarily driven by a 62.0% increase in maintenance reserve revenue, reflecting increased levels of usage fees resulting from high levels of travel and supply chain constraints. Additionally, payments received on sales-type leases increased $28.0 million, gain on sale of leased equipment increased $28.0 million, and changes in receivables contributed to $26.9 million of incremental operating cash flows as collections improved. Partially offsetting these increases in operating cash flows was a period over period decline of $30.7 million in cash flows from changes in inventory, reflecting investment in high demand engine types. 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. Approximately 80% and 84%, by book value, of our assets were on-lease as of September 30, 2024 and December 31, 2023, respectively. The average utilization rate (based on net book value) for the nine months ended September 30, 2024 and 2023 was approximately 83% and 85%, 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.

Current wording

Cash flows provided by operating activities were $41.0 million and $59.8 million for the three months ended March 31, 2025 and 2024, respectively. The $18.8 million, or 31.4%, decrease in operating cash flows was primarily driven by a period over period $76.1 million decrease in cash flows from changes in accounts payable and accrued expenses, partially offset by a period over period $49.1 million increase in cash flows from changes in inventory. These changes are reflective of significant inventory purchases made in the prior comparable period to meet the high demand for spare parts. Spare parts and equipment sales increased by $15.0 million, or 454.7%, as compared to that of the comparable period. 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. Approximately 85% and 83%, by book value, of our assets were on-lease as of March 31, 2025 and December 31, 2024, respectively. The average utilization rate (based on net book value) for the three months ended March 31, 2025 and 2024 was approximately 80% and 84%, 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.

Previous wording

Cash flows used in investing activities were $455.0 million for the nine months ended September 30, 2024 and primarily reflected $488.4 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $89.6 million related to leases entered into which were classified as notes receivable under ASC 842, partially offset by proceeds from sale of equipment (net of selling expenses) of $117.9 million. Cash flows used in investing activities were $132.1 million for the nine months ended September 30, 2023 and primarily reflected $142.5 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $15.4 million related to leases entered into which were classified as notes receivable under ASC 842, partially offset by proceeds from sale of equipment (net of selling expenses) of $25.0 million.

Current wording

Cash flows provided by investing activities were $13.7 million for the three months ended March 31, 2025 and primarily reflected proceeds from sale of equipment (net of selling expenses) of $47.7 million, partially offset by $29.3 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $7.5 million for the purchase of property, equipment and furnishings. Cash flows used in investing activities were $63.8 million for the three months ended March 31, 2024 and primarily reflected $62.8 million for the purchase of equipment held for operating lease (including capitalized costs and prepaid deposits made in the period) and $6.9 million related to leases entered into which were classified as notes receivable under ASC 842, partly offset by proceeds from sale of equipment (net of selling expenses) of $4.7 million.

Previous wording

Cash flows provided by financing activities were $175.6 million for the nine months ended September 30, 2024 and primarily reflected $518.9 million in proceeds from debt obligations and $13.1 million in proceeds from issuance of preferred stock, partially offset by $331.2 million in principal payments, $8.9 million in cash dividends paid to shareholders of common stock, and $7.2 million in cancellation of restricted stock in satisfaction of withholding tax. Cash flows used in financing activities were $70.2 million for the nine months ended September 30, 2023 and primarily reflected $221.9 million in principal payments, partially offset by $159.8 million in proceeds from debt obligations.

Current wording

Cash flows used in financing activities were $38.1 million for the three months ended March 31, 2025 and primarily reflected $169.4 million in principal payments and $1.8 million in cash dividends paid to shareholders of common stock, partially offset by $135.0 million in proceeds from debt obligations. Cash flows used in financing activities were $69.9 million for the three months ended March 31, 2024 and primarily reflected $138.8 million in principal payments, partially offset by $70.0 million in proceeds from debt obligations.

Previous wording

During the nine months ended September 30, 2024, the Company paid cash dividends of $8.9 million to shareholders of common stock.

Current wording

During the three months ended March 31, 2025, the Company paid cash dividends of $1.8 million to shareholders of common stock.

Previous wording

On September 27, 2024, the Company entered into a Series A Preferred Stock Purchase Agreement with Development Bank of Japan Inc. (the “Stock Purchase Agreement”), which refinanced the Company’s Series A-1 and Series A-2 Preferred Stock into one $65.0 million Series A Preferred Stock series (“the Series A Preferred Stock”), which accrues quarterly dividends at the rate per annum of 8.35% per share. The Company’s Series A-1 Preferred Stock accrued quarterly dividends at the rate per annum of 6.5% per share through October 15, 2023 and accrued at the rate per annum of 8.5% per share thereafter through September 26, 2024. The Series A-2 Preferred Stock accrued quarterly dividends at the rate per annum of 6.5% per share. During each of the nine months ended September 30, 2024 and 2023, the Company paid total preferred stock dividends of $3.4 million and $2.4 million, respectively.

Current wording

In September 2024, the Company entered into a Series A Preferred Stock Purchase Agreement with Development Bank of Japan Inc. (the “Stock Purchase Agreement”), which refinanced and expanded the Company’s Series A-1 and Series A-2 Preferred Stock into one $65.0 million Series A Preferred Stock series (the “Series A Preferred Stock”), which accrues quarterly dividends at the rate per annum of 8.35% per share.

Previous wording

At September 30, 2024, debt obligations consisted of loans totaling $1,990.5 million, net of unamortized issuance costs and note discounts, payable with interest rates varying between approximately 3.1% 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.

Current wording

At March 31, 2025, debt obligations consisted of loans totaling $2,231.6 million, net of unamortized issuance costs and note discounts, payable with interest rates varying between approximately 3.1% 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.

Previous wording

At September 30, 2024, 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 4.50 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 September 30, 2024, we were in compliance with the covenants specified in the WEST III, WEST IV, WEST V, WEST VI, WEST VII, and Willis Warehouse Facility LLC indentures and servicing and other debt related agreements.

Current wording

At March 31, 2025, 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 March 31, 2025, we were in compliance with the covenants specified in the WEST III, WEST IV, WEST V, WEST VI, WEST VII, and WWFL indentures and servicing and other debt related agreements.

Previous wording

From time to time we enter into contractual commitments to purchase engines directly from original equipment manufacturers. We are currently committed to purchasing seven additional new LEAP-1B engines, and 18 additional new LEAP-1A engines for an aggregate total of $426.7 million by 2027. 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.

Current wording

From time to time we enter into contractual commitments to purchase engines directly from original equipment manufacturers. We are currently committed to purchasing 30 additional new LEAP-1A engines and 21 additional new LEAP-1B engines for an aggregate total of $912.6 million by 2030. Further, we are currently committed to purchasing 28 used engines for approximately $142.6 million in 2025. 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.

Previous wording

In December 2020, we entered into definitive agreements for the purchase of 25 Pratt & Whitney aircraft engines. As part of the purchase, we have committed to certain future overhaul and maintenance services which are anticipated to range between $88.5 million and $121.5 million by 2030.

Current wording

In December 2020, we entered into definitive agreements for the purchase of 25 Pratt & Whitney aircraft engines. As part of the purchase, we have committed to certain future overhaul and maintenance services which are anticipated to range between $97.1 million and $126.6 million by 2030.