Use these links to rapidly review the document
TABLE OF CONTENTS
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES FORM 10-K Items 8, 15(a), and 15(b) INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ANNUAL REPORT

(Mark One)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2012
For the fiscal year ended December 31, 2013
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-31616

INTERNATIONAL LEASE FINANCE CORPORATION
(Exact name of registrant as specified in its charter)


California (State or other jurisdiction of incorporation or organization)		22-3059110 (I.R.S. Employer Identification No.)
10250 Constellation Blvd., Suite 3400 Los Angeles, California (Address of principal executive offices)		90067 (Zip Code)

Registrant's telephone number, including area code: (310) 788-1999

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
6.625% Notes due November 15, 2013		New York Stock Exchange
5.875% Notes due August 15, 2022		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ý NO o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES ý NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO ý

As of June 30, ~~2012~~2013 and February 2524, ~~2013~~2014, there were 45,267,723 shares of Common Stock, no par value, outstanding, all of which were held by affiliates.

Registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format.

Table of Contents

INTERNATIONAL LEASE FINANCE CORPORATION ~~2012~~ 2013 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

				Page
~~PART I~~			PART I
~~Item 1.~~	Item 1.	~~Business~~	Business	5	5
~~Item 1A.~~	Item 1A.	~~Risk Factors~~	Risk Factors	18	19
~~Item 1B.~~	Item 1B.	~~Unresolved Staff Comments~~	Unresolved Staff Comments	35	33
~~Item 2.~~	Item 2.	~~Properties~~	Properties	35	33
~~Item 3.~~	Item 3.	~~Legal Proceedings~~	Legal Proceedings	38	36
~~Item 4.~~	Item 4.	~~Mine Safety Disclosures~~	Mine Safety Disclosures	39	37
~~PART II~~			PART II
~~Item 5.~~	Item 5.	~~Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	39	37
~~Item 6.~~	Item 6.	~~Selected Financial Data~~	Selected Financial Data	39	37
~~Item 7.~~	Item 7.	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~	Management's Discussion and Analysis of Financial Condition and Results of Operations	42	41
~~Item 7A.~~	Item 7A.	~~Quantitative and Qualitative Disclosures About Market Risk~~	Quantitative and Qualitative Disclosures About Market Risk	71	71
~~Item 8.~~	Item 8.	~~Financial Statements and Supplementary Data~~	Financial Statements and Supplementary Data	72	72
~~Item 9.~~	Item 9.	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	72	72
~~Item 9A.~~	Item 9A.	~~Controls and Procedures~~	Controls and Procedures	72	72
~~Item 9B.~~	Item 9B.	~~Other Information~~	Other Information	73	73
~~PART III~~			PART III
~~Item 14.~~	Item 14.	~~Principal Accountant Fees and Services~~	Principal Accountant Fees and Services	73	73
~~PART IV~~			PART IV
~~Item 15.~~	Item 15.	~~Exhibits, Financial Statement Schedules~~	Exhibits, Financial Statement Schedules	73	74

Table of Contents

TABLE OF DEFINITIONS

737 Classic	~~737 Classic~~	The -300/-400/-500 series of the Boeing 737 aircraft	~~The -300/-400/-500 series of the Boeing 737 aircraft~~
737NG	~~737NG~~	The -600/-700/-800/-900 series of the Boeing 737 aircraft (Next-Generation)	~~The -600/-700/-800/-900 series of the Boeing 737 aircraft (Next-Generation)~~
	AeroTurbine		AeroTurbine, Inc.
AerCap		AerCap Holdings N.V.
	AIG		American International Group, Inc.
AeroTurbine		AeroTurbine, Inc.
	Airbus		Airbus S.A.S.
AIG		American International Group, Inc.
	AOCI		Accumulated other comprehensive income
Airbus		Airbus S.A.S.
	Boeing		The Boeing Company
AOCI		Accumulated other comprehensive (loss) income
	CFIUS		The Committee on Foreign Investment in the United States
Boeing		The Boeing Company
The Company, ILFC, management, we, our, us	~~The Company, ILFC, management, we, our, us~~	International Lease Finance Corporation and its consolidated subsidiaries	~~International Lease Finance Corporation and its consolidated subsidiaries~~
CVA	~~CVA~~	Credit Value Adjustment	~~Credit Value Adjustment~~
Department of the Treasury	~~Department of the Treasury~~	United States Department of the Treasury	~~United States Department of the Treasury~~
Dodd-Frank	~~Dodd-Frank~~	Dodd-Frank Wall Street Reform and Consumer Protection Act	~~Dodd-Frank Wall Street Reform and Consumer Protection Act~~
	ECA		Export Credit Agency
DOS		U.S. Department of State
	FAA		United States Federal Aviation Administration
DOT		U.S. Department of Transportation
	FASB		Financial Accounting Standards Board
ECA		Export Credit Agency
	FCPA		Foreign Corrupt Practices Act
Embraer		Embraer S.A.
	FDIC		Federal Deposit Insurance Corporation
ETI		Extraterritorial Income
	Fitch		Fitch Ratings, Inc.
FAA		United States Federal Aviation Administration
	FRB		Board of Governors of the Federal Reserve System
FASB		Financial Accounting Standards Board
	FRBNY		Federal Reserve Bank of New York
FCPA		Foreign Corrupt Practices Act
	GAAP		Generally Accepted Accounting Principles in the United States of America
FDIC		Federal Deposit Insurance Corporation
	IASB		International Accounting Standards Board
Fitch		Fitch Ratings, Inc.
	IFRS		International Financial Reporting Standards
FRB		Board of Governors of the Federal Reserve System
	IRC		Internal Revenue Code
FSC		Foreign Sales Corporation
	IRS		Internal Revenue Service
GAAP		Generally Accepted Accounting Principles in the United States of America
	Kingfisher Airlines		Kingfisher Airlines Limited
IASB		International Accounting Standards Board
	LIBOR		London Interbank Offered Rates
IRC		Internal Revenue Code
	MAPS		Market Auction Preferred Stock
IRS		Internal Revenue Service
	Moody's		Moody's Investors Service, Inc.
LIBOR		London Interbank Offered Rates
MAPS		Market Auction Preferred Stock

Table of Contents

Moody's Moody's Investors Service, Inc. MVA Market Value Adjustment OCC Office of the Comptroller of the Currency OCI Other comprehensive income OFAC Office of Foreign Assets Control part-out Disassembly of an aircraft for the sale of its parts PB Primary beneficiary S&P Standard and Poor's Ratings Services SEC United States Securities and Exchange Commission SIFI Systemically Important Financial Institution SLHC Savings and Loan Holding Company SPE Special Purpose Entity ~~TARP Troubled Asset Relief Program~~ VIE Variable Interest Entity ~~WKSI Well Known Seasoned Issuer~~

Table of Contents

PART I

Cautionary Statement Regarding Forward-Looking Information

This annual report on Form 10-K and other publicly available documents may contain or incorporate statements that ~~constitute~~ constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this Form 10-K and include statements regarding, among other matters, our pending sale to ~~an investor group~~AerCap, the state of the airline industry, our access to the capital markets, our ability to restructure leases and repossess aircraft, the structure of our leases, regulatory matters pertaining to compliance with governmental regulations and other factors affecting our financial condition or results of operations. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and "should," and variations of these words and similar expressions, are used in many cases to identify ~~these~~ these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others, general industry, economic and business conditions, which will, among other things, affect demand for aircraft, availability and creditworthiness of current and prospective lessees, lease rates, availability and cost of financing and operating expenses, governmental actions and initiatives, and environmental and safety requirements, as well as the factors discussed under "Item 1A. ~~Risk~~ Risk Factors" in this Form 10-K. We do not intend, and undertake no obligation to, update any forward-looking information to reflect actual results or future events or circumstances.

Item 1. Business

Our Company

In this Annual Report on Form 10-K, unless otherwise mentioned or unless the context requires otherwise, we use the terms the "Company," "ILFC," "management," "we," "our," and "us" to refer to International Lease Finance Corporation and its consolidated subsidiaries. We are the world's largest independent aircraft lessor measured by number of owned aircraft. We began operations in 1973 as a pioneer in the aircraft leasing industry. We have 40 years of operating history and we have demonstrated strong and sustainable financial performance through most airline industry cycles. Our prominent leadership position within the aircraft leasing industry has resulted in a premier brand name which provides us access to a variety of funding sources and helps us attract and retain customers and employees. Our offices are strategically located to provide us with proximity to our current customers, potential customers and airframe and engine manufacturers. We operate our business principally from offices in Los Angeles, Miami, Amsterdam, ~~Beijing,~~ Dublin, Seattle and Singapore.

We are ~~the world's largest independent aircraft lessor measured by number of owned aircraft. We are~~ an indirect wholly-owned subsidiary of AIG. AIG is a leading global insurance company that provides a wide range of property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services to customers in more than 130 countries and jurisdictions. On December 916, ~~2012~~2013, AIG ~~and~~entered into an ~~investor~~agreement ~~group~~with ~~led~~AerCap byand ~~Mr. Weng~~AerCap Ireland ~~Xianding~~Limited, ~~the~~a ~~Chairman~~wholly-owned subsidiary of ~~New~~AerCap, ~~China~~for ~~Trust~~the sale of 100 Copercent of our common stock for consideration consisting of $3.0 ~~Ltd.~~billion in cash, ~~announced~~a ~~that~~portion ~~they~~of ~~have~~which ~~entered~~will ~~into~~be funded by a ~~share~~special ~~purchase agreement~~distribution ~~under~~of ~~which~~$600.0 million to be paid by us to AIG ~~will~~upon ~~sell~~consummation 80of the transaction, and approximately 97.1%6 million ofnewly-issued ~~our~~AerCap ~~equity~~common toshares. ~~the~~The consideration ~~investor~~has ~~group~~a ~~for~~value of approximately $45.24 billion inbased ~~cash,~~on ~~with~~AerCap's anpre-announcement ~~option~~closing ~~for~~price ~~the~~per ~~investor~~share ~~group~~of $24.93 on December 13, 2013. The transaction is subject to ~~buy~~required regulatory anapprovals, ~~additional~~including 9all applicable U.9%S. ~~stake~~and foreign regulatory reviews and approvals, as well as other customary closing conditions. The ~~sale~~ transaction was approved by AerCap shareholders on February 13, 2014 and is expected to close in ~~2013~~ 2014.

We are a global company that acquires, leases, and sells commercial aircraft to customers throughout the world. We purchase aircraft from manufacturers, investors and airlines. At December 31, 2012, we had approximately 1,000 owned or managed aircraft in our portfolio, as well as commitments to purchase 229 new high-demand, fuel-efficient aircraft and rights to purchase an additional 50 such aircraft. We have approximately 200 customers in more than 80 countries. We are an

Table of Contents

~~independent~~ We are a global company that acquires, leases, and sells commercial aircraft to customers throughout the world. We purchase aircraft from manufacturers, investors and airlines. At December 31, 2013, we had approximately 1,000 owned or managed aircraft in our portfolio, as well as commitments to purchase 335 new high-demand, fuel-efficient aircraft, with delivery dates through 2022 . We have approximately 200 customers in more than 80 countries. We are an independent aircraft lessor because we are not affiliated with any airframe or engine manufacturer. This independence provides us with purchasing flexibility to acquire aircraft or engine models regardless of the manufacturer.

Our diversified aircraft portfolio consisted of ~~919~~911 owned aircraft at December 31, ~~2012~~2013, and was comprised of 7273% narrowbody (single-aisle) aircraft and 2827% widebody (twin-aisle) aircraft, as measured by aircraft count, with 53% representing Airbus models and 47% representing Boeing models. The weighted average age of our ~~fleet~~owned aircraft, weighted by the net book value of ~~our owned~~ such aircraft, was 8.37 years at December 31, ~~2012~~2013. The aircraft we have on order ~~or have rights to purchase~~ are among the most modern, fuel-efficient models. We have the largest order position for the Boeing 787 and the largest order position among aircraft leasing companies for the Airbus A320neo family according to reports currently available on Boeing and Airbus websites. We also have a large order position for the ~~Airbus~~ Airbus A350XWB and we are the first lessor to offer the Embraer E-Jets E2 aircraft.

We lease aircraft to airlines operating in every major geographic region, including emerging and high-growth markets in Asia, Latin America, the Middle East and Eastern Europe. Our top five lessees are AeroMexico, Air France, ~~China~~American ~~Southern~~ Airlines, ~~Emirates~~China ~~Airline,~~Southern ~~KLM Royal Dutch~~ Airlines, and ~~Virgin Atlantic Airways~~Emirates. We predominantly enter into net operating leases that require the lessee to pay all operating expenses. See "Aircraft Leasing" herein for further description of our leases.

In addition to our ~~primary~~aircraft leasing activities, we provide fleet management services ~~for~~to investors or owners of aircraft portfolios for a management fee. At December 31, ~~2012~~2013, we provided management services for 8168 aircraft. Through our wholly-owned subsidiary, AeroTurbine, we provide engine leasing,; certified aircraft engines, airframes, and engine parts; and supply chain solutions, and we possess the capabilities to disassemble aircraft and engines into parts. ~~This~~These ~~allows~~capabilities allow us to maximize the value of our aircraft and engines across their complete life cycle and offer an integrated value proposition to our airline customers as they transition out aging aircraft. At times, we sell aircraft from our leased aircraft fleet to other leasing companies, financial services companies and airlines. In limited cases, we have ~~also~~previously ~~provided~~contracted to provide asset value guarantees ~~and loan guarantees~~ to ~~buyers~~financial ofinstitutions ~~aircraft~~and orother tothird ~~financial~~parties ~~institutions~~ for a fee, some of which are still outstanding.

We continue to discuss with Lufthansa Technik AG ("Lufthansa Technik") a possible partnership with Lufthansa Technik through AeroTurbine. Under the potential arrangement, which is subject to final agreement, certain antitrust approvals and other customary closing conditions, AeroTurbine and Lufthansa Technik would enter into a set of commercial agreements covering the supply of AeroTurbine material to Lufthansa Technik, the purchase of maintenance services from Lufthansa Technik, and the consignment of surplus material to AeroTurbine. In conjunction with the commercial agreements, Lufthansa Technik would also purchase from us an indirect 15% minority interest in AeroTurbine. We would continue to own the remaining interest in AeroTurbine. Under the potential arrangement, if certain performance targets are met under the commercial agreements, Lufthansa Technik would also be able to exercise an option to increase its investment to 19.9%.

We are incorporated in the State of California and our principal offices are located at 10250 Constellation Blvd., Suite 3400, Los Angeles, California 90067. Our telephone number, facsimile number and website address are (310) 788-1999, (310) 788-1990, and www.ilfc.com, respectively. Our EDGAR filings with the SEC are available, free of charge, on our website or by written request to us. The information on our website is not part of or incorporated by reference into this report.

Competitive Strengths

We believe our size, global scale, long operating history and premier brand provide us with the following competitive strengths that contribute significantly to our success and sustained profitability.

Largest independent aircraft lessor with benefits of scale. We are the world's largest independent aircraft lessor with a portfolio of approximately 1,000 owned or managed aircraft and approximately 200 customers in more than 80 countries. We believe the size of our portfolio and our scale provide us with important competitive advantages, including the ability to:

Table of Contents

~~Long-standing~~ ~~and strategic customer relationships. We have collaborative and strategic relationships, many of which are~~ ~~long-standing,~~ ~~with approximately 200 customers worldwide, including scheduled and charter airlines and low-cost carriers. Our top ten customers have all been leasing aircraft~~ ~~from~~ Competitive us for over a decade. We believe we are the largest aircraft lessor to many of our customers, which strengthens our position and access to senior management with these customers. Our close customer relationships and market knowledge enable us to identify opportunities to remarket aircraft before leases mature, contributing to an average aircraft on-lease percentage of approximately 99% over the last five years. We also gain valuable insight and knowledge of the airline industry and market trends from our customers, enabling us to better anticipate new opportunities and mitigate adverse trends. Our established customer relationships also allow us to secure large and strategic aircraft transactions, including sale-leaseback transactions, often for multiple aircraft, and to play an important role in our customers' fleet initiatives. Our large and diverse customer base helps minimize our risks relating to regional economic conditions. Strengths

~~Attractive~~ We ~~and~~believe diversified aircraft fleet. Our diversified fleet of owned aircraft is comprised of 72% narrowbody (single-aisle) aircraft and 28% widebody (twin-aisle) aircraft, as measured by aircraft count, with 53% representing Airbus models and 47% representing Boeing models. The weighted average age of our ~~owned aircraft by net book value was 8.3 years as of December 31~~size, ~~2012.~~global ~~As our new aircraft orders are delivered~~scale, ~~our~~long ~~fleet~~operating ~~will~~history ~~gain more modern~~ and ~~fuel-efficient~~premier ~~aircraft~~brand ~~that~~provide ~~are in high demand from airlines around the world. We own a higher percentage of widebody aircraft compared to most other lessors, which benefits~~ us ~~due~~with to generally longer lease terms, higher lease rates, higher probability of lease extensions and, we believe, better credit quality of lessees, as compared to narrowbody aircraft. Fewer lessors compete in this portion of the ~~market~~following ~~due to the higher cost of widebody aircraft, which can create increased concentration risks for smaller lessors. Our~~ competitive ~~advantage~~strengths ~~will be enhanced as we take delivery of next generation widebody aircraft. We believe~~that ~~the~~contribute ~~large~~significantly ~~number~~to ~~and variety of widebody aircraft in~~ our ~~fleet~~success ~~uniquely position us in emerging markets, particularly in Asia~~ and ~~the~~sustained ~~Middle~~positive ~~East,~~operating ~~where~~cash ~~we expect airlines to require a substantial number of additional widebody aircraft to meet growing long-haul and regional travel demand~~flows.

~~Large~~ Largest ~~and~~independent ~~valuable~~ aircraft ~~delivery~~lessor ~~pipeline. We~~with ~~have~~benefits ~~one~~ of ~~the largest aircraft order books among lessors~~scale. We Atare ~~December 31,~~the ~~2012, we~~world's ~~had commitments~~largest toindependent ~~purchase 229 new high-demand, fuel-efficient~~ aircraft ~~scheduled~~lessor ~~for~~with ~~delivery~~a ~~through~~portfolio ~~2019, comprised~~ of ~~100 Airbus A320neo family aircraft, 20 Airbus A350s, 74~~ ~~Boeing 787s~~approximately 1,000 34owned ~~Boeing~~or ~~737-800s,~~managed ~~and one Boeing 777-300, and rights to purchase an additional 50 Airbus A320neo family~~ aircraft. ~~We believe we have developed this order book by capitalizing on our scale~~ and ~~strong~~approximately ~~relationships~~200 ~~with airframe and engine manufacturers and our airline~~ customers. ~~These new aircraft will provide us with significant fleet growth~~ in ~~high~~more ~~demand, fuel-efficient~~than ~~aircraft~~80 ~~over the next decade and represent a significant leadership position in the highly anticipated Airbus A320neo family and Boeing 787 aircraft deliveries~~countries. We ~~are~~believe the ~~largest~~ ~~customer~~size of ~~the~~our ~~Boeing~~portfolio ~~787~~ and the largest lessor customer of the Airbus A320neo family aircraft. We will also be the first aircraft leasing company to offer the Airbus A320neo family aircraft for lease with 75 A320neos and 25 A321neos on order with initial deliveries scheduled for 2015. We believe these aircraft will provide significant value and strong returns on investment and that our ~~prime~~ ~~delivery~~scale ~~dates for so many highly coveted aircraft will~~ provide us with aimportant competitive ~~advantage~~advantages, including bythe ~~further~~ability ~~strengthening our reputation and prominence with customers.~~ to:

•: enter into large, sophisticated and strategic aircraft transactions with our customers;
•: obtain favorable delivery dates and terms from manufacturers;
•: influence airframe manufacturers on a variety of matters including the design of aircraft;
•: maintain a diversified aircraft portfolio, including a higher percentage of widebody aircraft in our fleet as compared to most other aircraft lessors;
•: access multiple sources of capital with attractive pricing and terms; and
•: diversify our customer base and geographic exposure.

~~Extensive~~Long-standing ~~airframe~~ and ~~engine~~strategic ~~manufacturer~~customer relationships. We ~~are~~have ~~the~~collaborative ~~largest~~and ~~customer~~strategic relationships, many of ~~Airbus~~which are long-standing, with approximately 200 customers worldwide, including scheduled and charter airlines and low-cost carriers. Our top ten customers have all been leasing aircraft from us for over a decade. We believe we are the largest aircraft lessor ~~customer~~to many of ~~Boeing~~ ~~measured~~our bycustomers, which strengthens our position and facilitates our access to senior management. Our close customer relationships and market knowledge enable us to ~~deliveries~~identify ofopportunities to re-market aircraft ~~through~~before ~~2012~~leases mature, contributing to an average aircraft on-lease percentage of approximately 99% over the last five years. We ~~believe~~also wegain ~~are~~valuable ~~one~~insight and knowledge of the ~~largest~~airline ~~purchasers~~industry ofand ~~engines~~market trends from ~~CFM~~our ~~International~~customers, GEenabling ~~Aviation,~~us ~~International~~to ~~Aero~~better ~~Engines,~~anticipate ~~Pratt &~~new ~~Whitney~~opportunities and ~~Rolls-Royce~~mitigate adverse trends. Our established customer relationships ~~with~~also allow ~~Airbus~~us to secure large and ~~Boeing~~strategic ~~have~~aircraft ~~spanned~~transactions, ~~over~~including ~~20 years~~sale-leaseback transactions, often for multiple aircraft, and to play an important role in our ~~senior~~customers' ~~management~~fleet ~~has~~initiatives. ~~direct~~Our large ~~experience~~and ~~working~~diverse ~~for~~customer ~~airframe~~base helps minimize our risks relating to regional economic conditions.

Attractive and diversified aircraft fleet. Our diversified fleet of owned aircraft is comprised of 73% narrowbody (single-aisle) aircraft and 27% widebody (twin-aisle) aircraft, as measured by aircraft count, with 53% representing Airbus models and 47% representing Boeing models. The weighted average age of our owned aircraft, weighted by the net book value of such aircraft was 8.7 years as of December 31, 2013. As our new aircraft orders deliver, our fleet will gain more modern and fuel-efficient aircraft that are in high demand from airlines around the world. Our large number of widebody aircraft benefits us due to generally longer lease terms, higher lease rates, higher probability of lease extensions and, we believe, better credit quality of lessees, as compared to narrowbody aircraft. We believe the large number and variety of widebody aircraft in our fleet uniquely positions us in emerging markets, particularly in Asia and the Middle East where, according to the 2013 Boeing Current Market Outlook report, airlines are expected to require a substantial number of additional widebody aircraft to meet growing demand over the next 20 years.

Large and valuable aircraft delivery pipeline. We have the largest number of next generation Airbus and Boeing orders among lessors, comprised of 150 Airbus A320neo family aircraft, 20 Airbus A350s and 70 Boeing 787s. We are also adding E-Jets aircraft to our fleet, with commitments to purchase 50 E-Jets E2 next generation aircraft from Embraer. In addition, we have commitments to purchase 30 current generation Boeing 737-800s and up to 15 current generation Airbus A321 aircraft. We

Table of Contents

~~manufacturers.~~believe ~~These~~we ~~extensive~~have ~~manufacturer~~developed ~~relationships~~this ~~and~~order ~~the~~book ~~scale~~by ofcapitalizing on our ~~business~~scale ~~enable~~and usstrong torelationships ~~place~~with ~~large~~airframe ~~orders~~and ~~with~~engine ~~favorable~~manufacturers ~~terms~~ and ~~conditions,~~our ~~including~~airline ~~pricing~~customers. ~~and~~Our ~~delivery~~orders ~~terms~~with Airbus, Boeing and ~~have~~Embraer ~~allowed~~will provide us towith ~~become~~significant ~~the~~fleet ~~largest~~growth ~~lessor~~in ~~purchaser~~high ofdemand, fuel-efficient aircraft over the next ~~generation~~decade ~~aircraft,~~and ~~including~~represent a significant leadership position in the ~~Airbus~~highly anticipated Airbus A320neo family, ~~aircraft~~Boeing 787 and ~~Boeing~~Embraer ~~787~~E-Jets E2 aircraft deliveries. ~~Our~~We ~~independence~~will ~~from~~also ~~airframe~~be ~~and~~the ~~engine~~first ~~manufacturers allows~~aircraft usleasing company to ~~focus~~offer onthe ~~providing~~Airbus A320neo family aircraft and the ~~best~~Embraer ~~products~~E-Jets E2 aircraft for lease, with the ~~most~~A320neo ~~market~~initial ~~appeal~~delivery ~~regardless~~scheduled offor ~~manufacturer.~~2015 Inand ~~addition,~~the weEmbraer E-Jets E2 initial delivery scheduled for 2018. We believe ~~our~~these ~~strategic~~aircraft ~~relationships~~will ~~with~~provide ~~manufacturers~~significant value and ~~market knowledge~~strong ~~allow~~returns uson toinvestment ~~influence~~and ~~new~~that ~~aircraft~~our ~~designs,~~prime ~~which~~delivery ~~gives~~dates for so many highly coveted aircraft will provide us ~~increased~~with ~~confidence~~a incompetitive advantage by further strengthening our ~~airframe~~reputation and ~~engine~~prominence ~~selections~~with customers.

~~Strong~~ Extensive ~~liquidity~~airframe ~~position~~and ~~with~~engine ~~significant~~manufacturer ~~access to diverse funding sources~~relationships. ~~Our~~We ~~scale~~are ~~and~~the ~~operating~~largest ~~history~~customer ~~provide us with access to significant amounts~~ of ~~funding,~~Airbus ~~including~~and ~~unsecured~~the ~~debt,~~largest ~~from~~lessor ~~various~~customer ~~sources on competitive terms. Since 2010, we have raised over $23.1 billion, including approximately $11.7 billion~~ of ~~unsecured~~ ~~debt,~~Boeing ~~primarily~~measured ~~through~~by deliveries ~~a combination~~ of ~~new~~aircraft ~~loan~~through ~~and bond financings~~2013. AsWe ofalso ~~December 31,~~recently ~~2012,~~finalized weour ~~had~~first aaircraft ~~cash~~order ~~balance~~from ~~of approximately $3~~Embraer.~~0 billion~~ ~~and an additional $2.3 billion available under our revolving credit facility.~~ We believe ~~our~~we ~~existing~~are ~~sources~~one of ~~liquidity~~the ~~and~~largest ~~anticipated~~purchasers ~~cash~~of ~~flows~~engines from ~~operations~~CFM ~~will~~International, beGE ~~sufficient~~Aviation, International toAero ~~cover~~Engines, ~~our~~Pratt & ~~debt~~Whitney ~~maturities~~and ~~over~~Rolls-Royce. atOur ~~least~~relationships ~~the next~~with ~~12 months.~~Airbus Weand Boeing have ~~reduced~~spanned ~~our leverage~~ over ~~the last few~~ 20 years ~~to a level within our targeted range,~~ and our ~~adjusted~~senior ~~net~~management ~~debt~~has todirect ~~adjusted~~experience ~~shareholders' equity ratio was~~working ~~2.5-to-1.0~~for asairframe ~~of December 31, 2012 (adjusted net debt to adjusted shareholders' equity is a non-GAAP financial measure; see Item 6~~manufacturers. ~~"Selected~~ ~~Financial~~These ~~Data"~~extensive ~~for~~manufacturer arelationships ~~reconciliation~~and ~~of non-GAAP financial measures to their most directly comparable GAAP measure). We have also increased~~ the ~~weighted~~scale ~~average life~~ of our ~~debt~~business ~~maturities~~enable us to ~~6.3 years~~place aslarge oforders ~~December 31,~~with ~~2012,~~favorable ~~which~~terms ~~has~~and ~~allowed~~conditions, usincluding topricing ~~better~~and ~~align our debt maturities with our anticipated operating~~delivery ~~cash~~terms, ~~flows.~~and We have ~~relatively~~allowed ~~low~~us ~~exposure~~ to ~~interest~~become ~~rate~~the ~~risk~~largest ~~because~~lessor ~~approximately~~purchaser ~~79%~~ of ~~our~~next ~~outstanding~~generation ~~debt as of December 31~~aircraft, ~~2012,~~including ~~was~~the ~~fixed~~Airbus ~~rate~~A320neo ~~debt~~family oraircraft, ~~floating~~Boeing ~~rate~~787 ~~debt swapped~~and ~~into~~Embraer ~~fixed~~E-Jets ~~rate~~E2 ~~debt~~aircraft. Our ~~broad~~independence ~~access~~from toairframe ~~secured~~ and ~~unsecured~~engine ~~debt~~manufacturers allows us to ~~obtain~~focus ~~competitive~~on ~~financing~~providing ~~rates~~the ~~and~~best ~~terms.~~products ~~Our~~with ~~significant~~the ~~number~~most ofmarket ~~unencumbered~~appeal ~~aircraft~~regardless ~~provides~~of usmanufacturer. ~~with~~In ~~meaningful~~addition, ~~operational~~we ~~and~~believe ~~capital~~our ~~structure~~strategic ~~flexibility.~~relationships ~~Our financial flexibility together~~ with ~~our~~manufacturers ~~broad~~and ~~access~~market toknowledge ~~capital~~allow ~~also provides~~ us ~~with the ability~~ to ~~take~~influence ~~advantage of~~ new ~~business opportunities such as~~ aircraft ~~acquisitions.~~designs, ~~Our~~which ~~foreign~~gives ~~exchange~~us ~~exposure~~increased isconfidence ~~also~~in ~~limited with approximately 98% of~~ our ~~revenues~~airframe ~~denominated~~and ~~in U.S. dollars for the year ended December 31,~~engine ~~2012~~selections.

~~Ability~~Strong liquidity position with significant access to ~~maximize~~diverse ~~the~~funding ~~value~~sources. As of ~~aircraft~~December 31, 2013, we had approximately $1.4 billion in cash and ~~engines~~cash equivalents available for use in our operations and we have $2. ~~Our~~3 billion ~~subsidiary~~available ~~AeroTurbine~~under our revolving credit facility. Further, our scale and operating history provide us with access to significant amounts of funding, including unsecured debt, from various sources on competitive terms. The unencumbered aircraft in our fleet provides us with meaningful ~~part-out~~operational and ~~engine~~capital ~~leasing capabilities~~structure ~~that~~flexibility. ~~allow~~Our usfinancial flexibility together with our broad access to ~~maximize~~capital also provides us with the ~~value~~ability to take advantage of ~~our~~new business opportunities such as aircraft acquisitions. We believe our existing sources of liquidity and ~~engines~~anticipated ~~across~~cash ~~their~~flows ~~complete~~from ~~life~~operations ~~cycle.~~will ~~The~~be ~~ability~~sufficient to ~~provide~~cover ~~these~~our ~~services~~debt ~~also~~maturities ~~distinguishes~~over usthe ~~with~~next 18 to 24 months and our ~~airline~~capital ~~customers~~expenditures ~~by providing~~over ~~them~~the ~~with~~next an12 months. ~~integrated~~As ~~value~~of ~~proposition~~December 31, as2013, ~~they~~our ~~transition~~adjusted ~~out~~net ~~aging~~debt ~~aircraft.~~to ~~AeroTurbine~~adjusted ~~has~~shareholders' ~~market~~equity ~~insight~~ratio was 2.5-to-1.0 and ~~recurring~~the weighted ~~customer~~average ~~relationships,~~life ~~which~~of ~~are~~our ~~strengths~~debt ~~that~~maturities ~~can~~was be6.3 years (adjusted net debt to adjusted shareholders' equity is a non-GAAP financial measure; See Item 7, ~~leveraged~~"Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measurements" for ~~growth~~a inreconciliation of ~~the~~non-GAAP ~~engine~~financial measures to their most directly comparable GAAP measure). These results reflect our efforts to reduce our leverage and ~~parts~~to ~~business~~better align our debt maturities with our anticipated operating cash flows.

~~Dedicated~~Ability ~~management~~to ~~team~~maximize ~~with~~the ~~extensive~~value ~~airline,~~of ~~manufacturer~~aircraft and ~~leasing experience~~engines. ~~Our~~Through ~~senior~~our ~~management~~wholly ~~team~~owned ~~has~~subsidiary, anAeroTurbine, ~~average~~we ofprovide engine leasing; ~~over~~certified ~~20 years~~aircraft ofengines, ~~aviation~~airframes and ~~other~~engine ~~relevant~~parts; ~~experience,~~and ~~including~~supply ~~experience~~chain atsolutions, ~~ILFC~~ and ~~with~~we ~~airlines,~~possess ~~airframe~~the ~~manufacturers~~capabilities to disassemble aircraft and ~~other~~engines ~~lessors~~into parts. ~~Our~~These ~~management~~capabilities ~~team~~allow ~~has~~us ~~demonstrated~~to ~~success~~maximize ~~in all~~the ~~aspects~~value of ~~leasing~~our ~~including~~aircraft ~~financing,~~and ~~lease~~engines ~~structuring,~~across ~~strategic~~their ~~planning,~~complete ~~risk~~life ~~diversification,~~cycle. ~~fleet~~The ~~restructuring~~ability ~~and~~to ~~aircraft~~provide ~~purchasing.~~these Weservices ~~believe~~also distinguishes us with our ~~senior~~airline ~~management's~~customers ~~reputation~~by ~~and relationships~~providing them with ~~lessees,~~an ~~manufacturers,~~integrated ~~buyers~~value proposition ~~and~~as ~~financiers~~they oftransition out aging aircraft. AeroTurbine has market insight and recurring customer relationships, which are ~~important~~strengths ~~elements~~that tocan ~~the~~be ~~success~~leveraged offor ~~our~~growth in the engine and parts business.

Business Strategies

We believe the following strategies will enable us to continue to serve our customers, grow our customer base, manage our portfolio to optimize revenues and profitability and strengthen our position as the world's largest independent aircraft lessor.

Table of Contents

Dedicated management team with extensive airline, manufacturer and leasing experience. Our senior management team has extensive aviation and other relevant experience, including experience at ILFC and with airlines, airframe manufacturers and other lessors. Our management team has demonstrated success in all aspects of leasing including financing, lease structuring, strategic planning, risk diversification, fleet restructuring and aircraft purchasing. We believe our senior management's reputation and relationships with lessees, manufacturers, buyers, investors and financiers of aircraft are important elements to the success of our business.

Business Strategies

Continue to capitalize on our existing customer relationships. We believe that we have strong customer relationships as a result of our 40-year operating history. We intend to continue to capitalize on our customer relationships to facilitate strategic and sophisticated fleet solutions, including lease placements, large multi-aircraft re-fleeting transactions, multi-party placement arrangements and sale-leaseback transactions. Our customer relationships and market insight will influence our future aircraft purchases so that we can tailor orders and timing to the long-term needs of our customers. We believe our ability to offer options to customers seeking solutions for transitioning out aging aircraft will further strengthen our relationships with them.

Focus on high-growth and attractive markets. We are focused on increasing our presence in emerging markets with high potential for passenger growth and other markets with significant demand for new aircraft. We intend to capitalize on the increased demand for aircraft that will result from expected growth in emerging markets such as Asia, Latin America and the Middle East. We already have a leading position in China ~~where~~based ~~approximately~~on ~~175~~the number of commercial aircraft operated in China, where 172 of our aircraft are operated by Chinese carriers. During ~~2012~~the past several years, we opened ~~offices~~an office in Singapore ~~and Beijing~~ to further strengthen our position in Asia. ~~During~~We ~~2011,~~have wealso opened an office in Amsterdam and increased the size of our Dublin office to be closer to our customers in Europe, the Middle East, Eastern Europe and Africa. We believe these new ~~offices~~initiatives will help us to better serve our existing customers and to develop new customer relationships. In addition, we are pursuing growth in the North American market, where we believe that the re-fleeting campaigns undertaken by the major American carriers create an opportunity to increase our market presence and further diversify our geographic mix.

Enhance our fleet with modern, fuel-efficient aircraft. We plan to continue to acquire modern, fuel-efficient aircraft that will allow us to maintain a high rate of lease placements on attractive terms. WeIn ~~have~~2013, ~~commitments~~we ~~with~~finalized ~~manufacturers~~an agreement to purchase ~~225~~50 ~~new~~E-Jets ~~aircraft scheduled~~E2 ~~for~~next ~~delivery~~generation ~~through 2019, comprised of 100 Airbus A320neo family~~ aircraft, 20from ~~Airbus A350s, 74 Boeing 787s and 31 Boeing 737-800s~~Embraer. We ~~also have rights to purchase an additional 50 Airbus A320neo family aircraft. We~~ are in regular discussions with airframe and engine manufacturers regarding aircraft programs and technology advances, availability of future delivery positions, pricing, and potential aircraft orders. We believe that the scale of our business and access to capital markets will enable us to make large purchases of aircraft as needed. In addition to orders from the manufacturers, we are also pursuing aircraft acquisitions through sale-leaseback transactions with airline customers. Sale-leaseback transactions allow us to add attractive new aircraft to our fleet in the near term and balance our ~~speculative~~aircraft orders from manufacturers.

