Aircastle LTD

What they do

Aircastle describes itself as a leading secondary market investor, sourcing aircraft from other lessors, airlines via purchase-leaseback transactions, financial institutions and manufacturers. It manages aircraft through their life cycle, including lease and technical management, redeliveries, transitions and sales, and disposes of aircraft and engines either with a lease attached or on a part-out basis. Aircraft are managed by teams based in the United States, Ireland and Singapore.

Revenue drivers

• Lease rental revenue — Rental income from aircraft leased to airlines; revenue was $235.5 million in the quarter ended May 31, 2026, up 6% in lease rental revenue versus the prior-year first quarter.
• Gains on aircraft sales — Sale of aircraft and other flight equipment, with or without leases attached; FY2026 (ended February 28, 2026) sales of 33 aircraft and other flight equipment generated net proceeds of $729.5 million and gains of $95.9 million.
• Insurance settlements — Cash settlement proceeds from contingent and possessed insurance policies for aircraft formerly on lease to Russian airlines favorably impacted FY2026 results.
• Maintenance and other lease revenue — Revenue associated with lease maintenance obligations and other lease-related items, reported within total revenues of $975.1 million in FY2026.

Recent performance

For the quarter ended May 31, 2026, total revenues were $235.5 million, net income was $33.6 million and Adjusted EBITDA was $208.2 million. The company acquired 4 aircraft for $117 million and sold 5 aircraft and other flight equipment for $114 million in proceeds, recognizing $11 million of gains. For FY2026 (ended February 28, 2026), revenues were $975.1 million, net income was $194.0 million and Adjusted EBITDA was $945.1 million, versus $821.0 million, $123.6 million and $789.9 million in FY2025. Operating cash flow was $483.1 million in FY2026 and $97.7 million in the May 2026 quarter.

Strategy

Aircastle continues to acquire and sell aircraft, purchasing 46 aircraft for $1.7 billion in FY2026 and 4 aircraft for $117 million in the May 2026 quarter. As of May 31, 2026, it had commitments to purchase 19 aircraft for $897.8 million, with deliveries through November 2028. The company raised $1 billion in new financings in the first quarter of 2026, including $650 million of 5.000% unsecured senior notes and a $375 million unsecured term loan expandable to $425 million, bringing unsecured debt to 98% of total debt and total liquidity to $2.6 billion as of July 1, 2026. Management states it will deploy capital in 2026 with a disciplined strategy focused on profitability.

Risks

• Lessee credit and concentration — The fleet was leased to 72 airline customers in 43 countries as of May 31, 2026, and lessee defaults, bankruptcies or restructurings could reduce revenue and cash flows.
• Middle East conflict — Airline customers in the Middle East represented approximately 5% of Net Book Value and lease rental revenue in FY2026, and the conflict could disrupt regional aviation and airline finances.
• Aircraft residual values — Lease rates and aircraft values are subject to supply-demand dynamics and may decline from excess capacity or new aircraft and engine technology, affecting gains on sales.
• OEM delivery delays — The company attributes strong narrow-body demand to OEM delivery delays and supply-chain constraints, which are outside its control and could shift.

Outlook

Management states that supply shortages have aviation investors seeing consistently high values for aircraft and engines, and that favorable rental revenues and gains on sales drove first-quarter 2026 net income of $34 million. CEO Mike Inglese said conflict-related fuel prices are challenging airline profitability, though customers are managing costs. The company says it will deploy capital in 2026 with a disciplined strategy focused on profitability, supported by shareholder backing from Marubeni Corporation and Mizuho Leasing.