AerSale Corp

Previous wording

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. You should read the following management’s discussion and analysis and the accompanying financial statements and related notes with AerSale’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). This discussion contains forward-looking statements about AerSale’s business, operations and industry that involve risks and uncertainties, such as statements regarding AerSale’s plans, objectives, expectations and intentions. AerSale’s future results and financial condition may differ materially from those currently anticipated because of the factors described in the section titled “Risk Factors” in the 2025 Form 10-K and in any of AerSale’s subsequent reports filed with the Securities and Exchange Commission. Events relating to the possibility of customer demand fluctuations, supply chain constraints, continuing inflationary pressures, the effects of foreign currency fluctuations and high interest rates, geopolitical uncertainties including continuing hostilities and tensions, trade restrictions and sanctions, tariffs and retaliatory countermeasures. Should one or more of these risks or uncertainties materialize, actual outcomes, including the future results of AerSale’s operations, may vary materially from those indicated.

Current wording

The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. You should read the following management’s discussion and analysis and the accompanying financial statements and related notes with AerSale’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). This discussion contains forward-looking statements about AerSale’s business, operations and industry that involve risks and uncertainties, such as statements regarding AerSale’s plans, objectives, expectations and intentions. AerSale’s future results and financial condition may differ materially from those currently anticipated because of the factors described in the section titled “Risk Factors” in the 2025 Form 10-K, in the section of this Quarterly Report titled “Forward-Looking Statements” and in any of AerSale’s subsequent reports filed with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, actual outcomes, including the future results of AerSale’s operations, may vary materially from those indicated.

Previous wording

Our Asset Management Solutions segment focuses on mid-life Flight Equipment. Asset Management Solutions’ activities include monetization of assets through the lease or sale of whole assets, or through disassembly activities in support of our USM-related activities. Our monetizing services have been developed to maximize returns on mid-life Flight Equipment throughout their operating life, in conjunction with realizing the highest residual value of Flight Equipment at its retirement. We accomplish this by utilizing deep market and technical knowledge related to the management of Flight Equipment sales, leasing and MRO services. To extract value from the remaining flight time on whole assets, we provide flexible short-term (generally less than five years) leasing solutions of Flight Equipment to passenger and cargo operators across the globe. Once the value from the Flight Equipment’s flight time has been extracted, Flight Equipment is considered to be at or near the end of its useful life and is analyzed for return maximization as either

Current wording

Our Asset Management Solutions segment focuses on mid-life Flight Equipment. Asset Management Solutions’ activities include monetization of assets through the lease or sale of whole assets, or through disassembly activities in support of our USM-related activities. Our monetizing services have been developed to maximize returns on mid-life Flight Equipment throughout their operating life, in conjunction with realizing the highest residual value of Flight Equipment at its retirement. We accomplish this by utilizing deep market and technical knowledge related to the management of Flight Equipment sales, leasing and MRO services. To extract value from the remaining flight time on whole assets, we provide flexible short-term (generally less than five years) leasing solutions of Flight Equipment to passenger and cargo operators across the globe. Once the value from the Flight Equipment’s flight time has been extracted, Flight Equipment is considered to be at or near the end of its useful life and is analyzed for return maximization as either whole asset sales or disassembled for sale as USM parts. Revenue from this segment is segregated between Aircraft and Engine depending on the asset type that generated the revenue. Lease revenue and the related depreciation from aircraft and engines installed on those aircraft are recognized under the Aircraft category. Revenue from sales of whole aircraft and related cost of sales are allocated between the Aircraft and Engine categories based on the allocated cost basis of the asset sold.

Previous wording

We utilize these capabilities to support our customers’ Flight Equipment, as well as to maintain and improve our own Flight Equipment, which is subsequently sold or leased to our customers. These processes require a high degree of expertise on each individual aircraft or component that is being serviced. Our knowledge of these processes allows us to assist customers to comply with applicable regulatory and OEM requirements. A significant amount of skilled labor is required to support this process, which the Company has accumulated through its diversified offerings.

