FTAI Aviation Investors LLC
11/02/2026 | Press release | Distributed by Public on 11/02/2026 05:08
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help you understand FTAI Aviation Ltd. (the "Company," "we," "our" or "us"). Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, "Risk Factors" included elsewhere in this Quarterly Report on Form 10-Q.
Overview
We are a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. We repair and rebuild engines in our maintenance facilities and with our joint venture partners, and sell or lease the engines to airlines and asset owners around the world. Our primary business model is to sell engines via exchange through our proprietary Maintenance, Repair and Exchange ("MRE") model which is reported under our Aerospace Products segment.
We also own and manage a portfolio of on- and off-lease aircraft and engines through our Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, we launched our Strategic Capital Initiative, through which the Company manages third-party capital to invest in on-lease aircraft. We expect our primary investment activities to be through our Strategic Capital Initiative going forward.
As of September 30, 2026, we had total consolidated assets of $4.8 billion and total equity of $433.4 million.
Internalization of Management
On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company's management function. As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) 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; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP.
In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. In addition, the Former Manager was required to continue to provide the services that were reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Services were provided to the Company for a fee equal to the Former Manager's cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%).
Strategic Capital Initiative
On December 30, 2024, we announced the launch of our Strategic Capital Initiative (the "SCI") in collaboration with third-party institutional investors. The SCI and its related partnerships, as discussed further below, allow the Company to generate income while maintaining an asset-light business model.
The SCI Partnerships
We formed the 2025 Partnership and 2026 Partnership (collectively, the "SCI Partnerships"), the first and second partnership under the SCI, to provide institutional investors with the opportunity to invest in on-lease 737NG and A320ceo aircraft with the objective of generating returns for the SCI Partnership's partners through leasing cash flows and eventual asset sales. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments, which are supplemented by asset-level debt financing. We made a minority capital commitment to the SCI Partnerships, and our capital contributions are called in the same proportion as those of third-party institutional investors. As of September 30, 2026, we held an approximately 19% and 21% capital interest in the 2025 Partnership and 2026 Partnership, respectively, with a carrying value of $341.2 million and $12.9 million, respectively.
The SCI Partnerships use their equity capital and asset-level debt to acquire on-lease aircraft at scale from airlines, lessors and other third parties and, with requisite investor consent, from the Company. As of September 30, 2026, the 2025 Partnership owned 205 on-lease aircraft, 60 of which were acquired from the Company and 145 from third parties. As of September 30, 2026, the 2026 partnership owned 10 on-lease aircraft, all of which were acquired from third parties. The SCI Partnerships, and follow-on partnerships, are or will be the primary buyers of all future on-lease 737NG and A320ceo aircraft that meet the partnership's investment criteria.
Through our wholly owned consolidated subsidiaries, we are both the general partner of the SCI Partnerships and the servicers of their aircraft and engine portfolio. As servicers, our subsidiaries provide services to the SCI Partnerships related to acquiring, leasing, remarketing and selling aircraft, administering leases and collections, overseeing lessee maintenance and insurance, and obtaining valuations. We receive customary, market-based servicing fees in exchange for the services rendered. As the
general partner, we are entitled to profit participation distributions after the limited partners have received distributions equal to their contributed capital plus a preferred return.
When an aircraft owned by the SCI Partnerships requires a serviceable engine or module to fulfill its obligations under an aircraft lease, the SCI Partnerships purchase a serviceable engine or module from the Company and sell the unserviceable engine or module to the Company, for a contractual net purchase price. These exchanges take place under a Maintenance, Repair and Exchange ("MRE") agreement that is in place for the life of the partnerships.
We have three contractual relationships with the SCI Partnerships that give rise to revenue for the Company, directly or indirectly through our wholly owned consolidated subsidiaries:
•MRE agreement. "MRE Contract revenue - affiliate" is recognized at the point in time when control of each serviceable engine or module transfers to the SCI Partnerships and is reported in our Aerospace Products segment. MRE Contract revenue - affiliate totaled $129.4 million and $533.4 million for the three and nine months ended September 30, 2026, respectively.
•Servicing agreements. Servicing fees are recognized over time as the services are performed and are included in other revenue in our Aviation Leasing segment. Servicing fees totaled $4.7 million and $17.6 million for the three and nine months ended September 30, 2026, respectively.
•Profit participation. Profit participation is variable consideration and is recognized only when it is probable that a significant reversal of cumulative revenue will not occur. We expect this to be when the underlying aircraft investments are realized and the distributions are no longer subject to reversal. No profit participation has been recognized to date.
We account for our capital interest in the SCI Partnerships under the equity method. Because we hold a 19% and 21% interest in the 2025 Partnership and 2026 Partnership, respectively, we eliminate our proportionate share of the profit on MRE sales to the SCI Partnerships until realized by the SCI Partnerships. The amount of profit eliminated totaled $5.1 million and $21.7 million for the three and nine months ended September 30, 2026, respectively.
The gain on sale of the 0 and 15 on-lease aircraft sold to the 2025 Partnership during the three and nine months ended September 30, 2026, respectively, totaled $0.0 million and $17.6 million, respectively, and was recognized as a "Gain on sale to the 2025 Partnership - affiliate" within Other income (expense) component of the Consolidated Statements of Operations for the nine months ended September 30, 2026.
J&F Power Systems LLC
During 2026, we invested in J&F Power Systems LLC ("J&F"), the Company's joint venture with Jereh Group. J&F was established to package, test and distribute modular power generation solutions. The Company exercises significant influence, but not control, over the operating and financial policies of J&F and accounts for it as an equity method investment. During the three months ended September 30, 2026, the Company received an advanced disbursement of $234.0 million from J&F, which is accounted for as a contract liability on the Company's Consolidated Balance Sheets. As of September 30, 2026, we held an approximate 49% capital interest in J&F, with a carrying value of $2.5 million.
Operating Segments
The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aerospace Products and (ii) Aviation Leasing. The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-5B, CFM56-7B and V2500 commercial aircraft engines. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, directly and also through its equity method investment.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production, and expenses relating to FTAI Power.
Adjusted EBITDA (Non-GAAP)
Besides net income (loss), the chief operating decision maker ("CODM"), who is the Company's Chief Executive Officer, utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance.
Adjusted EBITDA is defined as net income (loss) attributable to shareholders, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, asset impairment charges, incentive allocations, depreciation and amortization expense, interest expense and dividends on preferred shares, internalization fee to affiliate, FTAI Power pre-commercial research and development, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities, if any.