Maintain a diverse aircraft fleet and lease portfolio to maximize revenue while minimizing risk. We seek to further maximize revenue and minimize risks by maintaining the diversity of our owned aircraft fleet and lease portfolio across aircraft type, lease expiration, geography and customer. ~~Diversification~~In ofJuly ~~our~~2013, ~~owned~~we ~~aircraft~~contracted ~~fleet~~to ~~minimizes~~purchase 50 E-Jets E2 ~~the~~aircraft ~~risk~~from ofEmbraer ~~changing~~with ~~customer~~deliveries ~~preferences~~starting in 2018, ~~while~~marking athe ~~diversified~~introduction ~~lease~~of ~~portfolio~~these ~~with~~aircraft ~~staggered~~to ~~lease~~our ~~expirations~~fleet ~~reduces~~and furthering our ~~exposure~~goal to ~~industry~~provide ~~fluctuations~~our ~~and~~customers ~~the~~with ~~credit~~a ~~risk~~diverse mix of ~~individual~~aircraft for ~~customers.~~their Wemarket-specific ~~evaluate~~needs. ~~multiple~~Diversification ~~strategies~~of ~~for~~ our ~~aging~~owned aircraft, ~~including~~fleet ~~continued~~lessens ~~leasing~~the risk of ~~the~~changing ~~aircraft~~customer orpreferences, ~~its~~while ~~constituent~~a ~~parts,~~diversified ~~sale,~~lease ~~passenger~~portfolio towith ~~freighter~~staggered ~~conversion~~lease orexpirations ~~part-out~~reduces ~~through~~ our ~~AeroTurbine~~exposure ~~subsidiary.~~to Weindustry ~~ultimately~~fluctuations ~~pursue~~and the ~~option~~credit ~~that~~risk ~~generates~~of ~~the~~individual ~~highest value for each aircraft~~customers.

Continue to access multiple funding sources to optimize our capital structure. We have proven our capability to access a variety of funding sources, including unsecured debt, and intend to use the scale of our business and our existing relationships with financial institutions to continue accessing capital from diverse sources at competitive rates. We aim to align our debt maturities with our anticipated operating cash flows. We target to maintain sufficient liquidity, consisting of unrestricted cash on hand, our revolving credit facility and operating cash flows, to repay our debt maturing over the next 18-24 months.

Table of Contents

Continue to access multiple funding sources to optimize our capital structure. We have proven our capability to access a variety of funding sources, including unsecured debt, and intend to use the scale of our business and our existing relationships with financial institutions to continue accessing capital from diverse sources at competitive rates. We aim to align our debt maturities with our anticipated operating cash flows. We target to maintain sufficient liquidity, consisting of unrestricted cash on hand, our revolving credit facility and operating cash flows, to cover our debt maturities over the next 18 to 24 months and our capital expenditures over the next 12 months.

Customers

We have long-standing, collaborative and strategic relationships with customers located in each major geographic region. Our top ten customers, based on revenue, are AeroMexico, Air Berlin, Air France, American Airlines, Cathay Pacific, China Southern Airlines, ~~Dragonair,~~ Emirates ~~Airline~~, KLM Royal Dutch Airlines, Vietnam Airlines and ~~Virgin~~ Virgin Atlantic Airways, all of which have been leasing aircraft from us for over a decade. ~~Our~~While regional and global economic and political conditions have and will continue to impact our customers, we believe that our diverse lease portfolio reduces our exposure to ~~industry fluctuations,~~ events that impact specific regions or countries, and the credit risk of individual customers.

The following table shows the number and percentage of our aircraft lessee customers by region at December 31, ~~2012~~2013, ~~2011~~2012 and ~~2010~~2011. Each airline is classified within the geographic region that represents the airline's principal place of business for the years indicated. A customer is an airline with its own operating certificate.

	Customers by Region
	2012						2011						2010
	2013						2012						2011
Region	Number of Customers~~(a)~~			%			Number of Customers~~(a)~~			%			Number of Customers~~(a)~~			%
Europe		5551			3029.63	%		6255			3430.6	%		6562			3634.26	%
Asia and the Pacific		47			2627.10			4447			2426.61			4344			2324.96
The Middle East and Africa		2526			1315.90			2425			13.49			2524			13.94
Commonwealth of Independent States		2019			1110.19			1920			1011.61			1719			910.46
U.S. and Canada		1816			109.02			1718			910.50			17			9.45
Central and South America and Mexico		15			8.36			1315			78.3			13			7.23
		180	(b)(c)(d)		100.0	%		179	(d)		100.0	%		180	(d)		100.0	%

		174	(a)(b)		100.0	%		180	(b)		100.0	%		179	(b)		100.0	%

(a)~~A customer is an airline with its own operating certificate. (b)~~Does not include 2732 leasing customers, ~~who primarily lease engines and are~~ unique to AeroTurbine~~. (c)We also~~ ~~maintain~~and ~~relationships~~15 ~~with 19~~ additional customers who operate aircraft we manage, which, ~~combined~~when added with ~~our~~the ~~AeroTurbine~~ customers identified in the table, brings our total to ~~226~~over 200 customers. (db)Includes ~~three~~six (~~2012~~2013), ~~two~~three (~~2011~~2012) and ~~one~~two (~~2010~~2011) ~~customer(s)~~customers whose only transactions with us consist of finance and sales-type leases.

The majority of our revenues are derived from customers located outside of the U.S. Revenues from rentals of flight equipment to foreign airlines have represented approximately 9493% of our total revenues from rentals of flight equipment since ~~2009~~2010. Even though a large percentage of our revenues are generated from outside the U.S., our foreign exchange exposure is limited with approximately 98% of our revenues denominated in U.S. dollars for the year ended December 31, 2013. The following table sets forth the dollar amount and percentage of total revenues from rentals of flight equipment

Table of Contents

~~and percentage of total revenues from rentals of flight equipment~~ attributable to the indicated geographic areas based on each airline's principal place of business for the years indicated:

	2012						2011						2010
	2013						2012						2011
	Amount			%			Amount			%			Amount			%
	(Dollars in thousands)
Europe	$	1,561,565	(a)		35.9	%	$	1,730,203	(a)		38.8	%	$	1,893,679	(a)		40.1	%
Europe(a)	$	1,405,342			33.7	%	$	1,561,565			35.9	%	$	1,730,203			38.8	%
Asia and the Pacific		1,~~295~~232,~~799~~174			29.86			1,~~335~~295,~~533~~799			3029.08			1,~~430~~335,~~017~~533			30.20
The Middle East and Africa		~~540~~533,~~047~~616			12.48			~~555~~540,~~058~~047			12.54			~~585~~555,~~679~~058			12.45
U.S. and Canada		~~389~~384,~~533~~430			9.02			~~362~~389,~~067~~533			89.10			~~375~~362,~~496~~067			78.91
Commonwealth of Independent States		~~287~~326,~~643~~062			67.68			~~244~~287,~~418~~643			56.56			~~235~~244,~~235~~418			5.05
Central and South America and Mexico		~~271~~284,~~015~~409			6.39			~~227~~271,~~126~~015			56.13			~~206~~227,~~396~~126			45.41
	$	4,345,602	(b)		100.0	%	$	4,454,405	(b)		100.0	%	$	4,726,502			100.0	%

	$	4,166,033	(b)		100.0	%	$	4,345,602	(b)		100.0	%	$	4,454,405	(b)		100.0	%

(a)Includes $~~352~~305,~~363~~296 (~~2012~~2013), $~~400~~352,~~300~~363 (~~2011~~2012) and $~~429~~400,~~366~~300 (~~2010~~2011) of revenue attributable to customers whose principal business is located in the Euro-zone periphery, which is comprised of Greece, Ireland, Italy, Portugal and Spain. Revenues generated from Europe have decreased from ~~2010~~2011 through ~~2012~~2013 as a result of increased repossessions of aircraft from European customers following the European sovereign debt crisis, that we re-leased to airlines domiciled elsewhere. (b)Includes AeroTurbine lease revenue of $7872,~~922~~175 ~~for~~(2013), ~~the year ended December 31~~$78,922 (2012) and $19,874 from its acquisition date of October 7, 2011, to December 31, 2011.

~~Recent~~None of ~~challenges~~our inindividual ~~the~~customers ~~global~~accounted ~~economy,~~for ~~including~~more ~~the~~than ~~European~~10% ~~sovereign~~of ~~debt~~flight ~~crisis,~~equipment ~~political~~rentals ~~uncertainty~~ in ~~the~~any ~~Middle~~of ~~East, and sustained higher fuel prices have negatively impacted many airlines' profitability, cash flows and liquidity, and increased~~ the ~~probability~~years ~~that some airlines, including our customers, will cease operations or file for bankruptcy. During the year~~ ended December 31, ~~2012~~2013, 112012 ~~of our customers, including one with two separate operating certificates, ceased operations~~ or ~~filed for bankruptcy, or its equivalent, and returned 55 of our aircraft~~2011. AsOur ofrevenues ~~February 25,~~from ~~2013,~~all 42 of ~~the 55 returned aircraft have been committed to lease and 13 aircraft have been, or are intended to be,~~our ~~parted-out or sold. One of these~~ customers, ~~Kingfisher~~based ~~Airlines, ceased operations~~ in ~~the~~each ~~last quarter~~ of ~~2012.~~China ~~While~~and weFrance ~~have~~exceeded ~~been~~10% ~~successful~~of inour ~~deregistering~~consolidated ~~our~~revenues ~~six~~for ~~affected~~certain ~~aircraft~~periods, ~~we have~~as ~~experienced~~set ~~difficulty~~forth in ~~repossessing~~ the ~~aircraft~~table ~~from India as a result of bureaucratic and regulatory obstacles~~below. ~~Future~~No ~~events,~~other ~~including~~individual acountry ~~prolonged~~accounted ~~recession,~~for ~~ongoing~~more ~~uncertainty~~than ~~regarding~~10% ~~the European sovereign debt crisis, political unrest, continued weak consumer demand, high fuel prices, or restricted availability~~ of ~~credit to the aviation industry, could lead to the weakening or cessation of operations of additional airlines, which in turn would adversely affect~~ our ~~earnings~~total ~~and~~revenues ~~cash~~during ~~flows in~~ the ~~near~~periods ~~term.~~indicated:

None of our individual customers accounted for more than 10% of flight equipment rentals in any of the years ended December 31, 2012, 2011 or 2010. Our revenues from all of our customers based in each of China and France exceeded 10% of our consolidated revenues for such periods, as set forth in the table below. No other individual country accounted for more than 10% of our total revenues during the periods indicated:

	2013					2012					2011

	Amount		%			Amount		%			Amount		%
	(Dollars in thousands)
China	$	706,748		17.0	%	$	743,447		17.1	%	$	766,350		17.2	%
France		411,343		9.9			457,007		10.5			487,027		10.9

	2012					2011					2010
	Amount		%			Amount		%			Amount		%
	(Dollars in thousands)
China	$	743,447		17.1	%	$	766,350		17.2	%	$	815,683		17.3	%
France		457,007		10.5			487,027		10.9			516,899		10.9

Aircraft Leasing

We lease most of our aircraft under operating leases. Under an operating lease, the cost of the aircraft is not fully recovered over the term of the initial lease and we retain the benefit, and assume the risk, of the residual value of the aircraft. Operating leasing can be an attractive alternative to ownership for airlines because leasing (i) increases fleet flexibility; (ii) requires a lower capital commitment for the airline; and (iii) significantly reduces aircraft residual value risk for the airline. On occasion, we enter into finance and sales-type leases where the full cost of the aircraft is substantially recovered over the term of the lease. At December 31, 2013, we owned 911 aircraft in our operating lease portfolio and accounted for 22 aircraft as finance and sales-type leases. At December 31, 2013, our operating lease portfolio included five aircraft not subject to a signed lease agreement or a signed letter of intent. All five of these aircraft are likely to be parted out or sold and are not being remarketed for lease. These aircraft did not meet the criteria for being classified as held for sale as of December 31, 2013.

Table of Contents

Our lease rates are generally fixed for the term of the lease, providing us with stable and predictable contractual operating cash flows. Our current operating leases have initial terms ranging in length from approximately one year to 15 years and the weighted average lease term remaining on our current leases, weighted by the net book value of our aircraft, was 4.3 years as of December 31, 2013. Our current leases mature through 2026. See "Item 2. Properties—Aircraft ~~Leasing~~ Portfolio" for information regarding scheduled lease terminations. We attempt to maintain a mix of short-, medium-and long-term leases to balance the benefits and risks associated with different lease terms. Varying lease terminations helps mitigate the effects of changes in market conditions at the time aircraft become eligible for re-lease or are sold.

~~We lease most of~~ Under our ~~aircraft under operating~~ leases~~. Under an operating lease~~, the ~~cost~~lessee ofis ~~the~~generally ~~aircraft~~responsible isfor ~~not~~all ~~fully~~operating ~~recovered~~expenses ~~over~~ during the term of the ~~initial~~ lease, ~~and~~which wecustomarily ~~retain~~include ~~the~~fuel, ~~benefit~~crews, airport and ~~assume~~navigation ~~the~~charges, taxes, ~~risk~~licenses, ofaircraft ~~the~~registration ~~residual~~and ~~value~~insurance ~~of the aircraft~~premiums. ~~Operating~~The ~~leasing~~lessee ~~can~~is bealso anresponsible ~~attractive~~for ~~alternative~~normal tomaintenance ~~ownership~~and ~~for~~repairs ~~airlines because~~and ~~leasing~~airframe ~~(i)~~and ~~increases~~engine ~~fleet~~overhauls, ~~flexibility;~~and ~~(ii)~~has ~~requires~~to acomply ~~lower~~with ~~capital~~agreed-upon return ~~commitment~~conditions. ~~for~~Under the ~~airline;~~ ~~and~~provisions ~~(iii)~~of ~~significantly~~many ~~reduces~~of ~~aircraft~~our ~~residual~~leases, ~~value~~the ~~risk~~lessee ~~for~~is ~~the~~required ~~airline.~~to Onmake ~~occasion,~~payments wefor ~~enter~~overhaul ~~into~~rentals ~~finance~~based ~~and~~on ~~sales-type leases~~hours ~~where~~or ~~the~~cycles ~~full~~of ~~cost~~utilization. ofIf ~~the~~a ~~aircraft~~lessee is ~~substantially~~paying ~~recovered~~us ~~over~~overhaul rentals, ~~the~~we ~~term~~would oftypically ~~the~~be ~~lease.~~obligated Atto ~~December 31,~~use ~~2012,~~the wefunds ~~owned~~paid ~~919~~by ~~aircraft~~the inlessee ~~our~~during ~~operating~~the lease ~~portfolio~~term ~~and~~to ~~accounted~~reimburse the lessee for 15 ~~aircraft~~costs asthey ~~finance~~incur ~~and~~for ~~sales-type~~certain ~~leases.~~airframe Atand ~~December 31,~~engine ~~2012,~~overhauls. ~~our~~In ~~operating~~connection with a lease ~~portfolio~~of ~~included~~a ~~seven~~used aircraft, ~~not~~we ~~subject~~generally agree to acontribute ~~signed~~to ~~lease~~certain ~~agreement~~maintenance orevents athe ~~signed~~lessee ~~letter of~~incurs ~~intent,~~during ~~five~~the oflease. ~~which~~We ~~have~~require ~~been~~our orlessees ~~may~~to becomply ~~parted~~with ~~out~~the orstandards ~~sold~~of ~~but did not meet~~ the ~~criteria~~FAA, ~~for~~or its ~~being~~foreign ~~classified~~equivalent. asFurthermore, ~~held~~all ~~for~~of ~~sale~~our ~~and~~lessees ~~two~~indemnify ofus ~~which~~for ~~were~~all ~~formerly~~liabilities onarising ~~lease~~from totheir ~~Kingfisher~~use ~~Airlines, which~~of ~~recently~~our ~~ceased operations~~aircraft.

Our lease rates are generally fixed for the term of the lease, providing us with stable and predictable operating cash flows. Our current operating leases have an initial term ranging in length from two years to 15 years and the weighted average lease term remaining on our current leases, weighted by the net book value of our aircraft, was 4.1 years as of December 31, 2012. Our current leases mature through 2026. See "Item 2. Properties—Aircraft Portfolio" for information regarding scheduled lease terminations. We attempt to maintain a mix of short-, medium- and long-term leases to balance the benefits and risks associated with different lease terms. Varying lease terminations helps mitigate the effects of changes in market conditions at the time aircraft become eligible for re-lease or are sold.

Under our leases, the lessee is generally responsible for all operating expenses during the term of the lease, which customarily include fuel, crews, airport and navigation charges, taxes, licenses, aircraft registration and insurance premiums. The lessee is also responsible for normal maintenance and repairs and airframe and engine overhauls, and has to comply with agreed-upon return conditions. Under the provisions of many of our leases, the lessee is required to make payments for overhaul rentals based on hours or cycles of utilization. If a lessee is paying us overhaul rentals, we would typically be obligated to use the funds paid by the lessee during the lease term to reimburse the lessee for costs they incur for certain airframe and engine overhauls. In connection with a lease of a used aircraft, we generally agree to contribute to the first major maintenance event the lessee incurs during the lease. We require our lessees to comply with the standards of either the FAA or its foreign equivalent. Furthermore, all of our lessees indemnify us for all liabilities arising from their use of our aircraft.

Management obtains and reviews relevant business materials from all prospective lessees and purchasers before entering into a lease or extending credit. We generally require a security deposit to guarantee the lessee's performance of its obligations under the lease and the condition of the aircraft upon its return. Under certain circumstances, the lessee may be required to obtain guarantees or other financial support from an acceptable financial institution or other third party. In addition, our leases contain extensive provisions regarding our remedies and rights in the event of a default by the lessee and specific provisions regarding the condition of the aircraft upon its return. The lessee is required to continue to make lease payments under all circumstances, including periods during which the aircraft is not in operation due to maintenance or grounding.

We attempt to minimize our currency and exchange risks by negotiating most of our aircraft leases in U.S. dollars, with approximately 98% of our revenues for the year ended December 31, ~~2012~~2013 denominated in U.S. dollars. To meet the needs of our customers, a few of our leases are negotiated in foreign currencies, mainly Euros. After we agree to the rental payment currency with an airline, the negotiated currency remains for the term of the lease. The economic risk arising from foreign currency denominated leases has, to date, been immaterial to us.

Some foreign countries have currency and exchange laws regulating the international transfer of currencies. We require, as a condition to any foreign transaction, that the lessee or purchaser in a foreign country obtain the necessary approvals of the appropriate government agency, finance ministry or central bank for the remittance of all funds contractually owed in U.S. dollars.

Table of Contents

~~Some~~repossessed ~~foreign~~aircraft, ~~countries~~which ~~have~~may ~~currency~~in ~~and~~limited ~~exchange~~circumstances ~~laws~~include ~~regulating~~charges ~~the~~relating ~~international~~to ~~transfer~~aircraft ofthat ~~currencies.~~we ~~When~~do ~~necessary~~not weown ~~require,~~but asthat awere ~~condition~~operated toby ~~any~~the ~~foreign~~lessee. ~~transaction,~~Depending ~~that~~on the condition of the aircraft at the ~~lessee~~time orof ~~purchaser~~repossession, inwe amay ~~foreign~~also ~~country~~have ~~obtain~~to perform maintenance on the ~~necessary~~aircraft. ~~approvals~~We ofmitigate the ~~appropriate~~negative ~~government~~financial ~~agency,~~impact ~~finance~~of ~~ministry~~repossession orcosts ~~central~~through ~~bank~~lessee ~~for~~security ~~the~~deposits, ~~remittance~~letters of ~~all~~credit ~~funds~~and overhaul ~~contractually~~rental ~~owed in U~~payments.S. ~~dollars.~~

At times, we may agree to restructure leases with our lessees. Historically, our lease restructurings have involved voluntary termination of leases prior to lease expiration, the arrangement of subleases from the primary lessee to another airline, the rescheduling of lease payments, and modifications of the length of the lease. If we need to repossess an aircraft from a lessee, we often must export the aircraft from the lessee's jurisdiction. We generally obtain the lessee's cooperation and the return and export of the aircraft is immediate. If the lessee does not fully cooperate in returning aircraft, we must take legal action in the appropriate jurisdictions. This process can delay the ultimate return and export of the aircraft. In addition, in connection with the repossession of an aircraft, we may agree to pay outstanding mechanic, airport, and navigation fees and other amounts secured by liens on the repossessed aircraft, which may in limited circumstances include charges relating to aircraft that we do not own but that were operated by the lessee. We may also have to perform maintenance on the aircraft depending on the condition of the aircraft at the time of repossession. We mitigate the negative financial impact of repossession costs through lessee security deposits, letters of credit and overhaul rental payments.

Aircraft Services

We provide fleet management services, including leasing, re-leasing and sales services, to third party operating lessors who are unable or ~~unwilling~~ choose not to perform this service as part of their own operations. The fleet management services we provide are generally the same services that we perform for our own fleet. As of December 31, ~~2012~~2013, we provided fleet management services for 8168 aircraft, 62 50 of which are owned by affiliate VIEs that are consolidated by AIG. The remaining 1918 aircraft we manage are owned by ~~two~~one ~~VIEs~~VIE which we do not consolidate because we are not the PB. We may occasionally participate with banks, other financial institutions, leasing companies, and airlines to assist in financing aircraft purchased by others and by ~~providing~~have ~~asset~~previously ~~value~~contracted orto ~~loan~~provide ~~guarantees~~aircraft ~~collateralized~~asset byvalue ~~aircraft~~guarantees onfor a fee~~-basis.~~, Wesome ~~plan~~of towhich ~~continue~~are tostill outstanding. We may provide aircraft services to third parties on a selective basis when these activities will complement, rather than conflict or compete with, our leasing activities.

Engine, Parts and Supply Chain Solutions

Through our wholly-owned subsidiary, AeroTurbine, we provide engine leasing,; certified aircraft engines, airframes, and engine parts ~~and~~; and supply chain solutions, and we possess the capabilities to disassemble aircraft and engines into parts. ~~This~~These ~~allows~~capabilities allow us to maximize the value of our aircraft and engines across their complete life cycle and offer an integrated value proposition to our airline customers as they transition out aging aircraft. AeroTurbine seeks to purchase engines for which there is high market demand, or for which it believes demand will increase in the future, and opportunistically sells and exchanges those engines. AeroTurbine has market insight and recurring customer relationships, which are strengths that can be leveraged for growth in the engine and parts business.

AeroTurbine also sells airframe parts primarily to airlines,; maintenance, repair and overhaul service providers; and aircraft parts distributors. Airframe parts comprise a broad range of aircraft sub-component groups, including avionics, hydraulic and pneumatic systems, auxiliary power units, landing gear, interiors, flight control surfaces, windows and panels. The ~~aircraft~~ aircraft disassembly operations are focused on the strategic acquisition of used aircraft with engines that AeroTurbine believes will have high demand in the secondary market. AeroTurbine also ~~provides~~ provides maintenance, repair and overhaul services for select customers in North America.

AeroTurbine further maximizes the value of our aircraft by providing us with part-out and engine leasing capabilities. Over time, the combined value of an aircraft's engines and other parts will often exceed the value of the aircraft as a whole operating asset, at which time the aircraft may be retired from service. Traditional aircraft lessors and airlines often retire their aircraft by selling or consigning them to companies that specialize in aircraft and engine disassembly. AeroTurbine allows us to integrate this revenue source into our business model and allows us to avoid paying a third party for this service. Disassembling an aircraft and selling its parts directly allows us to increase the value of our aircraft and engine assets by putting each sub-component (engines, airframes and related parts) to its most profitable use (sale, lease and/or disassembly for parts sales). In addition, this capability provides us with an advantage over our non-integrated competitors by providing us with a critical source of replacement engines and parts to support the maintenance of our aircraft and engine portfolios.

Table of Contents

AeroTurbine further maximizes the value of our aircraft by providing us with part-out and engine leasing capabilities. Over time, the combined value of an aircraft's engines and other parts will often exceed the value of the aircraft as a whole operating asset, at which time the aircraft may be retired from service. Traditional aircraft lessors and airlines often retire their aircraft by selling or consigning them to companies that specialize in aircraft and engine disassembly. AeroTurbine allows us to integrate this valuable revenue source into our business model and allows us to avoid paying a third party for this service. Disassembling an aircraft and selling its parts directly allows us to increase the value of our aircraft and engine assets by putting each sub-component (engines, airframes and related parts) to its most profitable use (sale, lease, and/or disassembly for parts sales). In addition, this capability provides us with an advantage over our non-integrated competitors by providing us with a critical source of replacement engines and parts to support the maintenance of our aircraft and engine portfolios.

Additionally, we can provide a differentiated fleet management product and service offering to our airline customers by providing them with an integrated value proposition as they transition out aging aircraft. The integrated value proposition we are able to offer is being increasingly sought by our customers around the world and should enhance our competitiveness on both the placement of new and existing aircraft as well as the trading of aircraft in the secondary markets.

Financing

We generally finance our operations, including aircraft purchases, through available cash balances, internally generated funds, ~~including~~proceeds from aircraft ~~sales~~dispositions, and debt financings. We borrow funds to purchase new and used aircraft, make progress payments during aircraft construction and pay off maturing debt obligations. These funds are borrowed on both a secured and unsecured basis from various sources. We have relatively low exposure to interest rate risk on our existing debt portfolio because approximately 78.6% of our outstanding debt as of December 31, 2013, was fixed rate debt or floating rate debt swapped into fixed rate debt. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity."

Competition

The leasing, remarketing and sale of aircraft is highly competitive. We face competition from other leasing companies, aircraft manufacturers, banks, financial institutions, aircraft brokers and airlines. Our primary competitor is GE Capital Aviation Services. Competition for leasing transactions is based on a number of factors including delivery dates, lease rates, terms of the lease, aircraft condition and the availability of aircraft types desired by customers. We believe we are a strong competitor in all of these areas and that our scale and ability to place large orders of new aircraft provides us with a competitive advantage, particularly as compared with smaller, less established aircraft lessors. Additionally, AeroTurbine helps distinguish us from our competitors by providing us with the ability to offer fleet management capabilities to our customers across the entire life cycle of an aircraft.

Employees

We operate in a capital intensive rather than a labor intensive business. As of December 31, ~~2012~~2013, we had ~~564~~ 632 full-time employees, including the ~~287~~324 employees of AeroTurbine, which we consider adequate for our business operations. Management and administrative personnel will expand or contract, as necessary, to meet our future needs. None of our employees is covered by a collective bargaining agreement and we believe that we maintain excellent employee relations. We provide certain employee benefits including retirement, health, life, disability and accident insurance plans, some of which are established and maintained by our parent, AIG.

Table of Contents

Service Marks

AIG holds service marks for the names "International Lease Finance Corporation" and "ILFC," among others, in various countries. If AIG completes the currently anticipated sale of ILFC to ~~an investor group~~AerCap, AIG has agreed to assign these service marks to ILFC. Unless renewed, the service marks will expire between ~~December~~March ~~2013~~2015 and ~~April~~ December 2023. We consider these service marks, and the substantial associated name recognition, to be valuable to our business.

Our Relationship with AIG

We are an indirect wholly-owned subsidiary of AIG. AIG is a leading global insurance company that provides a wide range of property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services to customers in more than 130 countries and jurisdictions. The common stock of AIG is listed on the New York Stock Exchange and the Tokyo Stock Exchange.

AIG has repaid all of the governmental support it received in September 2008 during the global financial crisis. The support included a credit facility from the FRBNY and funding from the Department of the Treasury through TARP. Through a series of transactions that closed on January 14, 2011, AIG exchanged various forms of government support for AIG common stock and the Department of the Treasury became AIG's majority shareholder, owning approximately 92% of outstanding AIG common stock at that time.

~~The Department~~Table of the Treasury, as selling shareholder, sold all of its shares of AIG common stock through six registered public offerings completed in May 2011 and March, May, August, September and December 2012. AIG purchased approximately 421 million shares of its own common stock in the first four offerings in 2012. Contents

On December 916, ~~2012~~2013, AIG and anAIG ~~investor~~Capital ~~group~~Corporation ~~led~~("Seller"), bya ~~Mr. Weng~~wholly-owned ~~Xianding~~direct subsidiary of AIG, entered into a definitive agreement (the ~~Chairman~~"AerCap Share Purchase Agreement") with AerCap and AerCap Ireland Limited ("Purchaser"), a wholly-owned subsidiary of ~~New~~AerCap, ~~China~~for ~~Trust~~the sale of 100 Copercent of our common stock by Seller to Purchaser (such transaction, the "AerCap Transaction") for consideration consisting of $3.0 ~~Ltd.~~billion of cash, ~~announced~~a ~~that~~portion ~~they~~of ~~have~~which ~~entered~~will ~~into~~be funded by a ~~share~~ ~~purchase~~special ~~agreement~~distribution ~~under~~of ~~which~~$600.0 million to be paid by us to AIG ~~will~~upon consummation ~~sell~~of 80the transaction, and approximately 97.1%6 million ofnewly-issued ~~our~~AerCap ~~equity~~common toshares. ~~the~~The ~~investor~~consideration ~~group~~has ~~for~~a value of approximately $45.24 billion inbased ~~cash~~on AerCap's pre-announcement closing price per share of $24.93 on December 13, ~~with~~2013. anUpon ~~option~~closing ~~for~~of the ~~investor~~AerCap ~~group~~Transaction, AIG will own approximately 46 percent of the common stock of AerCap. Under the terms of the AerCap Share Purchase Agreement, consummation of the AerCap Transaction is subject to ~~buy~~the ansatisfaction ~~additional~~or waiver of a number of conditions precedent, such as certain customary ~~9.9%~~conditions ~~stake~~and other closing conditions, including the receipt of approvals or non-disapprovals from antitrust and other regulatory bodies. The ~~sale~~AerCap Transaction was approved by AerCap shareholders on February 13, 2014 and is expected to close in ~~2013~~2014.

Government Regulation

Regulation of Air Transportation

The ~~U.S. Department of State, or "~~DOS", and the ~~U.S. Department of Transportation, or "~~DOT", including the FAA, an agency of the DOT, exercise regulatory authority over air transportation in the U.S. The DOS and DOT, in general, have jurisdiction over the economic regulation of air transportation, including the negotiation with foreign governments of the rights of U.S. carriers to fly to and from other countries and the rights of foreign carriers to fly to and from the U.S.

Because we are the lessor and not the operator of ~~our~~the aircraft, we are not ~~directly~~the ~~subject~~focus toof the ~~regulatory~~regulations ~~jurisdiction~~ of the DOS and DOT or their counterpart organizations in foreign countries related to the operation of aircraft for public transportation of passengers and property. However, particularly in an event in which the lessee-operator fails to cooperate, these agencies could assert their jurisdiction over to us to compel compliance with their regulatory regimes related to operation of aircraft.

~~However~~Moreover, under FAA regulations and federal law, for so long as we own U.S. registered aircraft, we must either (i) be controlled ~~by U.S.~~ ~~citizens, or (ii) hold such aircraft in voting trusts with a voting trustee that is a U.S. citizen and that meet certain other requirements. Currently, we are controlled~~ by U.S. citizens, meaning at least 75% of our voting stock is held by U.S. citizens and our president and at least two- thirds of our board of directors and managing officers are U.S. citizens., Inas well ~~connection~~as meet other statutory requirements, or (ii) hold such aircraft in voting trusts with a voting trustee that is a U.S. citizen and that meet certain other requirements. Currently we meet both tests, but after AIG's currently anticipated sale of our common stock to ~~an investor group~~AerCap, we ~~are~~will ~~required~~rely toon ~~transfer~~holding our U.S. registered aircraft ~~into~~in voting trusts that meet the applicable requirements. ~~prior to the~~

Our relationship with the FAA consists of the registration with the FAA of those aircraft which we have leased to U.S. carriers and to a number of foreign carriers where, by agreement, the aircraft are registered in the U.S. When an aircraft is not on lease, we may obtain from the FAA, or its designated representatives, a U.S. Certificate of Airworthiness or a ferry flight permit authorizing us to operate the aircraft solely to obtain maintenance or otherwise position the aircraft for temporary storage. Aircraft registrations have to be renewed every three years. The failure to renew the certificate of registration as required will result in the affected registration becoming invalid and the affected aircraft being grounded and could result in a breach of certain agreements, which require us to maintain valid and effective U.S. registration.

Our involvement with the civil aviation authorities of foreign jurisdictions consists largely of requests to register and deregister our aircraft on those countries' registries.

AeroTurbine's business and maintenance activities are regulated by the FAA and certain foreign aeronautical authorities. We are not aware of any action taken, or expected to be taken, by these

Table of Contents

~~completion~~authorities ofthat ~~the~~would ~~sale.~~suspend, ~~See Item 1A~~revoke, ~~"Risk~~or ~~Factors—Risks~~otherwise ~~Relating~~materially toadversely aaffect ~~Change~~AeroTurbine's inFAA ~~our Majority Shareholder and Our Separation from AIG~~licenses."

Our relationship with the FAA consists of the registration with the FAA of those aircraft which we have leased to U.S. carriers and to a number of foreign carriers where, by agreement, the aircraft are registered in the U.S. When an aircraft is not on lease, we may obtain from the FAA, or its designated representatives, a U.S. Certificate of Airworthiness or a ferry flight permit authorizing us to operate the aircraft solely to obtain maintenance or otherwise position the aircraft for temporary storage. As a result of recent amendments to FAA regulations, aircraft registrations have to be renewed every three years. The failure to renew the certificate of registration as required will result in the affected registration becoming invalid and the affected aircraft being grounded and could result in a breach of certain agreements, which require us to maintain valid and effective U.S. registration.

Our involvement with the civil aviation authorities of foreign jurisdictions consists largely of requests to register and deregister our aircraft on those countries' registries.

AeroTurbine's business and maintenance activities are regulated by the FAA and certain foreign aeronautical authorities. We are not aware of any action taken, or expected to be taken, by the FAA that would suspend, revoke or otherwise materially adversely affect AeroTurbine's FAA licenses.

Export, Import and Sale of Aircraft and Parts

The U.S. Department of Commerce, ("or DOC"), exercises regulatory authority over exports of dual use products and technical data and the ~~DOS~~ DOS exercises regulatory authority over the export of defense products, technical data and defense systems. We are subject to the regulatory authority of the DOS and DOC as it relates to the export of aircraft for lease and sale to foreign entities and the export of parts to be installed on our aircraft. These departments have, in some cases, required us to obtain export licenses for parts installed in aircraft exported to foreign countries.

The U.S. Bureau of Industry and Security within the DOC and the Directorate of Defense Trade Controls, ("or DDTC"), enforce regulations related to the export of our aircraft to other jurisdictions and the exportation of parts for installation on our aircraft. We monitor our exports for compliance with these regulations.

Through their regulations, the DOC and the Department of the Treasury (through its OFAC) impose restrictions on the operation of U.S. made goods, such as aircraft and engines, in sanctioned countries. In addition, they impose restrictions on the ability of U.S. companies to conduct business with entities in those countries. We monitor our activities for compliance with these DOC and OFAC restrictions.

A bureau of the U.S. Department of Homeland Security, U.S. Customs and Border Protection, enforces regulations related to the import of our aircraft into the U.S. for maintenance or lease and the import of parts for installation on our aircraft. We monitor our imports for compliance with ~~U.S.~~these ~~Customs~~ regulations.

Patriot Act

The Patriot Act of 2001 reinforced the authority of the U.S. Secretary of State and the U.S. Secretary of the Treasury to (i) designate individuals and organizations as terrorists and terrorist supporters and to freeze their U.S. assets and (ii) prohibit financial transactions with U.S. persons, including U.S. individuals, entities and charitable organizations. We comply with the provisions of this Act and we closely monitor our activities with foreign entities.

Dodd-Frank

Dodd-Frank has effected comprehensive changes to the regulation of financial services in the United States and subjects AIG to substantial additional federal regulation. The FRB supervises and regulates SLHCs such as AIG, and the OCC, supervises and regulates federal savings associations, including AIG Federal Savings Bank. Dodd-Frank directs existing and newly-created government agencies and oversight bodies to promulgate regulations implementing the law, an ongoing process that has begun and is anticipated to continue over the next few years.