Current wording

expertise on each individual aircraft or component that is being serviced. Our knowledge of these processes allows us to assist customers to comply with applicable regulatory and OEM requirements. A significant amount of skilled labor is required to support this process, which the Company has accumulated through its diversified offerings.

Previous wording

In addition to our aircraft and USM parts offerings, we develop Engineered Solutions consisting of Supplemental Type Certificates (“STCs”) that can be installed on existing Flight Equipment to improve performance, comply with regulatory requirements, or improve safety. An example of these solutions is the AerSafe® product line, which we designed and for which we obtained Federal Aviation Administration (the “FAA”) approval to sell as a solution for compliance with the FAA’s fuel tank flammability regulations. Another example of these solutions is our AerAware™ product, an industry-leading, next generation Enhanced Flight Vision System that has recently received approval by the FAA for the Boeing B737NG product line. These products are proprietary in nature and function as non-OEM solutions to regulatory requirements and other technical challenges, often at reduced delivery time and cost for operators. In order to develop these products, we engage in research and development (“R&D”) activities that are expensed as incurred.

Current wording

In addition to our aircraft and USM parts offerings, we develop Engineered Solutions consisting of Supplemental Type Certificates (“STCs”) that can be installed on existing Flight Equipment to improve performance, comply with regulatory requirements, or improve safety. An example of these solutions is the AerSafe® product line, which we designed and for which we obtained Federal Aviation Administration (“FAA”) approval to sell as a solution for compliance with the FAA’s fuel tank flammability regulations. Another example of these solutions is our AerAware™ product, an industry-leading, next generation Enhanced Flight Vision System that has received approval by the FAA for the Boeing B737NG product line. These products are proprietary in nature and function as non-OEM solutions to regulatory requirements and other technical challenges, often at reduced delivery time and cost for operators. In order to develop these products, we engage in research and development (“R&D”) activities that are expensed as incurred.

Previous wording

We source parts and components for our business from various suppliers around the world. Current geopolitical conditions, including trade restrictive actions and strained intercountry relations, and potential shutdowns of the U.S. government could cause significant materials and parts shortages, disruptions to government contracts such as delayed payments or halted projects, effects on supply chains due to reduced staffing for customers, inspections and transportations authorities, or delays in regulatory approvals, distribution issues, energy cost increases and price increases. Furthermore, the U.S. government’s adoption of new approaches to trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) may make it more difficult or costly for us to procure components and other material supplies and, in turn, may increase the cost to our customers, which may materially and adversely impact demand for our products and services, our results of operations or our financial condition. In addition, these U.S. actions have, and could in the future, result in other countries imposing retaliatory tariffs on our goods and services provided to foreign customers, which similarly could materially and adversely impact demand for our products and services. We continue to monitor the current economic environment and its potential impact on our business, results of operations or financial condition, as well as potential impact on our end customers whose demand for our products and services may be adversely impacted as a result of increased geopolitical instability or changes in policies by the U.S. or other governments, and closely manage our costs and capital resources so that we can respond appropriately as circumstances change. Our estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

Current wording

We source parts and components for our business from various suppliers around the world. Current geopolitical conditions, including trade restrictive actions and strained intercountry relations, and potential shutdowns of the U.S. government could cause significant materials and parts shortages, disruptions to government contracts such as delayed payments or halted projects, effects on supply chains due to reduced staffing for customers, inspections and transportation authorities, or delays in regulatory approvals, distribution issues, energy cost increases and price increases. Furthermore, the U.S. government’s adoption of new approaches to trade policy and imposition of tariffs on certain foreign goods (as well as the possibility of imposing significant, additional tariffs in the future) may make it more difficult or costly for us to procure components and other material supplies and, in turn, may increase the cost to our customers, which may materially and adversely impact demand for our products and services, our results of operations or our financial condition. In addition, these U.S. actions have, and could in the future, result in other countries imposing retaliatory tariffs on our goods and services provided to foreign customers, which similarly could materially and adversely impact demand for our products and services. We continue to monitor the current economic environment and its potential impact on our business, results of operations and financial condition, as well as the potential impact on our end customers whose demand for our products and services may be adversely impacted as a result of increased geopolitical instability or changes in policies by the U.S. or other governments, and closely manage our costs and capital resources so that we can respond appropriately as circumstances change. Our estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions or conditions.