Results of Operations
Comparison of the three and nine months ended September 30, 2026 and 2025
The following table presents our consolidated results of operations:
| Three Months Ended September 30, | Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Aerospace products revenue | $ | 780,598 | $ | 459,206 | $ | 321,392 | $ | 1,995,412 | $ | 1,144,317 | $ | 851,095 | |||||||||||||||||||||||
| MRE Contract revenue - affiliate | 129,408 | 58,663 | 70,745 | 533,437 | 228,886 | 304,551 | |||||||||||||||||||||||||||||
| Lease income | 25,281 | 55,072 | (29,791) | 92,938 | 185,951 | (93,013) | |||||||||||||||||||||||||||||
| Maintenance revenue | 27,292 | 52,370 | (25,078) | 83,684 | 175,081 | (91,397) | |||||||||||||||||||||||||||||
| Asset sales revenue | 5,886 | 38,461 | (32,575) | 32,995 | 105,315 | (72,320) | |||||||||||||||||||||||||||||
|
Other revenue (1)
|
9,192 | 3,292 | 5,900 | 22,973 | 5,831 | 17,142 | |||||||||||||||||||||||||||||
| Total revenues | 977,657 | 667,064 | 310,593 | 2,761,439 | 1,845,381 | 916,058 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Cost of sales | 623,821 | 362,922 | 260,899 | 1,783,871 | 980,894 | 802,977 | |||||||||||||||||||||||||||||
| Operating expenses | 62,327 | 39,092 | 23,235 | 175,434 | 105,858 | 69,576 | |||||||||||||||||||||||||||||
| Research and development | 22,014 | - | 22,014 | 41,461 | - | 41,461 | |||||||||||||||||||||||||||||
| General and administrative | 2,305 | 1,829 | 476 | 6,963 | 7,387 | (424) | |||||||||||||||||||||||||||||
| Acquisition and transaction expenses | 5,030 | 7,066 | (2,036) | 27,090 | 18,847 | 8,243 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 43,295 | 55,278 | (11,983) | 142,570 | 170,076 | (27,506) | |||||||||||||||||||||||||||||
| Total expenses | 758,792 | 466,187 | 292,605 | 2,177,389 | 1,283,062 | 894,327 | |||||||||||||||||||||||||||||
| Other (expense) income | |||||||||||||||||||||||||||||||||||
| Interest expense | (65,119) | (60,784) | (4,335) | (190,628) | (186,789) | (3,839) | |||||||||||||||||||||||||||||
|
Equity in earnings (losses) of unconsolidated entities (2)
|
16,933 | (4,224) | 21,157 | 24,540 | (16,841) | 41,381 | |||||||||||||||||||||||||||||
| Gain on sale to the 2025 Partnership - affiliate | - | 4,609 | (4,609) | 17,633 | 50,083 | (32,450) | |||||||||||||||||||||||||||||
| Other income | 2,168 | 3,570 | (1,402) | 57,324 | 63,797 | (6,473) | |||||||||||||||||||||||||||||
| Total other expense | (46,018) | (56,829) | 10,811 | (91,131) | (89,750) | (1,381) | |||||||||||||||||||||||||||||
|
Income before income taxes
|
172,847 | 144,048 | 28,799 | 492,919 | 472,569 | 20,350 | |||||||||||||||||||||||||||||
|
Provision for income taxes
|
22,239 | 26,330 | (4,091) | 79,318 | 87,067 | (7,749) | |||||||||||||||||||||||||||||
|
Net income
|
150,608 | 117,718 | 32,890 | 413,601 | 385,502 | 28,099 | |||||||||||||||||||||||||||||
| Less: Dividends on preferred shares | 1,544 | 3,709 | (2,165) | 8,962 | 13,533 | (4,571) | |||||||||||||||||||||||||||||
| Less: Loss on redemption of preferred shares | - | - | - | 3,800 | 6,327 | (2,527) | |||||||||||||||||||||||||||||
|
Net income attributable to shareholders
|
$ | 149,064 | $ | 114,009 | $ | 35,055 | $ | 400,839 | $ | 365,642 | $ | 35,197 | |||||||||||||||||||||||
(1)Includes servicing fees of $4,704 and $17,553 for the three and nine months ended September 30, 2026, respectively (2025 - $3,035 and $5,635, respectively), from the SCI Partnerships.
(2)Includes the profit elimination of $(5,055) and $(21,652) for the three and nine months ended September 30, 2026, respectively (2025 - $(3,908) and $(15,793), respectively), for sales to the SCI Partnerships.
The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA:
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
|
Net income attributable to shareholders
|
$ | 149,064 | $ | 114,009 | $ | 35,055 | $ | 400,839 | $ | 365,642 | $ | 35,197 | |||||||||||||||||||||||
|
Add: Provision for income taxes
|
22,239 | 26,330 | (4,091) | 79,318 | 87,067 | (7,749) | |||||||||||||||||||||||||||||
| Add: Equity-based compensation expense | 7,767 | 5,655 | 2,112 | 21,446 | 16,059 | 5,387 | |||||||||||||||||||||||||||||
| Add: Acquisition and transaction expenses | 5,030 | 7,066 | (2,036) | 27,090 | 18,847 | 8,243 | |||||||||||||||||||||||||||||
| Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations | - | - | - | 3,800 | 6,327 | (2,527) | |||||||||||||||||||||||||||||
| Add: Asset impairment charges | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Incentive allocations | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: Depreciation and amortization expense (1)
|
49,183 | 67,855 | (18,672) | 160,814 | 201,919 | (41,105) | |||||||||||||||||||||||||||||
| Add: Interest expense and dividends on preferred shares | 66,663 | 64,493 | 2,170 | 199,591 | 200,322 | (731) | |||||||||||||||||||||||||||||
| Add: Internalization fee to affiliate | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: FTAI Power pre-commercial research and development (2)
|
22,014 | - | 22,014 | 41,461 | - | 41,461 | |||||||||||||||||||||||||||||
|
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (3)
|
48,323 | 11,657 | 36,666 | 96,596 | 16,513 | 80,083 | |||||||||||||||||||||||||||||
|
Less: Equity in (earnings) losses of unconsolidated entities (4)
|
(21,988) | 316 | (22,304) | (46,192) | 1,048 | (47,240) | |||||||||||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 348,295 | $ | 297,381 | $ | 50,914 | $ | 984,763 | $ | 913,744 | $ | 71,019 | |||||||||||||||||||||||
(1)Includes the following items for the three months ended September 30, 2026: (i) depreciation and amortization expense of $43,295 (2025 - $55,278), (ii) lease intangible amortization of $(242) (2025 - $534) and (iii) amortization for lease incentives of $6,130 (2025 - $12,043).