AIG is regulated by the FRB and subject to its examination, supervision and enforcement authority and reporting requirements as a SLHC and as a non-bank SIFI.

Changes mandated by Dodd-Frank include directing the FRB to promulgate minimum capital requirements for SLHCs. The FRB, OCC and FDIC have established revised minimum leverage and risk-based capital requirements, which are based on accords established by the Basel Committee on Banking Supervision, that apply to bank holding companies, SLHCs and insured depository institutions. The requirements, however, do not apply to SLHCs that are substantially engaged in insurance underwriting activities. The FRB expects to implement a capital framework for SLHCs that are

Table of Contents

substantially engaged ~~Dodd-Frank~~ in insurance underwriting activities by the time covered SLHCs must comply with the requirements in 2015.

OnAs required ~~July 21,~~by ~~2010,~~ Dodd-Frank, ~~was~~the ~~signed~~FRB ~~into~~has ~~law.~~also ~~Dodd-Frank~~proposed ~~made~~enhanced ~~comprehensive~~prudential ~~changes~~standards to(including ~~the regulation~~minimum ofleverage ~~financial~~and ~~services~~risk-based incapital ~~the~~requirements) ~~United~~for ~~States~~non-bank SIFIs and ~~subjects~~has ~~AIG~~stated its intention to ~~substantial~~propose ~~additional~~enhanced ~~federal~~prudential ~~regulation.~~standards ~~Dodd-Frank~~for isSLHCs ~~intended~~pursuant to ~~enhance~~the Home Owners' Loan Act. We cannot predict whether the ~~safety~~capital ~~and~~regulations ~~soundness~~will ofbe ~~U.S.~~adopted as proposed or what enhanced ~~financial~~prudential ~~institutions~~standards ~~and~~the ~~increase~~FRB ~~public~~will ~~confidence~~promulgate infor ~~them~~SLHCs, either generally or as applicable to insurance businesses. ~~The~~Further, we cannot predict how the FRB ~~supervises~~will exercise general supervisory authority over AIG and ~~regulates~~its ~~SLHCs~~subsidiaries, ~~such~~including us, as ~~AIG~~a SIFI, ~~and~~although the ~~OCC~~FRB ~~supervises~~could ~~and~~for ~~regulates~~example, ~~federal~~limit ~~savings~~AIG's ~~associations~~or its subsidiaries' ability to pay dividends, ~~including~~repurchase ~~AIG~~shares of common stock or acquire or ~~Federal~~enter ~~Savings~~into ~~Bank~~other businesses. ~~Dodd-Frank~~We ~~directs~~cannot ~~existing~~predict ~~and~~with ~~newly~~certainty ~~created~~the ~~government~~requirements ~~agencies~~of ~~and~~the ~~oversight~~regulations ~~bodies~~ultimately toadopted ~~promulgate~~or how Dodd-Frank and such regulations ~~implementing~~will affect the ~~law,~~financial anmarkets ~~ongoing~~generally or ~~process~~impact ~~that~~our ~~has begun~~business, ~~and~~results isof ~~anticipated~~operations, tocash ~~continue~~flows, ~~over~~financial ~~the~~condition ~~next~~or ~~few~~credit ~~years~~ratings.

On July 8, 2013, AIG received notice from the Department of the Treasury that the Financial Stability Oversight Council, or FSOC, has made a final determination that AIG should be issupervised ~~currently~~by the FRB as a SIFI pursuant to Dodd-Frank. As a SIFI, AIG is regulated by the FRB both in that capacity and, for as long as AIG continues to control an insured depository institution, in its capacity as an SLHC. ~~and~~The isregulations ~~subject~~applicable to ~~the~~SIFIs ~~examination~~and to SLHCs, ~~enforcement~~when ~~and~~all ~~supervisory~~have ~~authority~~been ofadopted ~~the~~as ~~FRB.~~final ~~The~~rules, ~~FRB~~may ~~has~~differ ~~the~~materially ~~authority~~from each other. AIG is working to ~~impose~~restructure ~~capital~~AIG Federal ~~requirements~~Savings ~~and~~Bank ~~operational~~into ~~restrictions~~a ontrust-only ~~AIG~~thrift and ~~its~~deregister ~~subsidiaries,~~AIG ~~including~~as usa SLHC.

Changes mandated by Dodd-Frank include directing the FRB to promulgate minimum capital requirements for SLHCs. In addition, the FRB, as the primary supervisor for SLHCs, has the authority to impose enhanced standards on SLHCs. The FRB, OCC and FDIC have proposed revised minimum leverage and risk based capital requirements that would apply to all bank holding companies, SLHCs and insured depository institutions. As ~~required by Dodd-Frank, the FRB has also proposed enhanced prudential standards for large bank holding companies and nonbank SIFIs and has~~ ~~stated~~a its intention to propose enhanced prudential standards for SLHCs pursuant to the Home Owners' Loan Act. We cannot predict whether the capital regulations will be adopted as proposed or what enhanced prudential standards the FRB will promulgate for SLHCsSIFI, ~~either generally or as applicable to insurance businesses. Further, we cannot predict how the FRB will exercise general supervisory authority over~~ AIG ~~and~~anticipates ~~its~~it subsidiaries, although the FRB could for example, limit AIG's or its subsidiaries' ability to pay dividends, repurchase shares of common stock or acquire or enter into other businesses. We cannot predict the requirements of the regulations ultimately adopted or how Dodd-Frank and such regulations will ~~affect~~be ~~the~~subject ~~financial markets generally, impact AIG's businesses, results of operations, cash flows or financial condition, or require AIG~~ to ~~raise additional capital or result in a downgrade of AIG's credit ratings.~~ :

•: stress tests to determine whether, on a consolidated basis, AIG has the capital necessary to absorb losses due to adverse economic conditions;
•: stricter prudential standards, including stricter requirements and limitations relating to risk-based capital, leverage, liquidity and credit exposure, as well as overall risk management requirements, management interlock prohibitions and a requirement to maintain a plan for rapid and orderly resolution in the event of severe financial distress; and
•: an early remediation regime process to be administered by the FRB.

~~In addition~~Furthermore, if ~~Dodd-Frank~~the ~~requires~~FSOC ~~SIFIs~~were to bemake ~~subject~~an toadditional ~~regulation,~~separate ~~examination~~determination ~~and~~that ~~supervision~~AIG byposes ~~the~~a ~~FRB~~"grave ~~(including minimum leverage and risk-based capital requirements). Nonbank SIFIs will be designated by the Financial Stability Oversight Council (~~threat"~~FSOC")~~ ~~created~~to ~~by Dodd-Frank~~U.S. Iffinancial ~~AIG is designated as a SIFI~~stability, AIG ~~will~~would be ~~regulated~~required ~~by the FRB both in that capacity and in its capacity as an SLHC. The regulations applicable~~ to ~~SIFIs~~maintain ~~and~~a debt-to ~~SLHCs, when all have been adopted as final rules, may differ materially from each other. In October~~-equity ~~2012,~~ratio ~~AIG received a notice that it is under consideration by the FSOC for a proposed determination that it is a SIFI. The notice stated that AIG will be reviewed in Stage 3~~ of ~~the~~no ~~SIFI determination~~more ~~process~~than ~~described~~15:1 inand the ~~FSOC~~FRB ~~interpretive guidance for nonbank financial company determinations.~~ may:

•: limit AIG's ability to merge with, acquire, consolidate with, or become affiliated with another company;
•: restrict AIG's ability to offer specified financial products;
•: require AIG to terminate specified activities;
•: impose conditions on how AIG conducts its activities; and
•: with approval of the FSOC, and a determination that the foregoing actions are inadequate to mitigate a threat to U.S. financial stability, require AIG to sell or otherwise transfer assets or off-balance-sheet items to unaffiliated entities.

InAs ~~the~~part ~~event~~of ~~AIG~~its ~~completes~~general ~~the~~prudential ~~currently~~supervisory ~~anticipated~~powers, ~~sale~~the ofFRB ~~ILFC~~has the authority to anlimit ~~investor~~AIG's ~~group,~~ability weto ~~will~~conduct noactivities ~~longer~~that would otherwise be ~~considered~~permissible anfor AIG ~~subsidiary~~to ~~and~~engage ~~will~~in noif AIG ~~longer~~does benot ~~subject~~satisfy tocertain ~~FRB oversight~~requirements.

Insurance

Our lessees are required to carry those types of insurance that are customary in the air transportation industry, including comprehensive liability insurance, aircraft hull insurance and hull war risks and allied perils insurance. In general, we are an additional insured party on liability policies carried by the lessees. We obtain certificates of insurance from the lessees' insurance brokers. All certificates of insurance contain a breach of warranty endorsement so that our interests are not prejudiced by any act or omission of the operator-lessee. Lease agreements generally require hull and liability limits to be listed in U.S. dollars on the certificate of insurance.

Table of Contents

In the event AIG completes the currently anticipated sale of ILFC to AerCap, although we will no longer be considered an AIG subsidiary, we may remain subject to FRB oversight as long as AIG maintains a significant ownership interest in AerCap.

Insurance

Our lessees are required to carry those types of insurance that are customary in the air transportation industry, including comprehensive liability insurance, aircraft hull insurance, and hull war risks and allied perils insurance. In general, we are an additional insured party on liability policies carried by the lessees. We obtain certificates of insurance from the lessees' insurance brokers. All certificates of insurance contain a breach of warranty endorsement so that our interests are not prejudiced by any act or omission of the operator-lessee. Lease agreements generally require hull and liability limits to be listed in U.S. dollars on the certificate of insurance.

Insurance premiums are paid by the lessee, with coverage acknowledged by the broker or carrier. Generally, the territorial coverage is suitable for the lessee's area of operations. The certificates of insurance contain, among other provisions, a provision prohibiting cancellation or material change without at least 30 days advance written notice to the insurance broker (who is obligated to give us prompt notice), except in the case of hull war insurance policies, which customarily only provide seven days advance written notice for cancellation and may be subject to shorter notice under certain market conditions. Furthermore, the insurance is primary and not contributory, and all insurance carriers are required to waive rights of subrogation against us.

The stipulated loss value schedule under aircraft hull insurance and hull war risk and allied perils policies is on an agreed value basis acceptable to us, and usually exceeds the book value of the aircraft. In cases where we believe that the agreed value stated in the lease is not sufficient, we purchase additional Total Loss Only coverage for the deficiency.

Aircraft hull policies contain standard clauses covering aircraft engines. The lessee is required to pay all deductibles. Furthermore, the hull war policies contain full war risk endorsements, including, but not limited to, confiscation (where available), seizure, hijacking and similar forms of retention or terrorist acts. The policies include customary exclusions such as physical damage to aircraft hulls caused by any nuclear detonation, dirty bombs, bio-hazardous materials and electromagnetic pulsing.

The comprehensive liability insurance listed on certificates of insurance includes provisions for bodily injury, property damage, passenger liability, cargo liability and such other provisions reasonably necessary in commercial passenger and cargo airline operations. Such certificates of insurance list combined comprehensive single liability limits of not less than $500 million. As a result of the terrorist attacks on September 11, 2001, the insurance market unilaterally imposed a sublimit on each operator's policy for third party war risk liability in the amount of $50 million. We require each lessee to purchase higher limits of third party war risk liability or obtain an indemnity from their government.

Separately, we purchase contingent liability insurance and contingent hull insurance on all aircraft in our fleet and maintain other insurance covering the specific needs of our business operations. Insurance policies are purchased through a broker who may place or reinsure those policies through AIG subsidiaries. AIG charges us directly for any insurance costs related to policies placed directly with AIG. We believe our insurance is adequate both as to coverage and amount.

Code of Ethics and Conduct

Our employees are subject to AIG's Code of Conduct designed to assure that all employees perform their duties with honesty and integrity. In addition, our directors and officers are subject to AIG's Director, Executive Officer, and Senior Financial Officer Code of Business Conduct and Ethics. Both of these Codes appear in the Corporate Governance section of www.~~aigcorporate~~aig.com.

Item 1A. Risk Factors

Our business is subject to numerous significant risks and uncertainties as described below. Many of these risks are interrelated and occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence, or exacerbate the effect, of others. Such a combination could materially increase the severity of the impact on us. The risks and uncertainties to which our business is subject are described below and in the section titled "Item 7A. Quantitative and Qualitative Disclosures about Market Risk."

Table of Contents

Item 1A. Risk Factors

Our business is subject to numerous significant risks and uncertainties as described below. Many of these risks are interrelated and occur under similar business and economic conditions, and the occurrence of certain of them may in turn cause the emergence, or exacerbate the effect, of others. Such a combination could materially increase the severity of the impact on us. The risks and uncertainties to which our business is subject are described below and in the section titled "Item 7A. Quantitative and Qualitative Disclosures about Market Risk."

In addition, on December 16, 2013, AIG entered into an agreement with AerCap, under which AIG will sell 100% of our common stock for consideration consisting of $3.0 billion in cash, a portion of which will be funded by a special distribution of $600 million to be paid by us to AIG upon consummation of the transaction, and approximately 97.6 million newly-issued AerCap common shares. We may face increased and additional risks during the pendency of our sale and, if the sale is consummated, after the sale is completed. See "—Risks Relating to the Sale of Us and Our Separation from AIG."

Risks Relating to Our Business

Our substantial level of indebtedness could adversely affect our ability to fund future needs of our business and to react to changes affecting our business and industry.

The aircraft leasing business is capital intensive and we have a substantial amount of indebtedness which requires significant interest and principal payments. As of December 31, ~~2012~~ 2013, we had approximately $2421.35 billion in principal amount of indebtedness outstanding. As of December 31, ~~2012~~2013, principal and interest payments on our outstanding indebtedness due in ~~2013~~ 2014 and ~~2014~~2015 totaled approximately $54.53 billion and $4.30 billion, respectively (assuming the December 31, ~~2012~~2013 interest rates on our outstanding floating rate indebtedness remain unchanged). Because some of our debt bears variable rates of interest, our interest expense could fluctuate in the future.

Our substantial level of indebtedness could have important consequences to our business, including the following:

•: requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for other purposes, including acquiring new aircraft and exploring business opportunities;
•: increasing our vulnerability to adverse economic and industry conditions;
•: limiting our flexibility in planning for, or reacting to, changes in our business and industry; and
•: limiting our ability to borrow additional funds or refinance our existing indebtedness, which could cause us to forego business opportunities we otherwise would pursue.

In addition, despite our current indebtedness levels, we expect to incur additional debt in the future to finance our operations, including purchasing aircraft and meeting our contractual obligations. If we increase our total indebtedness, our debt service obligations will increase. We will become more exposed to these risks as we become more leveraged. We may also become guarantors of a large amount of indebtedness at the closing of the sale of our common stock to AerCap. In connection with the financing of such transaction, AerCap has entered into a $2.75 billion bridge credit agreement. At the closing of the transaction, we and certain of our subsidiaries will become guarantors of the facility. Additionally, AIG has entered into a credit agreement for a senior unsecured revolving credit facility between AerCap Ireland as borrower and AIG as lender. The revolving credit facility provides for an aggregate commitment of $1 billion and permits loans for general corporate purposes after the closing of the transaction. We will become a guarantor of the facility after the closing of the transaction.

We will need additional capital to finance our operations, including purchasing aircraft, servicing our existing indebtedness, including refinancing our indebtedness as it matures, and meeting our other contractual leasing commitments. We may not be able to obtain additional capital on favorable terms, or at all.

We will require additional capital to purchase new and used flight equipment, make progress payments during aircraft construction and repay our maturing debt obligations. As of December 31, 2012, we had approximately $4.1 billion and $3.0 billion of indebtedness maturing in 2013 and 2014, respectively. In addition, we had commitments to purchase 229 new aircraft and five used aircraft for delivery through 2019 with aggregate estimated total remaining payments of approximately $17.5 billion. We also have purchase rights for an additional 50 Airbus A320neo family aircraft, provided we exercise those rights.

If we are unable to purchase aircraft as the commitments come due, we will be subject to several risks, including:

Table of Contents

~~Our ability~~ toWe ~~satisfy~~will ~~our~~need ~~obligations~~additional ~~with~~capital ~~respect~~ to finance our ~~future aircraft purchases and indebtedness will depend on~~operations, ~~among~~including ~~other~~purchasing ~~things~~aircraft, ~~our~~servicing ~~future financial and operating performance and~~ our ~~ability~~existing toindebtedness, ~~raise~~including ~~additional~~refinancing ~~capital through~~ our ~~funding~~indebtedness ~~sources~~as ~~or through aircraft sales. Prevailing economic and market conditions~~it matures, and ~~financial,~~meeting ~~business~~our ~~and~~ other ~~factors,~~contractual ~~many~~leasing ofcommitments. ~~which are~~We ~~beyond~~may ~~our~~not ~~control,~~be ~~will~~able ~~affect our future operating performance and our ability~~ to ~~access~~obtain ~~the~~additional capital ~~markets~~on orfavorable ~~seek potential aircraft sales. For example~~terms, ~~changes~~or toat ~~the Aircraft Sector Understanding in February 2011 will make financing for aircraft from the export-credit agencies more expensive~~all. ~~In addition, our ability to access debt markets and other financing sources depends, in part, on our credit ratings by the three major nationally recognized statistical rating organizations.~~

~~In addition~~We towill ~~the~~require ~~impact of economic and market conditions on our ability to raise~~ additional capital, ~~we are subject~~ to ~~restrictions~~purchase ~~under~~new ~~our existing debt agreements. Our bank credit facilities~~ and ~~indentures~~used ~~limit~~flight ~~our~~equipment, ~~ability~~make toprogress ~~incur~~payments ~~secured~~during ~~indebtedness.~~aircraft ~~The most restrictive covenant in the bank credit facilities permits us and our subsidiaries to incur secured indebtedness~~construction, ~~totaling~~repay ~~up to 30% of~~ our ~~consolidated~~maturing ~~net~~debt ~~tangible assets~~obligations, asmeet ~~defined~~our inother ~~the~~contractual ~~credit~~obligations ~~agreement,~~and ~~which~~cover ~~limit~~our ~~currently~~operating ~~totals approximately $10~~costs.~~8 billion.~~ ~~This limitation is subject to certain exceptions, including the ability to incur secured indebtedness to finance the purchase of aircraft.~~ As of ~~February~~December 2531, 2013, we ~~were~~had ~~able~~approximately to$3.0 billion ~~incur an additional~~ and $72.69 billion of ~~secured~~ indebtedness ~~under~~maturing ~~this~~in ~~covenant.~~2014 ~~Our~~and ~~debt~~2015, ~~indentures~~respectively. ~~also~~In ~~restrict~~addition, uswe ~~and~~had ~~our~~commitments ~~subsidiaries~~to ~~from~~purchase ~~incurring~~335 ~~secured~~new ~~indebtedness~~aircraft, inone ~~excess~~used ofaircraft ~~12.5%~~and of13 ~~consolidated~~new ~~net~~spare ~~tangible~~engines ~~assets,~~scheduled ~~as defined in~~for ~~the~~delivery ~~indentures.~~through ~~However~~2022, wewith ~~may~~aggregate ~~obtain~~estimated ~~secured~~total ~~financing~~remaining ~~without~~payments ~~regard~~for to the ~~12.5%~~new ~~consolidated~~aircraft ~~net~~of ~~tangible~~approximately ~~asset limit under our debt indentures by doing so through subsidiaries that qualify as non-restricted under the indentures~~$21.7 billion.

AsOur aability ~~result~~to ofsatisfy ~~these~~our ~~limitations,~~obligations wewith ~~may~~respect beto ~~unable~~our tofuture ~~generate~~aircraft ~~sufficient~~purchases ~~cash~~and ~~flows~~indebtedness ~~from~~will ~~operations~~depend on, oramong ~~obtain~~other ~~additional~~things, ~~capital~~our infuture anfinancial ~~amount~~and ~~sufficient~~operating toperformance and ~~enable~~our usability to ~~pay~~raise ~~our indebtedness,~~additional ~~make~~capital ~~aircraft~~through ~~purchases~~our orfunding ~~fund~~sources ~~our~~or ~~other~~through ~~liquidity~~aircraft ~~needs~~sales. IfPrevailing weeconomic ~~are~~and ~~able~~market toconditions, ~~obtain~~and ~~additional capital~~financial, itbusiness ~~may~~and ~~not~~other befactors, onmany ~~terms~~of ~~favorable~~which are tobeyond ~~us.~~our ~~Further~~control, inwill ~~evaluating~~affect ~~potential~~our ~~aircraft sales,~~future weoperating ~~must~~performance ~~balance~~and ~~the~~our ~~need~~ability ~~for~~to ~~funds~~access ~~with~~ the ~~long-term~~capital ~~value~~markets ofor ~~holding~~seek potential aircraft ~~and~~sales. ~~long-term~~For ~~prospects~~example, ~~for~~changes ~~us.~~to Ifthe weAircraft ~~are~~Sector Understanding ~~unable~~in toFebruary ~~generate~~2011 orhave ~~borrow~~made financing ~~sufficient~~aircraft ~~cash, we~~from ~~may~~the beexport-credit ~~unable~~agencies tomore ~~meet~~expensive. In addition, our ~~debt~~ability ~~obligations~~to ~~and/or~~access ~~aircraft~~debt ~~purchase~~markets ~~commitments~~and asother ~~they~~financing ~~become~~sources ~~due~~depends, ~~which~~in ~~could~~part, ~~limit~~on our ~~ability~~credit toratings ~~obtain~~by ~~new,~~the ~~modern~~three major ~~aircraft~~nationally ~~and~~recognized ~~compete~~statistical inrating ~~the aircraft leasing market~~organizations.

In addition Anto ~~increase~~the inimpact of economic and market conditions on our ~~cost~~ability ofto ~~borrowing~~raise ~~could~~additional ~~have~~capital, awe ~~material~~are subject to restrictions under our existing debt agreements. Our bank credit facilities and ~~adverse~~indentures ~~impact~~limit onour ability to incur secured indebtedness. The most restrictive covenant in the bank credit facilities permits us and our subsidiaries to incur secured indebtedness totaling up to 30% of our consolidated net ~~income~~tangible assets, ~~results~~as defined in the credit agreement, and such limit currently totals approximately $9.7 billion. This limitation is subject to certain exceptions, including the ability to incur secured indebtedness to finance the purchase of ~~operations~~aircraft. As of February 24, 2014, we were able to incur an additional $7.4 billion of secured indebtedness under this covenant. Our debt indentures also restrict us and ~~cash~~our ~~flows~~subsidiaries from incurring secured indebtedness in excess of 12. 5% of consolidated net tangible assets, as defined in the indentures. However, we may obtain secured financing without regard to the 12.5% consolidated net tangible asset limit under our debt indentures by doing so through subsidiaries that qualify as non-restricted under the indentures.

~~Our~~As a ~~cost~~result of ~~borrowing~~these islimitations, ~~impacted~~we bymay ~~fluctuations~~be inunable ~~interest~~to ~~rates.~~generate ~~Our~~sufficient ~~lease~~cash ~~rates~~flows ~~are~~from ~~generally~~operations, ~~fixed~~or ~~over~~obtain ~~the~~additional ~~life~~capital ofin ~~the~~an ~~lease.~~amount sufficient to enable us to pay our ~~Changes~~indebtedness, ~~both~~make ~~increases~~aircraft ~~and~~purchases ~~decreases,~~or infund our ~~cost~~other ofliquidity ~~borrowing~~needs. ~~due~~If towe ~~changes~~are inable ~~interest~~to ~~rates~~obtain additional capital, ~~directly~~it ~~impact~~may ~~our~~not ~~net~~be ~~income.~~on ~~The~~terms ~~interest~~favorable ~~rates~~to ~~that~~us. weFurther, ~~obtain~~in onevaluating ~~our~~potential ~~debt~~aircraft sales, ~~financings~~we ~~are~~must abalance ~~result of~~the ~~several~~need ~~components,~~for ~~including~~funds ~~credit~~with ~~spreads,~~the ~~swap~~long-term ~~spreads,~~value ~~duration~~of holding aircraft and ~~new~~long-term ~~issue~~prospects ~~premiums~~for us. ~~These~~If we are ~~all~~unable into ~~addition~~generate toor ~~the~~borrow ~~underlying~~sufficient ~~Treasury~~cash, ~~rates~~we may be unable to meet our debt obligations and/or ~~LIBOR~~aircraft ~~rates,~~purchase commitments as ~~applicable.~~they Webecome ~~manage interest~~due, ~~rate~~which ~~volatility~~could ~~and~~limit ~~uncertainty~~our byability ~~maintaining~~to aobtain ~~balance~~new, ~~between~~modern ~~fixed~~aircraft and ~~floating~~compete ~~rate~~in ~~debt~~the aircraft leasing market. Moreover, ~~through~~if ~~derivative~~we are ~~instruments~~unable ~~and~~to ~~through~~purchase ~~varying~~aircraft ~~debt~~as ~~maturities.~~the commitments come due, we will be subject to several risks, including:

•: forfeiting deposits and progress payments to manufacturers and having to pay certain significant costs related to these commitments such as actual damages and legal, accounting and financial advisory expenses;
•: defaulting on our lease commitments, which could result in monetary damages and damage to our reputation and relationships with lessees and manufacturers;
•: failing to realize the benefits of purchasing and leasing such aircraft; and

Our weighted average effective cost of borrowing, which excludes the effect of amortization of deferred debt issue costs, increased from 5.90% to 6.10% from the year ended December 31, 2011, to the year ended December 31, 2012, reflecting higher interest rates on some of our new debt relative to the debt we were replacing. Our weighted average effective cost of borrowing reflects our composite interest rate, including any effect of interest rate swaps or other derivatives and including the effect of amortization of debt premiums and discounts. A 1% increase in our weighted average effective cost of borrowing at December 31, 2012, without any change to the amount of our outstanding debt, would have increased our interest expense by approximately $244.0 million annually. A net increase in our interest expense would put downward pressure on our operating margins and could materially and adversely impact our cash generated from operations.

Table of Contents

•: risking harm to our business reputation, which would make it more difficult to purchase aircraft in the future on agreeable terms, if at all.

In addition, ~~The~~on ~~recent~~December 16, ~~global~~2013, ~~sovereign~~AIG ~~debt~~entered ~~crisis,~~into ~~particularly~~an ~~among~~agreement ~~European~~with ~~countries~~AerCap, ~~has~~under ~~impacted~~which ~~the~~AIG ~~financial~~will ~~health~~sell 100% of ~~some~~our common stock for consideration consisting of $3.0 billion ~~our~~in ~~lessees~~cash, ~~and~~a ~~could~~portion ~~continue~~of towhich ~~have~~will be funded by a ~~broader impact~~special ondistribution ~~the~~of ~~airline~~$600 million ~~industry~~to inbe ~~general~~paid by us to AIG upon consummation of the transaction, asand ~~well~~approximately 97.6 million asnewly-issued ~~result~~AerCap incommon ~~higher~~shares. ~~borrowing~~We ~~costs~~may face increased and ~~more~~additional ~~limited~~risks ~~availability~~during the pendency of ~~credit~~our ~~for~~sale usand, if the sale is consummated, after the sale is completed. See "—Risks Relating to the Sale of Us and ~~our~~Our ~~customers~~Separation from AIG. "

~~Countries~~ inAn ~~Europe,~~increase ~~including~~in Greece, Italy, Portugal, Ireland, Spain, France and the United Kingdom, had their debt downgraded by the major rating agencies during 2012 and 2013 and could be subject to further downgrades. Several of these countries agreed to multi-year bailout loans from the European Central Bank, the International Monetary Fund, and other institutions to avoid defaulting on their debt obligations. For each of the years ended December 31, 2012, 2011 and 2010, we generated more than 35% of our total revenues from rental of flight equipment from European lessees. In addition, the United States credit rating was downgraded for the first time in history by one of the three nationally recognized rating agencies in August 2011. If concerns about the credit worthiness of these countries continue to escalate, the cost of borrowing may increase across all markets and the availability of credit may become more limited. Many banks globally, particularly those in Europe, have principal exposure to sovereign debt. The downgrades of sovereign debt have put pressure on the banks' regulatory capital levels resulting in more limited lending. Accordingly, our composite interest rate could ~~increase, which would~~ have an adverse impact on our profitability and cash flow, or we may be unable to incur debt on favorable terms, or at all, in order to fund our future growth and refinance our maturing debt obligations. Further, the recent global sovereign debt crisis could result in lower consumer confidence, which could result in a ~~recession~~material and ~~the~~adverse ~~loss of revenue for our lessees. This could~~ impact ~~their ability to make payments~~ on ~~their leases and could result in airlines ceasing operations, which could impact~~ our ~~business~~net ~~through early returns of aircraft~~income, ~~maintenance~~results ~~expenses, loss~~ of ~~revenue~~operations and ~~potential~~cash ~~aircraft impairment charges, which could have a material adverse effect on our financial results and growth prospects~~flows.

An Weincrease ~~have~~in ~~recently~~our ~~recognized~~cost anof ~~increase~~borrowing, indirectly impacts our net income. Our cost of borrowing is impacted primarily by the ~~number~~market's assessment of ~~airlines~~our credit risk and fluctuations in interest rates and general market conditions. Interest rates that ~~have~~we ~~ceased~~obtain ~~operations~~on orour ~~filed~~debt ~~for~~financings ~~reorganization~~can fluctuate based on, among other things, changes in views of our credit risk, fluctuations in Treasury rates and ifLIBOR ~~this~~rates, ~~trend~~as ~~continues~~applicable, itchanges ~~could~~in ~~have~~credit ~~a significant~~spreads ~~impact~~and onswap ~~our~~spreads, ~~operations~~and the duration of the debt being issued.

AsWe also can experience a ~~result~~lag ofbetween ~~challenging~~changes ~~global~~to ~~economic~~our ~~conditions,~~cost ~~combined~~of ~~with~~borrowing ~~significant~~as ~~volatility~~a inresult ~~oil~~of ~~prices,~~changes ~~some~~in ~~airlines~~market ~~have~~conditions ~~been forced~~and changes to ~~cease~~our ~~operations~~lease orrevenue due to ~~reorganize. Since~~ the ~~beginning~~same ofmarket ~~2012~~conditions, because 11some of our ~~customers,~~contracts ~~including~~will ~~one~~not ~~with~~yet ~~two~~reflect ~~separate~~current ~~operating~~market ~~certificates,~~lease ~~have~~rates. ~~ceased~~Our ~~operations~~leases orare ~~filed~~generally for ~~bankruptcy, or~~multiple ~~its~~years ~~equivalent,~~with ~~and~~fixed ~~returned~~lease 55rates ~~aircraft~~over tothe ~~us.~~life ~~Seven~~ of the ~~customers~~lease ~~that~~and, ~~ceased operations were airlines operating in Europe. In certain cases~~therefore, welags ~~have a large number of aircraft with a single~~can ~~airline,~~often ~~which~~exist ~~increases~~due ~~our~~to ~~exposure in~~ the ~~event~~staggered ~~the~~maturity ~~airline ceases operations or reorganizes. For example, two~~ of our ~~customers~~leases ~~that~~impacting ~~ceased operations in 2012 operated a combined 32 of~~ our ~~owned aircraft.~~ability ~~A severe recession in Europe, the inability~~ to ~~resolve~~quickly ~~the~~reflect ~~sovereign~~changes ~~debt crisis and political uncertainty~~ in ~~the~~market ~~Middle~~conditions ~~East~~across ~~could result in additional failures of airlines and could materially affect~~ our ~~financial results~~fleet. ~~If this trend continues, it could have a material adverse effect on our financial results and growth prospects.~~

We manage ~~Our~~interest ~~business~~rate ~~model~~volatility ~~depends~~and onuncertainty ~~the~~by ~~continual~~maintaining ~~leasing~~a balance between fixed and ~~re-leasing~~floating ofrate ~~the~~debt, ~~aircraft~~through inderivative ~~our~~instruments ~~fleet~~and through varying debt maturities. Nevertheless, ~~and~~if weinterest ~~may~~rates ~~not~~were to rise sharply, it is highly unlikely that we would be able to ~~enter~~increase ~~into~~our ~~leases~~lease rates quickly enough to compensate for the negative impact on ~~favorable~~our ~~terms~~net income, even if atthe ~~all~~market were able to bear such increases in lease rates, which it might not.

~~Our~~Between 2010 ~~business~~and ~~model~~2011, ~~depends~~we onentered ~~the~~into ~~continual~~debt ~~leasing~~financings ~~and~~with ~~re-leasing~~relatively ofhigher interest rates than the ~~aircraft~~debt inoutstanding ~~our~~at ~~fleet~~the intime. ~~order~~Since tothe ~~generate sufficient~~beginning ~~revenues~~of to2012, ~~finance~~we ~~our~~have ~~growth~~been ~~and~~able ~~operations,~~to borrow ~~pay~~at ~~our~~similar ~~debt~~or ~~service~~lower ~~obligations~~interest ~~and~~rates ~~generate~~as ~~positive~~compared ~~cash~~to ~~flows~~the ~~from~~debt ~~operations.~~borrowed ~~Because~~in ~~our~~2010 ~~leases~~and ~~are~~2011. ~~predominantly~~Our ~~operating~~weighted ~~leases,~~average ~~only a~~effective ~~portion~~cost of ~~the~~borrowing, ~~aircraft's~~which ~~value~~excludes isthe ~~covered~~effect byof ~~revenues~~amortization ~~generated~~of ~~from~~deferred debt ~~the~~issue ~~lease~~costs, ~~and~~was we5.94% ~~may~~at ~~not~~December 31, be2013. ~~able~~Our toweighted ~~realize~~average ~~the~~effective ~~aircraft's~~cost ~~residual~~of ~~value~~borrowing ~~after~~reflects ~~expiration~~our ofweighted ~~the~~average ~~initial~~interest ~~lease.~~rate Weplus ~~bear~~ the ~~risk~~ net effect of ~~re-leasing,~~interest ~~selling~~rate swaps or other ~~parting~~derivatives ~~out~~and the ~~aircraft~~effect inof ~~our~~debt ~~fleet~~discounts. ~~when~~A ~~our~~1.0% ~~operating~~increase ~~leases~~in ~~expire~~our orweighted ~~when~~average ~~aircraft~~effective ~~are~~cost ~~returned~~of toborrowing usat ~~prior~~December 31, to2013, ~~expiration~~without of any ~~lease.~~change ~~Our~~to ~~ability~~the toamount of our outstanding ~~lease~~debt, ~~re-lease~~would orhave ~~sell~~increased our ~~aircraft~~interest ~~will~~expense ~~depend~~by onapproximately ~~conditions~~$215.0 million inannually. ~~the~~A ~~airline~~net ~~industry~~increase ~~and~~in ~~general~~our ~~market~~interest ~~and~~expense ~~competitive~~would ~~conditions~~put atdownward ~~the~~pressure ~~time~~on ~~the~~our operating ~~leases~~margins ~~are~~and ~~entered~~could materially ~~into~~ and ~~expire,~~ ~~including~~adversely ~~those~~impact ~~risks~~our ~~discussed~~cash generated from operations.

The agreements governing certain of our indebtedness contain restrictions and limitations that could significantly affect our ability to operate our business and compete effectively.

The agreements governing certain of our indebtedness contain covenants that restrict, among other things, our ability to:

•: incur debt;
•: encumber our assets;

Table of Contents

•: dispose of certain assets;
•: access cash in restricted bank accounts;
•: consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
•: make equity or debt investments in other parties;
•: enter into transactions with affiliates;
•: designate our subsidiaries as non-restricted subsidiaries; and
•: pay dividends and distributions.

~~under~~ The ~~"In~~agreements ~~addition~~governing tocertain ~~increased~~of ~~fuel~~our ~~costs~~indebtedness ~~and~~also ~~the~~contain ~~global~~financial ~~sovereign debt crisis~~covenants, ~~other~~such ~~risks~~as ~~adversely~~requirements ~~impacting~~that ~~the~~we ~~airline~~comply ~~industry~~with incertain ~~general could adversely impact our business because they increase the likelihood of lessee non~~loan-~~performance and an inability~~ to ~~lease our aircraft." In addition to factors linked to the aviation industry in general~~-value, ~~other~~interest ~~factors~~coverage ~~that may affect the market value~~ and ~~lease rates of our aircraft include (i) maintenance and operating history of the~~leverage ~~airframe and engines; (ii) the number of operators using the particular type of aircraft; and (iii) aircraft age~~ratios.