Previous wording

Sales and gross profit for AerSale’s two business segments for the three months ended March 31, 2026 and 2025 were as follows:

Current wording

Revenue and gross profit for AerSale’s two business segments for the three months ended June 30, 2026 and 2025 were as follows:

Previous wording

Total revenue for the three months ended March 31, 2026 increased $4.8 million, or 7.4%, compared to the same period in 2025, driven by an increase of $3.9 million, or 10.0%, within Asset Management Solutions, and an increase of $0.9 million, or 3.4%, within TechOps.

Current wording

Total revenue for the three months ended June 30, 2026 decreased $36.5 million, or 33.9%, compared to the three months ended June 30, 2025, driven by a decrease of $39.1 million, or 51.3%, in revenue within Asset Management Solutions, and an increase of $2.7 million, or 8.7%, in revenue within TechOps.

Previous wording

Aircraft gross profit margins increased to 30.9% for the three months ended March 31, 2026, from 21.4% for the three months ended March 31, 2025 due to higher margins generated on leased Flight Equipment as well as higher margins generated on USM sales. Engine gross profit margin was 41.4% for the three months ended March 31, 2026, an increase from 32.9% for the three months ended March 31, 2025, which was primarily the result of higher margins generated on Flight Equipment sales.

Current wording

Aircraft gross profit margins decreased to 26.0% for the three months ended June 30, 2026, from 42.0% for the three months ended June 30, 2025 due to lower margin contribution from leasing revenue and USM sales. Engine gross profit margin was 37.3% for the three months ended June 30, 2026, an increase from 34.3% for the three months ended June 30, 2025, which was primarily the result of changes in the revenue mix, mainly higher leasing revenue which, historically, tend to generate higher margins.

Previous wording

Cost of sales in TechOps increased $4.9 million, or 23.6%, to $25.5 million for the three months ended March 31, 2026 compared to the prior year period, driven by the sales increase discussed above. Gross profit in TechOps decreased $4.0 million, or 67.1%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, driven by lower margin generated from our heavy MROs, as a result of higher initial costs at our facility in Millington, Tennessee as it returned to service; as well as higher margin work completed during the prior year in our facility in Goodyear, Arizona. Gross profit margin decreased to 7.1% for the three months ended March 31, 2026 compared to 22.3% for the prior year period, and was largely attributable to lower margin on Service Revenue of 0.9% for the three months ended March 31, 2026 compared to 18.9% for the prior year period, driven by gross profit reduction from our heavy MROs noted above.

Current wording

Cost of sales in TechOps increased $7.4 million or 32.5%, to $30.1 million for the three months ended June 30, 2026 compared to the prior year period, driven by the sales increase discussed above. Gross profit in TechOps decreased $4.7 million, or 56.1% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, driven by lower margin generated from our heavy MROs, as a result of higher labor costs, which includes non-recurring hiring and training expenses associated to the return to service of Millington, Tennessee. Gross profit margin decreased to 10.9% for the three months ended June 30, 2026 compared to 26.9% for the prior year period, which was largely attributable to lower margin on service revenue of 2.0% for the three months ended June 30, 2026 compared to 23.6% for the prior year period, driven by the gross profit reduction from our heavy MROs noted above.

Previous wording

Interest expense, net was $2.1 million for the three months ended March 31, 2026, compared to $1.2 million interest expense, net for the three months ended March 31, 2025. The increase was primarily related to higher outstanding borrowings under our debt facilities.

Current wording

Interest expense, net was $2.5 million for the three months ended June 30, 2026 and 2025. The interest expense is primarily driven by borrowings under our debt facilities.

Previous wording

The effective tax rate for the three months ended March 31, 2026 was 22.6% compared to 12.0% for the three months ended March 31, 2025. The difference between the effective tax rate and the statutory tax rate of 21% for the three months ended March 31, 2026 is primarily due to the impact of state income taxes and stock-based compensation. The difference between the effective tax rate and the statutory tax rate of 21% for the three months ended March 31, 2025 is primarily due to the benefit of the foreign derived intangible income deduction and R&D credits.