Includes the following items for the nine months ended September 30, 2026: (i) depreciation and amortization expense of $142,570 (2025 - $170,076), (ii) lease intangible amortization of $6 (2025 - $5,893) and (iii) amortization for lease incentives of $18,238 (2025 - $25,950).
(2)Represents non-recurring research and development costs incurred for the design and testing related to the development of FTAI Power's aeroderivative turbine that has not yet been commercially launched and has not generated revenue.
(3)Includes the following items for the three months ended September 30, 2026: (i) net income of $21,988 (2025 - net loss of $316), (ii) interest expense of $7,359 (2025 - $2,629), (iii) depreciation and amortization expense of $18,969 (2025 - $9,449), and (iv) tax expense of $7 (2025 -benefit of $105).
Includes the following items for the nine months ended September 30, 2026: (i) net income of $46,192 (2025 - net loss of $1,048), (ii) interest expense of $16,626 (2025 - $4,119), (iii) depreciation and amortization expense of $33,716 (2025 - $13,077), (iv) acquisition and transaction expenses of $0 (2025 - $470), and (v) tax expense of $62 (2025 - benefit of $105).
(4)Excludes the profit elimination of $5,055 and $21,652 for the three and nine months ended September 30, 2026, respectively (2025 - $3,908 and $15,793, respectively), for sales to the SCI Partnerships.
Revenues
Comparison of the three months ended September 30, 2026 and 2025
Total revenues increased by $310.6 million, driven by the following:
•Aerospace products revenue increased by $321.4 million, primarily due to a $313.8 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
•MRE Contract revenue - affiliate increased by $70.7 million, primarily due to an increase in engine and module sales made to the SCI Partnerships.
•Lease income decreased by $29.8 million, due to decreases in aircraft lease revenue of $12.3 million, driven by the sale of Seed Assets to the 2025 Partnership, and decreases in engine lease revenue of $17.5 million, driven by a decrease in revenue generating assets on lease.
•Asset sales revenue decreased by $32.6 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
•Maintenance revenue decreased by $25.1 million, due to decreases in aircraft maintenance revenue of $7.9 million and engine maintenance revenue of $17.2 million, both driven by a decrease in revenue generating assets on lease.
Comparison of the nine months ended September 30, 2026 and 2025
Total revenues increased by $916.1 million, driven by the following:
•Aerospace Products revenue increased by $851.1 million, primarily due to a $823.3 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
•MRE Contract revenue - affiliate increased by $304.6 million, primarily due to an increase in engine and module sales made to the SCI Partnerships.
•Lease income decreased by $93.0 million, primarily due to a decrease in aircraft lease revenue of $56.5 million, and a decrease in engine lease revenue of $36.5 million, both driven by a decrease in revenue generating assets on lease.
•Maintenance revenue decreased by $91.4 million, primarily due to a decrease in aircraft maintenance revenue of $47.0 million and a decrease in engine maintenance revenue of $44.4 million, both driven by a decrease in revenue generating assets on lease.
•Asset sales revenue decreased by $72.3 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
Expenses
Comparison of the three months ended September 30, 2026 and 2025
Total expenses increased by $292.6 million, driven by the following:
•Cost of sales increased by $260.9 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
•Operating expenses increased by $23.2 million, primarily due to increases in compensation and benefits expense and shipping and logistics expense across our operating segments, as well as increased general corporate expenses.
•Research and development expenses increased $22.0 million, resulting from costs incurred during the current period for design and testing related to the development of aeroderivative turbines for FTAI Power.
•Depreciation and amortization expense decreased by $12.0 million, primarily driven by the sale of Seed Assets to the 2025 Partnership.
Comparison of the nine months ended September 30, 2026 and 2025
Total expenses increased by $894.3 million, driven by the following:
•Cost of sales increased by $803.0 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
•Operating expenses increased by $69.6 million, primarily due to an increase in compensation and benefits expense due to an increase in employee headcount and increased overall compensation, as well as increased general corporate expenses.
•Research and development expenses increased $41.5 million, resulting from costs incurred during the current year for design and testing related to the development of aeroderivative turbines for FTAI Power.
•Depreciation and amortization expense decreased by $27.5 million, primarily driven by the sale of Seed Assets to the 2025 Partnership.
Other (expense) income
Comparison of the three months ended September 30, 2026 and 2025
Total other expense decreased by $10.8 million driven by the following:
•Equity in earnings of unconsolidated entities increased by $21.2 million, driven by net income earned by the 2025 Partnership in the current period, compared to losses in the prior period.
•Gain on sale to the 2025 Partnership - affiliate decreased by $4.6 million, driven by the lower number of Seed Assets sold to the 2025 Partnership in the current period as compared to the prior period.
•Interest expense increased $4.3 million, driven by the amended and restated Revolving Credit Facility which was executed on April 24, 2026.
Comparison of the nine months ended September 30, 2026 and 2025
Total other expense increased by $1.4 million driven by the following:
•Equity in earnings of unconsolidated entities increased by $41.4 million, driven by net income earned by the 2025 Partnership in the current period, compared to losses in the prior period.
•Gain on sale to the 2025 Partnership - affiliate decreased by $32.5 million, driven by the lower number of Seed Assets sold to the 2025 Partnership in the current period as compared to the prior period.
•Other income decreased by $6.5 million, primarily due to a decrease in insurance settlements in the current period as compared to the prior period.
Provision for income taxes
The provision for income taxes decreased $4.1 million and $7.7 million for the three and nine months ended September 30, 2026, as compared to the prior period, primarily driven by higher corporate overhead expenses deductible for tax purposes and lower income generated in the Aviation Leasing segment within taxable jurisdictions, offset by higher income generated in the Aerospace Products segment.
Net income
Net income increased by $32.9 million and $28.1 million for the three and nine months ended September 30, 2026, as compared to the prior period, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased by $50.9 million and $71.0 million for the three and nine months ended September 30, 2026, as compared to the prior period, primarily due to the changes noted above.
Aerospace Products Segment
The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes, and sells aircraft engines and aftermarket components primarily for the CFM56-5B, CFM56-7B, and V2500 commercial aircraft engines. Our engine, module, and parts sales are facilitated through a dedicated commercial maintenance program designed to focus on modular and parts repair and refurbishment of CFM56-5B and CFM56-7B engines. In addition, other serviceable used modules and parts are sold through our exclusive partnership, which is responsible for the teardown, repair, marketing, and sales of parts from our CFM56 engine pool.