Our failure ~~Aircraft~~to incomply ~~our~~with ~~fleet~~any ~~that~~of ~~become~~these ~~obsolete~~covenants ~~will~~would belikely ~~more~~constitute ~~difficult~~a default under such facilities and could give rise to ~~re-lease~~an acceleration of some or ~~sell~~all of our then outstanding indebtedness, which ~~could~~would ~~result~~have ina ~~declining~~material ~~lease~~adverse ~~rates,~~effect ~~impairment~~on ~~charges~~our orbusiness ~~losses related~~and our ability to ~~aircraft~~continue ~~asset~~as ~~value~~a ~~guarantees~~going concern.

~~Aircraft~~ are long-lived assets requiring long lead times to develop and manufacture. Aircraft of a particular model and type tend to become obsolete and less in demand over time, as more advanced and efficient aircraft are manufactured. The ~~life~~success ~~cycle~~ of ~~aircraft~~our ~~can~~business bedepends ~~shortened~~on byacquiring ~~world~~strategically ~~events,~~attractive ~~government regulation or customer preferences. For example, increases in fuel prices have resulted in an increased demand for newer fuel-efficient~~ aircraft, ~~such~~and asthen ~~the~~profitably ~~Airbus~~leasing ~~A320neo family~~ and ~~the~~disposing ~~Boeing 737 MAX narrowbody aircraft, which may potentially shorten the useful life~~ of ~~older~~them ~~aircraft,~~to ~~including~~generate ~~older~~sufficient ~~A320~~returns ~~family~~on ~~and 737 family aircraft presently in operation. Approximately 28% of~~ our ~~fleet is~~ ~~at least 12 years old~~investment. AsAn ~~aircraft~~inability into ~~our~~do ~~fleet~~so ~~approach obsolescence, demand for those particular models and types will decrease which~~ could ~~result~~materially ~~in declining lease rates~~ and ~~could~~adversely ~~have~~impact ~~a material adverse effect on~~ our financial ~~condition~~results and ~~results~~growth ~~of operations~~prospects. In addition, if we dispose of an aircraft for a price that is less than the depreciated book value of the aircraft on our balance sheet, we will recognize impairments or fair value adjustments. Deterioration of aircraft values may also result in impairment charges or losses related to aircraft asset value guarantees.

~~We recorded~~Our ~~impairment~~results ~~charges~~depend ~~and fair value adjustments~~ on ~~aircraft~~our ofability ~~approximately~~to ~~$192.4 million~~consistently ~~for~~acquire ~~the~~strategically ~~year~~attractive ~~ended December 31~~aircraft, ~~2012~~continually and ~~$1.7 billion~~profitably ~~for~~lease ~~each~~and ofre-lease ~~the years ended December 31~~them, ~~2011~~ and ~~2010.~~finally ~~The~~sell ~~impairment~~or ~~charges~~otherwise indispose ~~2011~~of ~~resulted~~them, ~~from~~in ~~unfavorable~~order ~~airline~~to ~~industry~~generate ~~trends~~returns ~~affecting~~on the ~~residual~~investments ~~values~~we ofhave ~~certain~~made, ~~aircraft~~provide ~~types~~cash ~~and management's~~to ~~expectations~~finance ~~that~~our ~~certain~~growth ~~aircraft~~and ~~will~~operations, ~~more~~and ~~likely~~service ~~than~~our ~~not be parted-out or otherwise disposed of in less than 25 years~~existing debt. ~~The~~Upon ~~reduction~~acquiring innew ~~the~~aircraft ~~expected~~we ~~holding~~may ~~period was~~not ~~made~~be inable ~~connection~~to ~~with~~enter ~~the~~into ~~addition~~leases ofthat ~~part-out~~generate ~~capabilities~~sufficient ascash aflow ~~result~~to ofjustify the ~~acquisition~~cost of ~~AeroTurbine~~purchase. ~~The~~When ~~impairment~~our ~~charges~~leases inexpire ~~2010~~or ~~were~~our ~~primarily~~aircraft ~~due~~are returned prior to the ~~announcement~~date ~~of new~~contemplated ~~technology~~ in the ~~marketplace~~lease, ~~and~~we bear the ~~sale~~risk of ~~aircraft~~re-leasing, inselling ~~that~~or ~~year.~~parting-out ~~GAAP~~the ~~requires~~aircraft. ~~that~~Because weour ~~use~~leases ~~undiscounted~~are ~~future~~predominantly ~~cash~~operating ~~flows~~leases, inonly ~~determining~~a ~~whether~~portion ~~impairment~~of ~~charges~~the ~~are appropriate;~~aircraft's ~~accordingly,~~value ~~the~~is ~~fair~~recovered ~~value~~by ofthe ~~our~~revenues ~~assets~~generated ~~(using~~from athe ~~discounted~~lease ~~cash~~and ~~flow~~we ~~analysis)~~may ~~could~~not be ~~significantly~~able ~~less~~to ~~than~~realize ~~their~~the ~~book~~aircraft's ~~value.~~residual ~~We could recognize additional impairment charges and fair~~ value ~~adjustments~~ inafter ~~the~~lease ~~future, which would negatively impact our operating results~~expiration.

Our ability ~~The~~to ~~residual~~profitably ~~values~~lease, ofre-lease or sell our aircraft ~~are~~will ~~subject~~depend toon aconditions ~~number~~in ofthe ~~risks~~airline industry and ~~uncertainties~~general market and competitive conditions at the time the operating leases are entered into and expire, including ~~obsolescence~~those ~~risk,~~risks ~~which~~discussed ~~could~~under ~~result~~"Risks adversely impacting the airline industry in ~~future~~general ~~impairment~~could ~~charges~~adversely impact our business because they increase the likelihood of lessee non-performance and an inability to lease our aircraft." In addition to factors linked to the aviation industry in general, other factors that may affect our ability to generate adequate returns from of our aircraft include (i) maintenance and operating history of the airframe and engines; (ii) the number of operators using the particular type of aircraft; and (iii) aircraft age.

~~The~~ ~~residual~~Customer ~~values~~demand ~~of our aircraft are subject to a number of risks and uncertainties. Technological developments, macro-economic conditions, availability and cost of funding~~ for ~~aviation, and~~ the ~~overall~~aircraft ~~health~~in ~~of the airline industry impact the residual values of~~ our ~~aircraft.~~fleet Ifmay ~~challenging~~be ~~economic~~lower ~~conditions~~than ~~persist for extended periods~~anticipated, ~~the~~including ~~residual~~due ~~values~~to ofobsolescence, ~~our~~which ~~aircraft~~ could beresult ~~negatively~~in ~~impacted,~~declining ~~which~~lease ~~could~~rates, ~~result~~reduced insale ~~future~~prices or impairment charges.

Aircraft ~~Our~~are ~~relationship~~long-lived ~~with~~assets ~~AIG~~and demand for a particular model and type can change over time. Demand may ~~affect~~fall ~~our~~for ~~ability~~a variety of reasons, including obsolescence following the introduction of newer technologies, market saturation due to ~~operate~~increased ~~and~~production ~~finance~~rates, ~~our~~technical ~~business~~problems associated with a particular model, new manufacturers entering the marketplace or existing manufacturers entering new market segments, additional governmental regulation, or the overall health of the airline industry, among other causes. For example, increases in fuel prices have resulted in greater demand for newer fuel-efficient aircraft, such as wethe ~~deem~~Airbus ~~appropriate~~A320neo family and ~~changes~~the ~~with~~Boeing ~~respect~~737 toMAX ~~AIG~~narrowbody ~~could~~aircraft, ~~negatively~~which ~~impact~~may potentially ~~us.~~ shorten the economic useful life of older aircraft, including older

We are an indirect wholly owned subsidiary of AIG. Although neither AIG nor any of its subsidiaries is a co-obligor or guarantor of our debt securities, circumstances affecting AIG may have

Table of Contents

anA320 family ~~impact~~and on737 usfamily ~~and~~aircraft wepresently in operation. As demand for particular aircraft diminishes, lease rates are ~~not~~likely ~~sure~~to ~~how~~decline, ~~further~~the ~~changes~~residual invalues ~~regulations~~of our aircraft could be negatively impacted and ~~other~~we ~~circumstances~~may ~~related~~be unable to ~~AIG~~lease ~~may~~such ~~impact~~aircraft uson favorable terms, if at all.

In addition, ~~Conflicts~~if reduced demand for an aircraft causes a decline in its projected lease rates, or if we dispose of ~~interest~~the ~~may~~aircraft ~~arise~~for ~~between~~a usprice that is less than its depreciated book value on our balance sheet, then we will recognize impairments or fair value adjustments. For example, we recorded impairment charges and ~~customers~~fair ~~who~~value ~~utilize~~adjustments on aircraft of approximately $1.4 billion for the year ended December 31, 2013. These impairment charges primarily reflect a decrease in the estimated holding period for certain four-engine widebody aircraft in our fleet, ~~management~~and ~~services~~in particular the Airbus A340-600. The increasing number of aircraft operators looking to completely or partially replace their Airbus A340s and Boeing 747s is expected to increase the available supply of these aircraft types and diminish future lease placement opportunities. Sustained high fuel prices, ~~which~~the introduction of more fuel-efficient aircraft, and the success of competing aircraft models have resulted in a shrinking operator base for these aircraft types. Deterioration of aircraft values may ~~adversely~~also ~~affect~~result in impairment charges or losses related to aircraft asset value guarantees. For example, we recorded provisions for losses on asset value guarantees of $100.5 million related to six guarantees for the year ended December 31, 2013. The amounts recorded reflect the differences between the estimated fair market value of the aircraft at the expected purchase date and the guaranteed value of these aircraft, adjusted for contractual provisions that limit our expected ~~business~~losses. ~~interests~~The provision recorded during the year ended December 31, 2013 primarily relates to four Airbus A340-600 aircraft.

~~Conflicts~~The risks ofassociated ~~interest~~with ~~may~~a ~~arise~~decrease ~~between~~in usdemand ~~and~~for ~~third-party~~particular aircraft ~~owners,~~increase ~~financiers~~if ~~and~~we ~~operating~~acquire ~~lessors~~a ~~who~~high ~~hire~~concentration usof tosuch ~~perform fleet~~aircraft. ~~management~~For ~~services~~example, ~~such~~we ashave ~~leasing,~~contracted ~~re-leasing,~~to ~~lease~~purchase ~~management~~150 A320neo ~~and~~family ~~sales~~narrowbody ~~services.~~aircraft, ~~Our~~70 ~~servicing~~Boeing ~~contracts~~787s ~~require~~and ~~that~~50 weEmbraer ~~act~~E-Jets inE2 ~~good~~aircraft. ~~faith~~If ~~and~~these ~~not~~aircraft ~~unreasonably~~types ~~discriminate against~~or ~~serviced~~any other aircraft intypes ~~favor~~ of ~~our~~which ~~owned~~we ~~aircraft.~~acquire ~~Nevertheless,~~a ~~competing~~relatively ~~with~~high ~~our~~concentration ~~fleet~~encounter reduced ~~management~~demand, ~~customers~~it ~~may~~could ~~result~~have ina ~~strained~~material ~~relationships~~adverse ~~with~~effect ~~these~~on ~~customers~~our business, ~~which~~financial ~~may~~condition ~~adversely affect~~and ~~our~~results ~~business~~of ~~interests~~operations.

~~The~~Risks ~~agreements~~adversely ~~governing~~impacting ~~certain~~the ofairline ~~our~~industry ~~indebtedness~~in ~~contain~~general ~~restrictions~~could ~~and~~adversely ~~limitations~~impact ~~that~~our ~~could~~business ~~significantly~~because ~~affect~~they ~~our~~increase ~~ability~~the tolikelihood ~~operate~~of ~~our~~lessee ~~business~~non-performance and ~~compete~~an inability ~~effectively~~to lease our aircraft.

~~The~~Our ~~agreements~~business ~~governing~~depends ~~certain~~on the ability of our ~~indebtedness~~airline ~~contain~~customers ~~covenants~~to ~~that~~meet ~~restrict~~their payment obligations to us. If their ability materially decreases, ~~among~~it ~~other~~may ~~things~~negatively affect our business, financial condition, results of operations and cash flows. For example, as a result of challenging global economic conditions, combined with volatility in oil prices, some airlines were forced to cease operations or reorganize during the last few years. During 2012, 11 of our ~~ability~~customers, including one with two separate operating certificates, ceased operations or filed for bankruptcy, or its equivalent, and returned 55 aircraft to: us. Six of our customers, operating a total of nine of our owned aircraft, ceased operations in 2011, and one other customer filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.

The ~~agreements~~risks ~~governing~~affecting ~~certain~~our airline customers are generally out of our ~~indebtedness~~control ~~also~~and ~~contain~~impact ~~financial~~our ~~covenants,~~customers ~~such~~to asvarying ~~requirements~~degrees. ~~that~~As wea ~~maintain~~result, awe ~~minimum~~are ~~net~~indirectly ~~worth~~impacted ~~and~~by ~~comply~~all ~~with~~the ~~certain~~risks facing ~~loan-~~airlines today. Their ability to~~-value,~~ ~~interest~~compete ~~coverage~~effectively in the marketplace and ~~leverage~~manage ~~ratios~~these risks has a direct impact on us. Among the most prominent risks our customers face are:

~~Our failure~~• toincreased ~~comply~~fuel ~~with~~costs; ~~any~~• ofnatural ~~these~~disasters; ~~covenants~~• ~~would~~security, ~~likely~~terrorism ~~constitute a default under such facilities~~ and ~~could~~war, ~~give~~including ~~rise~~increased topassenger anscreening ~~acceleration~~as ~~of some or all of our then outstanding indebtedness, which would have~~ a ~~material~~result ~~adverse~~thereof; ~~effect on our business~~ and ~~our~~• ~~ability~~worldwide tohealth ~~continue~~concerns, such as aoutbreaks ~~going~~of ~~concern.~~contagious diseases;

Increases in fuel costs could materially adversely affect our lessees and, by extension, the demand for our aircraft.

Fuel costs represent a major expense to airlines, and fuel prices fluctuate widely depending primarily on international market conditions, geopolitical and environmental events, regulatory changes and currency exchange rates. The ongoing unrest in North Africa and the Middle East has generated uncertainty regarding the predictability of the world's future oil supply, which has led to significant near-term increases in fuel costs. If this unrest continues, fuel costs may continue to rise. Other events can also significantly affect fuel availability and prices, including natural disasters, decisions by the Organization of the Petroleum Exporting Countries regarding its members' oil output and the increase in global demand for fuel from countries such as China.

Higher cost of fuel will likely have a material adverse impact on airline profitability. Due to the competitive nature of the airline industry, airlines may not be able to pass on increases in fuel prices to

Table of Contents

~~their passengers by increasing fares. If airlines do increase fares, demand for air travel may be adversely affected.~~ In addition, ~~airlines may not be able~~ to ~~manage~~those ~~fuel~~listed ~~cost risk by appropriately hedging their exposure to fuel price fluctuations. If fuel prices increase further~~above, ~~our~~airlines ~~lessees~~face ~~are~~additional ~~likely to incur higher costs or experience reduced revenues. Consequently~~risks, ~~these conditions may~~including:

~~Such effects~~• ~~could~~reduced ~~have~~demand afor ~~material~~air ~~adverse~~travel; ~~effect~~• heavy reliance on ~~our~~automated ~~business,~~systems; ~~financial~~• ~~condition,~~competition between carriers; • geopolitical events; • labor costs and ~~results~~stoppages; of• ~~operations.~~equity and borrowing capacity; • maintenance costs; • environmental concerns; • employee labor contracts; • government regulation; • air traffic control infrastructure constraints; • interest rates; • airport access; • airline capacity; and • insurance costs and coverage;

In addition to increased fuel costs and the global sovereign debt crisis, other risks adversely impacting the airline industry in general could adversely impact our business because they increase the likelihood of lessee non-performance and an inability to lease our aircraft.

Our business depends on the ability of our airline customers to meet their payment obligations to us. If their ability materially decreases, it may negatively affect our business, financial condition, results of operations and cash flows.

The risks affecting our airline customers are generally out of our control and impact our customers to varying degrees. As a result, we are indirectly impacted by all the risks facing airlines today. Their ability to compete effectively in the marketplace and manage these risks has a direct impact on us. In addition to increased fuel prices and availability discussed above, these risks include:

• demand for air travel;		• heavy reliance on automated systems;
• competition between carriers;		• geopolitical events;
• labor costs and stoppages;		• equity and borrowing capacity;
• maintenance costs;		• environmental concerns;
• employee labor contracts;		• government regulation;
• air traffic control infrastructure constraints;		• interest rates;
• airport access;		• airline capacity;
• insurance costs and coverage;		• natural disasters; and
• security, terrorism and war, including increased passenger screening as a result thereof;		• worldwide health concerns, such as outbreaks of H1N1, SARS and avian influenza.

To the extent that our customers are affected by these or other risks, we may experience:

•: lower demand for the aircraft in our fleet and an inability to immediately place new and used aircraft when they become available, resulting in lower lease margins, and payments for storage and maintenance;
•: a higher incidence of lessee defaults and repossessions, resulting in additional maintenance, consulting and legal costs associated with the repossessions, as well as lost revenue for the time the aircraft are off lease and likely lower lease rates from the new lessees;
•: a higher incidence of lease restructurings for our troubled customers which reduces overall lease revenue; and
•: a loss if an aircraft is damaged or destroyed by an event specifically excluded from the insurance policy such as dirty bombs, bio-hazardous materials and electromagnetic pulsing.

If we experience any of these events, it may result in the negative effects described under "Customer demand for the aircraft in our fleet may be lower than anticipated, including due to obsolescence, which could result in declining lease rates, reduced sale prices or impairment charges."

We are exposed to significant regional political and economic risks due to the concentration of our lessees in certain geographical regions, which could adversely affect our financial results.

Through our lessees, we are exposed to local economic and political conditions. Such conditions can be adverse to us, including through additional regulation or, in extreme cases, seizure of our aircraft. The effect of these conditions on payments to us will be more or less pronounced, depending on the concentration of lessees in the region with adverse conditions. For example, during 2012, when many European countries were suffering acutely from the global sovereign debt crisis, seven of our European customers ceased operations or filed for bankruptcy, or its equivalent, and returned 44 aircraft to us. Europe is where we have our largest concentration of lessees, and severe recession in Europe, or the inability to resolve financial emergencies in any particular region where we have many customers, could result in additional failures of airlines and materially affect our financial results and growth prospects.

In addition, we derived approximately 50% of our revenues for the year ended December 31, 2013, from airlines in frontier and emerging market countries (as defined by Dow Jones & Company). Frontier and emerging market countries have less developed economies and infrastructure and are often more vulnerable to economic and geopolitical challenges and may experience significant fluctuations in gross domestic product, interest rates and currency exchange rates, as well as civil disturbances, government instability, nationalization and expropriation of private assets and the

Table of Contents

imposition of Wetaxes or other charges by government authorities. In addition, legal systems in emerging market countries may be ~~indirectly~~less ~~subject~~developed, which could make it more difficult for us to ~~many~~enforce our legal rights in such countries. The occurrence of any of these events in markets served by our lessees and the resulting economic ~~and~~instability ~~political~~that ~~risks~~may ~~associated~~arise, particularly if combined with ~~emerging~~high ~~markets~~fuel prices, ~~which~~ could adversely affect the value of our ~~financial~~aircraft ~~results~~subject ~~and~~to ~~growth~~lease in such countries or the ability of our lessees that operate in these markets to meet their lease obligations. If we ~~prospects~~experience any of these risks, it may result in the negative effects described under "Customer demand for the aircraft in our fleet may be lower than anticipated, including due to obsolescence, which could result in declining lease rates, reduced sale prices or impairment charges. "

We derived approximately 48% of our revenues for the year ended December 31, 2012, from airlines in frontier and emerging market countries (as defined by Dow Jones & Company). Frontier and emerging market countries have less developed economies and infrastructure and are often more vulnerable to economic and geopolitical challenges and may experience significant fluctuations in gross domestic product, interest rates and currency exchange rates, as well as civil disturbances, government instability, nationalization and expropriation of private assets and the imposition of taxes or other charges by government authorities. The occurrence of any of these events in markets served by our lessees and the resulting economic instability that may arise, particularly if combined with high fuel prices, could adversely affect the value of our aircraft subject to lease in such countries or the ability of our lessees that operate in these markets to meet their lease obligations. In addition, legal systems in emerging market countries may be less developed, which could make it more difficult for us to enforce our legal rights in such countries.

Further, demand for aircraft is dependent on passenger and cargo traffic, which in turn is dependent on general business and economic conditions. As a result, weak or negative economic growth in emerging markets may have an indirect effect on the value of the assets that we acquire if airlines and other potential lessees are adversely affected. If the recent global economic downturn continues or worsens, our assets may decline in value, which could have an adverse effect on our results of operations or our financial condition. For these and other reasons, our financial results and growth prospects may be negatively impacted by adverse economic and political developments in emerging market countries.

Our aircraft may not at all times be adequately insured either as a result of lessees failing to maintain sufficient insurance during the course of a lease or insurers not being willing to cover certain risks.

While an aircraft is on lease, we do not directly control its operation. Nevertheless, because we hold title, directly or indirectly, to such aircraft, we ~~could~~might be ~~sued or~~ held ~~strictly~~ liable for losses resulting from the operation of such aircraft, orunder ~~may~~one beor ~~held~~more ~~liable for those losses on other~~ legal theories, in certain jurisdictions around the world, or ~~claims~~at ~~may~~a beminimum ~~made~~we ~~against~~may be usrequired ~~as the owner of an aircraft requiring us~~ to expend resources in our defense. We require our lessees to obtain specified levels of insurance and indemnify us for, and insure against, liabilities arising out of their use and operation of our aircraft. Some lessees may fail to maintain adequate insurance coverage during a lease term, which, although in contravention of the lease terms, would necessitate our taking some corrective action such as terminating the lease or securing insurance for the aircraft, either of which could adversely affect our financial results.

In addition, there are certain risks or liabilities that our lessees may face, for which insurers may be unwilling to provide coverage or the cost to obtain such coverage may be prohibitively expensive. For example, following the terrorist attacks of September 11, 2001, non-government aviation insurers significantly reduced the amount of insurance coverage available for claims resulting from acts of terrorism, war, dirty bombs, bio-hazardous materials, electromagnetic pulsing or similar events. Accordingly, our lessees' insurance or other coverage may not be sufficient to cover all claims that could or will be asserted against us arising from the operation of our aircraft by our lessees. Inadequate insurance coverage or default by lessees in fulfilling their indemnification or insurance obligations will reduce the proceeds that we receive if we are sued and are required to make payments to claimants, which could have a material adverse effect on our business, financial condition and results of operations.

The failure of our lessees to perform required maintenance on our aircraft could result in a diminution in the value of the aircraft, some of which could constitute collateral under our secured debt facilities, and could impair our ability to resell or repossess the aircraft.

Under each of our leases, the lessee is primarily responsible for maintaining the aircraft and complying with all governmental requirements applicable to the lessee and to the aircraft, including operational, maintenance and registration requirements and airworthiness directives. The lessee's failure to perform required maintenance during the term of a lease could result in a diminution in the appraised or liquidation value of an aircraft, an inability to re-lease the aircraft at favorable rates, or at all, or a potential grounding of the aircraft, and could require us to incur maintenance and modification costs upon the expiration or earlier termination of the lease to restore the aircraft to an acceptable condition prior to sale or re-leasing or for further flight. Even if we perform maintenance or modification of the aircraft, the value of the aircraft may still deteriorate.

Table of Contents

significantly reduced the amount of insurance coverage available for claims resulting from acts of terrorism, war, dirty bombs, bio-hazardous materials, electromagnetic pulsing or similar events. Accordingly, our lessees' insurance or other coverage may not be sufficient to cover all claims that could or will be asserted against us arising from the operation of our aircraft by our lessees. Inadequate insurance coverage or default by lessees in fulfilling their indemnification or insurance obligations will reduce the proceeds that we receive if we are sued and are required to make payments to claimants, which could have a material adverse effect on our business, financial condition, and results of operations.

Under each of our leases, the lessee is primarily responsible for maintaining the aircraft and complying with all governmental requirements applicable to the lessee and to the aircraft, including operational, maintenance and registration requirements and airworthiness directives. A lessee's failure to perform required maintenance during the term of a lease could result in a diminution in the appraised or liquidation value of an aircraft, an inability to re-lease the aircraft at favorable rates, or at all, or a potential grounding of the aircraft, and could require us to incur maintenance and modification costs upon the expiration or earlier termination of the lease to restore the aircraft to an acceptable condition prior to sale or re-leasing or for further flight. Even if we perform maintenance or modification of the aircraft, the value of the aircraft may still deteriorate.

If our lessees fail to discharge aircraft liens, we may be obligated to pay the aircraft liens and until they are discharged, the liens could impair our ability to repossess, re-lease or sell the aircraft.

Our lessees are likely to incur aircraft liens that secure the payment of airport fees and taxes, customs duties and air navigation charges, and aircraft may also be subject to mechanics' liens. Although we anticipate that the financial obligations relating to these liens will be the responsibility of our lessees, if they fail to fulfill such obligations, the liens may attach to our aircraft and ultimately become our responsibility. In some jurisdictions, aircraft liens may give the holder thereof the right to detain or, in limited cases, sell or cause the forfeiture of the aircraft. Until they are discharged, these liens could impair our ability to repossess, re-lease, or sell our aircraft.

~~There~~Risks ~~are~~adversely aimpacting ~~limited~~the ~~number of~~ airframe and engine manufacturers ~~and~~that supply us could adversely impact our business, because they increase the ~~failure~~likelihood ofthat ~~any~~a manufacturer might fail to meet its delivery obligations to us, which in turn could adversely affect our financial results and growth prospects.

The ~~supply of~~ aircraft we purchase and lease isare ~~dominated~~exclusively supplied by ~~two airframe manufacturers, Boeing and Airbus, and~~ a limited number of airframe and engine manufacturers. As a result, we are dependent on these manufacturers' success in remaining financially stable, producing aircraft and related components that meet the airlines' demands, in both type and quantity, and fulfilling their contractual obligations to us. Should the manufacturers fail to respond appropriately to changes in the market environment or fail to fulfill their contractual obligations, we may experience:

•: missed or late delivery of aircraft ordered by us and an inability to meet our contractual obligations to our customers, resulting in lost or delayed revenues, lower growth rates and strained customer relationships;
•: an inability or limitation on our ability to acquire aircraft and related components on terms which will allow us to lease those aircraft to customers at a profit, resulting in lower growth rates or a contraction in our fleet;
•: a marketplace with too many aircraft available, creating downward pressure on demand for the aircraft in our fleet and reduced market lease rates; and
•: poor customer support from the manufacturers resulting in reduced demand for its products, creating downward pressure on demand for those aircraft in our fleet and reduced market lease rates for those aircraft.

Moreover, our purchase agreements with the manufacturers and the leases we have signed with our customers for future lease commitments are all subject to cancellation clauses related to delays in delivery dates. Any manufacturer delays for aircraft that we have committed to lease could strain our relations with our customers, and cancellation of such leases by the lessees could have a material adverse effect on our financial results.

In the past both Boeing and Airbus have experienced delays in meeting deadlines when bringing new aircraft to market. As a recent example, in January 2013 the FAA announced an emergency airworthiness directive that required all U.S. Boeing 787 operators to temporarily cease operations of Boeing 787s to address the potential battery fire risk, and regulatory bodies in other jurisdictions followed suit. Although the FAA approved Boeing's battery improvements and the aircraft were permitted to return to service in April 2013, an investigation focusing on the design and certification requirements of the battery system being conducted by the National Transportation Safety Board, or NTSB, continues. This event, or other engineering, technical or other problems at the manufacturers that supply us, could have a negative impact on our business.

Table of Contents

Both Boeing and Airbus have experienced delays in meeting stated deadlines when bringing new aircraft to market. Our purchase agreements with the manufacturers and the leases we have signed with our customers for future lease commitments are all subject to cancellation clauses related to delays in delivery dates. Any manufacturer delays for aircraft that we have committed to lease could strain our relations with our lessees and termination of such leases by the lessees could have a material adverse effect on our financial results.

On January 16, 2013, as a result of an All Nippon Airways battery-related event in-flight and a previous Japan Airlines event at Logan airport, the FAA announced an emergency airworthiness directive that required all U.S. Boeing 787 operators to temporarily cease operations of Boeing 787s to address the potential battery fire risk; other jurisdictions followed suit. The National Transportation Safety Board is carrying out an investigation on the 787 with a focus on the design and certification requirements of the battery system. We are scheduled to take delivery of our first six Boeing 787 aircraft in 2013, with the first delivery scheduled in April, but there may be delays in our 2013 deliveries. Any such delays are not expected to have a material impact on our financial condition, results of operations or cash flows.

Future acquisitions may require significant resources and result in unanticipated adverse consequences that could have a material adverse effect on our business, results of operations and financial condition.

We may seek to grow by making acquisitions, like our acquisition of AeroTurbine. Future acquisitions may require us to make significant cash investments or incur substantial debt, which could reduce our liquidity and access to financial markets. In addition, acquisitions may require significant management attention and divert management from our other operations. These capital, equity and managerial commitments may impair the operation of our business. In addition, if the due diligence of the operations of any acquired business performed by us or by third parties on our behalf is inadequate or flawed, or if we later discover unforeseen financial or business liabilities, an acquired business may not perform as expected. Acquisitions could also have a negative impact on our results of operations if we subsequently determine that goodwill or other acquired assets are impaired, resulting in an impairment charge in a future period. Additionally, if we fail to successfully integrate an acquired business or we are unable to realize the intended benefits from an acquisition, our existing business, revenue and operating results could be adversely affected.

The continued success of our business will depend, in part, on our ability to acquire strategically attractive aircraft and enter into profitable leases upon the acquisition of such aircraft. If we are unable to successfully execute on our acquisition strategy, our financial results and growth prospects could be materially and adversely affected.

The success of our business depends, in part, on our ability to acquire strategically attractive aircraft and enter into profitable leases upon the acquisition of such aircraft. As of December 31, 2012 we had commitments to purchase 229 new fuel-efficient aircraft. We are considering pursuing additional aircraft purchases from airlines and leasing them back to the airlines, but we may not be able to acquire such additional aircraft. We also may not be able to enter into profitable leases upon the acquisition of the new aircraft we purchase directly from the manufacturers. An acquisition of one or more aircraft may not be profitable to us and may not generate sufficient cash flow to justify those acquisitions. If we experience significant delays in the implementation of our business strategies, including delays in the acquisition and leasing of aircraft, our fleet management strategy and long-term results of operations could be adversely affected.

Table of Contents

In addition, our acquisition strategy exposes us to risks that could have a material adverse effect on our business, financial condition, results of operations and cash flow, including risks that we may:

If we acquire a high concentration of a particular type of aircraft, our business and financial results could be adversely affected by changes in market demand or problems specific to that aircraft type.

If we acquire a high concentration of a particular type of aircraft, our business and financial results could be adversely affected if the demand for that type of aircraft declines, if it is redesigned or replaced by its manufacturer or if that type of aircraft experiences design or technical problems. For instance, we have contracted to purchase 74 Boeing 787s and 100 A320neo family narrowbody aircraft and have the right to purchase an additional 50 A320neo family aircraft. If these aircraft types or any other aircraft type of which we acquire a high concentration encounters technical or other problems, such as the recent Boeing 787 battery fire, the value and lease rates of such aircraft may decline and we may be unable to lease such aircraft on favorable terms, if at all. A significant technical problem with a specific type of aircraft could result in the grounding of the aircraft. Any decrease in the value and lease rates of our aircraft may have a material adverse effect on our business and financial results.

Competition from other aircraft lessors or purchasers could adversely affect our financial results and growth prospects.

The aircraft leasing industry is highly competitive. We may also encounter competition from other entities in the acquisition ofand leasing of aircraft such as airlines, financial institutions, aircraft brokers, public and private partnerships, investors and funds with more capital to invest in aircraft, and other aircraft leasing ~~companies~~ companies that we do not currently consider our major competitors.

Competition for a leasing transaction is based principally upon lease rates, delivery dates, lease terms, reputation, management expertise, aircraft condition, specifications and configuration and the availability of the types of aircraft necessary to meet the needs of the customer. Some of our competitors may have greater operating and financial resources and access to lower capital costs than we have. In addition, some competing aircraft lessors may have a lower overall cost of capital and may provide inducements to potential lessees that we cannot match. Competition in the purchase and sale of used aircraft is based principally on the availability of used aircraft, price, the terms of the lease to which an aircraft is subject and the creditworthiness of the lessee, if any. We may not always be able to compete successfully with our competitors and other entities, which could materially adversely affect our financial results and growth prospects.

The loss of key personnel could adversely affect our reputation and relationships with lessees, manufacturers, buyers and financiers of aircraft, which are a critical element to the success of our business.

We believe our senior management's reputation and relationships with lessees, manufacturers, buyers and financiers of aircraft are an important element to the success of our business. Strong competition exists for qualified personnel with demonstrated ability both within and outside our industry. We had significant turnover in our senior management team during 2010 and 2011, resulting in a new chief executive officer, president, chief financial officer and general counsel. Additionally, we appointed a new Executive Chairman in June 2012 who is our most senior executive officer. Only our Executive Chairman, Laurette T. Koellner, and our Chief Executive Officer, Mr. Henri Courpron, are currently covered by employment agreements. The inability to retain our key employees or attract and retain new talent could adversely impact our business and results of operation.

Table of Contents

The future settlement of deferred tax liabilities accumulated during prior periods could have a negative impact on our future cash flows.

It is typical in the aircraft leasing industry for companies that are continuously acquiring additional aircraft to incur significant tax depreciation, which offsets taxable income but creates a deferred tax liability on the aircraft leasing company's balance sheet. This deferred tax liability is attributable to the excess of the depreciation claimed for tax purposes over the depreciation claimed for financial statement purposes. As of December 31, ~~2012~~2013, we had a net deferred tax liability of approximately $43.19 billion, which primarily reflects accelerated depreciation claimed for tax purposes. The settlement of these deferred tax liabilities could have a negative impact on our cash flow in future periods.

We operate in multiple jurisdictions and may become subject to a wide range of income and other taxes.

We operate in multiple jurisdictions and may become subject to a wide range of income and other taxes. If we are unable to execute our business in jurisdictions with favorable tax treatment, our operations may be subject to significant income and other taxes.

Moreover, as our aircraft are operated by our lessees in multiple states and foreign jurisdictions, we may have nexus or taxable presence as a result of our aircraft landings in various states or foreign jurisdictions. Such landings may result in us being subject to various foreign, state and local taxes in such states or foreign jurisdictions.

We are subject to various risks and requirements associated with transacting business in foreign countries.

Our international operations, including those of AeroTurbine, expose us to trade and economic sanctions, regulations and other restrictions imposed by the United States or other governments or organizations. See "Business—Government Regulation." The U.S. Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the FCPA, and other federal statutes and regulations, including those established by OFAC. Under these laws and regulations, the government may require export licenses, may seek to impose modifications to business practices, including cessation of business activities in sanctioned countries, and modifications to compliance programs, which may increase compliance costs, and may subject us to fines, penalties and other sanctions. A violation of these laws or regulations could adversely impact our business, operating results, and financial condition.

We have in place training programs for our employees with respect to FCPA, OFAC, export controls and similar laws and regulations. There can be no assurance that our employees, consultants, sales agents, or associates will not engage in conduct for which we may be held responsible. Violations of the FCPA, OFAC and other export control regulations, and similar laws and regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. 27

We are subject to various environmental laws and regulations that could have an adverse impact on our results of operations.

Table of Contents

~~liability~~ We onhave usin ~~for~~place ~~related~~training ~~natural~~programs ~~resource~~for ~~damages~~our oremployees ~~investigation~~with ~~and~~respect ~~remediation~~to ofFCPA, ~~third~~OFAC, ~~party~~export ~~waste~~controls ~~disposal~~and ~~sites~~similar ~~where~~laws weand ~~have sent, or may send, waste~~regulations. WeThere ~~may~~can ~~also~~ be ~~subject~~no toassurance ~~claims~~that ~~for~~our employees, ~~personal~~consultants, ~~injury~~sales agents, or ~~property~~associates ~~damages~~will ~~relating~~not toengage ~~any~~in ~~such~~conduct ~~contamination~~for orwhich ~~non-compliance~~we ~~with~~may ~~other~~be ~~environmental~~held ~~requirements~~responsible. WeViolations ~~may~~of ~~not~~the beFCPA, insanctions ~~complete~~and ~~compliance~~export ~~with~~control ~~these~~regulations, and similar laws, and regulations ormay ~~permits~~result atin ~~all~~severe ~~times.~~criminal ~~Also~~or civil sanctions, ~~new~~and orwe ~~more~~may ~~stringent~~be ~~standards~~subject into ~~existing~~other ~~environmental~~liabilities, ~~laws~~which ~~may~~could ~~cause~~negatively usaffect toour ~~incur~~business, ~~additional~~operating ~~costs~~results and financial condition.