Current wording

The effective tax rate for the three months ended June 30, 2026 was 22.6% compared to 17.0% for the three months ended June 30, 2025. The difference between the effective tax rate and the statutory tax rate of 21.0% for the three months ended June 30, 2026 is primarily due to the impact of state income taxes, offset by the foreign derived intangible income deduction and foreign tax credits. The difference between the effective tax rate and the statutory tax rate of 21.0% for the three months ended June 30, 2025 is primarily due to the impact of state income taxes, offset by the foreign derived intangible income deduction and R&D tax credits.

Previous wording

Sales in the Asset Management Solutions segment increased $3.9 million, or 10.0%, to $43.1 million for the three months ended March 31, 2026, due to a $2.6 million, or 8.1%, increase in revenue from Engine, and a $1.3 million, or 18.3%, increase in revenue from Aircraft. The increase in Engine revenue is due to higher Flight Equipment sales in the amount of $3.5 million and higher leasing revenue of $3.0 million primarily attributable tohigher activity in the RB211 and CF6-80 product lines, partly offset by lower USM sales in the amount of $3.9 million. The increase in Aircraft revenue is primarily attributable to higher activity in the B757 product line as a result of higher leasing revenue in the amount of $1.2 million.

Current wording

Revenue in the Asset Management Solutions segment decreased $35.2 million or 30.5%, to $80.3 million for the six months ended June 30, 2026, due to a $37.2 million, or 38.1%, decrease in revenue from Engine; offset by a $2.0 million, or 11.1%, increase in revenue from Aircraft. The decrease in Engine revenue is primarily attributable to lower activity in the PW4000 and CF6-80 product lines due to lower Flight Equipment sales of $29.5 million and lower USM sales of $13.7 million, partly offset by higher leasing revenue in the amount of $6.0 million. The increase in Aircraft revenue is primarily attributable toincreased leasing activity of our B757 freighters in the amount of $2.0 million, partially offset by lower USM sales.

Previous wording

Cost of sales in Asset Management Solutions decreased $1.0 million, or 3.5%, to $26.2 million for the three months ended March 31, 2026, compared to the prior year period. The decrease in cost of sales was primarily driven by the decrease in USM sales discussed above. Gross profit in the Asset Management Solutions segment increased $4.9 million to $16.9 million, or 40.6%, for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The gross profit increase is mainly attributable to higher revenue generated on our Flight Equipment sales for the three months ended March 31, 2026, as noted above.

Current wording

Cost of sales in Asset Management Solutions decreased $25.7 million, or 33.7%, to $50.7 million for the six months ended June 30, 2026, compared to the prior year period. The decrease in cost of sales was primarily driven by the sales decrease noted above. Gross profit in the Asset Management Solutions segment decreased $9.5 million, or 24.3%, to $29.5 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The gross profit decrease is mainly attributable to lower Flight Equipment sales, as well as lower USM for the six months ended June 30, 2026.

Previous wording

As of March 31, 2026, we had $2.1 million of cash and cash equivalents. We finance our growth through cash flows generated from operations and borrowings secured by our assets. We had $137.8 million outstanding under the Revolving Credit Agreement (as defined below) as of March 31, 2026, and we had $39.7 million of availability thereunder. We used $26.7 million of cash for operating activities, primarily related to feedstock acquisition, and used cash in investing activities of $3.1 million for the three months ended March 31, 2026.

Current wording

As of June 30, 2026, we had $2.2 million in cash and cash equivalents. We finance our growth through cash flows generated from operations and borrowings secured by our assets. We had $146.2 million outstanding under the Revolving Credit Agreement (as defined below) as of June 30, 2026, with $31.8 million of availability thereunder. We used cash in operations of $33.5 million for the six months ended June 30, 2026, primarily for feedstock acquisition and improvements to flight equipment, and used cash in investing activities of $4.4 million for the six months ended June 30, 2026.

Previous wording

Net cash used in operating activities was $26.7 million for the three months ended March 31, 2026, compared to cash used of $45.2 million for the same period in 2025. The decrease in cash used in operating activities of $18.6 million was primarily due to lower feedstock acquisitions of $11.6 million.