In 2023, we acquired the remaining interest in Quick Turn Engine Center LLC ("QuickTurn"), a dedicated hospital maintenance and testing facility specializing in the CFM56-5B and CFM56-7B engines.
In 2024, we acquired Lockheed Martin Commercial Engine Solutions ("LMCES") to establish permanent engine and module manufacturing capabilities.
In 2025, we entered into an agreement within our MRE business to supply replacement aircraft engines and modules for the life of the 2025 Partnership. We also acquired Pacific Aerodynamic Inc. ("Pac Aero"), a specialist in CFM56 compressor blade and vane repairs, expanding our repair capabilities, and the MRE business of AerotechOPS ("ATOPS"), expanding our MRE business in Miami.
In 2026, we entered into an agreement within our MRE business to supply replacement aircraft engines and modules for the life of the 2026 Partnership.
Additionally, we maintain a (i) 25% equity interest in the Advanced Engine Repair joint venture, which focuses on developing innovative cost-saving programs for engine repairs, (ii) 50% equity interest in QuickTurn Europe, which operates as a dedicated maintenance, repair, and overhaul facility for CFM56 engines, and (iii) 50% equity interest in Prime Engine Accessories LLC, which focuses on developing in-house CFM56 accessory maintenance repairs.
The following table presents our results of operations:
| Three Months Ended September 30, | Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Aerospace products revenue | $ | 780,598 | $ | 459,206 | $ | 321,392 | $ | 1,995,412 | $ | 1,144,317 | $ | 851,095 | |||||||||||||||||||||||
| MRE Contract revenue - affiliate | 129,408 | 58,663 | 70,745 | 533,437 | 228,886 | 304,551 | |||||||||||||||||||||||||||||
| Total revenues | 910,006 | 517,869 | 392,137 | 2,528,849 | 1,373,203 | 1,155,646 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Cost of sales | 618,007 | 328,153 | 289,854 | 1,743,548 | 874,377 | 869,171 | |||||||||||||||||||||||||||||
| Operating expenses | 11,913 | 10,545 | 1,368 | 33,749 | 25,221 | 8,528 | |||||||||||||||||||||||||||||
| Acquisition and transaction expenses | 124 | 599 | (475) | 253 | 3,145 | (2,892) | |||||||||||||||||||||||||||||
| Depreciation and amortization | 4,942 | 3,930 | 1,012 | 14,523 | 11,218 | 3,305 | |||||||||||||||||||||||||||||
| Total expenses | 634,986 | 343,227 | 291,759 | 1,792,073 | 913,961 | 878,112 | |||||||||||||||||||||||||||||
| Other income | |||||||||||||||||||||||||||||||||||
| Equity in earnings of unconsolidated entities | 1,431 | 767 | 664 | 1,209 | 1,594 | (385) | |||||||||||||||||||||||||||||
| Other (expense) income | (54) | - | (54) | 58 | - | 58 | |||||||||||||||||||||||||||||
|
Total other income
|
1,377 | 767 | 610 | 1,267 | 1,594 | (327) | |||||||||||||||||||||||||||||
| Income before income taxes | 276,397 | 175,409 | 100,988 | 738,043 | 460,836 | 277,207 | |||||||||||||||||||||||||||||
| Provision for income taxes | 50,883 | 26,815 | 24,068 | 134,550 | 72,017 | 62,533 | |||||||||||||||||||||||||||||
| Net income attributable to shareholders | $ | 225,514 | $ | 148,594 | $ | 76,920 | $ | 603,493 | $ | 388,819 | $ | 214,674 | |||||||||||||||||||||||
The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:
| Three Months Ended September 30, | Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Net income attributable to shareholders | $ | 225,514 | $ | 148,594 | $ | 76,920 | $ | 603,493 | $ | 388,819 | $ | 214,674 | |||||||||||||||||||||||
|
Add: Provision for income taxes
|
50,883 | 26,815 | 24,068 | 134,550 | 72,017 | 62,533 | |||||||||||||||||||||||||||||
| Add: Equity-based compensation expense | 238 | 168 | 70 | 488 | 491 | (3) | |||||||||||||||||||||||||||||
| Add: Acquisition and transaction expenses | 124 | 599 | (475) | 253 | 3,145 | (2,892) | |||||||||||||||||||||||||||||
| Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Asset impairment charges | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Incentive allocations | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: Depreciation and amortization expense
|
4,942 | 3,930 | 1,012 | 14,523 | 11,218 | 3,305 | |||||||||||||||||||||||||||||
| Add: Interest expense and dividends on preferred shares | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Internalization fee to affiliate | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: FTAI Power pre-commercial research and development | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (1)
|
2,109 | 1,082 | 1,027 | 2,573 | 2,134 | 439 | |||||||||||||||||||||||||||||
| Less: Equity in (earnings) of unconsolidated entities | (1,431) | (767) | (664) | (1,209) | (1,594) | 385 | |||||||||||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 282,379 | $ | 180,421 | $ | 101,958 | $ | 754,671 | $ | 476,230 | $ | 278,441 | |||||||||||||||||||||||
(1)Includes the following items for the three months ended September 30, 2026: (i) net income of $1,431 (2025 - $767), (ii) depreciation and amortization expense of $671 (2025 - $420), and (iii) tax expense of $7 (2025 - tax benefit of $105).
Includes the following items for the nine months ended September 30, 2026: (i) net income of $1,209 (2025 - $1,594), (ii) depreciation and amortization expense of $1,302 (2025 - $645), and (iii) tax expense of $62 (2025 - tax benefit of $105).
Revenues
Comparison of the three months ended September 30, 2026 and 2025
Total revenues increased by $392.1 million, due to the following:
•Aerospace products revenue increased by $321.4 million, primarily due to a $313.8 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
•MRE Contract revenue - affiliate increased by $70.7 million, primarily due to an increase in engine and module sales made to the SCI Partnerships.
Comparison of the nine months ended September 30, 2026 and 2025
Total revenues increased by $1.2 billion, due to the following:
•Aerospace products revenue increased by $851.1 million, primarily due to a $823.3 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
•MRE Contract revenue - affiliate increased by $304.6 million, primarily due to an increase in engine and module sales made to the SCI Partnerships.