We are subject to various environmental laws and regulations that could have an adverse impact on our results of operations.

Our operations, including AeroTurbine's operations, are subject to various federal, state and local environmental, health and safety laws and regulations in the United States, including those relating to the discharge of materials into the air, water, and ground, the generation, storage, handling, use, transportation and disposal of regulated materials, the remediation of contaminated sites, and the health and safety of our employees. A violation of these laws and regulations or permit conditions can result in substantial fines, permit revocation or other damages. Many of these laws could obligate us to investigate or clean up contamination that may exist at our current facilities, or facilities that we formerly owned or operated, even if we did not cause the contamination. They could also impose liability on us for related natural resource damages or investigation and remediation of third party waste disposal sites where we have sent, or may send, waste. We may also be subject to claims for personal injury or property damages relating to any such contamination or non-compliance with other environmental requirements. We may not be in complete compliance with these laws, regulations or permits at all times. Also, new or more stringent standards in existing environmental laws may cause us to incur additional costs.

Regulations relating to climate change, noise restrictions, and greenhouse gas emissions may have a negative effect on the airline industry and our business and financial condition.

~~Governmental~~Customers operating our aircraft are subject to governmental regulations regarding aircraft and engine noise levels and ~~emissions~~the ~~levels~~emission of certain greenhouse gases, such as nitrogen oxide, that apply based on where the ~~relevant~~ aircraft is registered and operated. ~~For~~Concerns ~~example,~~over ~~jurisdictions~~climate ~~throughout~~change ~~the~~could ~~world~~result ~~have~~in ~~adopted~~more ~~noise~~stringent ~~regulations~~limitations ~~which~~on ~~require~~the operation ~~all~~of aircraft topowered ~~comply~~by ~~with~~older, ~~noise~~noncompliant ~~level~~engines, ~~standards.~~as Inwell ~~addition~~as tonewer ~~the~~engines. ~~current requirements~~For example, the United States ~~and~~recently ~~the~~adopted ~~International~~more ~~Civil~~stringent ~~Aviation~~nitrogen ~~Organization,~~oxide oremission ~~the~~standards ~~ICAO,~~for ~~have~~newly manufactured ~~adopted~~aircraft aengines ~~new,~~starting ~~more~~in ~~stringent~~2013 ~~set~~and ofan ~~standards~~even ~~for~~more ~~noise~~stringent ~~levels~~emission ~~which~~standard ~~applies~~for to engines manufactured in 2014 or ~~certified~~later. onBeginning orin ~~after~~2012 ~~January 1,~~the ~~2006.~~European ~~Currently,~~Union ~~U.S.~~incorporated aviation-related ~~regulations~~greenhouse ~~would~~gas ~~not~~emissions ~~require~~into ~~any~~the ~~phase-out~~European ofUnion's ~~aircraft~~Emission ~~that~~Trading ~~meet~~System or "EU-ETS" which, along with the ~~older~~emissions ~~standards~~trading ~~applicable~~regime eventually expected to ~~engines~~be adopted by the ~~manufactured~~International Civil Aviation Organization, or ~~certified~~ICAO ~~prior~~(termed toa ~~January 1,~~global ~~2006,~~market-based ~~but~~mechanism or Global MBM program) could possibly distort the ~~European~~international ~~Union~~air ~~has~~transport ~~established~~market aleading ~~framework~~to ~~for~~higher ~~the~~ticket prices ~~imposition~~and ofultimately ~~operating~~a ~~limitations~~reduction onin ~~aircraft~~demand ~~that~~for isair ~~not~~travel. ~~consistent~~Additional ~~with~~regulations in these ~~new~~ ~~standards~~areas are also being considered.

~~More~~Noise ~~recently,~~and ~~the~~emission ~~ICAO~~regulations ~~has~~could ~~been~~limit ~~reviewing~~the ~~and~~economic ~~analyzing~~life ~~certification~~of ~~noise~~our ~~levels for certain~~ aircraft, and ~~based~~engines, onreduce ~~that~~their ~~analysis~~value, islimit ~~developing~~our aability ~~range of increased stringency noise standard alternatives. This analysis will be considered at an ICAO meeting in 2013. In addition~~ to ~~more~~lease ~~stringent~~or ~~noise~~sell ~~restrictions,~~ the ~~United~~non-compliant ~~States~~aircraft and ~~certain other jurisdictions regulate~~engines ~~emissions of certain greenhouse gases~~or, ~~such~~if asengine ~~nitrogen~~modifications ~~oxide.~~are ~~These~~necessary, ~~limits~~require ~~frequently~~us ~~apply only~~ to ~~engines~~make ~~manufactured~~significant ~~after~~additional ~~1999;~~investments ~~however,~~in ~~because~~the aircraft and engines ~~are replaced from time~~ to ~~time in~~make ~~the~~them ~~usual~~compliant. ~~course,~~Compliance itwith iscurrent ~~likely~~or ~~that~~future ~~the~~regulations, taxes ~~number~~or ofduties ~~engines~~imposed ~~subject~~ to ~~these~~deal ~~requirements~~with ~~would~~environmental ~~increase over time. In addition,~~ concerns ~~over climate change~~ could ~~result~~cause inlessees ~~more~~to ~~stringent limitations~~incur onhigher ~~the~~costs ~~operation~~and ofto ~~aircraft~~generate ~~powered~~lower bynet ~~older~~revenues, ~~noncompliant~~resulting ~~engines,~~in asan ~~well~~adverse asimpact ~~newer~~on ~~engines.~~their ~~For~~financial ~~example~~conditions. Consequently, ~~the~~such ~~United~~compliance ~~States~~may ~~recently~~affect ~~adopted~~lessees' ~~more~~ability ~~stringent~~to ~~nitrogen~~make ~~oxide~~rental ~~emission standards~~and ~~for~~other ~~newly~~lease ~~manufactured~~payments ~~aircraft engines starting in 2013~~ and anreduce ~~even~~the ~~more~~value ~~stringent~~we ~~emission~~receive ~~standard~~ for ~~engines manufactured in 2014 or later;~~ the ~~European~~aircraft ~~Union~~upon ~~has~~any ~~incorporated aviation-related greenhouse gas emissions into the European Union's Emission Trading System beginning January 1~~disposition, ~~2012,~~which ~~and~~could ~~the~~have ~~ICAO~~an ~~recently approved a resolution designed to cap greenhouse gas~~adverse ~~emissions~~effect ~~from~~on ~~aircraft~~our business and ~~committed~~financial ~~to propose a greenhouse gas emission standard for aircraft engines by 2013~~condition.

European countries generally have relatively strict environmental regulations that can restrict operational flexibility and decrease aircraft productivity. As noted, the European Parliament and the European Court of Justice included aviation in the European Union's Emissions Trading System starting January 1, 2012, and all of the emissions associated with flights that land or take off within the EU-ETS zone comprising the European Union, Iceland, Lichtenstein, Norway and Croatia, including flights to or from countries outside of such zone (i.e. "international flights") are now subject to the trading program, even those emissions that are emitted outside of the European Union. Although the European Union announced on November 12, 2012, that it intends to delay enforcement of the aviation portion of their Emission Trading System for international flights (but not for flights within the EU-ETS zone) in light of recent progress made by ICAO on international aviation emission regulation, the delay is expected to be for one year only to allow ICAO time to craft a regulation, and if ICAO fails to adopt regulations acceptable to the European Union, the European Union will start enforcing its aviation emissions trading program in respect to international flights. This inclusion could possibly distort the international air transport market leading to higher ticket prices and ultimately a reduction in demand for air travel. Beginning in 2007, the United Kingdom doubled its air passenger duties to 28

Table of Contents

respond to the environmental costs of air travel. Similar measures may be implemented in other jurisdictions or by the ICAO due to environmental concerns. These increased costs could have a negative impact on the demand for air travel and, as a result, on our business and financial condition.

In addition, noise and emission regulations could limit the economic life of our aircraft and engines, reduce their value, limit our ability to lease or sell the non-compliant aircraft and engines or, if engine modifications are necessary, require us to make significant additional investments in the aircraft and engines to make them compliant. Compliance with current or future regulations, taxes or duties imposed to deal with environmental concerns could cause lessees to incur higher costs and to generate lower net revenues, resulting in an adverse impact on their financial conditions. Consequently, such compliance may affect lessees' ability to make rental and other lease payments and reduce the value we receive for the aircraft upon any disposition, which could have an adverse effect on our business and financial condition.

Failure to obtain certain required licenses and approvals could negatively affect our ability to re-lease or sell aircraft, which would negatively affect our financial condition and results of operations.

Lessees are subject to extensive regulation under the laws of the jurisdictions in which the aircraft are registered and operated. As a result, we expect that certain aspects of our leases will require licenses, consents or approvals, including consents from governmental or regulatory authorities for certain payments under our leases and for the import, export or deregistration of the aircraft. Subsequent changes in applicable law or administrative practice may increase such requirements and governmental consent, once given, could be withdrawn. Furthermore, consents needed in connection with the future re-leasing or sale of an aircraft may not be forthcoming. Any of these events could adversely affect our ability to re-lease or sell aircraft which would negatively affect our financial condition and results of operations.

A cyber-attack that bypasses our information technology, or IT, security systems, causing an IT security breach, may lead to a material disruption of our IT systems and the loss of business information which may hinder our ability to conduct our business effectively and may result in lost revenues and additional costs.

Parts of our business depend on the secure operation of our computer systems to manage, process, store, and transmit information associated with aircraft leasing. ~~Like~~We ~~other global companies, we~~ have, from time to time, experienced threats to our data and systems, including malware and computer virus attacks, internet network scans, systems failures and disruptions. A cyber-attack could adversely impact our daily operations and lead to the loss of sensitive information, including our own proprietary information and that of our customers, suppliers and employees. Such losses could harm our reputation and result in competitive disadvantages, litigation, regulatory enforcement actions, lost revenues, additional costs and liability. While we devote substantial resources to maintaining adequate levels of cyber-security, our resources and technical sophistication may not be adequate to prevent all types of cyber-attacks.

Material damage to, or interruptions in, our information systems as a result of external factors, staffing shortages and difficulties in updating our existing software or developing or implementing new software could have a material adverse effect on our business or results of operations.

We depend largely upon our information technology systems in the conduct of all aspects of our operations. Such systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, fire and natural disasters. Damage or interruption to our information systems may require a significant investment to fix or replace them, and we may suffer interruptions in our operations in the interim. In addition, we are currently pursuing a number of IT related projects that will require ongoing IT related development and conversion of existing systems. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations. Any material interruptions or failures in our information systems may have a material adverse effect on our business or results of operations.

The timing and amount in which we report our revenue may be significantly impacted by a proposed new standard for lease accounting.

In August 2010, the FASB and the IASB issued an Exposure Draft that proposes substantial changes to existing lease accounting that will affect all lease arrangements. Subsequent meetings of the joint committee of the FASB and the IASB have made further changes to the proposed lease accounting, including the issuance of a Revised Exposure Draft in May 2013.

31 Under the current proposed accounting model, leases of assets other than property, including flight equipment, would generally be accounted for by lessors using a receivable and residual approach, an approach that derecognizes the underlying asset and recognized (i) a lease receivable for the lessor's right to receive lease payments; (ii) a residual asset for the rights the lessor retains relating to the underlying asset; and (iii) a profit or loss at the lease commencement date.

The comment period on the Revised Exposure Draft ended on September 13, 2013. When and if the proposed guidance becomes effective, it may have a significant impact on our consolidated financial statements. Although we believe the presentation of our financial statements, and those of our lessees, may change, including the pattern of revenue and expense recognition, we do not believe the accounting pronouncement will change the fundamental economic reasons for which the airlines lease aircraft.

Table of Contents

~~Under~~ ~~the~~Future ~~current~~acquisitions ~~proposed~~may ~~accounting~~require ~~model,~~significant ~~lessees~~resources ~~will~~and beresult ~~required~~in tounanticipated ~~record~~adverse anconsequences ~~asset~~that ~~representing~~could ~~the~~have ~~right-to-use the leased item for the lease term, or right-of-use asset, and~~ a ~~corresponding~~material ~~liability~~adverse toeffect ~~make lease payments. The right-of-use asset and liability incorporate the rights arising under the lease and are based~~ on the lessee's assessment of expected payments to be made over the lease term. The proposed model requires measuring these amounts at the present value of the future expected payments. For the majority of our ~~leases~~business, itresults ~~is expected that the lease expense would include the amortization~~ of operations ~~the right-of-use asset~~ and ~~the~~financial ~~recognition of interest expense based upon the lessee's incremental borrowing rate (or the rate implicit in the lease, if known) on the repayment of the lease obligation~~condition.

~~Under~~We may seek to grow by making acquisitions, like our acquisition of AeroTurbine. Future acquisitions may require us to make significant ~~the~~cash ~~current~~investments ~~proposed~~or ~~accounting~~incur ~~model~~substantial debt, ~~lessors~~which ~~will~~could ~~apply~~reduce ~~the~~our ~~receivable~~liquidity and ~~residual~~access ~~method~~to financial markets. ~~This~~In ~~will~~addition, acquisitions may increase our operating costs and require asignificant management ~~lessor~~attention toand ~~derecognize~~divert ~~its~~management ~~flight~~from ~~equipment~~our ~~into~~other aoperations. ~~receivable~~These ~~based upon~~capital, equity and managerial commitments may impair the ~~present~~operation ~~value~~of our business. In addition, if the due diligence of the ~~lease~~operations ~~payments~~of ~~under~~any acquired business performed by us or by third parties on our behalf is inadequate or flawed, or if we later discover unforeseen financial or business liabilities, an acquired business may not perform as expected. Acquisitions could also have a ~~lease~~negative ~~and~~impact on our results of operations if we subsequently determine that goodwill or other acquired assets are impaired, resulting in an impairment charge in a ~~residual~~future ~~value~~period. ~~Revenue~~Additionally, ~~recognized~~if ~~would~~we befail ~~interest~~to ~~income~~successfully ~~based~~integrate ~~upon~~an ~~the~~acquired ~~effective~~business ~~interest~~or ~~rate~~we ~~implicit~~are inunable to realize the ~~lease~~intended benefits from an acquisition, our existing business, revenue and operating results could be adversely affected.

~~The FASB~~ and IASB intend to issue a revised exposure draft in 2013. A proposed effective date has not yet been announced; rather it is expected to be considered as part of the evaluation of the effective dates for the major projects currently undertaken by the FASB. The ~~FASB~~loss ~~and IASB continue to deliberate on the proposed accounting. Currently, management is unable to assess the impact the adoption~~ of ~~the~~key ~~new~~personnel ~~finalized~~could ~~lease~~adversely ~~standard~~affect ~~will have on~~ our ~~financial~~reputation ~~statements. Although we believe the presentation of our financial statements,~~ and ~~those~~relationships ofwith ~~our~~ lessees, ~~will likely change~~manufacturers, ~~including~~buyers ~~the~~and ~~pattern~~financiers of ~~revenue and expense recognition~~aircraft, wewhich doare ~~not~~a ~~believe the accounting pronouncement~~critical ~~will~~element ~~change~~to the ~~fundamental~~success ~~economic~~of ~~reasons~~our ~~for which the airlines lease aircraft~~business.

We ~~Risks~~believe ~~Relating~~our reputation and relationships with lessees, manufacturers, buyers and financiers of aircraft are an important element to the success of our business. Strong competition exists for qualified personnel with demonstrated ability both within and outside our industry. We have had significant turnover in our senior management team in recent years, resulting in a ~~Change~~new Chief Executive Officer, President, Chief Financial Officer and General Counsel. Additionally, we appointed a new Executive Chairman in June 2012. Only our Executive ~~Majority~~Chairman, ~~Shareholder~~Laurette T. Koellner is currently covered by an employment agreement. The inability to retain our key employees or attract and ~~Our~~retain new talent could adversely impact our business and results of operations. This risk may increase in light of our anticipated sale to AerCap, as described under "—Risks Relating to the Sale of Us and Our Separation from AIG ."

On ~~December 9,~~Our ~~2012,~~relationship with AIG ~~entered~~may ~~into~~affect aour ~~share~~ability ~~purchase agreement~~ to ~~sell~~operate upand tofinance ~~90%,~~our ~~with~~business anas ~~initial~~we ~~sale~~deem ofappropriate ~~80.1%,~~and ofchanges ~~their ownership~~with inrespect us to anAIG ~~entity~~could ~~formed~~negatively onimpact ~~behalf of an investor group led by Mr~~us. ~~Weng Xianding, the Chairman of New China Trust Co, Ltd.~~

We are an indirect wholly-owned subsidiary of AIG. Although neither AIG nor any of its subsidiaries is a co-obligor or guarantor of our debt securities, circumstances affecting AIG may have an impact on us and we are not sure how further changes in regulations and other circumstances related to AIG may impact us.

Risks Relating to the Sale of Us and Our Separation from AIG

On December 16, 2013, AIG entered into an agreement with AerCap, under which AIG will sell 100% of our common stock for consideration consisting of $3.0 billion in cash, a portion of which will be funded by a special distribution of $600 million to be paid by us to AIG upon consummation of the transaction, and approximately 97.6 million newly-issued AerCap common shares. We may face increased and additional risks during the pendency of our sale and, if the sale is consummated, after the sale is completed.

Significant conditions precedent must be satisfied in order for AIG to complete the sale of our common stock on the agreed terms.

The completion of AIG's sale of ~~up to 90.0% of~~ our common stock depends on the satisfaction, or waiver, of a number of closing conditions, including:

•: approvals or non-disapprovals from antitrust and other regulatory bodies; and

In addition to other customary termination events, the share purchase agreement allows termination (i) by AIG or the investor group if the closing of the transaction has not occurred on or before May 15, 2013, subject to an extension to June 17, 2013 by AIG in the event the transfer of aircraft into trusts has not occurred by then; or (ii) by AIG if the investor group has not paid the applicable deposit into escrow upon the later of ten days after approval of the transaction by CFIUS and March 15, 2013. 30

Any relevant regulatory body may refuse its approval or may seek to make its approval subject to compliance by us or the investor group with unanticipated or onerous conditions, or, even if approval is

Table of Contents

•: the amendment or waiver of financial covenants contained in certain of our debt agreements that otherwise would be triggered by the sale.

~~not~~ Any relevant regulatory body may refuse its approval or may seek to make its approval subject to compliance by us or AerCap with unanticipated or onerous conditions, or, even if approval is not required, the regulator may impose requirements on us subsequent to the completion of the sale of our common stock to ~~the investor group~~AerCap. AIG or ~~the~~AerCap ~~investor group~~ may not agree to those conditions or requirements.

~~There~~In isaddition ~~also~~to noother ~~assurance~~customary ~~that~~termination weevents, ~~will~~the beAerCap ~~able~~Share toPurchase ~~transfer~~Agreement ~~title~~allows termination by (i) Seller or Purchaser if the closing of ~~all~~the 66AerCap ~~aircraft~~Transaction has not occurred on or before September 16, 2014 (the "Long-Stop Date"), subject to ~~voting~~an ~~trusts~~extension ~~with~~to aDecember 16, ~~voting~~2014 ~~trustee~~for the receipt of certain approvals; (ii) AIG, Seller or Purchaser in the event that isapprovals aor ~~United~~non-disapprovals ~~States~~from ~~citizen~~certain ~~prior~~regulatory tobodies ~~June~~have not been obtained by the Long-Stop Date (as extended); (iii) 17AIG or Seller, ~~2013~~if the AerCap board of directors withdraws or adversely modifies its approval of the AerCap Transaction; or (iv) AIG or Seller if all conditions are satisfied, AIG and Seller are prepared to close but Purchaser fails to close the AerCap Transaction as required.

Because of the significant closing conditions and termination rights applicable to the sale, AIG may not complete the sale of ~~up to 90% of~~ our common stock to ~~the~~AerCap ~~investor group~~ or the closing of the sale may be be delayed.

Failure to complete the sale of ~~up to 90% of~~ our common stock to ~~the~~AerCap ~~investor group led by Mr. Xianding~~ could create uncertainty among investors, lenders, lessees and manufacturers regarding our long-term strategy, which could lead to increased borrowing costs, less access to funds, lower lease revenues and an inability to add desirable new aircraft to our fleet.

A delay in the closing of the sale of ~~up to 90% of~~ our common stock to ~~an investor group~~AerCap, or the failure to complete such sale as planned, may create uncertainty among investors, lenders, lessees and manufacturers regarding our long-term strategy, which could: (i) make investors and lenders less willing to lend us money on agreeable terms and consequently increase our borrowing costs and limit our ability to borrow additional funds; (ii) make lessees less willing to lease our aircraft, which would negatively affect our lease revenues; and (iii) make aircraft manufacturers less willing to sell aircraft to us on favorable terms, thereby preventing us from adding modern and desirable aircraft to our fleet.

~~Conflicts~~The announcement of ~~interest~~the ~~may~~sale ~~arise~~of ~~between~~our uscommon ~~and~~stock ~~our~~by ~~investors~~AIG ~~that~~ could beadversely ~~resolved~~impact ~~in a manner unfavorable to~~ us.

~~Conflicts~~The announcement of ~~interest~~the ~~may~~sale ~~arise~~of ~~between~~our ~~us,~~common ~~the~~stock ~~investor~~by ~~group~~AIG ~~and~~could ~~AIG.~~cause ~~Potential~~disruptions ~~conflicts~~in ~~could~~our ~~arise,~~business. ~~for~~For example, ~~over~~we ~~matters~~may ~~such~~find it more asdifficult to obtain capital during the ~~desirability~~pendency of anour ~~acquisition~~sale ~~opportunity~~to AerCap, ~~employee~~which ~~retention~~could orincrease ~~recruiting~~our borrowing costs and limit our ability to borrow additional funds. In addition, our customers may refrain from leasing or re-leasing our ~~dividend~~aircraft ~~policy~~until they determine whether the sale will affect our business, including, but not limited to, the pricing of our leases, the availability of certain aircraft, and ~~these~~our ~~conflicts~~customer support. Our customers may bealso ~~resolved~~choose into alease ~~manner~~aircraft ~~that~~and ispurchase ~~unfavorable~~services from our competitors until they determine whether the sale will affect our business or our relationship with them. Uncertainty concerning potential changes to us and our business could also harm our ability to enter into agreements with new customers.

The share ~~announcement~~purchase ofagreement governing the sale ofsubjects upus to ~~90%~~certain operating covenants before the closing of ~~our~~the ~~common~~transaction. ~~stock~~These covenants include a requirement that ILFC continue to conduct business in the ordinary course, seek approval from AerCap before taking certain actions and seek waivers or amendments to certain financing agreements containing covenants that would otherwise be triggered by ~~AIG~~the transaction. The agreement also places certain restrictions on the operations of the company, including, with respect to leasing, acquisitions, dispositions, indebtedness, human resource and other matters. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the sale that could ~~adversely~~be favorable ~~impact~~to us and our investors.

The announcement of the sale of up to 90% of our common stock by AIG could cause disruptions in our business. For example, our customers may refrain from leasing or re-leasing our aircraft until they determine whether the sale will affect our business, including, but not limited to, the pricing of our leases, the availability of certain aircraft, and our customer support. Our customers may also choose to lease aircraft and purchase services from our competitors until they determine whether the sale will affect our business or our relationship with them. Uncertainty concerning potential changes to us and our business could also harm our ability to enter into agreements with new customers. In addition, key personnel may depart for a variety of reasons, including perceived uncertainty regarding the effect of the sale on their employment. The pendency of the sale could also divert the time and attention of management from our ongoing business operations. 31

The share purchase agreement governing the sale generally requires us to operate our business in the ordinary course pending the completion of the sale and restricts our ability to take certain actions until the sale is complete or the share purchase agreement is terminated including, without limitation, acquiring and selling assets, incurring indebtedness, incurring liens, and disposing of subsidiaries. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the sale that could be favorable to us and our investors.

Table of Contents

In addition, Ifkey ~~AIG~~personnel ~~completes~~may ~~the~~depart ~~anticipated~~for ~~sale~~a ofvariety ~~up to 90%~~ of ~~our common stock~~reasons, weincluding ~~will~~perceived ~~apply~~uncertainty ~~purchase~~regarding ~~accounting, which will adjust~~ the ~~carrying~~effect ~~value~~ of ~~our~~the ~~assets~~sale ~~and~~on ~~liabilities to~~ their ~~then-current fair value~~employment. ~~This~~The ~~adjustment~~pendency ~~could cause us to violate certain financial covenants under some~~ of ~~our~~the ~~debt~~sale ~~agreements, which~~ could ~~result~~also divert in the ~~acceleration~~time ofand ~~some~~attention ~~or all~~ of management from our ~~debt~~ongoing ~~obligations~~business operations.

~~We are subject to various covenants under our existing debt agreements, including financial covenants in certain of our debt agreements~~The ~~that~~resulting ~~require~~distraction uscould tonegatively ~~maintain~~affect a minimum net worth, maximum consolidated debt to consolidated net worth ratio, and maximum consolidated debt to shareholder's equity ratio. If AIG completes the currently anticipated sale of up to 90% of our ~~common~~ongoing ~~stock~~business ~~to an investor group~~operations, ~~we will apply purchase accounting at the time the sale is completed,~~ which ~~will adjust the carrying value of our assets and liabilities to their then-current fair value. We expect this to result in a decrease in the carrying value of our assets and equity, which~~ could cause us to breach certain financial covenants. If we violate these covenants, the relevant lenders could choose to accelerate the payment of these debt obligations. Additionally, violations of these covenants could trigger cross-default or cross-acceleration provisions in our other debt agreements. There can be no assurance that we will be able to obtain waivers or amendments relating to these financial covenants and an acceleration of our debt obligations could have a material adverse effect on our financial condition and results of operations.

~~Additionally, under~~ ~~the~~The ~~terms~~integration of ~~our~~ILFC ~~subordinated~~with ~~debt,~~AerCap if we do not maintain a minimum ratio of tangible equity to total managed assets or a minimum fixed charge coverage ratio and the contribution agreements from AIG relating to such subordinated debt have been terminated following the anticipated sale of our common stock, and we are unable to raise sufficient capital from the issuance of our stock to cover interest payments due on the next interest payment date, we will be required to defer interest payments on the subordinated debt and prohibited from paying cash dividends on our capital stock until we are in compliance with both financial covenants or have raised sufficient capital to pay all accumulated and unpaid interest on the subordinated debt. The application of purchase accounting could ~~result in our ratio of tangible equity to total managed assets falling below the minimum requirement. If that occurs and the contribution agreements are terminated, there can~~ be ~~no assurance~~less ~~that~~successful wethan ~~will be able to raise sufficient capital from the issuance of our stock to cover the required interest payments~~anticipated.

Following Wethe ~~may~~sale ~~not~~of our common stock to AerCap, management of the combined company will need to integrate the ILFC and AerCap assets, facilities, systems, platforms, cultures and personnel (including senior management). Concluding a successful integration is likely to be complex and costly, and to absorb substantial amounts of management's time and attention. Even if we are able to ~~obtain~~integrate ~~financing~~our ~~following~~business operations successfully, there can be no assurance that we will realize the full benefits of synergies, cost savings, and operational efficiencies that are currently expected, or that these benefits will be achieved within the anticipated time frame. Additionally, as a condition to their approval of the sale of our common stock to AerCap, regulatory authorities may impose requirements or limitations, or require divestitures or place restrictions on ~~terms~~the asconduct ~~favorable~~of asthe combined company's business, that impair its ability to realize the anticipated benefits of the sale. If the integration process is less successful or takes longer than anticipated, we could ~~obtain~~face the loss of key personnel or strained relationships with customers and manufacturers. In addition, we could face financial, operational and other risks as a ~~wholly~~result ~~owned~~of ~~subsidiary~~the acquisition not currently anticipated. Any of ~~AIG~~these risks could have a material adverse effect on our financial condition and results of operations.

~~Although~~ ~~neither~~Following ~~AIG~~the ~~nor~~acquisition ~~any~~ of ~~its subsidiaries is a co-obligor or guarantor of~~ our ~~debt~~common ~~securities,~~stock ~~we have benefited in the past~~ from AIG's, ~~strong~~AerCap ~~credit~~may ~~rating~~effect asa itreorganization ~~enabled us to finance the purchase~~ of our ~~aircraft~~corporate atstructure ~~rates~~and ~~that~~assets, ~~were~~which ~~likely~~may ~~cheaper than rates we would have been able to obtain if we were~~ not ~~a wholly owned subsidiary of AIG. Although we believe we will~~ be ~~able~~completed ~~to access additional sources of funding as a result of our anticipated sale to the investor group~~successfully, ~~our~~or at ~~cost of funding may increase~~all.

Following ~~The~~the ~~terms~~sale of ~~certain~~our ~~arrangements~~common westock ~~have~~by ~~with~~ AIG, AerCap may beeffect ~~more~~a ~~favorable~~reorganization ~~than~~of weour ~~will~~corporate bestructure ~~able~~and assets to ~~obtain~~achieve ~~from~~its tax anand ~~unaffiliated~~financing ~~third~~goals ~~party~~going forward. WeThe details of the reorganization plan have not been finalized, but AerCap has indicated that the reorganization may result in a significant amount of our income being taxed in Ireland. There can be ~~unable~~no toassurance ~~replace~~that the ~~services~~ ~~AIG~~plan ~~provides~~will tobe uscompleted successfully, if at all, or that AerCap will be successful in realizing any particular tax savings or other benefits as a ~~timely~~result ~~manner~~of the plan. Accordingly, the capital structure of ILFC or onthe ~~comparable~~combined ~~terms~~entity following the completion of such a plan is not known to us at this time.

We ~~have~~cannot apredict ~~cost~~what ~~sharing~~impact ~~agreement~~the ~~with~~sale ~~AIG, under which AIG generally provides for allocation~~ of ~~corporate~~us ~~costs~~to ~~based~~AerCap ~~upon~~will ~~a proportional~~have ~~allocation~~on ofour ~~costs~~ability to ~~all~~obtain ~~AIG~~financing ~~subsidiaries.~~and ~~Services~~our ~~include~~borrowing ~~tax~~costs, ~~finance,~~in ~~legal,~~part ~~compliance,~~because ~~and~~our ~~management~~financing ~~services.~~strategy ~~We intend to transition all services provided to us by AIG to third~~may ~~parties~~change atafter ~~or before~~ the ~~time that AIG completes the anticipated~~ sale ~~of our common stock~~. ~~Our third party vendors may not provide the same level of service as AIG and we may not be able to replace these services in a timely manner, or on comparable terms.~~

34 We do not know how the market will react to the sale of our common stock to AerCap. For instance, although neither AIG nor any of its subsidiaries is a co-obligor or guarantor of our debt securities, we have benefited in the past from AIG's credit rating. If the market believes there are increased credit risks because of our sale from AIG to AerCap, our borrowing costs could increase or the rating agencies could take negative actions with respect to our ratings, which could make it more difficult for us to obtain financing at similar terms that we have received prior to the sale. In addition, the management of the new combined company may significantly change the capital structure and financing strategy of the new company. These changes could also have a direct impact on our borrowing costs and ability to obtain financing on desired terms. As noted in "Risks Relating to Our Business—We will need additional capital to finance our operations, including purchasing aircraft, servicing our existing indebtedness, including refinancing our indebtedness as it matures, and meeting our other contractual leasing commitments. We may not be able to obtain additional capital on favorable terms, or at all," we will require additional capital to purchase new and used flight equipment, make progress

Table of Contents

payments during aircraft construction and repay our maturing debt obligations and our ability to obtain financing at competitive terms is critical to our success.

In addition, as noted in "Risks Relating to Our Business—Our substantial level of indebtedness could adversely affect our ability to fund future needs of our business and to react to changes affecting our business and industry," we and certain of our subsidiaries will become guarantors of certain AerCap debt."

Our historical financial information may not be a reliable indicator of our future results.

If AIG completes the anticipated sale of our common stock, the historical financial information included in this Annual Report on Form 10-K may not be a reliable indicator of our future financial condition, results of operations, or cash flows. This is primarily a result of the following factors:

•: we will apply purchase accounting at the time of the sale and the carrying values of our assets and liabilities will generally be adjusted to their then-current fair values;
•: we will adopt AerCap's accounting policies, which will impact the timing and amount of future revenues and expenses that we would recognize in our results of operations and may impact the classification of amounts recorded in our financial statements in subsequent periods;
•: our effective tax rate may be different from our historical effective tax rate because we will no longer be subject to the tax sharing agreement with AIG, which will terminate upon the sale, and we will not be included in AIG's tax returns;
•: significant changes may occur in our cost structure, financing and business operations as a result of our separation from AIG. These changes could result in increased costs associated with reduced economies of scale and costs for services currently provided by AIG;
•: the need for additional personnel to perform services currently provided by AIG;
•: we may incur higher costs on vendor services previously provided to us under AIG volume discounts; and
•: election under IRC 338(h)(10) is expected to be made with respect to the sale such that we will adjust our historical tax basis and our historical deferred taxes.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

Aircraft Portfolio

As of December 31, ~~2012~~2013, we owned ~~919~~911 aircraft in our operating lease portfolio and had 15 22 additional aircraft in our ~~fleet~~ fleet classified as finance and sales-type leases. Our fleet iswas comprised of 7273% narrowbody (single-aisle) aircraft and 2827% widebody (twin-aisle) aircraft, with 53% representing Airbus models and 47% representing Boeing models. At December 31, ~~2012~~2013, the weighted average age of ~~the aircraft in~~ our ~~fleet~~owned aircraft, weighted by the net book value of ~~our~~such aircraft, was 8.37 years and approximately 7269% of the aircraft in our fleet were less than 12 years old.

3533

Table of Contents

The following table provides details on our operating lease portfolio by aircraft type, including the scheduled lease expirations (for the minimum non-cancelable period which does not include contracted unexercised lease extension options) by aircraft type, as of December 31, ~~2012~~2013:

Aircraft Type
737 Classic	9	93	13	35	41	1—	—	—	—	—	—	—	—	21		27
737NG	1224	2528	2939	3946	4527	2519	118	58	14	4	14	139	32	2232		~~214~~
747-400	21	37	63	1—	—	—	—	—	—	—	—	—	—	11		12
757-200	67	175	97	98	45	53	1	—	—	—	—	—	—	36		50
767-200		1														1
767-300	6	11	5	9	12	1	2	—	—	—	—	—	—	46
767-300	9	10	13	6	7	5										50
777-200	2	3	4	6	13	1	—	—	2	5	1	—	—	37
777-200	2	2	3	5	11	14										37
777-300	—	3	—	6	13	8	—	1	—	—	1	2	—	34
777-300			3		7	13	8		1			1				33
787-8	—	—	—	—	—	—	—	—	—	3	—	—	—	3
A310	1—	1	—	—	—	1—	—	—	—	—	—	—	—	1		2
A319	45	1920	2224	2115	1511	810	823	139	65	5—	—	—	—	122		~~121~~
A320	915	1925	3340	4423	2520	15	1014	4	1	3	3—	—	—	160		~~162~~
A321	29	226	724	2514	913	76	45	59	2—	1	—	—	—	87		83
A330-200	4	58	149	913	139	91	8	45	31	—	—	—	—	58		61
A330-300	43	42	32	3	31	2	1	—	—	4	1	—	—	19		18
A330-300LGW	—	4	61	1	2—	1	1—	—	—	—	—	—	—	7		10
A340-300	23	34	34	4	2—	1	1—	—	—	—	—	—	—	16		15
A340-600	1	15	4—	2	24	41	1—	—	—	—	—	—	—	13		13
MD-11	1	1	1	1—	—	—	—	—	—	—	—	—	—	3		3
Total	68	140	157	171	149	107	45	31	13	9	3	14	3	2		912	(a)(b)

Total	90	136	166	155	129	69	62	36	13	20	17	11	2	906	(a)

(a)~~Includes~~Total ~~four~~ aircraft ~~that~~excludes ~~were~~five ~~formerly on lease to Kingfisher Airlines, which recently ceased operations, as further discussed in "Overview" herein, and were subject to a follow-on lease at December 31, 2012, but which~~ aircraft ~~we have experienced difficulty repossessing from India. Excludes seven aircraft~~ not subject to a lease or letter of intent as of December 31, ~~2012,~~2013. All five of ~~which~~these ~~have~~aircraft ~~been~~are orlikely ~~may~~to be parted out or sold ~~but~~and are not being remarketed for lease. These aircraft did not meet the criteria for being classified as held for sale ~~and~~as ~~two~~ of ~~which~~December 31, ~~were~~2013. ~~formerly~~Also, onexcludes ~~lease~~nine ~~to Kingfisher Airlines. (b)Excludes four~~ aircraft owned and leased by AeroTurbine.