Current wording

Net cash used in operating activities was $33.5 million for the six months ended June 30, 2026, compared to cash used of $25.4 million for the same period in 2025. The increase in cash deployed of $8.0 million was primarily due to lower results from operations and the timing of changes in working capital levels during the six months ended June 30, 2026 compared to the prior year period.

Previous wording

Net cash used in investing activities was $3.1 million for the three months ended March 31, 2026, compared to cash used of $3.5 million in the same period for 2025. Cash used in investing activities during the three months ended March 31, 2026 was driven by capitalized costs on Flight Equipment and purchases of property and equipment.

Current wording

Net cash used in investing activities was $4.4 million for the six months ended June 30, 2026, compared to cash used of $3.8 million in the same period for 2025. The increase in cash used in investing activities was driven by cash generated from the sale of assets during the six months ended June 30, 2025.

Previous wording

Net cash provided by financing activities was $27.5 million for the three months ended March 31, 2026, compared to cash provided of $48.8 million for the three months ended March 31, 2025. Cash provided by financing activities during the three months ended March 31, 2026 resulted from borrowing under our Revolving Credit Agreement. Cash provided by financing activities during the three months ended March 31, 2025 resulted from borrowing under our Revolving Credit Agreement, offset by cash used in the repurchase of common stock.

Current wording

Net cash provided by financing activities was $35.7 million for the six months ended June 30, 2026, compared to cash provided of $30.2 million in the same period for 2025. Cash provided by financing activities during the six months ended June 30, 2026 resulted from net borrowing under our Revolving Credit Agreement. Cash provided by financing activities during the six months ended June 30, 2025 resulted from net borrowing under the Revolving Credit Agreement, offset by cash used in the repurchase of common stock.

Previous wording

As of March 31, 2026, there was $137.8 million outstanding under the Revolving Credit Agreement and we had $39.7 million of availability thereunder. We were in compliance with our debt covenants for the Revolving Credit Agreement as of March 31, 2026.

Current wording

As of June 30, 2026, there was $146.2 million outstanding under the Revolving Credit Agreement and we had $31.8 million of availability thereunder. We were in compliance with our debt covenants for the Revolving Credit Agreement as of June 30, 2026.

Previous wording

On November 22, 2024, the Company entered into a property and equipment term loan (the “CIBC Equipment Loan”) with a total advance commitment of $10.0 million for the purpose of financing capital expenditures on property and equipment. Advances made by the lender are convertible into term loans at the option of the lender at a rate of SOFR plus 3.0% and have a maturity date of thirty-six (36) months from the term loan conversion date. Advances under this loan are collateralized by the property and equipment it finances and require interest only payment until converted to a term loan, at which point, principal and interest payments are required.

Current wording

On November 22, 2024, the Company entered into a property and equipment term loan (the “CIBC Equipment Loan”) with a total advance commitment of $10.0 million for the purpose of financing capital expenditures on property and equipment. Advances made by the lender are convertible into term loans at the option of the lender at a rate of the Secured Overnight Financing Rate (“SOFR”) plus 3.0% and have a maturity date of 36 months from the term loan conversion date. Advances under this loan are collateralized by the property and equipment it finances and require interest only payment until converted to a term loan, at which point, principal and interest payments are required.

Previous wording

During the three months ended March 31, 2026, the Company repaid $0.2 million under this facility, and $2.0 million remained outstanding as of March 31, 2026.

Current wording

During the six months ended June 30, 2026, the Company repaid $0.5 million under this facility, and $1.8 million remained outstanding as of June 30, 2026.

Previous wording

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires our management 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2025 Form 10-K. We continually review these estimates and their underlying assumptions to ensure they are appropriate for the circumstances. Changes in the estimates and assumptions we use could have a material impact on our financial results.

Current wording

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires our management 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 condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the 2025 Form 10-K. We continually review these estimates and their underlying assumptions to ensure they are appropriate for the circumstances. Changes in the estimates and assumptions we use could have a material impact on our financial results. During the six months ended June 30, 2026, there were no material changes in our critical accounting estimates and policies.