Expenses
Comparison of the three months ended September 30, 2026 and 2025
Total expenses increased by $291.8 million, due to the following:
•Cost of sales increased by $289.9 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
Comparison of the nine months ended September 30, 2026 and 2025
Total expenses increased by $878.1 million, due to the following:
•Cost of sales increased by $869.2 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
Provision for income taxes
The provision for income taxes increased by $24.1 million and $62.5 million for the three and nine months ended September 30, 2026, as compared to the prior period, primarily due to the increase in income discussed above from Aerospace Products activities in jurisdictions subject to taxes.
Net income
Net income increased $76.9 million and $214.7 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA increased $102.0 million and $278.4 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Aviation Leasing Segment
As of September 30, 2026, in our Aviation Leasing segment, we own and manage 166 aviation assets, consisting of 21 commercial aircraft and 145 engines.
As of September 30, 2026, 19 of our commercial aircraft and 76 of our engines were leased to operators or other third parties. Aviation assets currently off lease are either undergoing repair and/or maintenance, being prepared to go on lease or held in short term storage awaiting a future lease. Our aviation equipment was approximately 69% utilized during the three months ended September 30, 2026, based on the percent of days on-lease in the quarter weighted by the monthly average equity value of our aviation leasing equipment, excluding airframes. Our aircraft currently have a weighted average remaining lease term of 38 months, and our engines currently on-lease have an average remaining lease term of 10 months. The table below provides additional information on the assets in our Aviation Leasing segment, including transfers which involve aircraft breakdowns, engine transfers from leasing equipment to inventory for manufacturing and sales, and engine transfers from inventory to leasing equipment for rebuilding and sales:
| Aviation Assets | Widebody | Narrowbody | Total | ||||||||||||||
| Aircraft | |||||||||||||||||
|
Assets at January 1, 2026
|
5 | 42 | 47 | ||||||||||||||
| Purchases | - | - | - | ||||||||||||||
| Sales | - | (15) | (15) | ||||||||||||||
| Transfers | - | (3) | (3) | ||||||||||||||
|
Insurance settlement - Russia assets
|
(3) | (5) | (8) | ||||||||||||||
|
Assets at September 30, 2026
|
2 | 19 | 21 | ||||||||||||||
| Engines | |||||||||||||||||
| Assets at January 1, 2026 | 18 | 225 | 243 | ||||||||||||||
| Purchases | 1 | 15 | 16 | ||||||||||||||
| Sales | - | (1) | (1) | ||||||||||||||
| Transfers | (1) | (95) | (96) | ||||||||||||||
|
Insurance settlement - Russia assets
|
(10) | (7) | (17) | ||||||||||||||
| Assets at September 30, 2026 | 8 | 137 | 145 | ||||||||||||||
The following table presents our results of operations for our Aviation Leasing segment:
| Three Months Ended September 30, | Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Lease income | $ | 25,281 | $ | 55,072 | $ | (29,791) | $ | 92,938 | $ | 185,951 | $ | (93,013) | |||||||||||||||||||||||
| Maintenance revenue | 27,292 | 52,370 | (25,078) | 83,684 | 175,081 | (91,397) | |||||||||||||||||||||||||||||
| Asset sales revenue | 5,886 | 38,461 | (32,575) | 32,995 | 105,315 | (72,320) | |||||||||||||||||||||||||||||
|
Other revenue (1)
|
9,192 | 3,292 | 5,900 | 22,973 | 5,827 | 17,146 | |||||||||||||||||||||||||||||
| Total revenues | 67,651 | 149,195 | (81,544) | 232,590 | 472,174 | (239,584) | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Cost of sales | 5,814 | 34,769 | (28,955) | 40,323 | 106,517 | (66,194) | |||||||||||||||||||||||||||||
| Operating expenses | 12,479 | 10,146 | 2,333 | 34,539 | 28,661 | 5,878 | |||||||||||||||||||||||||||||
| Acquisition and transaction expenses | 1,374 | 3,571 | (2,197) | 7,408 | 7,053 | 355 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 37,242 | 50,226 | (12,984) | 124,712 | 155,710 | (30,998) | |||||||||||||||||||||||||||||
| Total expenses | 56,909 | 98,712 | (41,803) | 206,982 | 297,941 | (90,959) | |||||||||||||||||||||||||||||
|
Other income (expense)
|
|||||||||||||||||||||||||||||||||||
|
Equity in earnings (losses) of unconsolidated entities
|
20,557 | (1,083) | 21,640 | 44,983 | (2,642) | 47,625 | |||||||||||||||||||||||||||||
| Gain on sale to the 2025 Partnership - affiliate | - | 4,609 | (4,609) | 17,633 | 50,083 | (32,450) | |||||||||||||||||||||||||||||
| Other income | 2,222 | 2,103 | 119 | 56,698 | 61,696 | (4,998) | |||||||||||||||||||||||||||||
| Total other income | 22,779 | 5,629 | 17,150 | 119,314 | 109,137 | 10,177 | |||||||||||||||||||||||||||||
| Income before income taxes | 33,521 | 56,112 | (22,591) | 144,922 | 283,370 | (138,448) | |||||||||||||||||||||||||||||
| Provision for income taxes | 8,373 | 14,500 | (6,127) | 34,470 | 58,301 | (23,831) | |||||||||||||||||||||||||||||
| Net income attributable to shareholders | $ | 25,148 | $ | 41,612 | $ | (16,464) | $ | 110,452 | $ | 225,069 | $ | (114,617) | |||||||||||||||||||||||
(1)Includes servicing fees of $4,704 and $17,553 for the three and nine months ended September 30, 2026, respectively (2025 - $3,035 and $5,635, respectively), from the SCI Partnerships.
The following table sets forth a reconciliation of net income attributable to shareholders to Adjusted EBITDA:
| Three Months Ended September 30, | Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
|
Net income attributable to shareholders
|
$ | 25,148 | $ | 41,612 | $ | (16,464) | $ | 110,452 | $ | 225,069 | $ | (114,617) | |||||||||||||||||||||||
|
Add: Provision for income taxes
|
8,373 | 14,500 | (6,127) | 34,470 | 58,301 | (23,831) | |||||||||||||||||||||||||||||
| Add: Equity-based compensation expense | 361 | 264 | 97 | 886 | 703 | 183 | |||||||||||||||||||||||||||||
| Add: Acquisition and transaction expenses | 1,374 | 3,571 | (2,197) | 7,408 | 7,053 | 355 | |||||||||||||||||||||||||||||
| Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Asset impairment charges | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Incentive allocations | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: Depreciation and amortization expense (1)
|
43,130 | 62,803 | (19,673) | 142,956 | 187,553 | (44,597) | |||||||||||||||||||||||||||||
| Add: Interest expense and dividends on preferred shares | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Internalization fee to affiliate | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: FTAI Power pre-commercial research and development | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2)
|
46,214 | 10,575 | 35,639 | 94,023 | 14,379 | 79,644 | |||||||||||||||||||||||||||||
|
Less: Equity in (earnings) losses of unconsolidated entities
|
(20,557) | 1,083 | (21,640) | (44,983) | 2,642 | (47,625) | |||||||||||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 104,043 | $ | 134,408 | $ | (30,365) | $ | 345,212 | $ | 495,700 | $ | (150,488) | |||||||||||||||||||||||
(1)Includes the following items for the three months ended September 30, 2026: (i) depreciation expense of $37,242 (2025 - $50,226), (ii) lease intangible amortization of $(242) (2025 - $534) and (iii) amortization for lease incentives of $6,130 (2025 - $12,043).