As of February 2524, ~~2013~~2014, 2936 of the 6890 aircraft with lease expiration dates in ~~2013~~2014 were not yet subject to a signed lease agreement or a signed letter of intent following the expiration of their current leases. Of these 2936 aircraft, 1719 may be parted -out or sold but did not meet the criteria for being classified as held for sale. If the current customers of the remaining 12 17 aircraft do not extend their leases, we will be required to find new customers for these aircraft.

Our lease agreements generally require lessees to notify us six to twelve months in advance of the lease's expiration if a lessee desires to renew or extend the lease. Generally, more than 50% of our leases are extended beyond their initial term. Requiring lessees to provide us with advance notice provides our management team with an extended period of time to consider a broad ~~set~~ range of alternatives with respect to the aircraft, including assessing general market and competitive conditions and preparing to re-lease, sell or part-out the aircraft. If a lessee fails to provide us with notice, the lease will automatically expire at the end of the term, and the lessee will be required to return the aircraft pursuant to the conditions in the lease. Our leases contain detailed provisions regarding the required condition of the aircraft and its components upon redelivery at the end of the lease term.

We typically contract to re-lease aircraft before the end of the existing lease term and for aircraft returned before the end of the lease term, we have generally been able to re-lease aircraft within two to six months of their return. We have an average aircraft on-lease percentage of approximately 99% over the last five years. We may also sell our leased aircraft at or before the expiration of their leases. The buyers of our aircraft include the aircraft's lessees, other aircraft operators, financial institutions, private investors and third party lessors. Occasionally, we purchase aircraft with the intent to resell them.

3634

Table of Contents

The buyers of our aircraft include the aircraft's lessee and other aircraft operators, financial institutions, private investors and third party lessors. Occasionally, we purchase aircraft with the intent to resell them.

Commitments

Management frequently reviews opportunities to acquire suitable aircraft based not only on market demand and customer airline requirements, but also on our fleet portfolio mix, leasing strategies, and likely timeline for development of future aircraft. Before committing to purchase specific aircraft, management takes into consideration factors such as estimates of future values, potential for remarketing, purchase price, trends in supply and demand for the particular type, make and model of aircraft and engines, trends in local, regional, and worldwide air travel, fuel economy, environmental considerations (e.g., nitrogen oxide emissions, noise standards), operating costs, anticipated obsolescence, and the overall economics of the transaction.

At December 31, ~~2012~~2013, we had committed to purchase the following ~~229~~335 new aircraft with aggregate estimated total remaining payments (including ~~adjustment~~adjustments for ~~anticipated~~certain contractual ~~inflation~~escalation provisions) of approximately $1721.57 billion, scheduled for delivery as shown below.

Aircraft Type
737-800(a)	1115	814	141	1—	—	—	—	34—		—	30
787-8/9(b)	6	12	12	10	13	17	4	74
787-8/9(b)(c)	13	13	10	13	17	4	—	—		—	70
777-300(c)	1							1
A321-200(d)	2	13	—	—	—	—	—	—		—	15
A320neo/A321neo(b)			1	16	41	42		100
A320neo/A321neo(c)	—	1	16	41	42	30	20	—		—	150
A350XWB-800/900			4	8	6	2		20
A350XWB-900	—	2	8	8	2	—	—	—		—	20
Total(d)	18	20	31	35	60	61	4	229	(e)
E190-E2/E195-E2	—	—	—	—	5	14	14	14		3	50

Total(e)	30	43	35	62	66	48	34	14		3	335

(a)Includes ~~three~~ten new aircraft to be acquired pursuant to sale-leaseback transactions. (b)WeIncludes ~~have~~two ~~certain contractual rights for minor model substitution. (c)Consists of one~~ new aircraft to be acquired pursuant to a sale-leaseback ~~transaction,~~transactions. (c)We also ~~which~~have ~~was~~certain ~~delivered~~contractual ~~subsequent~~rights tofor ~~December 31, 2012~~minor model substitution. (d)~~Excludes~~Our ~~our~~obligation ~~right~~ to purchase 50nine ~~additional~~of ~~A320neo~~the ~~family~~15 aircraft is contingent upon the occurrence of certain events. (e)Excludes ~~five~~one used aircraft and ~~nine~~13 engines we had committed to purchase as of December 31, ~~2012~~2013, and AeroTurbine commitments to purchase ~~one~~two used aircraft and ~~three~~two engines. ~~Also excludes 15 Boeing 737-800 and one Boeing 777-300ER, with delivery dates in 2013 and 2014, we agreed to purchase from and lease back to~~ ~~American~~ ~~Airlines on March 1, 2013.~~

All of our scheduled deliveries of new aircraft in the above table are for modern, fuel-efficient aircraft. We will be the first aircraft leasing company to offer the Airbus A320neo family aircraft with the initial ~~deliveries~~delivery scheduled for 2015. Weand ~~believe~~the ~~these~~Embraer ~~aircraft~~E-jets ~~will~~E2 ~~provide~~aircraft ~~significant~~with ~~value~~the ~~and~~initial ~~strong~~delivery ~~returns~~scheduled ~~on investment~~for 2018. We ~~have~~believe ~~also~~these ~~agreed~~aircraft towill ~~purchase~~provide ~~five~~significant ~~used~~value and ~~aircraft~~strong ~~from~~returns ~~third~~on ~~parties~~investment.

We anticipate that a portion of the aggregate purchase price of these aircraft will be funded by incurring additional debt. The ~~exact~~ amount of the indebtedness to be incurred will depend, in part, upon the ~~actual~~final purchase price of the aircraft, which can vary due to a number of factors, including inflation.

The new aircraft listed above are primarily being purchased pursuant to purchase agreements with each of Boeing, Airbus and ~~Airbus~~Embraer, with the remainder being purchased through sale-leaseback transactions with our airline customers. The agreements with Boeing, Airbus, and ~~Airbus~~Embraer establish the pricing formulas (~~which~~including ~~include certain price~~ adjustments ~~based~~for ~~upon~~certain ~~inflation and~~contractual ~~other factors~~escalation provisions) and various other terms with respect to the purchase of aircraft. Under certain circumstances, we have the right to alter the mix of aircraft type ultimately acquired. As of December 31, 2013, we had made non-refundable deposits (exclusive of capitalized interest) with respect to the aircraft which we have

3735

Table of Contents

~~the~~committed ~~mix~~to purchase of ~~aircraft~~approximately ~~type ultimately acquired~~$411. ~~As of December~~7 ~~31,~~million ~~2012, we had made non-refundable deposits (exclusive of capitalized interest)~~ with ~~respect to the aircraft which we have committed to purchase and the additional 50 Airbus A320neo family aircraft that we have rights to purchase~~Boeing, ~~of approximately~~ $~~331~~124.16 million with ~~Boeing~~Airbus and $967.45 million with ~~Airbus~~ Embraer.

As of February 2524, ~~2013~~2014, we had entered into contracts for the lease of new aircraft scheduled to be delivered through ~~2019~~2022 as follows:

Delivery Year
2013	18	18	100	%
2014	30	30	100	%
2014	20	17	85
2015	43	38	88
2015	31	20	65
2016	35	22	63
2016	35	18	51
2017	62	21	34
2017	60	10	17
2018	66	12	18
2018	61	—	—
2019	48	—	—
2019	4	—	—
2020	34	—	—
2021	14	—	—
2022	3	—	—

We will need to find customers for aircraft presently on order and for any new aircraft ordered that are not subject to a lease or sale contract, and we will need to arrange financing for portions of the purchase price of such equipment.

Facilities

Our headquarters are located at 10250 Constellation Blvd., Suite 3400, Los Angeles, California 90067. We occupy space under a lease which expires in 2015. As of December 31, ~~2012~~2013, we occupied approximately 127,000 square feet of office space and leased an additional 22,000 square feet of office space that is ~~currently~~ currently subleased to third parties. Additionally, we occupy approximately 16,000 square feet of office space in Amsterdam and have small regional offices in ~~Beijing,~~ Dublin, Seattle, and Singapore.

Through our AeroTurbine subsidiary we also occupy approximately ~~150~~264,000 square feet of space ~~used~~near asMiami, anFlorida ~~office~~that ~~and~~is ~~warehouse~~used ~~located~~as ~~near~~ the ~~Miami~~corporate ~~International~~office ~~Airport~~and ~~in Florida~~warehouse, under a lease ~~which~~ that expires in ~~January~~March ~~2014~~2024. ~~AeroTurbine~~This ~~has~~facility ~~entered~~replaces ~~into~~AeroTurbine's aprevious ~~new~~Miami lease for office and warehouse ~~lease~~space inunder ~~the~~which ~~Miami~~AeroTurbine ~~area~~occupied ~~for~~ approximately ~~200~~150,000 square feet, ~~which~~near ~~will~~the ~~replace its existing~~ Miami International ~~facility,~~Airport. ~~commencing~~We inalso ~~November~~lease ~~2013~~approximately ~~and~~1,100,000 ~~expiring~~square feet in ~~October 2023. We also lease~~ AeroTurbine's Goodyear facility in Arizona, which includes antwo ~~approximately~~hangars ~~795,000 square foot hangar~~ and substantial additional space for outdoor storage of aircraft, pursuant to a long-term leases that expire in 2018 and 2026. AeroTurbine also leases approximately 5,000 square feet of office space in the United Kingdom, pursuant to a lease that expires in ~~2026~~May 2023.

Item 3. Legal Proceedings

Legal Proceedings

Yemen Airways-Yemenia: We are named in a lawsuit in connection with the 2009 crash of ~~our~~an Airbus A310-300 aircraft onowned by ILFC and on lease to Yemen Airways-Yemenia, a Yemeni carrier. The plaintiffs are families of deceased occupants of the flight and seek unspecified damages for wrongful death, costs, and fees. The operative litigation commenced in January 2011 and is pending in the United States District Court for the Central District of California. ~~The~~On ~~Yemenia~~February 18, ~~lawsuit~~2014, isthe district court granted summary judgment in ~~its~~our ~~incipient~~favor ~~stages~~and dismissed all of plaintiffs' remaining claims. WeThis order remains subject to plaintiffs' right to appeal but we believe that we have substantial defenses on the merits and that we are adequately covered by available liability insurance. We do not believe that the outcome of the Yemenia lawsuit will have a material effect on our consolidated financial condition, results of operations or cash flows.

3836

Table of Contents

Air Lease: On April 24, 2012, ILFC and AIG filed a lawsuit in the Los Angeles Superior Court against ILFC's former CEO, Steven Udvar Hazy, Mr. Hazy's current company, Air Lease Corporation (ALC), and a number of ~~ILFC~~ALC's ~~former~~ officers and employees who ~~are~~were ~~currently~~formerly employed by ~~ALC~~ILFC. The lawsuit alleges that Mr. Hazy and the ~~former~~ former officers and employees, while employed at ILFC, diverted corporate opportunities from ILFC, misappropriated ILFC's trade secrets and other proprietary information, and committed other breaches of their fiduciary duties, all at the behest of ALC. The complaint seeks monetary damages and injunctive relief for breaches of fiduciary duty, misappropriation of trade secrets, unfair competition, and various other violations of state law. ~~The litigation is in its incipient stages.~~

WeOn ~~are~~August 15, ~~also~~2013, ALC filed a ~~party~~cross-complaint against ILFC and AIG. Relevant to ~~various~~ILFC, ~~claims~~ALC's ~~and~~cross-complaint ~~litigation~~alleges ~~matters~~that ~~arising~~ILFC inentered ~~the~~into, ~~ordinary~~and ~~course~~later ofbreached, ~~our~~an ~~business.~~agreement Weto sell doaircraft ~~not~~to ~~believe~~ALC. ~~that~~Based on these allegations, the ~~outcome~~cross-complaint ofasserts ~~any~~a claim against ILFC for breach of ~~these~~contract. ~~matters,~~The ~~individually~~cross-complaint ~~or in~~seeks ~~the~~significant ~~aggregate,~~compensatory ~~will~~and bepunitive ~~material~~damages. toWe believe ~~our~~we ~~consolidated~~have ~~financial~~substantial ~~position,~~defenses ~~results~~on ofthe ~~operations~~merits orand ~~cash~~will ~~flows~~vigorously defend ourselves against ALC's claim.

We are also a party to various claims and litigation matters arising in the ordinary course of our business. We do not believe that the outcome of these matters, individually or in the aggregate, will be material to our consolidated financial condition, results of operations or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

We are an indirect wholly-owned subsidiary of AIG and our common stock is not listed on any national exchange nor is it traded in any established market. We have not paid any dividends on our common stock since 2008. Under the most restrictive provision of our debt agreements, we currently may declare and pay dividends of up to $12.67 billion of our consolidated retained earnings. Under the terms of our subordinated debt, we may be restricted from paying cash dividends on our capital stock in the future if we fail to comply with certain covenants. See Note K~~—"Debt~~ ~~Financing—Subordinated Debt"~~ of Notes to Consolidated Financial Statements for additional information.

On December 916, ~~2012~~2013, AIG ~~and~~entered into an ~~investor~~agreement ~~group~~with ~~led~~AerCap byand ~~Mr. Weng~~AerCap ~~Xianding~~Ireland Limited, ~~the~~a ~~Chairman~~wholly-owned subsidiary of ~~New~~AerCap, ~~China~~for ~~Trust~~the sale of 100 Copercent of our common stock for consideration consisting of $3.0 ~~Ltd.~~billion in cash, ~~announced~~a ~~that~~portion ~~they~~of ~~have~~which ~~entered~~will ~~into~~be funded by a ~~share~~ ~~purchase~~special ~~agreement~~distribution ~~under~~of ~~which~~$600.0 million to be paid by us to AIG ~~will~~upon ~~sell~~consummation 80of the transaction, and approximately 97.1%6 million ofnewly-issued ~~our~~AerCap ~~equity~~common toshares. ~~the~~The ~~investor~~consideration ~~group~~has ~~for~~a value of approximately $45.24 billion inbased ~~cash,~~on ~~with~~AerCap's anpre-announcement ~~option~~closing price ~~for~~per ~~the~~share ~~investor~~of ~~group~~$24.93 on December 13, 2013. The transaction is subject to ~~buy~~required anregulatory ~~additional 9~~approvals, including all applicable U.9%S. ~~stake~~and foreign regulatory reviews and approvals, as well as other customary closing conditions. The ~~sale~~transaction was approved by AerCap shareholders on February 13, 2014 and is expected to close in ~~2013~~2014.

Item 6. Selected Financial Data

The following table summarizes selected consolidated financial data and certain operating information of the Company. The selected consolidated financial data should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and accompanying notes included elsewhere herein.

Table of Contents

Items Affecting Comparability between Periods

The following are significant items that affected the comparability between periods:

•: We incurred significant impairment charges in 2011 and 2013.
•: We acquired AeroTurbine on October 7, 2011, and 2012 was the first year that reflects a full year of AeroTurbine results, which contributed pre-tax income of $1.8 million, $19.4 million, and $15.1 million to 2011, 2012, and 2013 respectively.

Table of Contents

•: Global financial challenges during 2012 resulted in early returns of 55 aircraft which negatively impacted our revenues, aircraft costs and pre-tax income during this period.

	2013			2012		2011			2010			2009

	(Dollar amounts in thousands)
Statement of Operation Data:
Rentals of flight equipment	$	4,166,033		$	4,345,602	$	4,454,405		$	4,726,502		$	4,928,253
Total revenues		4,417,385			4,504,240		4,526,663			4,798,880			4,997,192
Aircraft impairment charges and fair value adjustments		1,401,400			192,362		1,737,508			1,663,189			86,332
Interest expense		1,426,900			1,555,567		1,569,468			1,567,369			1,365,490
Aircraft costs		71,594			134,825		49,673			33,352			43,935
Depreciation		1,850,303			1,918,728		1,864,735			1,963,175			1,968,981
Other expenses		463,672			331,667		339,258			336,431			149,290
Total expenses		5,213,869			4,133,149		5,560,642			5,563,516			3,614,028
(Loss) income before income taxes		(796,484	)		371,091		(1,033,979	)		(764,636	)		1,383,164
Net (loss) income		(517,083	)		410,322		(723,901	)		(495,668	)		887,175
Other Financial Data:
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends		—	(a)		1.22x		—	(a)		—	(a)		1.99x
Adjusted net debt to adjusted shareholders' equity(b)		2.5x			2.5x		2.7x			2.7x			3.1x
Balance Sheet Data:
Flight equipment, net of accumulated depreciation	$	32,453,037		$	34,468,309	$	35,502,288		$	38,515,379		$	44,091,783
Net investment in finance and sales-type leases		211,116			93,936		81,746			67,620			261,081
Total assets		36,309,117			39,810,357		39,161,244			43,308,060			46,129,024
Total secured debt		8,202,791			9,489,247		9,764,631			9,556,634			7,067,446	(c)
Total unsecured debt(d)		13,238,066			14,853,540		14,619,641			17,997,466			22,644,293
Shareholders' equity		7,442,885			7,942,868		7,531,869			8,225,007			8,655,089
Other Data:
Aircraft lease portfolio at period end(e):
Owned		911			919		930			933			993
Subject to finance and sales-type leases		22			15		7			4			11
Aircraft disposed during the period		41			33		17			61			9

(a): See Exhibit 12. In the twelve months ended December 31, 2013, 2011 and 2010, earnings were insufficient to cover fixed charges and preferred stock dividends by $821.1 million, $1,042.9 million and $772.1 million, respectively, primarily due to non-cash impairment and lease related charges aggregating $1.4 billion, $1.7 billion and $1.8 billion, respectively.

Table of Contents

	2012		2011			2010			2009		2008
	(Dollar amounts in thousands)
Statement of Operation Data:
Rentals of flight equipment	$	4,345,602	$	4,454,405		$	4,726,502		$	4,928,253	$	4,678,856
Total revenues		4,504,240		4,526,663			4,798,880			4,997,192		4,823,954
Aircraft impairment charges and fair value adjustments		192,362		1,737,508			1,663,189			86,332		—
Interest expense		1,555,567		1,569,468			1,567,369			1,365,490		1,576,664
Aircraft costs		134,825		49,673			33,352			43,935		34,613
Depreciation		1,918,728		1,864,735			1,963,175			1,968,981		1,875,640
Other expenses		331,667		339,258			336,431			149,290		253,226
Total expenses		4,133,149		5,560,642			5,563,516			3,614,028		3,740,143
Income (loss) before income taxes		371,091		(1,033,979	)		(764,636	)		1,383,164		1,083,811
Net income (loss)		410,322		(723,901	)		(495,668	)		887,175		696,045
Other Financial Data:
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends		1.22x		—	(a)		—	(a)		1.99x		1.65x
Adjusted net debt to adjusted shareholders' equity(b)		2.5x		2.7x			2.7x			3.1x		3.5x
Balance Sheet Data:
Flight equipment, net of accumulated depreciation	$	34,468,309	$	35,502,288		$	38,515,379		$	44,091,783	$	43,395,124
Net investment in finance and sales-type leases		93,936		81,746			67,620			261,081		301,759
Total assets		39,810,357		39,161,244			43,308,060			46,129,024		47,490,499
Total secured debt(c)		9,489,247		9,764,631			9,556,634			7,067,446		1,436,296
Total unsecured debt(d)		14,853,540		14,619,641			17,997,466			22,644,293		31,040,372
Shareholders' equity		7,942,868		7,531,869			8,225,007			8,655,089		7,738,580
Other Data:
Aircraft lease portfolio at period end(e):
Owned		919		930			933			993		955
Subject to finance and sales-type leases		15		7			4			11		9
Aircraft sold or remarketed during the period		18		14			59			9		11

(b): Adjusted net debt to adjusted shareholders' equity is a non-GAAP financial measure; see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measurements" for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP measure.
(c): Includes loans from AIG Funding of $3.9 billion, which was repaid in 2010.
(d): Includes subordinated debt. Includes the effect of foreign currency swaps for the debt outstanding at December 31, 2010 and 2009.
(e): See "Item 2. Properties—Aircraft Portfolio."

(a)See Exhibit 12. In the twelve months ended December 31, 2011 and 2010, earnings were insufficient to cover fixed charges by $1,042.1 million and $771.2 million, respectively, due to non-cash impairment and lease related charges aggregating $1.7 billion and $1.8 billion, respectively. (b)Adjusted net debt means our total debt, net of deferred debt discount, including current portion, less cash and cash equivalents, excluding restricted cash, and less a 50% equity credit for our $1.0 billion outstanding in hybrid instruments, as of the end of the corresponding period. Adjusted shareholders' equity means our total shareholders' equity excluding accumulated other comprehensive income (loss) and including a 50% equity credit for our $1.0 billion outstanding in hybrid instruments. Adjusted net debt and adjusted shareholders' equity are not defined under GAAP and may not be comparable

Table of Contents

to similarly titled measures reported by other companies. We have presented this measure of financial leverage because it is the way that we present our leverage to investors and because it aligns, in part, with definitions under certain of our debt covenants. Accumulated other comprehensive income (loss), which principally reflects aggregate changes in the market value of our cash flow hedges, has been excluded from adjusted shareholders' equity because it is excluded from shareholders' equity in determining compliance with our debt covenants. Total debt has been adjusted by cash and cash equivalents to better evaluate our financial condition and our future obligations that would not be readily satisfied by cash and cash equivalents on hand. Total debt and shareholders' equity are adjusted by a 50% equity credit for our $1.0 billion outstanding in hybrid instruments to reflect the equity nature of that financing arrangement and to provide information in line with our debt covenant calculations. Investors should consider adjusted net debt to adjusted shareholders' equity in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Our adjusted net debt to adjusted shareholders' equity presentation may be different from that presented by other companies.

The following table reconciles adjusted net debt to the most directly comparable GAAP measure, total debt:

	December 31,
	2012		2011		2010		2009		2008
	(Dollars in thousands)
Total debt, net of deferred debt discount, including current portion	$	24,342,787	$	24,384,272	$	27,554,100	$	29,711,739	$	32,476,668
Less: Cash and cash equivalents, excluding restricted cash		3,027,587		1,975,009		3,067,697		336,911		2,385,948
Less: 50% equity credit for $1.0 billion in hybrid instruments		500,000		500,000		500,000		500,000		500,000
Adjusted net debt	$	20,815,200	$	21,909,263	$	23,986,403	$	28,874,828	$	29,590,720

The following table reconciles adjusted shareholders' equity to the most directly comparable GAAP measure, total shareholders' equity:

	December 31,
	2012			2011			2010			2009			2008
	(Dollars in thousands)
Total shareholders' equity	$	7,942,868		$	7,531,869		$	8,225,007		$	8,655,089		$	7,738,580
Less: Accumulated other comprehensive loss		(12,491	)		(19,637	)		(58,944	)		(138,206	)		(168,065	)
Plus: 50% equity credit for $1.0 billion in hybrid instruments		500,000			500,000			500,000			500,000			500,000
Adjusted shareholders' equity	$	8,455,359		$	8,051,506		$	8,783,951		$	9,293,295		$	8,406,645

(c)Includes loans from AIG Funding for applicable periods. We repaid the loan to AIG Funding in 2010. (d)Includes subordinated debt. Includes the effect of foreign currency swaps for the debt outstanding at December 31, 2010, 2009 and 2008. (e)See "Item 2. Properties—Aircraft Portfolio."

Table of Contents

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

INDEX TO ITEM 7

Overview			42
Financial Overview			44
Recent Developments relating to Our Potential Sale			44
Capital Resources and Liquidity Developments			44
Financial Overview			45
Recent Developments relating to AIG			45
Capital Resources and Liquidity Developments			45
Recent Developments relating to Potential Sale to Investor Group			45
Our Revenues			45
Our Revenues			46
Our Operating Expenses			47
Critical Accounting Policies and Estimates			50
Results of Operations			5556
Liquidity			6463
Non-GAAP Financial Measurements			69
Variable Interest Entities			70
Off-Balance-Sheet Arrangements			7071
Recent Accounting Pronouncements			7071

Table of Contents

Overview

We are the world's largest independent aircraft lessor, measured by number of owned aircraft, with ~~over~~approximately 1,000 owned or managed aircraft. As of December 31, ~~2012~~2013, we owned ~~919~~911 aircraft in our ~~operating~~leased ~~lease~~fleet. ~~portfolio~~The ~~and~~weighted ~~four~~average ~~additional~~age ~~aircraft~~of inour ~~AeroTurbine's~~owned ~~leased fleet~~aircraft, ~~with~~weighted anby ~~aggregate~~the net book value of such aircraft, was ~~$34~~8.57 ~~billion~~years at December 31, 2013. The ~~weighted~~aggregate ~~average~~net ~~age~~book value of our ~~fleet~~flight equipment, ~~weighted~~including bynine ~~the~~additional ~~net~~aircraft ~~book~~in ~~value~~AeroTurbine's ofleased ~~our aircraft~~fleet, was 8$32.35 ~~years~~billion at December 31, ~~2012~~2013. We had 1522 additional aircraft in the fleet classified as finance and sales-type leases and provided fleet management services for 8168 aircraft. Our fleet features popular aircraft types, including both narrowbody and widebody aircraft. In addition to our existing fleet, as of December 31, ~~2012~~2013, we had commitments to purchase ~~229~~335 new aircraft, ~~for~~with delivery dates through ~~2019~~2022, including ~~four~~12 through sale-leaseback transactions. ~~The~~These new aircraft commitments are comprised of ~~100~~150 Airbus A320neo family aircraft, 20 Airbus A350 aircraft, 74up to 15 Airbus A321 aircraft, nine of which are contingent upon the occurrence of certain events, 70 Boeing 787 aircraft, 34 30 Boeing 737-800 aircraft and ~~one~~50 ~~Boeing 777~~E-~~300ER~~Jets E2 aircraft. WeIn ~~also~~addition, we have ~~the~~committed ~~rights~~ to purchase one anused ~~additional~~aircraft 50from ~~Airbus~~a ~~A320neo~~third ~~family~~party. Our new aircraft. Wecommitments ~~intend~~include to50 ~~continue~~E-Jets toE2 ~~complement~~aircraft ~~our orders~~that we contracted to purchase from ~~aircraft~~Embraer ~~manufacturers~~in ~~with~~July ~~strategic~~2013, ~~acquisitions~~marking the introduction of ~~additional~~the E-Jets aircraft ~~from~~to ~~third~~our ~~parties~~fleet, ~~which~~and ~~may~~up ~~include~~to ~~sale-leaseback~~15 ~~transactions~~Airbus ~~with~~A321 ~~airlines.~~aircraft Onthat ~~March 1,~~ we agreed to purchase from Airbus in July 2013. weThe ~~entered~~Airbus ~~into~~A321 anaircraft ~~agreement~~are committed to ~~acquire~~lease 15to ~~Boeing~~a ~~737-800~~single ~~and~~airline. ~~one~~We ~~Boeing~~intend ~~777-300ER,~~to continue to complement our orders from aircraft manufacturers with ~~delivery~~opportunistic ~~dates~~acquisitions inof ~~2013~~additional ~~and~~aircraft ~~2014~~from third parties, ~~through~~which may ainclude sale-leaseback ~~transaction~~ transactions with ~~American Airlines~~airlines. We balance the benefits of holding and leasing our aircraft and selling or parting-out the aircraft depending on economics, ~~and~~ opportunities and risks.

Under the terms of our leases, the lessee is generally responsible for all operating expenses, which customarily include maintenance, fuel, crews, airport and navigation charges, taxes, licenses, aircraft registration and insurance premiums. We, however, generally contribute to ~~the~~certain ~~first major~~ maintenance ~~event~~events a lessee incurs during the lease of a used aircraft and, if an aircraft is is returned due to a lessee ceasing operations or failing to meet its obligations under a lease, we may incur costs to repossess and prepare the aircraft for re-lease. Our leases are generally for a fixed term, although inthey ~~many~~may ~~cases~~include ~~the lessees have~~ early termination rights or extension options. Our leases require all non-contingent payments to be made in advance and our leases are predominantly ~~denominated~~ denominated in U.S. dollars. Our lessees are generally required to continue to make lease payments under all circumstances, including periods during which the aircraft is not in operation due to maintenance or grounding. We typically contract to re-lease aircraft before the end of the existing lease term. For aircraft returned before the end of the lease term due to exceptional circumstances, we have generally been able to re-lease the aircraft within two to six months of their return. The weighted average lease term remaining on our current leases, weighted by net book value of our aircraft, was 4.13 years as of December 31, ~~2012~~2013.

In addition to our leasing activities, we provide fleet management services to investors or owners of aircraft portfolios for a management fee. Through our wholly-owned subsidiary, AeroTurbine, we provide engine leasing; certified aircraft engines, airframes, and engine parts; and supply chain solutions, and we possess the capabilities to disassemble aircraft and engines into parts. These capabilities allow us to maximize the value of our aircraft and engines across their complete life cycle and offer an integrated value proposition to our airline customers as they transition out aging aircraft. At times, we also sell aircraft from our leased aircraft fleet to other leasing companies, financial services companies, and airlines. In limited cases, we have previously contracted to provide asset value guarantees to financial institutions and other third parties for a fee, some of which are still outstanding.

We continue to discuss with Lufthansa Technik a possible partnership with Lufthansa Technik through AeroTurbine. Under the potential arrangement, which is subject to final agreement, certain antitrust approvals and other customary closing conditions, AeroTurbine and Lufthansa Technik would enter into a set of commercial agreements covering the supply of AeroTurbine material to Lufthansa Technik, the purchase of maintenance services from Lufthansa Technik, and the consignment of surplus

Table of Contents

Inmaterial ~~addition~~ to ~~our leasing activities, we provide fleet management services to investors or owners of aircraft portfolios for a management fee~~AeroTurbine. ~~Through~~In ~~our~~conjunction ~~wholly-owned~~with ~~subsidiary, AeroTurbine,~~the wecommercial ~~provide engine leasing~~agreements, ~~certified~~Lufthansa ~~aircraft~~Technik ~~engines,~~would ~~airframes,~~also ~~engine~~purchase ~~parts~~from ~~and~~us ~~supply~~an ~~chain~~indirect ~~solutions,~~15% ~~and~~minority ~~possess~~interest ~~the~~in ~~capabilities to disassemble aircraft and engines into parts~~AeroTurbine. ~~This~~ ~~allows~~We uswould continue to ~~maximize~~own the remaining ~~value~~interest ofin ~~our aircraft and engines across their complete life cycle and offer an integrated value proposition to our airline customers as they transition out aging aircraft~~AeroTurbine. AtUnder ~~times~~the wepotential ~~also~~arrangement, ~~sell~~if ~~aircraft~~certain ~~from~~performance ~~our~~targets ~~leased~~are ~~aircraft~~met ~~fleet~~under tothe ~~other~~commercial ~~leasing companies~~agreements, ~~financial~~Lufthansa ~~services~~Technik ~~companies,~~would ~~and airlines. In limited cases, we have~~ also ~~provided~~be ~~asset~~able ~~value guarantees~~to ~~and~~exercise ~~loan~~an ~~guarantees~~ option to ~~buyers~~increase ofits ~~aircraft~~investment or to ~~financial institutions for a fee~~19.9%.

We operate our business on a global basis, deriving ~~more~~approximately ~~than 90~~93% of our revenues from airlines outside of the United States. As of December 31, ~~2012~~2013, we had ~~912~~906 aircraft ~~leased~~ leased under operating leases to ~~177~~168 customers in 7876 countries, with no lessee accounting for more than 10% of lease revenue for any of the years ended December 31, ~~2012~~2013, ~~2011,~~2012 or ~~2010~~2011. At December 31, ~~2012~~2013, our operating lease portfolio included ~~seven~~five aircraft not subject to a signed lease agreement or a signed letter of intent,. All five of ~~which~~these ~~have~~aircraft ~~been~~are orlikely ~~may~~to be parted out or sold ~~but~~and are not being remarketed for lease. These aircraft did not meet the criteria for being classified as held for sale ~~and~~as ~~two~~ of ~~which were formerly on lease to Kingfisher Airlines~~December 31, ~~which recently ceased operations, as further discussed below~~2013. We have 6890 aircraft that are subject to leases expiring through ~~2013~~2014, 2936 of which are not yet subject to a signed lease agreement or a signed letter of intent following the expiration of their current leases. Of these 2936 aircraft, 1719 may be parted -out or sold but did not meet the criteria for being classified as held for sale. If the current customers of the remaining 1217 aircraft do not extend their leases, we will be required to find new customers for these aircraft. We also maintain relationships with 1915 additional customers who operate aircraft we manage. Our results of operations are affected by a variety of factors, primarily:

•: the number, type, age and condition of the aircraft we own;
•: aviation industry market conditions, including events affecting air travel;
•: the demand for our aircraft and the resulting lease rates we are able to obtain for our aircraft;
•: the purchase price we pay for our aircraft;
•: the number, types and sale prices of aircraft, or parts in the event of a part-out of an aircraft, we sell in a period;
•: the ability of our lessee customers to meet their lease obligations and maintain our aircraft in airworthy and marketable condition;
•: the utilization rate of our aircraft;
•: our expectations of future overhaul reimbursements and lessee maintenance contributions;
•: changes in interest rates and credit spreads, which may affect our aircraft lease revenues and our borrowing costs; and
•: our ability to fund our business.

~~Recent~~Regional ~~challenges~~and ~~in the~~ global ~~economy,~~economic ~~including~~and ~~the~~political ~~European~~conditions ~~sovereign~~have ~~debt~~and ~~crisis,~~will ~~political~~continue ~~uncertainty~~to ininfluence ~~the~~consumer ~~Middle East~~demand, ~~and sustained higher~~ fuel prices ~~have negatively impacted many airlines' profitability, cash flows~~ and ~~liquidity, and increased~~ the ~~probability~~availability ~~that~~of ~~some~~credit ~~airlines,~~to ~~including~~the ~~our~~aviation ~~customers~~industry, ~~will~~which ~~cease~~in turn ~~operations~~impacts orairline ~~file for bankruptcy. During the year ended December 31~~profitability, ~~2012,~~cash 11flows ofand ~~our~~liquidity. ~~customers,~~Despite ~~including~~challenging ~~one~~conditions ~~with~~in ~~two~~the ~~separate~~past ~~operating~~several ~~certificates,~~years ~~ceased~~which ~~operations~~have orresulted ~~filed~~in ~~for~~airline ~~bankruptcy,~~bankruptcies ~~or its equivalent,~~ and ~~returned~~have 55negatively ofimpacted our ~~aircraft. As~~ offinancial ~~February 25~~results, ~~2013,~~we 42are ofoptimistic about the 55long-term ~~returned~~future ~~aircraft~~of ~~have~~air ~~been~~transportation ~~committed to lease~~ and 13the ~~aircraft~~growing ~~have~~role ~~been,~~that orthe ~~are~~leasing ~~intended~~industry toand beILFC, ~~parted-out~~in ~~or sold. One of these customers~~particular, ~~Kingfisher Airlines,~~will ~~ceased~~play ~~operations~~ in ~~the~~commercial ~~last~~air ~~quarter~~transport. of

At February 24, 2014, we had signed leases for all of our new aircraft deliveries through 2014. We have contracted with Airbus, Boeing and Embraer to purchase new fuel-efficient aircraft with delivery dates through 2022. These aircraft are in high demand from our airline customers. In many cases, we have delivery positions for the most modern and fuel-efficient aircraft earlier than the airlines can obtain such aircraft from the manufacturers. At December 31, 2013, we had agreements to purchase 12 new aircraft from airlines through sale-leaseback transactions with scheduled delivery dates in 2014

Table of Contents

~~2012.~~and ~~While~~2015. weWe ~~have~~believe ~~been~~that, ~~successful~~with inrespect ~~deregistering~~to our ~~six~~used ~~affected~~ aircraft, we have ~~experienced~~the ~~difficulty~~market ~~repossessing~~reach, ~~the~~visibility and understanding to best deploy our aircraft ~~from~~across ~~India~~jurisdictions. asWe are focused on increasing our presence in frontier and emerging markets that have high potential for passenger growth and other markets that have significant demand for new aircraft. We have assembled a ~~result~~highly ofskilled ~~bureaucratic~~and experienced management team and ~~regulatory~~have secured sufficient liquidity to manage through expected ~~obstacles~~market volatility. We have also demonstrated strong and sustainable financial performance through most airline industry cycles. For these reasons, we believe that we are well positioned to manage the current cycle and over the long-term.

~~Future~~ ~~events,~~ ~~including a prolonged recession, ongoing uncertainty regarding the European sovereign debt crisis, political unrest, continued weak consumer demand, high fuel prices, or~~ ~~restricted~~ Recent ~~availability~~Developments ofrelating ~~credit~~ to ~~the~~Our ~~aviation~~Potential ~~industry, could lead to the weakening or cessation of operations of additional airlines, which in turn would adversely affect our earnings and cash flows in the near term.~~ Sale

~~Despite the~~As ~~current difficulties in the global economy, we are optimistic about the long-term future~~ of ~~air transportation and the growing role that the leasing industry and ILFC, in particular, will play in commercial air transport. At February~~December 2515, 2013, wethe ~~had~~closing ~~signed leases for all~~ of our ~~new~~previously ~~aircraft~~announced ~~deliveries~~sale ~~through 2013. We have contracted with Airbus and Boeing~~ to ~~purchase~~Jumbo ~~new~~Acquisition ~~fuel-efficient~~Limited ~~aircraft~~had ~~with~~not ~~delivery~~occurred ~~dates through 2019. These aircraft are in high demand from our airline customers. In many cases, we have delivery positions for the most modern~~ and ~~fuel-efficient aircraft earlier than the airlines can obtain such aircraft from the manufacturers. We believe that~~on December 16, ~~with respect to our used aircraft~~2013, weAIG ~~have the market reach, visibility~~ and ~~understanding~~AIG toCapital ~~move~~Corporation ~~our~~terminated ~~aircraft~~the ~~across~~share ~~jurisdictions~~purchase toagreement ~~best deploy our aircraft~~ with ~~the~~Jumbo ~~world's~~Acquisition ~~airlines~~Limited. We are focused on increasing our presence in frontier and emerging markets that have high potential for passenger growth and other markets that have significant demand for new aircraft. We have assembled a highly skilled and experienced management team and have secured sufficient liquidity to manage through expected market volatility. We have also demonstrated strong and sustainable financial performance through most airline industry cycles. For these reasons, we believe that we are well positioned to manage the current cycle and over the long-term.

On December 16, 2013, AIG and AIG Capital Corporation ("Seller"), a wholly-owned direct subsidiary of AIG, entered into a definitive agreement (the "AerCap Share Purchase Agreement") with AerCap and AerCap Ireland Limited ("Purchaser"), a wholly-owned subsidiary of AerCap, for the sale of 100 percent of our common stock by Seller to Purchaser (such transaction, the "AerCap Transaction") for consideration consisting of $3.0 billion of cash, a portion of which will be funded by a special distribution of $600.0 million to be paid by us to AIG upon consummation of the transaction, and approximately 97.6 million newly-issued AerCap common shares. The consideration has a value of approximately $5.4 billion based on AerCap's pre-announcement closing price per share of $24.93 on December 13, 2013. Upon closing of the AerCap Transaction, AIG will own approximately 46 percent of the common stock of AerCap. Under the terms of the AerCap Share Purchase Agreement, consummation of the AerCap Transaction is subject to the satisfaction or waiver of a number of conditions precedent, such as certain customary conditions and other closing conditions, including the receipt of approvals or non-disapprovals from antitrust and other regulatory bodies. The AerCap Transaction was approved by AerCap shareholders on February 13, 2014 and is expected to close in 2014.

In addition to other customary termination events, the AerCap Share Purchase Agreement allows termination by (i) AIG, Seller or Purchaser if the closing of the AerCap Transaction has not occurred on or before September 16, 2014 (the "Long-Stop Date"), subject to an extension to December 16, 2014 for the receipt of certain approvals; (ii) AIG, Seller or Purchaser in the event that approvals or non-disapprovals from certain regulatory bodies have not been obtained by the Long-Stop Date (as extended); (iii) AIG or Seller, if the AerCap board of directors withdraws or adversely modifies its approval of the AerCap Transaction; or (iv) AIG or Seller if all conditions are satisfied, AIG and Seller are prepared to close but Purchaser fails to close the AerCap Transaction as required.

Under the AerCap Share Purchase Agreement, we are subject to certain operating covenants before the closing of the transaction. These covenants include a requirement that ILFC continue to conduct business in the ordinary course, seek approval from AerCap before taking certain actions, and seek waivers or amendments to certain financing agreements containing covenants that would otherwise be triggered by the transaction. The agreement also places certain restrictions on the operations of the Company, including with respect to leasing, acquisitions, dispositions, indebtedness, human resource and other matters.

In connection with our pending sale to AerCap, on January 28, 2014, we amended our $2.3 billion revolving credit facility. The amendment will only become effective upon the occurrence of certain conditions, including the consummation of the pending sale of us to AerCap. As part of the amendments to our revolving credit facility, AerCap and certain of its subsidiaries will be required to guarantee our obligations under the revolving credit facility and the cross-default provision will extend

Table of Contents

to defaults on certain indebtedness of AerCap or any of its subsidiaries that are guarantors at such time under the revolving credit agreement. The amendments to the revolving credit facility also add financial covenants and revise other financial and restrictive covenants. The new and revised financial covenants will be measured on a consolidated basis for AerCap and its subsidiaries.

Currently, under the agreement AIG has entered into with AerCap, net tax payments under our tax sharing agreement with AIG have been temporarily suspended, and our tax sharing agreement with AIG will be terminated upon the consummation of the AerCap Transaction.

Financial Overview

~~Our~~We ~~2012~~had ~~income~~a loss before income taxes ~~increased~~of by $1796.45 ~~billion~~million asfor the year ended December 31, 2013, compared to ~~2011~~income before income taxes of $371.1 million for the year ended 2012, primarily due to aimpairment charges and fair value adjustments aggregating $1.54 billion ~~decrease~~ induring ~~aircraft~~the year ended December 31, 2013. The impairment charges onrecorded ~~flight~~during ~~equipment~~the ~~held~~year primarily reflect a decrease in the estimated holding period for ~~use.~~certain ~~The~~four-engine ~~increase~~widebody aircraft in ~~income~~our ~~before~~fleet, ~~income~~primarily ~~taxes~~the Airbus A340-600. ~~was~~See ~~offset~~Note F ~~by:~~of Notes to Consolidated Financial Statements.

See "Results of Operations" herein for a detailed discussion of our results.

Capital Resources and Liquidity Developments

Significant capital resources and liquidity developments in ~~2012~~2013 include:

•: issuances of $750 million of unsecured 3.875% notes due 2018 and $500 million of unsecured 4.625% notes due 2021;
•: the issuance of $550 million of unsecured floating rate notes due 2016, bearing interest at three-month LIBOR plus a margin of 1.95%;
•: prepayment in full of our $550 million secured term loan originally scheduled to mature in April 2016, which was bearing interest at LIBOR plus a margin of 3.75%; and
•: partial prepayment and amendment of our secured term loan due June 30, 2017, reducing the outstanding principal amount from $900 million to $750 million and lowering the interest rate to LIBOR plus a margin of 2.75%, with a LIBOR floor of 0.75%, from the initial interest rate of LIBOR plus a margin of 4.0% with a 1.0% LIBOR floor.

Table of Contents

scheduled to mature in 2015; and (ii) $750 million of 5.875% notes due 2022, issued in August 2012;

Recent Developments relating to AIG

AIG has repaid all of the governmental support it received in September 2008 during the global financial crisis. This support included a credit facility from the FRBNY and funding from the Department of the Treasury through TARP. Through a series of transactions that closed on January 14, 2011, AIG exchanged various forms of government support for AIG common stock and the Department of the Treasury became AIG's majority shareholder, owning approximately 92% of outstanding AIG common stock at that time.

The Department of the Treasury, as selling shareholder, sold all of its shares of AIG common stock through six registered public offerings completed in May 2011 and March, May, August, September and December 2012. AIG purchased approximately 421 million shares of its own common stock in the first four offerings in 2012.

Recent Developments relating to Potential Sale to Investor Group

On December 9, 2012, AIG and an investor group led by Mr. Weng Xianding, the Chairman of New China Trust Co. Ltd., announced that they have entered into a share purchase agreement under which AIG will sell 80.1% of our equity to the investor group for approximately $4.2 billion in cash, with an option for the investor group to buy an additional 9.9% stake. The sale is expected to close in 2013.

The completion of the sale depends on the satisfaction or waiver of certain closing conditions, including:

In addition to other customary termination events, the share purchase agreement allows termination (i) by AIG or the investor group if the closing of the transaction has not occurred on or before May 15, 2013, subject to an extension to June 17, 2013 by AIG in the event the transfer of the aircraft into trusts has not occurred by then; or (ii) by AIG if the investor group has not paid the applicable deposit into escrow upon the later of ten days after approval of the transaction by CFIUS and March 15, 2013.

Before the closing of the transaction, we generally must seek approval from the investor group before taking any action for which we also must seek approval from our board of directors. In addition,

Table of Contents

before the closing of the transaction, we must seek waivers or amendments to certain financing agreements containing covenants that otherwise would be triggered by the transaction.

At the completion of the sale, AIG and the investor group will enter into a stockholders' agreement which, among other things, will give AIG the right to appoint one member on our board subsequent to the sale (or two, if the investor group does not elect to purchase the additional 9.9% of our common stock). See "Item 1A. Risk Factors—Risks Relating to a Change in our Majority Shareholder and Our Separation from AIG" herein for risks related to AIG's anticipated sale of us to the investor group.

Our Revenues

Our revenues consist primarily of rental of flight equipment, flight equipment marketing and gain on aircraft sales and other income.

Rental of Flight Equipment

Our leasing revenue is principally derived from airlines and companies associated with the airline industry. Our aircraft leases generally provide for the payment of a fixed, periodic amount of rent. In certain cases, our leases provide for additional rental ~~revenue~~payments based on usage. The usage may be calculated based on hourly usage or on the number of cycles operated. A cycle is defined as one take-off and landing. Under the provisions of many of our leases, we also receive overhaul rentals based on the usage of the aircraft. For certain airframe and engine overhauls, we reimburse the lessee for costs incurred up to, but generally not exceeding, related overhaul rentals that the lessee has paid to us. We recognize overhaul rental revenue net of estimated overhaul reimbursements,. ~~which~~Estimated overhaul reimbursements are recorded as deferred overhaul rentals.

We capitalize as lease incentives any amount of actual maintenance reimbursement we make in excess of overhaul rentals paid to us by the lessee and payments received from prior lessees for deficiencies in return conditions and amortize the lease incentives into Rental of flight equipment over the remaining life of the lease. 45

Table of Contents

The amount of lease revenue we recognize is primarily influenced by the following factors:

•: the contracted lease rate and overhaul rentals, which are highly dependent on the age, condition and type of the leased equipment;
•: the lessees' performance of their lease obligations;
•: the usage of the aircraft during the period; and
•: our expectations of future overhaul reimbursements.

In addition to aircraft or engine specific factors such as the type, condition and age of the asset, the lease rates for our leases may be determined in part by reference to the specified interest rate at the time the aircraft is delivered to the customer. The factors described in the bullet points above are influenced by airline industry conditions, global and regional economic trends, airline market conditions, the supply and demand balance for the type of flight equipment we own and our ability to remarket flight equipment subject to expiring lease contracts under favorable economic terms.

Because the terms of our leases are generally for multiple years and have staggered maturities, there are lags between changes in market conditions and their impact on our results, as contracts not yet reflecting current market lease rates remain in effect. Therefore, current market conditions and any potential effect they may have on our results may not be fully reflected in current results. Management monitors all lessees that are behind in lease payments, and assesses relevant operational and financial issues, in order to determine the amount of rental income to recognize for past due amounts. Lease payments are due in advance and we generally recognize rental income only to the extent we have received payments or hold security and other deposits.

Flight Equipment Marketing and Gain on Aircraft Sales

Our sales revenue is generated from the sale of our aircraft and engines and any gains on such sales are recorded in Flight equipment marketing and gain on aircraft sales. The price we receive for our aircraft and engines is largely dependent on the condition of the asset being sold, airline market conditions, funding availability to the buyer and the supply and demand balance for the type of asset we are selling. The timing of the closing of aircraft and engine sales is often uncertain, as a sale may be concluded swiftly or negotiations may extend over several weeks or months. As a result, even if sales are comparable over a long period of time, during any particular fiscal quarter or other reporting period we may close significantly greater or fewer sale transactions than in other reporting periods. Accordingly, gain on aircraft sales recorded in one fiscal quarter or other reporting period may not be comparable to gain on aircraft sales in other periods. We also engage in the marketing of our flight equipment throughout the lease term, as well as the sale of third party owned flight equipment and other marketing services on a principal and commission basis.

Table of Contents

payments are due in advance and we generally recognize rental income only to the extent we have received payments or hold security and other deposits.

Flight Equipment Marketing and Gain on Aircraft Sales

Our sales revenue is generated from the sale of our aircraft and engines and any gains on such sales are recorded in Flight equipment marketing and gain on aircraft sales. The price we receive for our aircraft and engines is largely dependent on the condition of the asset being sold, airline market conditions, funding availability to the buyer and the supply and demand balance for the type of asset we are selling. The timing of the closing of aircraft and engine sales is often uncertain, as a sale may be concluded swiftly or negotiations may extend over several weeks or months. As a result, even if sales are comparable over a long period of time, during any particular fiscal quarter or other reporting period we may close significantly more or fewer sale transactions than in other reporting periods. Accordingly, gain on aircraft sales recorded in one fiscal quarter or other reporting period may not be comparable to gain on aircraft sales in other periods. We also engage in the marketing of our flight equipment throughout the lease term, as well as the sale of third party owned flight equipment and other marketing services on a principal and commission basis.

Other Income

Other income includes (i) gross profit on sales from AeroTurbine of engines, airframes, parts and supplies; (ii) fees ~~management~~from early lease terminations; (iii) management fee revenue we generate through a variety of management services that we provide to non-consolidated aircraft securitization vehicles and joint ventures and third party owners of aircraft; and (~~iii~~iv) interest income. Income from AeroTurbine's engine, airframes, parts and supplies sales are included in Other income, net of cost of sales. The price AeroTurbine receives for engines, airframes, parts and supplies is largely dependent on the condition of the asset being sold, airline market conditions and the supply and demand balance for the type of asset being sold. Our management services may include leasing and remarketing services, cash management and treasury services, technical advisory services and accounting and administrative services depending on the needs of the aircraft owner.

~~Interest~~Our interest income is derived primarily from interest recognized on cash and short-term investments, finance and sales-type leases and notes receivables ~~issued~~recorded ~~by lessees~~ in connection with ~~lease~~ lease restructurings, or in limited circumstances, ~~issued by buyers of aircraft~~ in connection with sales of aircraft from our fleet. The amount of interest income we recognize in any period is influenced by the amount of our cash and short-term investments, the principal balance of finance and sales-type leases and notes receivable we hold, and effective interest rates~~, and adjustments to valuations or allowance for uncollectible notes receivables~~.

Our Operating Expenses

Our ~~primary~~ operating expenses primarily consist of interest on debt, depreciation, aircraft impairment charges, ~~selling~~aircraft costs, selling, general and administrative expenses and other expenses.

Interest Expense

Our interest expense in any period is primarily affected by changes in interest rates and outstanding amounts of indebtedness. ~~Since~~Between 2010, ~~several~~and the end of ~~our~~2011, ~~refinancings~~we ~~have~~entered ~~had~~into debt financings with relatively higher interest rates than the debt weoutstanding ~~replaced~~at the time, partially as a result of our initiatives to extend our debt maturities. The weighted average of our debt maturities was 6.3 years as of December 31, ~~2012~~2013. While our weighted average effective cost of borrowing, which excludes the effect of amortization of deferred debt issue ~~cost~~costs, ~~has~~ increased ~~since~~during ~~2010~~those two years, the decrease in our average debt outstanding due to our deleveraging efforts ~~has~~ offset those increases starting in late 2011. However, since the beginning of 2012, we have been able to borrow at similar or lower interest rates as compared to the debt borrowed in the 2010 and 2011. Our weighted average effective cost of borrowing was 5.94% at December 31, 2013 compared to 6.09% at December 31, 2012. Our weighted average effective cost of borrowing ~~reflects~~is our ~~composite~~ weighted average interest rate, ~~including~~plus the net effect of interest rate swaps or other derivatives and the effect of debt ~~premiums~~discounts. ~~and~~It ~~discounts~~does not include the effect of amortization of deferred debt issue costs.

During the year ended December 31, 2013, we recorded favorable adjustments to interest expense of $15.1 million and $4.4 million to correct and fully align amortization of deferred debt issue costs and debt discounts, respectively, in prior periods with the effective interest method. The effect on our weighted average effective cost of borrowing at December 31, 2013 as a result of these cumulative adjustments was insignificant. See Note A of Notes to Consolidated Financial Statements.

Table of Contents

Our total debt outstanding at the end of each period and weighted average effective cost of borrowing, which excludes the effect of amortization of deferred debt issue ~~discount~~costs, for the periods indicated were as follows:

Depreciation

WeOur ~~generally~~depreciation ~~depreciate~~expense ~~aircraft~~is ~~using~~influenced by the ~~straight-line~~adjusted ~~method~~carrying ~~over~~values aof ~~25-year~~our ~~life~~flight ~~from~~equipment, the ~~date~~depreciable ~~of manufacture~~life toand an estimated residual value of the flight equipment. ~~Management~~Adjusted ~~regularly~~carrying ~~reviews~~value ~~depreciation~~is onthe original cost of our ~~aircraft~~flight byequipment, ~~aircraft~~including ~~type~~capitalized interest during the construction phase, adjusted for subsequent capitalized improvements and ~~depreciates~~impairments. ~~the~~We generally depreciate aircraft using the straight-line method over ~~the estimated~~a ~~remaining~~25-year ~~holding~~life ~~period~~from the date of manufacture to an ~~established~~ estimated residual value. See "Critical Accounting Policies and Estimates—Flight Equipment" below. ~~Our~~However, ~~depreciation~~management regularly ~~expense~~reviews isdepreciation ~~influenced by the adjusted carrying values~~ of our ~~flight equipment,~~aircraft ~~the~~by ~~depreciable~~aircraft ~~life~~type. ~~and~~At ~~estimated~~times, ~~residual~~management ~~value~~may ofchange ~~the~~useful ~~flight~~lives ~~equipment.~~or ~~Adjusted~~residual ~~carrying~~values ~~value is the original cost~~ of ~~our~~certain ~~flight equipment~~aircraft, ~~including~~as ~~capitalized~~appropriate. ~~interest~~Any ~~during~~such ~~the construction~~changes ~~phase,~~are ~~adjusted~~accounted for on ~~subsequent~~a ~~capitalized~~prospective ~~improvements and impairments~~basis.

Aircraft Impairment Charges and Fair Value Adjustments

Management evaluates quarterly the need to perform a recoverability assessment of aircraft in our fleet considering the requirements under GAAP and performs this assessment at least annually for all aircraft in our fleet. ~~Recurring~~Recoverability ~~recoverability~~ assessments are performed whenever events or changes in circumstances indicate that the carrying amount of our aircraft may not be recoverable,. ~~which~~Some ~~may~~of ~~require~~these ~~us to change our assumptions related to future estimated cash flows. These~~ events or changes in circumstances ~~considered~~may include potential disposals of aircraft (sales or part-outs), changes in contracted lease terms, changes in the lease status of an aircraft as (leased, re-leased, or not subject to lease), repossessions of aircraft, changes in portfolio strategies, changes in demand for a particular aircraft type and changes in economic and market circumstances. Economic and market circumstances include the risk factors affecting the airline industry. Recoverability of an aircraft's

Factors that have affected impairment charges in recent years include, but are not limited to, the following: (i) unfavorable airline industry trends affecting the residual values of certain aircraft types; (ii) management's expectations that certain aircraft were more likely than not to be parted-out or otherwise disposed of sooner than 25 years; and (iii) new technological developments.

While we continue to manage our fleet by ordering new in-demand aircraft and maximize our returns on our existing aircraft, we may incur additional impairment charges in the future. Impairment charges may result from future deterioration in lease rates, net overhaul rentals and residual values,

Table of Contents

~~which~~carrying ~~can~~amount beis ~~caused~~measured by ~~new~~comparing ~~technological~~the ~~developments,~~carrying ~~further~~amount ~~sustained~~of ~~increases~~the inaircraft ~~fuel~~to ~~costs,~~the ~~prolonged~~estimated ~~economic~~future ~~distress,~~undiscounted ~~and~~cash ~~decisions~~flows expected to ~~sell~~be orgenerated ~~part-out~~by the aircraft. atIf ~~amounts~~the ~~below~~future undiscounted cash ~~net~~flows ~~book~~are ~~value.~~less ~~The~~than ~~potential~~the ~~for~~aircraft ~~impairment~~carrying oramount, the aircraft is impaired and is re-measured to fair value ~~adjustments~~in ~~could~~accordance bewith ~~material~~our Fair Value Policy. Our Fair Value Policy is described in Note T of Notes to ~~our~~Consolidated ~~results~~Financial Statements. The difference between the fair value and the carrying amount of ~~operations~~the ~~for~~aircraft is recognized as an ~~individual~~impairment ~~period~~loss.

Factors that have affected impairment charges in recent years include, but are not limited to: (i) unfavorable airline industry trends affecting the residual values of certain aircraft types; (ii) high fuel prices and development of more fuel-efficient aircraft shortening the useful lives of certain aircraft; (iii) management's expectations that certain aircraft were more likely than not to be parted-out or otherwise disposed of sooner than 25 years; and (iv) new technological developments.

While we continue to manage our fleet by ordering new in-demand aircraft and maximizing our returns on our existing aircraft, we may incur additional impairment charges in the future. Impairment charges may result from future deterioration in lease rates, net overhaul rentals, residual values, and shortened aircraft holding periods, which can be caused by new technological developments, sustained high fuel costs or prolonged economic distress, and decisions to sell or part-out aircraft at amounts below net book value. The potential for impairment or fair value adjustments could be material to our results of operations for an individual period.

Aircraft Costs

~~Aircraft costs consist of maintenance and repossession-related expenses borne by us. These expenses are typically incurred when aircraft are returned early, repossessed, or otherwise off-lease.~~ While lessees are generally responsible for maintenance of the aircraft under the provisions of the lease, we may incur ~~maintenance~~ costs to prepare the aircraft for re-lease when aircraft are returned early or repossessed and are not in satisfactory condition to re-lease. ~~Aircraft~~These costs ~~will~~generally consist of expenses incurred in preparing aircraft transitioning from one lessee to another and repossession-related expenses. Such costs are not capitalized and include, for example, repairs, storage, transportation, and paint. Aircraft costs will generally fluctuate with the number of aircraft repossessed ~~during a period~~.

Selling, General and Administrative Expenses

Our ~~principal~~ selling, general and administrative expenses consist primarily of ~~expenses related to~~ personnel expenses, including salaries, share-based compensation charges, and employee benefits, professional and advisory costs, and office and travel expenses. The level of our selling, general and administrative expenses is influenced primarily by the number of employees, fluctuations in AIG's share price, and the extent of transactions or ventures we pursue which require the assistance of outside professionals or advisors.

Other Expenses

Other expenses consist primarily of ~~lease related charges,~~ provision for losses on aircraft asset value guarantees, ~~and~~ provision for credit losses on notes receivable and ~~net investment in~~ finance and sales-type leases, and the effect onof ~~income from derivative activities~~derivatives. ~~Our~~Other ~~lease~~expenses ~~related~~also ~~charges~~ include ~~the write-off~~various ~~of unamortized lease incentives and overhaul and straight~~non-~~line~~recurring ~~lease~~charges ~~adjustments~~during ~~that~~certain ~~we incur when we sell an aircraft prior to the end of the lease~~periods.

Our provision for losses on aircraft asset value guarantees represents ~~changes~~charges made in the current period based on our ~~best~~ estimate of ~~probable~~losses ~~loss~~ on asset value guarantees that are ~~likely~~ toprobable beof being exercised.

Our provision for credit losses on notes receivable consists primarily of allowances we establish to reduce the carrying value of our notes receivable to estimated collectible levels. Management reviews all outstanding notes that are in arrears to determine whether we should reserve for, or write off any portion of, the notes receivable. In this process, management evaluates the collectability of each note and the value of the underlying collateral, if any, by assessing relevant operational and financial issues. As of December 31, ~~2012~~2013, notes receivable, ~~net,~~ were not material.

Our provision for credit losses on finance and sales-type leases consists primarily of allowances we establish to reduce the carrying value of our net investment in these leases to estimated collectible levels. Management monitors the activities and financial health of customers and evaluates the impact certain events, such as customer bankruptcies, will have on lessee's abilities to perform under the contract terms of the related leases. Management reviews all outstanding leases classified as finance and sales-type to determine appropriate classification of the related aircraft within our fleet, and whether we should reserve for any portion of our net investment.

We employ derivative products to manage our exposure to interest rates risk and foreign currency risks. We do not speculate on interest rates or currency fluctuations. We record in other expense the change in market value of derivatives not designated as hedges and the effect from ineffectiveness of cash flow hedges.

Table of Contents

~~The~~Our ~~primary~~provision ~~factors~~for ~~affecting~~credit ~~our~~losses ~~other~~on ~~expenses~~finance ~~are:~~and ~~(i)~~sales-type ~~the~~leases ~~sale~~consists primarily of ~~aircraft~~allowances ~~prior~~we establish to reduce the ~~end~~carrying value of aour ~~lease,~~net ~~which~~investment ~~may~~in ~~result~~these inleases ~~lease~~to ~~related~~estimated ~~costs;~~collectible ~~(ii)~~amounts. aManagement ~~deterioration~~monitors inthe ~~aircraft~~activities ~~values,~~and ~~which~~financial ~~may~~health ~~result~~of incustomers ~~additional~~and ~~provisions~~evaluates ~~for~~the ~~losses~~impact oncertain ~~aircraft~~events, ~~asset~~such ~~value~~as ~~guarantees; (iii) lessee~~customer ~~defaults~~bankruptcies, ~~which~~will ~~may~~have ~~result~~on inlessees' abilities ~~additional~~to ~~provisions~~perform ~~for~~under ~~doubtful~~the ~~notes~~contracted ~~receivable;~~terms ~~and~~of ~~(iv) volatility~~the inrelated ~~market~~leases. ~~value~~Management inreviews ~~derivatives~~all ~~not~~outstanding ~~designated~~leases classified as ~~hedges~~finance and ~~ineffectiveness~~sales-type to determine appropriate classification of ~~cash~~the related ~~flow~~aircraft ~~hedges~~within our fleet, and whether we should reserve for any portion of our net investment.

The primary factors affecting our Other expenses are: (i) the sale of aircraft prior to the end of a lease, which may result in lease related costs; (ii) a deterioration in aircraft values, which may result in additional provisions for losses on aircraft asset value guarantees that are probable of being exercised; (iii) lessee defaults, which may result in additional provisions for doubtful notes receivable; and (iv) volatility in the market value of derivatives not designated as hedges and the ineffectiveness of cash flow hedges.

Critical Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We evaluate our estimates, including those related to flight equipment, ~~lease~~inventory, lease revenue, derivative financial instruments, fair value measurements, and income taxes, on a recurring and non-recurring basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions and conditions. A summary of our significant accounting policies is presented in Note B of Notes to Consolidated Financial Statements. We believe the following critical accounting policies could have a significant impact on our results of operations, financial condition and financial statement disclosures, and may require subjective and complex estimates and judgments.

Flight Equipment

Flight equipment is our largest asset class, representing approximately 9089% and 87% of our consolidated assets as of December 31, ~~2012~~ 2013 and ~~2011~~2012, respectively.

Depreciable Lives and Residual Values. We generally depreciate ~~passenger~~our aircraft using the straight-line method over a 25-year life from the date of manufacture to an estimated residual value. When we change the useful lives or residual values of our aircraft, we adjust our depreciation rates on a prospective basis. Any change in the ~~assumption of~~ estimated useful ~~life~~lives or residual value ~~changes~~assumptions affects depreciation expense and could have a significant impact on our results orof operations for any one period. As of December 31, 2013, 104 of our aircraft, with a net book value of $1.1 billion, are being depreciated over useful lives of less than 25-years from the date of manufacture. The weighted average useful life of these aircraft, weighted by the net book value of such aircraft, is 16.9 years.

~~Based~~In onconnection ~~the~~with ~~annual~~our ~~fleet~~recoverability assessment of aircraft performed in the third quarter of ~~2011~~2013, we ~~identified~~re-assessed ~~239~~the ~~aircraft~~estimated ~~that~~holding ~~were~~period ~~either~~for certain aircraft ~~out~~types ofand, ~~production~~as ~~or impacted by new~~a ~~technology developments. Out of these 239 aircraft~~result, we changed the estimated economic useful life of ~~140~~55 aircraft. Inin ~~addition~~our fleet, weincluding ~~changed~~32 aircraft that were impaired during the ~~useful~~third ~~life~~quarter of ~~our~~2013. ~~ten~~In ~~freighter~~the ~~aircraft~~fourth ~~from~~quarter 35of to2013, we started ~~25 years.~~depreciating ~~These~~these ~~changes~~aircraft ~~resulted~~using inthe anstraight-line ~~increase~~method inover ~~our~~their ~~2012~~estimated ~~depreciation~~remaining ~~expense~~revised ~~for~~useful ~~these~~lives. ~~aircraft~~This ofchange ~~approximately~~accelerates ~~$55.9 million~~the asoverall ~~compared~~depreciation toexpense ~~2011.~~on ~~The~~these ~~overall~~aircraft ~~increase~~but inwill be ~~depreciation~~partially ~~expense~~offset ~~from~~by ~~shortening~~the reduction in the ~~holding~~carrying ~~periods~~values onof ~~these~~the ~~140~~32 aircraft ~~will~~for ~~decline~~which asimpairment ~~these~~charges ~~aircraft~~were ~~are~~recorded ~~disposed~~during ~~of.~~

Impairment Charges on Flight Equipment Held for Use. Management evaluates quarterly the need to perform a recoverability assessment of held for use aircraft considering the requirements under GAAP and performs this assessment at least annually for all aircraft in our fleet. The undiscounted cash flows used in the recoverability assessment consist of cash flows from currently contracted leases, future projected lease cash flows, including estimated flight hour rentals and net overhaul collections and an estimated disposition value, as appropriate, for each aircraft. Management is active in the aircraft leasing industry and develops the assumptions used in the recoverability assessment.

Table of Contents

~~data,~~the ~~current~~third ~~macro-economic~~quarter ~~trends~~of ~~and~~2013. ~~conditions~~These changes, absent any other changes to the carrying value of these aircraft in ~~management's~~the ~~holding~~ordinary ~~period~~course ~~intent~~of business, would result in an increase in our 2014 depreciation expense for ~~any~~these aircraft ~~and~~of ~~any~~approximately ~~events~~$23 million. ~~happening~~Beginning ~~before~~in ~~the~~2015, ~~financial~~our ~~statements~~depreciation ~~that~~expense ~~management~~for ~~needs~~these aircraft is expected to ~~consider,~~ ~~including~~decrease ~~subsequent~~as ~~lessee~~these ~~bankruptcies~~aircraft begin to reach the end of their respective estimated useful lives.

Impairment Charges on Flight Equipment Held for Use. Management evaluates quarterly the need to perform a recoverability assessment of held for use aircraft considering the requirements under GAAP and performs this assessment at least annually for all aircraft in our fleet. Recoverability is measured by comparing the carrying amount of the aircraft to the estimated future undiscounted cash flows expected to be generated by the aircraft. The undiscounted cash flows used in the recoverability assessment include the current contractual lease cash flows and projected future non-contractual lease cash flows, both of which include estimates of net overhaul rental collections, where appropriate, extended to the end of our estimated holding period, and an estimated disposition value for each aircraft. If the future undiscounted cash flows are less than the aircraft carrying amount, the aircraft is impaired and is re-measured to fair value in accordance with our Fair Value Policy. Our Fair Value Policy is described in Note T of Notes to Consolidated Financial Statements. The difference between the fair value and the carrying amount of the aircraft is recognized as an impairment loss.

As part of our recurring recoverability assessment process, we update the critical and significant assumptions used in the recoverability assessment, including projected lease rates and terms, estimated net overhaul rental collections, residual values and estimated aircraft holding periods. Management uses its judgment when determining the assumptions used in the recoverability analysis, taking into consideration historical data, current macro-economic trends and conditions, any changes in management's estimated holding period for any aircraft and any events that occur before the financial statements are issued that management should consider, including subsequent lessee bankruptcies. Management is active in the aircraft leasing industry and develops the assumptions used in the recoverability assessment.

Some critical and significant assumptions we consider are as follows:

Market Conditions. We consider current and future expectations of the global demand for a particular aircraft type and historical experience in the aircraft leasing market and aviation industry, as well as information received from third party sources. Factors ~~taken~~considered ~~into account~~ include the impact of fuel price volatility and higher average fuel prices; the ~~growing~~ impact of new technology aircraft (announcements, deliveries and order backlog) on current and future demand for mid-generation aircraft; the higher production rates sustained by manufacturers ~~for~~ of more fuel-efficient newer generation aircraft during the recent economic downturn; the unfavorable impact of low rates of inflation on aircraft values; current market conditions and ~~future~~ industry outlook for future marketing of older mid-generation aircraft and aircraft that are out of production; and a decreasing number of lessees for older aircraft. In addition our lessees may face financial difficulties and return aircraft to us prior to the contractual lease ~~expiry~~expiration dates. As a result, our cash flow assumptions may change and future impairment charges may be required.

Portfolio Management Strategy. We take into account our end-of-life management options and capabilities provided by our ~~subsidiary~~ subsidiary AeroTurbine. AeroTurbine provides us with increased choices in managing the end-of-life of aircraft in our fleet and makes the part-out of an aircraft a more economically and commercially viable option by eliminating the payment of commissions to third parties. Parting-out aircraft also enables us to retain greater cash flows from an aircraft during the last cycle of ~~its~~an aircraft's life by allowing us to eliminate certain maintenance costs and realize higher net overhaul revenues resulting in changes in cash flow assumptions.

Subsequent Events. We also consider events subsequent to year end, such as a subsequent bankruptcy, in evaluating the recoverability of our fleet as of year-end. We take into account lessee non-performance, as well as management's expectation of whether to re-lease or part-out the aircraft, which change the projected lease cash flows of the affected aircraft.

Sensitivity Analysis. Aircraft impairment charges on flight equipment held for use aggregated $102.7 million for the year ended December 31, 2012. If estimated cash flows used in a hypothetical full fleet assessment as of December 31, 2012 were decreased by 10% and 20%, 36 additional aircraft with a net book value of $250.6 million or 89 additional aircraft with a net book value of $1.8 billion at December 31, 2012, respectively, would have been impaired and written down to their resulting respective fair values.

Impairment Charges and Fair Value Adjustments on Flight Equipment Sold or to be Disposed. Management evaluates quarterly the need to perform recoverability assessments of all contemplated aircraft sale or disposal transactions considering the requirements under GAAP. The recoverability assessment is performed if events or changes in circumstances indicate that it is more likely than not that an aircraft will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Due to the significant uncertainties of potential sales transactions, management must use its judgment to evaluate whether a sale is more likely than not. The factors that management considers in its assessment include (i) the progress of the potential sales transactions through a review and evaluation of the sales related documents and other communications, including, but not limited to, letters of intent or sales agreements that have been negotiated or executed; (ii) our general or specific fleet strategies, liquidity requirements and other business needs and how those requirements bear on the likelihood of sale; and (iii) the evaluation of potential execution risks, including the source of potential purchaser funding and other execution risks, including the source of potential purchaser funding and other execution risks. If the carrying value of the aircraft exceeds its estimated

Table of Contents

~~undiscounted cash~~ Sensitivity ~~flows,~~Analysis. Aircraft ~~then an~~ impairment ~~charge~~charges oron aflight ~~fair~~equipment ~~value~~held ~~adjustment~~for isuse ~~recognized~~aggregated ~~separately~~$1.2 billion onfor ~~our~~the ~~Consolidated~~year ~~Statements~~ended December 31, ~~of Operations~~2013. ~~The~~If estimated future undiscounted cash flows used in ~~the~~a ~~more~~hypothetical ~~likely~~full ~~than not~~fleet ~~sales recoverability~~ assessment ~~will~~as ~~depend on the structure~~ of ~~the~~December 31, ~~potential~~2013 ~~sale~~were ~~transaction~~decreased ~~and~~by ~~may~~10% ~~consist~~or ~~of cash flows from currently contracted leases~~20%, ~~including flight hour and overhaul~~14 additional ~~rentals,~~aircraft ~~when~~with ~~appropriate,~~a ~~and~~net ~~the~~book ~~estimated~~value ~~proceeds~~of ~~from sale~~$435.1 million Inor ~~the~~52 ~~event~~additional ~~that an~~ aircraft ~~does~~with ~~not~~a ~~meet~~net ~~the~~book ~~more~~value ~~likely~~of ~~than~~$1.5 billion ~~not~~at ~~sales~~December 31, ~~recoverability assessment~~2013, ~~it is re-measured to fair value~~respectively, ~~which~~would inhave ~~almost~~been ~~all~~impaired ofand written ~~our~~down ~~potential~~to ~~sales~~their ~~transactions is based on the value of the sales transaction,~~ resulting inrespective ~~an impairment charge or~~ fair ~~value adjustment~~values.