Includes the following items for the nine months ended September 30, 2026: (i) depreciation expense of $124,712 (2025 - $155,710), (ii) lease intangible amortization of $6 (2025 - $5,893) and (iii) amortization for lease incentives of $18,238 (2025 - $25,950).
(2)Includes the following items for the three months ended September 30, 2026: (i) net income of $20,557 (2025 - net loss of $1,083), (ii) interest expense of $7,359 (2025 - $2,629), and (iii) depreciation and amortization of $18,298 (2025 - $9,029).
Includes the following items for the nine months ended September 30, 2026: (i) net income of $44,983 (2025 - net loss of $2,642), (ii) interest expense of $16,626 (2025 - $4,119), (iii) depreciation and amortization of $32,414 (2025 - $12,432) and (iv) acquisition and transactions expenses of $0 (2025 - $470).
Revenues
Comparison of the three months ended September 30, 2026 and 2025
Total revenue decreased by $81.5 million, driven by the following:
•Lease income decreased by $29.8 million, due to decreases in aircraft lease revenue of $12.3 million, driven by the sale of Seed Assets to the 2025 Partnership, and decreases in engine lease revenue of $17.5 million, driven by a decrease in revenue generating assets on lease.
•Maintenance revenue decreased by $25.1 million, due to decreases in aircraft maintenance revenue of $7.9 million and engine maintenance revenue of $17.2 million, both driven by a decrease in revenue generating assets on lease.
•Asset sales revenue decreased by $32.6 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
•Other revenue increased by $5.9 million, primarily as a result of servicing fees earned in our capacity as the Servicer to the SCI Partnerships.
Comparison of the nine months ended September 30, 2026 and 2025
Total revenue decreased by $239.6 million, driven by the following:
•Maintenance revenue decreased by $91.4 million, primarily due to a decrease in aircraft maintenance revenue of $47.0 million and a decrease in engine maintenance revenue of $44.4 million, both driven by a decrease in revenue generating assets on lease.
•Lease income decreased by $93.0 million, primarily due to a decrease in aircraft lease revenue of $56.5 million, and a decrease in engine lease revenue of $36.5 million, both driven by a decrease in revenue generating assets on lease.
•Asset sales revenue decreased by $72.3 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
•Other revenue increased by $17.1 million, primarily as a result of servicing fees earned in our capacity as the Servicer to the SCI Partnerships.
Expenses
Comparison of the three months ended September 30, 2026 and 2025
Total expenses decreased by $41.8 million, driven by the following:
•Cost of sales decreased by $29.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue.
•Depreciation and amortization expense decreased by $13.0 million, primarily driven by the sale of Seed Assets to the 2025 Partnership.
•Acquisition and transaction expenses decreased $2.2 million, primarily driven by a decrease in legal fees and professional services associated with the SCI.
•Operating expenses increased $2.3 million, primarily driven by an increase in equipment lease expense in the current period, as well as an increase in compensation and insurance expense.
Comparison of the nine months ended September 30, 2026 and 2025
Total expenses decreased by $91.0 million, driven by the following:
•Cost of sales decreased by $66.2 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines, which is in line with an overall decrease in the corresponding asset sales revenue.
•Depreciation and amortization expense decreased by $31.0 million, primarily driven by the sale of Seed Assets to the 2025 Partnership.
•Operating expense increased by $5.9 million, primarily driven by an increase in equipment lease expense in the current period.
Other income (expense)
Comparison of the three months ended September 30, 2026 and 2025
Total other income increased by $17.2 million, primarily due to (i) a $21.6 million increase in equity in earnings of unconsolidated entities as a result of net income earned by the 2025 Partnership; partially offset by (ii) a $4.6 million decrease in Gain on sale to the 2025 Partnership - affiliate, driven by the lower number of Seed Assets sold to the 2025 Partnership as compared to the prior period.
Comparison of the nine months ended September 30, 2026 and 2025
Total other income increased by $10.2 million, primarily due to (i) a $47.6 million increase in equity in earnings of unconsolidated entities as a result of net income earned by the 2025 Partnership; partially offset by (ii) a $32.5 million decrease in Gain on sale to the 2025 Partnership - affiliate, driven by the lower number of Seed Assets sold to the 2025 Partnership as compared to the prior period, and (iii) a $5.0 million decrease in other income, driven by lower insurance proceeds as compared to the prior period.
Provision for income taxes
The provision for income taxes decreased by $6.1 million and $23.8 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior period, primarily due to the respective changes in income discussed above from leasing activities in jurisdictions subject to taxes.
Net income
Net income decreased by $16.5 million and $114.6 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA decreased by $30.4 million and $150.5 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Corporate and Other
The following table presents our results of operations:
|
Three Months Ended September 30, |
Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||||
| Other revenue | $ | - | $ | - | $ | - | $ | - | $ | 4 | $ | (4) | |||||||||||||||||||||||
| Total revenues | - | - | - | - | 4 | (4) | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Operating expenses | 37,935 | 18,401 | 19,534 | 107,146 | 51,976 | 55,170 | |||||||||||||||||||||||||||||
| Research and development | 22,014 | - | 22,014 | 41,461 | - | 41,461 | |||||||||||||||||||||||||||||
| General and administrative | 2,305 | 1,829 | 476 | 6,963 | 7,387 | (424) | |||||||||||||||||||||||||||||
| Acquisition and transaction expenses | 3,532 | 2,896 | 636 | 19,429 | 8,649 | 10,780 | |||||||||||||||||||||||||||||
| Depreciation and amortization | 1,111 | 1,122 | (11) | 3,335 | 3,148 | 187 | |||||||||||||||||||||||||||||
| Total expenses | 66,897 | 24,248 | 42,649 | 178,334 | 71,160 | 107,174 | |||||||||||||||||||||||||||||
|
Other (expense) income
|
|||||||||||||||||||||||||||||||||||
| Interest expense | (65,119) | (60,784) | (4,335) | (190,628) | (186,789) | (3,839) | |||||||||||||||||||||||||||||
| Other income | - | 1,467 | (1,467) | 568 | 2,101 | (1,533) | |||||||||||||||||||||||||||||
| Total other expense | (65,119) | (59,317) | (5,802) | (190,060) | (184,688) | (5,372) | |||||||||||||||||||||||||||||
| Loss before income taxes | (132,016) | (83,565) | (48,451) | (368,394) | (255,844) | (112,550) | |||||||||||||||||||||||||||||
| Benefit from income taxes | (37,017) | (14,985) | (22,032) | (89,702) | (43,251) | (46,451) | |||||||||||||||||||||||||||||
| Net loss | (94,999) | (68,580) | (26,419) | (278,692) | (212,593) | (66,099) | |||||||||||||||||||||||||||||
| Less: Dividends on preferred shares | 1,544 | 3,709 | (2,165) | 8,962 | 13,533 | (4,571) | |||||||||||||||||||||||||||||
| Less: Loss on redemption of preferred shares | - | - | - | 3,800 | 6,327 | (2,527) | |||||||||||||||||||||||||||||
| Net loss attributable to shareholders | $ | (96,543) | $ | (72,289) | $ | (24,254) | $ | (291,454) | $ | (232,453) | $ | (59,001) | |||||||||||||||||||||||
The following table sets forth a reconciliation of net loss attributable to shareholders to Adjusted EBITDA:
| Three Months Ended September 30, | Change |
Nine Months Ended September 30, |
Change | ||||||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
|
Net loss attributable to shareholders
|
$ | (96,543) | $ | (72,289) | $ | (24,254) | $ | (291,454) | $ | (232,453) | $ | (59,001) | |||||||||||||||||||||||
|
Add: Benefit from income taxes
|
(37,017) | (14,985) | (22,032) | (89,702) | (43,251) | (46,451) | |||||||||||||||||||||||||||||
| Add: Equity-based compensation expense | 7,168 | 5,223 | 1,945 | 20,072 | 14,865 | 5,207 | |||||||||||||||||||||||||||||
| Add: Acquisition and transaction expenses | 3,532 | 2,896 | 636 | 19,429 | 8,649 | 10,780 | |||||||||||||||||||||||||||||
| Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations | - | - | - | 3,800 | 6,327 | (2,527) | |||||||||||||||||||||||||||||
| Add: Asset impairment charges | - | - | - | - | - | - | |||||||||||||||||||||||||||||
| Add: Incentive allocations | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: Depreciation and amortization expense
|
1,111 | 1,122 | (11) | 3,335 | 3,148 | 187 | |||||||||||||||||||||||||||||
| Add: Interest expense and dividends on preferred shares | 66,663 | 64,493 | 2,170 | 199,591 | 200,322 | (731) | |||||||||||||||||||||||||||||
| Add: Internalization fee to affiliate | - | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Add: FTAI Power pre-commercial research and development (1)
|
22,014 | - | 22,014 | 41,461 | - | 41,461 | |||||||||||||||||||||||||||||
|
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities
|
- | - | - | - | - | - | |||||||||||||||||||||||||||||
|
Less: Equity in losses (earnings) of unconsolidated entities
|
- | - | - | - | - | - | |||||||||||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | (33,072) | $ | (13,540) | $ | (19,532) | $ | (93,468) | $ | (42,393) | $ | (51,075) | |||||||||||||||||||||||
(1)Represents non-recurring research and development costs incurred for the design and testing related to the development of FTAI Power's aeroderivative turbine that has not yet been commercially launched and has not generated revenue.
Expenses
Comparison of the three months ended September 30, 2026 and 2025
Total expenses increased by $42.6 million, primarily due to the following:
•Research and development expenses increased $22.0 million, resulting from costs incurred during the current period for design and testing related to the development of aeroderivative turbines for FTAI Power.
•Operating expenses increased $19.5 million, primarily driven by higher compensation and benefits expense due to an increase in employee headcount and overall compensation, as well as increased general corporate expenses.
Comparison of the nine months ended September 30, 2026 and 2025
Total expenses increased by $107.2 million, primarily due to the following:
•Research and development expenses increased $41.5 million, resulting from costs incurred during the current year for design and testing related to the development of aeroderivative turbines for FTAI Power.
•Operating expenses increased $55.2 million, primarily driven by higher compensation and benefits expense due to an increase in employee headcount and overall compensation, as well as increased general corporate expenses.
•Acquisition and transaction expense increased $10.8 million, primarily due to higher professional fees associated with acquisitions and transactions in the current period.
Other (expense) income
Total other expense increased $5.8 million and $5.4 million for the three and nine months ended September 30, 2026, as compared to the prior period. The increase was mainly driven by higher interest expense, due to amounts drawn on the amended and restated Revolving Credit Facility.
Benefit from income taxes
The benefit from income taxes increased by $22.0 million and $46.5 million for the three and nine months ended September 30, 2026, respectively, as compared to the prior period. The increase was mainly driven by higher corporate overhead expenses deductible for 2026 tax purposes.
Net loss
Net loss increased by $26.4 million and $66.1 million during the three and nine months ended September 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA decreased by $19.5 million and $51.1 million during the three and nine months ended September 30, 2026, respectively, as compared to the prior period, primarily due to the changes noted above.
Liquidity and Capital Resources
We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during various environments. As of September 30, 2026, we had $385.6 million of cash and cash equivalents and $2.025 billion of undrawn availability under our Revolving Credit Facility, for total liquidity of approximately $2.4 billion.
On December 30, 2024, we announced the launch of the SCI in collaboration with third-party institutional investors. The SCI and its related partnerships allow the Company to generate income while maintaining an asset-light business model. The SCI Partnerships under the initiative focus on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments. During 2026, we launched the 2026 Partnership, which began acquiring aircraft in the third quarter.
As of September 30, 2026, we held approximately 19% and 21% capital interests in the 2025 Partnership and 2026 Partnership. During the nine months ended September 30, 2026, we contributed $115.1 million to the SCI Partnerships and received $66.8 million of returns of capital. We have completed the sale of all committed seed aircraft to the 2025 Partnership, including $175.7 million of sales in 2026. The SCI Partnerships also generated cash for us through MRE contract revenue of $533.4 million and servicing fees of $17.6 million for the nine months ended September 30, 2026.
Our principal uses of liquidity have been and continue to be (i) purchases of inventory, including engine feedstock and FTAI Power production inventory, (ii) acquisitions of aircraft and engines, (iii) dividends to our ordinary and preferred shareholders and share repurchases and redemptions, (iv) investments in unconsolidated entities, (v) expenses associated with our operating activities, and (vi) interest and principal payments on our Senior Notes and Revolving Credit Facility.
•Inventory increased $885.9 million during the nine months ended September 30, 2026 (2025 - $391.9 million)
•Cash used for the purpose of making investments was $534.3 million during the nine months ended September 30, 2026 (2025 - $757.4 million).
•Distributions to shareholders, including cash dividends, preferred stock redemptions and share repurchases, were $303.0 million during the nine months ended September 30, 2026 (2025 - $230.0 million).
•Uses of liquidity associated with our operating expenses are captured on a net basis in our cash flows from operating activities. Uses of liquidity associated with our debt obligations are captured in our cash flows from financing activities.
Our principal sources of liquidity to fund these uses have been and continue to be (i) revenue from our Aerospace Products and Aviation Leasing segments net of operating expenses, (ii) customer deposits, (iii) proceeds from borrowings or the issuance of securities and (iv) proceeds from asset sales.
•Net cash used in operating activities was $333.0 million during the nine months ended September 30, 2026 (2025 - $131.7 million), reflecting the increase in inventory, partially offset by $234.0 million of customer deposits received from J&F, an affiliate, in advance of FTAI Power equipment deliveries.
•During the nine months ended September 30, 2026, additional borrowings and total principal repayments in connection with the Revolving Credit Facility were $1,225.0 million and $1,225.0 million, respectively (2025 - $430.0 million and $430.0 million, respectively). The Revolving Credit Facility, which was amended in April 2026, provides up to $2.025 billion of borrowings and matures in April 2031; no amounts were outstanding at September 30, 2026.
•Proceeds from the sale of assets were $1,163.9 million during the nine months ended September 30, 2026 (2025 - $1,375.5 million), including $175.7 million from sales to the 2025 Partnership (2025 - $485.1 million).
We are currently evaluating several potential transactions and related financings, including, but not limited to, certain additional debt and equity financings, which could occur within the next 12 months. None of these potential transactions, negotiations, or financings are definitive or included within our planned liquidity needs. We cannot assure if or when any such transaction will be consummated or the terms of any such transaction or related financing.
Historical Cash Flow
Comparison of the nine months ended September 30, 2026 and 2025
The following table compares the historical cash flow for the nine months ended September 30, 2026 and 2025:
| Nine Months Ended September 30, | |||||||||||
| (in thousands) | 2026 | 2025 | |||||||||
| Cash Flow Data: | |||||||||||
| Net cash used in operating activities | $ | (333,017) | $ | (131,666) | |||||||
| Net cash provided by investing activities | 757,672 | 722,668 | |||||||||
| Net cash used in financing activities | (339,507) | (196,173) | |||||||||
Net cash used in operating activities increased $201.4 million, primarily reflecting the increase in inventory, partially offset by customer deposits received from J&F. Other drivers included an increase in our Net income of $28.1 million and certain adjustments to reconcile net income to cash used in operating activities, including a:
•increase in Changes in net working capital of $155.9 million,
•decrease in Deferred income taxes of $64.4 million,
•increase in Equity in earnings of unconsolidated entities of $41.4 million; partially offset by
•decrease in Gain on sale of assets to the 2025 Partnership of $32.5 million, and
•decrease in Security deposits and maintenance claims included in earnings of $18.2 million.
Net cash provided by investing activities increased $35.0 million, primarily due to an:
•decrease in Acquisition of leasing equipment of $191.7 million,
•increase in Proceeds from sale of assets of $97.8 million,
•decrease in Investment in unconsolidated entities of $59.2 million,
•increase in Return of capital from unconsolidated entities of $40.2 million
•decrease in Acquisition of business, net of cash acquired of $37.1 million; partially offset by
•decrease in Proceeds from the sale of assets to the 2025 partnership of $309.5 million, and
•decrease in Return of deposits for acquisition of leasing equipment of $36.8 million.
Net cash used in financing activities increased $143.3 million, primarily due to a:
•increase in Proceeds from debt of $795.0 million,
•increase in Repayment of debt of $795.0 million,
•increase in Share repurchases of $50.0 million
•increase in Cash dividends on ordinary shares of $46.2 million,
•decrease in Receipt of maintenance deposits under operating lease agreements of $24.9 million,
•increase in Payment of deferred financing costs of $11.6 million,
•Increase in Settlement of equity-based compensation of $32.1 million; partially offset by
•decrease in Redemption of preferred shares of $18.7 million.
Contractual Obligations
Our material cash requirements include the following contractual and other obligations:
Debt Obligations-As of September 30, 2026, we had outstanding principal and interest payment obligations of $3.5 billion and $1.0 billion, respectively, of which only interest payments of $228.8 million are due in the next twelve months. Refer to Note 6, "Debt" in our "Notes to Consolidated Financial Statements" for additional information about our debt obligations.
Lease Obligations-As of September 30, 2026, we had outstanding operating and finance lease obligations of $38.9 million, of which $2.8 million is due in the next twelve months.
Other Cash Requirements-In addition to our contractual obligations, we pay quarterly cash dividends on our ordinary shares and preferred shares, which are subject to change at the discretion of our Board of Directors. During the last twelve months, we declared cash dividends of $174.5 million and $12.7 million on our ordinary shares and preferred shares, respectively.
We expect to meet our future short-term liquidity requirements through cash on hand, unused borrowing capacity or future
financings and net cash provided by our current operations. We expect that our operating subsidiaries will generate sufficient cash flow to cover operating expenses and the payment of principal and interest on our indebtedness as they become due. We may elect to meet certain long-term liquidity requirements or to continue to pursue strategic opportunities through utilizing cash on hand, cash generated from our current operations and the issuance of securities in the future. Management believes adequate capital and borrowings are available from various sources to fund our commitments to the extent required.
Critical Accounting Estimates and Policies
There were no material changes to our critical accounting estimates described in our Annual Report on Form 10-K for the year ended December 31, 2025.
Recent Accounting Pronouncements
See Note 2, "Summary of Significant Accounting Policies" in our "Notes to Consolidated Financial Statements" for recent accounting pronouncements.
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