~~Aircraft impairment~~ Impairment ~~charges~~Charges and ~~fair~~Fair ~~value~~Value ~~adjustments~~Adjustments on ~~flight~~Flight ~~equipment~~Equipment ~~sold~~Sold or to be ~~disposed aggregated $89~~Disposed.~~7 million~~ Management ~~for~~evaluates quarterly the ~~year~~need ~~ended~~to perform recoverability ~~December 31,~~assessments ~~2012.~~of Wecontemplated ~~recorded impairment~~aircraft ~~charges~~sale ~~and~~or ~~fair~~disposal ~~value~~transactions ~~adjustments~~considering ofthe ~~(i)~~requirements ~~$43~~under GAAP.~~3 million~~ onThe 10recoverability ~~aircraft~~assessment weis ~~sold~~performed if events or ~~deemed~~changes in circumstances indicate that it is more likely than not tothat an aircraft will be sold or parted-out significantly before the end of its previously estimated economic useful life. Due to the significant uncertainties of potential sales transactions, ~~but~~management must use its judgment to evaluate whether a sale or other disposal is more likely than not. The factors that ~~did~~management considers in its ~~not~~assessment ~~meet~~include (i) the ~~criteria~~progress ~~required~~of the potential sales transactions through a review and evaluation of the sales related documents and other communications, including, but not limited to, beletters ~~classified~~of asintent ~~Flight~~or ~~equipment~~sales ~~held~~agreements ~~for~~that ~~sale~~have been negotiated or executed; (ii) ~~$4.1 million~~our ongeneral ~~four~~or specific ~~aircraft~~fleet ~~classified~~strategies, asliquidity ~~Flight equipment~~requirements ~~held~~and ~~for~~other ~~sale~~business ~~that~~needs ~~were~~and ~~sold~~how orthose ~~transferred~~requirements ~~from~~bear ~~Flight~~on ~~equipment~~the ~~held~~likelihood ~~for~~of sale ~~back~~or toother ~~flight equipment~~disposal; and (iii) the ~~$42~~evaluation of potential execution risks, including the source of potential purchaser funding and other execution risks.~~3 million~~ onRecoverability is 12measured by comparing the carrying amount of the aircraft to the estimated future undiscounted cash flows expected to be generated by the aircraft. If the future undiscounted cash flows are less than the aircraft carrying amount, the aircraft is impaired and 13is ~~engines~~re-measured ~~intended~~to fair value in accordance with our Fair Value Policy. Our Fair Value Policy is described in Note T of Notes to beConsolidated Financial Statements. The difference between the fair value and the carrying amount of the aircraft is recognized as an impairment loss or ~~designated~~fair ~~for~~value ~~part-out~~adjustment. The undiscounted cash flows will depend on the structure of the potential disposal transaction and may consist of cash flows from currently contracted leases, including estimated net overhaul rental collections, when appropriate, and the estimated proceeds from sale or other disposal.

~~Flight Equipment Held for Sale. Management evaluates all contemplated aircraft sale transactions to determine whether all the required~~ Aircraft ~~criteria~~impairment ~~have been~~charges ~~met~~and ~~under~~fair ~~GAAP~~value toadjustments ~~classify~~on ~~aircraft~~flight ~~as Flight~~ equipment ~~held~~sold ~~for~~or ~~sale.~~to ~~Management~~be ~~uses~~disposed ~~judgment~~aggregated ~~in evaluating these criteria~~$238.6 million ~~Due~~for to the ~~significant~~year ~~uncertainties~~ended ofDecember 31, ~~potential~~2013. ~~sale transactions,~~We ~~the~~recorded ~~held~~impairment ~~for~~charges ~~sale~~and ~~criteria~~fair ~~generally~~value ~~will~~adjustments ~~not~~of be(i) $95.0 million ~~met~~on ~~unless~~19 ~~the~~ aircraft islikely ~~subject~~ to abe ~~signed~~sold ~~sale agreement,~~ or ~~management~~sold; ~~has made a specific determination~~ and (ii) $143.6 million ~~obtained~~on ~~appropriate~~25 ~~approvals to sell a particular~~ aircraft orand ~~group~~seven ofengines ~~aircraft.~~intended ~~Aircraft classified as Flight equipment held for sale are recognized at the lower of their carrying amount or estimated fair value less estimated costs~~ to ~~sell.~~be ~~At the time aircraft are sold,~~ or ~~classified~~designated ~~as Flight equipment held~~ for ~~sale, the cost and accumulated depreciation are removed from the related accounts~~part-out.

~~Inventory: Our~~Flight ~~inventory~~Equipment ~~consists~~Held ~~primarily~~for ofSale. Management ~~engine~~evaluates ~~and~~all ~~airframe~~contemplated ~~parts~~aircraft ~~and~~sale ~~rotable~~transactions ~~and~~to ~~consumable~~determine ~~parts~~whether ~~and~~all isthe ~~included in Lease~~required ~~receivables~~criteria ~~and~~have ~~other~~been ~~assets~~met onunder ~~our~~GAAP ~~Consolidated~~to ~~Balance~~classify ~~Sheets.~~aircraft Weas ~~value~~Flight ~~our~~equipment ~~inventory~~held atfor ~~the~~sale. ~~lower~~Management ofuses ~~cost~~judgment orin ~~market.~~evaluating ~~Cost~~these iscriteria. ~~primarily~~Due ~~determined~~to ~~using~~ the ~~specific~~significant ~~identification~~uncertainties ~~method~~of ~~for~~potential ~~individual~~sale ~~part~~transactions, ~~purchases~~the ~~and~~held onfor ansale ~~allocated~~criteria ~~basis~~generally ~~for~~will ~~engines~~not ~~and~~be ~~aircraft~~met ~~purchased~~unless ~~for~~the ~~disassembly~~aircraft ~~and~~is ~~bulk~~subject ~~inventory~~to ~~purchases.~~a ~~Costs~~signed ~~are~~sale ~~allocated~~agreement, ~~using~~or ~~the~~management ~~relationship~~has ofmade ~~the~~a ~~cost~~specific ofdetermination ~~the~~and ~~engine,~~obtained ~~aircraft~~appropriate ~~or bulk~~approvals ~~inventory purchase~~ to sell ~~the~~a ~~estimated~~particular ~~retail~~aircraft ~~sales~~or ~~value~~group ~~at the time~~ of ~~purchase~~aircraft. AtAircraft ~~the~~classified ~~time~~as ofFlight ~~sale,~~equipment ~~this~~held ~~ratio~~for issale ~~applied~~are torecognized at the ~~sales~~lower ~~price~~ of ~~each~~their ~~individual~~carrying ~~part~~amount toor ~~determine~~estimated ~~its~~fair ~~cost.~~value ~~We evaluate~~less ~~this~~estimated ~~ratio~~costs to ~~based~~sell. onAt ~~periodic~~the ~~analysis~~time ~~and~~aircraft ifare ~~necessary~~sold, ~~update~~or ~~sales~~classified ~~estimates~~as ~~and~~Flight ~~make~~equipment ~~adjustments~~held tofor ~~this ratio. Generally~~sale, ~~inventory~~the ~~that~~cost isand ~~held~~accumulated ~~for~~depreciation ~~more~~are ~~than~~removed ~~four~~from ~~years~~the isrelated ~~considered excess~~accounts ~~inventory~~ and ~~its~~we ~~carrying~~cease ~~value~~recognizing depreciation ~~is zero~~expense.

Guarantees: In ~~Lease~~limited ~~Revenue~~ cases, we have previously contracted to provide aircraft asset value guarantees to financial institutions and other third parties for a fee. We recognize the guarantee fee paid to us in Accrued interest and other payables on our Consolidated Balance Sheets. The fee received is amortized into Flight equipment marketing and gain on aircraft sales in our Consolidated Statements of Operations over the guarantee period. When it becomes probable that we will be

We lease flight equipment principally under operating leases and recognize rental revenue on a straight-line basis over the life of the lease. The difference between the rental revenue recognized and the cash received under the provisions of our leases is included in Lease receivables and other assets and, in the event it is a liability, Security deposits, deferred overhaul rental and other customer deposits on our Consolidated Balance Sheets. Past-due rental revenue is recognized on the basis of management's assessment of collectability. Management monitors all lessees that are behind in lease payments and discusses relevant lessee operational and financial issues to determine the amount of rental revenue to recognize for past due amounts. Our customers make lease payments in advance and we generally recognize rental revenue only to the extent we have received payments or hold security deposits.

Overhaul Rentals. Under the provisions of our leases, lessees are generally responsible for maintenance and repairs, including major maintenance (overhauls) over the term of the lease. Under

Table of Contents

~~the~~required ~~provisions~~to ofperform ~~many~~under ofa ~~our leases~~guarantee, we ~~receive~~cease ~~overhaul~~recognition ~~rentals based on the usage~~ of the ~~aircraft.~~guarantee ~~The~~fee ~~usage~~income ~~may~~and beaccrue ~~calculated~~a liability based on ~~hourly~~an ~~usage~~estimate ~~or on the number~~ of ~~cycles operated. A cycle is defined as one take-off and landing. The usage is typically reported monthly by~~ the ~~lessee.~~loss ~~For certain airframe and engine overhauls,~~ we ~~reimburse~~will ~~the~~incur ~~lessee for costs incurred up~~ to, ~~but generally~~perform ~~not~~under ~~exceeding,~~ the ~~overhaul rentals that the lessee has paid to us~~guarantee. We recognize overhaul rentals received, net of estimated overhaul reimbursements, as revenue. During the years ended December 31, 2012, 2011 and 2010, we recognized net overhaul rental revenues of approximately $241.6 million, $198.8 million and $270.3 million, respectively, from overhaul rental collections of $722.0 million, $734.0 million and $749.0 million, respectively, during those periods. We estimate expected overhaul reimbursements during the life of the lease, which requires significant judgment. Management determines the reasonableness of the estimated future overhaul reimbursement rate considering quantitative and qualitative information including (i) changes in historical pay-out rates from period to period; (ii) trends in reimbursements made; (iii) trends in historical pay-out rates for expired leases; (iv) future estimates of pay-out rates on leases scheduled to expire in the near term; (v) changes in our business model or portfolio strategies; and (vi) other factors affecting the future pay-out rates that may occur from time to time. Changes in the expected overhaul reimbursement estimate result in an adjustment to the cumulative deferred overhaul rental balance sheet amount, which is recognized in current period results. If overhaul reimbursements are different than our estimates, or if estimates of future reimbursements change, there could be a material impact on our results of operations in a given period.

~~Additionally,~~The inestimate ~~connection with a lease~~ of athe ~~used~~loss ~~aircraft,~~is we generally ~~agree~~measured toas ~~contribute to~~ the ~~first~~amount ~~major~~by ~~maintenance~~which ~~event~~ the ~~lessee~~contractual ~~incurs~~guaranteed ~~during~~value ~~the~~exceeds ~~lease. At~~ the ~~time~~referenced weaircraft ~~pay the~~fair agreed upon maintenance contribution, we record the reimbursement against deferred overhaul rentals to the extent we have received overhaul rentals from the lessee, or against return condition deficiency deposits to the extent we have received such deposits from the prior lesseevalue. WeThe ~~capitalize~~fair asvalue ~~lease incentives any amount~~ of the ~~actual~~referenced aircraft ~~maintenance~~is ~~reimbursement~~estimated ~~we pay~~ in ~~excess~~accordance ~~of overhaul~~with ~~rentals~~our ~~and~~Fair ~~payments~~Value ~~received~~Policy ~~from~~described ~~prior lessees for deficiencies~~ in ~~return conditions and amortize the lease incentives into Rental of flight equipment over the remaining life of the lease. We capitalized lease incentives of $65.8~~Note ~~million,~~T $89.6 million, and $55.4 million, which included such maintenance contributions, for the years ended December 31, 2012, 2011 and 2010, respectively. During the years ended December 31, 2012, 2011 and 2010, we amortized lease incentives into Rentals of ~~flight~~Notes ~~equipment~~to ~~aggregating~~Consolidated ~~$61.5 million,~~Financial ~~$63~~Statements.~~4 million and $47.8 million, respectively.~~

Inventory: Our ~~Derivative~~inventory ~~Financial~~consists ~~Instruments~~ primarily of engine and airframe parts and rotable and consumable parts and is included in Lease receivables and other assets on our Consolidated Balance Sheets. We value our inventory at the lower of cost or market. Cost is primarily determined using the specific identification method for individual part purchases and on an allocated basis for engines and aircraft purchased for disassembly and for bulk inventory purchases. Costs are allocated using the relationship of the cost of the engine, aircraft or bulk inventory purchase to the estimated retail sales value at the time of purchase. At the time of sale, this ratio is applied to the sales price of each individual part to determine its cost. We periodically evaluate this ratio and, if necessary, update sales estimates and make adjustments to this ratio. Generally, inventory that is held for more than four years is considered excess inventory and its carrying value is reduced to zero.

We ~~employ~~Lease a variety of derivative instruments to manage our exposure to interest rate risks and, at times, foreign currency risks. Derivatives are recognized at their fair values on our consolidated balance sheets. Management determines the fair values of our derivatives each quarter using a discounted cash flow model, which incorporates an assessment of the risk of non-performance by our swap counterparties. The model uses various inputs including contractual terms, interest rate, credit spreads and volatility rates, as applicable. When hedge accounting treatment is achieved for a derivative, the changes in fair value related to the effective portion of the hedge is recognized in other comprehensive income or in current period earnings, depending on the designation of the derivative as a cash flow hedge or a fair value hedge. The ineffective portion of the hedge is recognized in income. At the time the derivative is designated as a hedge, we select a method of effectiveness assessment, which we must use for the life of the hedge. We use the "hypothetical derivative method" for all of our hedges when we assess effectiveness. This method involves establishing a hypothetical derivative that mirrors the hedged item, but has a zero-value at the hedge designation date. The cumulative change in fair value of the actual hedge derivative instrument is compared to the cumulative change in the fair value of the hypothetical derivative. The difference between these two amounts is the calculated ineffectiveness and is recognized in current period earnings. Revenue

We lease flight equipment principally under operating leases and recognize rental revenue on a straight line basis over the life of the lease. The difference between the rental revenue recognized and the cash received under the provisions of our leases is included in Lease receivables and other assets and, in the event it is a liability, in Security deposits, deferred overhaul rental and other customer deposits on our Consolidated Balance Sheets. Past-due rental revenue is recognized on the basis of management's assessment of collectability. Management monitors all lessees that are behind in lease payments and evaluates lessee operational and financial issues to determine the amount of rental revenue to recognize for past due amounts. Our customers are required to make lease payments in advance and we generally recognize rental revenue only to the extent we have received payments or hold security deposits.

Under the provisions of our leases, lessees are generally responsible for maintenance and repairs, including major maintenance (overhauls) over the term of the lease. Under the provisions of many of our leases, we receive overhaul rentals based on the usage of the aircraft. The usage is typically reported monthly by the lessee. For certain airframe and engine overhauls, we reimburse the lessee for costs incurred up to, but generally not exceeding, the overhaul rentals that the lessee has paid to us. We recognize overhaul rentals received, net of estimated overhaul reimbursements, as revenue. We estimate expected overhaul reimbursements during the life of the lease. This requires significant judgment. Management determines the reasonableness of the estimated future overhaul reimbursement rate considering quantitative and qualitative information including (i) changes in historical pay-out rates from period to period; (ii) trends in reimbursements made; (iii) trends in historical pay-out rates for expired leases; (iv) future estimates of pay-out rates on leases scheduled to expire in the near term; (v) changes in our business model or portfolio strategies; and (vi) other factors affecting the future pay-out rates that may occur from time to time. Changes in the expected overhaul reimbursement estimate result in an adjustment to the cumulative deferred overhaul rental balance sheet amount, which is recognized in current period results. If overhaul reimbursements are different than our estimates, or if estimates of future reimbursements change, there could be a material impact on our results of operations in a given period. During the years ended December 31, 2013, 2012 and 2011, we recognized net overhaul rental revenues of approximately $202.4 million, $241.6 million and $198.8 million, respectively, from overhaul rental collections of $713.4 million, $722.0 million and $734.0 million, respectively, during those periods. The decrease in net overhaul rental revenue recognized for the year ended December 31, 2013 as compared to the year ended December 31, 2012,

Table of Contents

primarily reflects an increase in overhaul rentals deferred due to higher expected overhaul reimbursements on certain aircraft types in our fleet.

Additionally, in connection with a lease of a used aircraft, we generally agree to contribute to certain maintenance events the lessee incurs during the lease. At the time we pay the agreed upon maintenance reimbursement, we record the reimbursement against deferred overhaul rentals, to the extent we have received overhaul rentals from the lessee, and against return condition deficiency deposits, to the extent received from the prior lessee. We capitalize as lease incentives any amount of the actual maintenance reimbursement we pay in excess of overhaul rentals paid to us by the lessee and payments received from prior lessees for deficiencies in return conditions and amortize the lease incentives as a reduction of revenues from Rental of flight equipment over the remaining life of the lease. We capitalized lease incentives of $138.5 million, $65.8 million, and $89.6 million, which included such maintenance contributions, for the years ended December 31, 2013, 2012 and 2011, respectively. During the years ended December 31, 2013, 2012 and 2011, we amortized lease incentives as a reduction of revenues from Rental of flight equipment aggregating $78.1 million, $61.5 million and $63.4 million, respectively.

Derivative Financial Instruments

From time to time, we may employ a variety of derivative instruments to manage our exposure to interest rate risks and, at times, foreign currency risks. Derivatives are recognized at their fair values on our Consolidated Balance Sheets. Management determines the fair values of our derivatives each quarter using a discounted cash flow model, which incorporates an assessment of the risk of non-performance by our swap counterparties. The model uses various inputs including contractual terms, interest rate, credit spreads and volatility rates, as applicable. When hedge accounting treatment is achieved for a derivative, the changes in fair value related to the effective portion of the hedge is recognized in OCI if designated as a cash flow hedge, or in current period earnings if designated as a fair value hedge. The ineffective portion of the hedge is recognized in income. At the time the derivative is designated as a hedge, we select a method of effectiveness assessment, which we must use for the life of the hedge. We use the "hypothetical derivative method" for all of our hedges when we assess effectiveness. This method involves establishing a hypothetical derivative that mirrors the hedged item, but has a zero-value at the hedge designation date. The cumulative change in fair value of the actual hedge derivative instrument is compared to the cumulative change in the fair value of the hypothetical derivative. The difference between these two amounts is the calculated ineffectiveness and is recognized in current period earnings.

Fair Value Measurements

Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Derivatives: We measure the fair values of our derivatives on a recurring basis. We use a valuation model that includes a variety of observable inputs, including contractual terms, interest rate curves, foreign exchange rates, yield curves, credit curves, measures of volatility, and correlations of such inputs to determine the fair value. Valuation adjustments may be made in the determination of fair value. These adjustments include amounts to reflect counterparty credit quality and liquidity risk, and are as follows:

•: Credit Valuation Adjustment, or CVA. The CVA adjusts the valuation of derivatives to account for nonperformance risk of our counterparty with respect to all net derivative assets positions. The CVA also accounts for our own credit risk, in the fair value measurement of all net derivative liabilities positions, when appropriate.

Aircraft: We measure the fair value of aircraft on a non-recurring basis, when GAAP requires the application or use of fair value, including events or changes in circumstances that indicate that the carrying amounts of our aircraft may not be recoverable. We principally use the income approach to measure the fair value of our aircraft. The income approach is based on the present value of contractual lease cash flows, projected future lease cash flows, including flight hour rental cash flows, where appropriate, which extend to the end of the aircraft's economic life in its highest and best use configuration, as well as a disposition value based on expectations of market participants. Other than as a result of the exclusion of net overhaul rental cash flows, the cash flows used in the fair value estimate are generally consistent with those used in the recurring recoverability assessment for aircraft held for use and are subject to the same management judgment. See "—Flight Equipment—Impairment Charges on Flight Equipment Held for Use" above for further discussion.

Income Taxes

ILFC is included in the consolidated federal income tax return of AIG, as well as certain state tax returns where AIG files on a combined/unitary basis. Our provision for federal income taxes is calculated on a separate return basis, adjusted to give recognition to the effects of net operating losses, foreign tax credits and other tax benefits to the extent we estimate that they would be realizable in AIG's consolidated federal income tax return. Under our tax sharing agreement with AIG, we settle our current tax liability as if ILFC and its subsidiaries are each a separate standalone taxpayer. Thus, AIG credits us to the extent our net operating losses, foreign tax credits and other tax benefits (calculated on a separate return basis) are used in AIG's consolidated tax return and charges us to the extent of our tax liability (calculated on a separate return basis). To the extent the benefit of a net operating loss is not utilized in AIG's consolidated federal income tax return, AIG reimburses us upon the expiration of the loss carry-forward period as long as we are still included in AIG's consolidated federal income tax return and the benefit would have been utilized if we had filed a separate consolidated federal income tax return. Our provision for state income taxes includes California, in which we file with AIG using the unitary apportionment factors, and certain other states, in which we file separate tax returns.

Table of Contents

•: Market Valuation Adjustment, or MVA. The MVA adjusts the valuation of derivatives to reflect the fact that we are an "end-user" of derivative products. As such the valuation is adjusted to take into account the bid-offer spread (the liquidity risk).

Aircraft: We measure the fair value of aircraft on a non-recurring basis, when GAAP requires the application or use of fair value, including events or changes in circumstances that indicate that the carrying amounts of our aircraft may not be recoverable. We principally use the income approach to measure the fair value of our aircraft. The income approach is based on the present value of estimated future cash flows, including current contractual lease cash flows and projected future non-contractual lease cash flows, extended to the end of the aircraft's estimated holding period in its highest and best use configuration, as well as a disposition value based on expectations of market participants. Other than the exclusion of estimated net overhaul rental cash flows, the cash flows used in the fair value estimate are generally consistent with those used in the recurring recoverability assessment for aircraft held for use and are subject to the same management judgment. See "—Flight Equipment—Impairment Charges on Flight Equipment Held for Use" above for further discussion.

Income Taxes

We calculate our provision for income taxes using the asset and liability method. This method considers the future tax consequences of temporary differences between the financial reporting and the tax basis of assets and liabilities measured using currently enacted tax rates. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We recognize an uncertain tax benefit only to the extent that it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Our ~~2012~~ effective tax rate ~~decreased~~for the year ended December 31, 2013 was 35.1% as compared to ~~2011~~(10.6)% ~~and~~for ~~2010,~~the ~~due~~same toperiod ain ~~net~~2012. ~~adjustment~~Our ineffective tax rate for the ~~amount~~year ended December 31, 2012 was significantly impacted by a net adjustment of $162.6 million, ~~which~~as ~~resulted~~a ~~from~~result anof ~~adjustment~~ adjustments in the tax basis of certain flight equipment. The adjustment related to depreciation deductions allocable to tax-exempt foreign trade income and was made as a result of a ~~recent~~ court decision, which ruled in favor of a taxpayer. See Note O of Notes to Consolidated Financial Statements.

Table of Contents

Results of Operations

Year Ended December 31, 2013 Versus 2012

Flight Equipment: During the year ended December 31, 2013, we had the following activity related to Flight equipment:



Flight equipment at December 31, 2012	919
Aircraft reclassified to Net investment in finance and sales-type leases	(10	)
Aircraft purchases	38
Aircraft sold from Flight equipment	(24	)
Aircraft designated for part-out	(12	)


Flight equipment at December 31, 2013(a)	911

(a): Excludes nine aircraft owned and leased by AeroTurbine and 22 aircraft classified as finance and sales-type leases.

(Loss) Income before Income Taxes: We had a loss before income taxes of $(796.5) million for the year ended December 31, 2013, as compared to income before income taxes of $371.1 million for the same period in 2012, primarily due to a $1.2 billion increase in recorded impairment charges and fair value adjustments on flight equipment. See below for a detailed analysis of each category affecting (loss) income before income taxes.

Rental of Flight Equipment: Revenues from rentals of flight equipment decreased to $4,166.0 million for the year ended December 31, 2013 from $4,345.6 million for the same period in 2012. The average number of aircraft we owned during the year ended December 31, 2013, decreased to 915 compared to 925 for the year ended December 31, 2012. Revenues from rentals of flight equipment recognized for the year ended December 31, 2013 as compared to the year ended December 31, 2012 decreased (i) $164.2 million due to the re-lease of aircraft and extension of expiring leases, which will normally re-lease or extend at lower rental rates than the rates on the previous leases as the aircraft will be older; (ii) $117.5 million related to aircraft in service during the year ended December 31, 2012 and consigned, sold or designated as held for sale prior to December 31, 2013; (iii) $39.2 million decrease in net overhaul rentals recognized; and (iv) $8.3 million decrease in lease revenue earned through AeroTurbine transactions. These decreases in revenue were offset by a $149.6 million increase from new aircraft added to our fleet that earned revenue for a greater number of days during the year ended December 31, 2013 than during the same period in 2012.

At December 31, 2013, seven customers operating 35 aircraft were 60 days or more past due on minimum lease payments aggregating $3.4 million relating to some of those aircraft, $1.9 million of which related to one customer. Of this amount, we recognized $2.5 million in rental income through December 31, 2013. In comparison, at December 31, 2012, seven customers operating 12 aircraft were 60 days or more past due on minimum lease payments aggregating $9.1 million relating to some of those aircraft, $7.1 million of which related to two customers. Of this amount, we recognized $5.8 million in rental income through December 31, 2012.

At December 31, 2013, five aircraft in our fleet were not subject to a signed lease agreement or a signed letter of intent. All five of these aircraft are likely to be parted out or sold and are not being remarketed for lease. These aircraft did not meet the criteria for being classified as held for sale as of December 31, 2013.

Table of Contents

Flight Equipment Marketing and Gain on Aircraft Sales: Flight equipment marketing and gain on aircraft sales increased to $128.1 million for the year ended December 31, 2013, compared to $35.4 million for the same period in 2012, primarily due to larger gains recorded on 18 aircraft sold, six of which were converted into sales-type leases during the year ended December 31, 2013 as compared to the gains recorded on 15 aircraft sold, seven of which were converted into sales-type leases for the same period in 2012. The amount of the gain depends on the type and age of, and demand for, flight equipment marketed in each period.

Other Income: Other income decreased slightly to $123.2 million for the year ended December 31, 2013, compared to $123.3 million for the same period in 2012 primarily due to a $7.2 million increase in interest income from Notes receivable and Net investment in finance and sales-type leases, offset by a $6.6 million decrease in revenue recognized by AeroTurbine, net of cost of sales, from the sale of engines, airframes, parts and supplies and a $0.7 million decrease in early termination fees and security deposit forfeitures.

Interest Expense: Interest expense decreased to $1,426.9 million for the year ended December 31, 2013, compared to $1,555.6 million for the same period in 2012. Our average debt outstanding, net of deferred debt discount, decreased to $22.9 billion during the year ended December 31, 2013, compared to $24.4 billion during the same period in 2012.

Depreciation: Depreciation of flight equipment decreased 3.6% to $1,850.3 million for the year ended December 31, 2013, compared to $1,918.7 million for the same period in 2012, primarily due to aircraft disposals and the conversion of certain aircraft under operating leases to sales-type leases.

Aircraft Impairment Charges on Flight Equipment Held for Use: Aircraft impairment charges on flight equipment held for use increased to $1,162.8 million relating to 44 aircraft for the year ended December 31, 2013, as compared to $102.7 million relating to ten aircraft recorded for the year ended December 31, 2012, primarily in connection with our third quarter of 2013 recoverability assessment whereby we concluded that the net book values of certain four-engine widebody aircraft in our fleet were no longer supportable based upon the latest cash flow estimates because the estimated holding periods were not likely to be as long as previously anticipated. The increasing number of aircraft operators looking to completely or partially replace their Airbus A340s and Boeing 747s is expected to increase the available supply of these aircraft types and diminish future lease placement opportunities. Sustained high fuel prices, the introduction of more fuel-efficient aircraft, and the success of competing aircraft models have resulted in a shrinking operator base for these aircraft types. These factors along with the latest updates to airline fleet plans and recent efforts to remarket these aircraft informed our conclusions. Approximately $1.0 billion of the $1.2 billion in impairment charges recorded for the year ended December 31, 2013, resulted from the four-engine widebody aircraft and in particular the Airbus A340-600s, which has a limited operator base. See "Critical Accounting Policies and Estimates—Flight Equipment."

Aircraft Impairment Charges and Fair Value Adjustments on Flight Equipment Sold or to Be Disposed: During the years ended December 31, 2013 and 2012, respectively, we recorded the following aircraft

Table of Contents

impairment charges and fair value adjustments on flight equipment sold or to be disposed (See Note G of Notes to Consolidated Financial Statements):

	Year Ended

	December 31, 2013					December 31, 2012
	Aircraft Impaired or Adjusted		Impairment Charges and Fair Value Adjustments			Aircraft Impaired or Adjusted		Impairment Charges and Fair Value Adjustments
	(Dollars in millions)
Impairment charges and fair value adjustments on aircraft likely to be sold or sold (including sales-type leases)		19	$	95.0	(a)		10	$	43.3
Fair value adjustments on held for sale aircraft sold or transferred from held for sale back to flight equipment		—		—			4		4.1
Impairment charges on aircraft intended to be or designated for part-out		25		143.6	(b)		12		42.3	(b)


Total Impairment charges and fair value adjustments on flight equipment sold or to be disposed		44	$	238.6			26	$	89.7

(a): Includes charges relating to 11 aircraft that met the criteria to be classified as Flight equipment held for sale, and were reclassified into Flight equipment held for sale. During the year ended December 31, 2013, 10 of these aircraft were sold to a third party and one of these aircraft was converted to a finance and sales-type lease.
(b): Includes charges relating to seven engines for the year ended December 31, 2013 and 13 engines for the year ended December 31, 2012.

Loss on Extinguishment of Debt: During the year ended December 31, 2013, we prepaid in full our $550 million secured term loan originally scheduled to mature in April 2016, the total outstanding under both tranches of the $106.0 million secured financing, and the total outstanding under the $55.4 million secured financing, and prepaid $150 million of the $900 million outstanding principal amount of our secured term loan due June 30, 2017. In connection with these prepayments, we recognized charges aggregating $17.7 million from the write off of unamortized deferred financing costs and deferred debt discount.

During the year ended December 31, 2012, we prepaid the remaining $456.9 million outstanding under our secured credit facility dated October 13, 2006 and the $750 million outstanding under our secured term loan entered into in 2010, and we refinanced our $550 million secured term loan at a lower interest rate. In connection with these prepayments and refinancings, we recognized charges aggregating $22.9 million from the write off of unamortized deferred financing costs and deferred debt discount. See Note K of Notes to Consolidated Financial Statements.

Aircraft Costs: Aircraft costs decreased to $71.6 million for the year ended December 31, 2013, compared to $134.8 million for the same period in 2012 primarily due to fewer repossessions of aircraft from customers that have ceased operations and lower than initially estimated losses related to repossessions of aircraft from a customer that ceased operations in 2012.

Selling, General and Administrative Expenses: Selling, general and administrative expenses increased to $338.7 million for the year ended December 31, 2013, compared to $259.4 million for 2012 due to (i) a $42.0 million increase in salaries and employee related expenses, as a result of (a) increased expense for certain incentive plans that will either be accelerated or paid upon the closing

Table of Contents

of the sale of ILFC to Aercap, (b) the impact of the appreciation in AIG's stock price on share-based compensation expense, and (c) an increase in employee headcount; (ii) a $34.7 million increase in professional, consulting and legal fees primarily relating to the potential future separation from AIG and litigation activities; and (iii) a net increase of $2.6 million in other expense categories.

Other Expenses: Other expenses for the years ended December 31, 2013 and 2012 were $107.2 million and $49.3 million , respectively. The results for the year ended December 31, 2013, were primarily impacted by a $100.5 million provision recorded for asset value guarantees on six aircraft. See Note R of Notes to Consolidated Financial Statements. The results for the year ended December 31, 2012, were primarily impacted by a $31.3 million provision recorded for asset value guarantees associated with three aircraft and $18.0 million of rent expense associated with two aircraft leases that expired in January 2013.

Provision for Income Taxes: Our effective tax rate for the year ended December 31, 2013 was 35.1% as compared to (10.6)% for the same period in 2012. Our effective tax rate for the year ended December 31, 2012 was significantly impacted by a net adjustment of $162.6 million as a result of adjustments in the tax basis of certain flight equipment. The adjustment related to depreciation deductions allocable to tax-exempt foreign trade income and was made as a result of a court decision which ruled in favor of a taxpayer. See Note O of Notes to Consolidated Financial Statements. Our unrecognized tax benefits increased by $83.3 million for the year ended December 31, 2013, the benefits of which, if recognized, would have a significant impact on our effective tax rate.

Other Comprehensive Income: Other comprehensive income increased to $8.3 million for the year ended December 31, 2013, compared to $7.1 million for the same period in 2012, primarily due to changes in the market values on derivatives qualifying for and designated as cash flow hedges.

Year Ended December 31, 2012 Versus 2011

Flight Equipment: During the year ended December 31, 2012, we had the following activity related to Flight equipment:


Flight equipment at December 31, 2011	930
Aircraft reclassified from Net investment in finance and sales-type leases	2
Aircraft reclassified to Net investment in finance and sales-type leases	(11	)
Aircraft purchases	33
Aircraft sold from Flight equipment	(12	)
Aircraft designated for part-out	(15	)
Aircraft transferred from Flight equipment to Flight equipment held for sale	(8	)

Flight equipment at December 31, 2012(a)	919

(a): Excludes four aircraft owned and leased by AeroTurbine, 15 aircraft classified as finance and sales-type leases, and two aircraft classified as flight equipment held for sale.

Income before Income Taxes: Our income before income taxes increased by approximately $1.4 billion for the year ended December 31, 2012, as compared to the same period in 2011, primarily ~~due to a $1.5 billion decrease in aircraft impairment charges on flight equipment held for use. This decrease in aircraft impairment charges was partially offset by:~~

5559

Table of Contents

~~employee~~due ~~related~~to ~~expenses~~a ~~related~~$1.5 billion todecrease anin ~~increase~~aircraft inimpairment ~~employee~~charges ~~headcount~~on ~~and~~flight anequipment ~~increase~~held for use. This decrease in ~~share~~aircraft ~~based~~impairment ~~compensation.~~charges was partially offset by:

•: a $108.8 million decrease in rental revenue because of lower lease rates on aircraft in our fleet that were re-leased in 2012, including 55 aircraft returned early by lessees that ceased operations or filed for bankruptcy, or its equivalent;
•: a $85.2 million increase in aircraft costs primarily from costs related to the repossession of the 55 aircraft from lessees that ceased operations or filed for bankruptcy, or its equivalent, and the costs related to re-lease of these aircraft; and
•: a $69.4 million increase in selling, general and administrative expenses primarily driven by expenses related to AeroTurbine, which we did not acquire until October 7, 2011, and higher employee related expenses related to an increase in employee headcount and an increase in share based compensation.

See below for a detailed analysis of each category affecting income before income taxes.

Rental of Flight Equipment: Revenues from rentals of flight equipment decreased to $4,345.6 million for the year ended December 31, 2012 from $4,454.4 million for the same period in 2011. The average number of aircraft we owned during the year ended December 31, 2012, decreased to 925 compared to 932 for the year ended December 31, 2011. Revenues from rentals of flight equipment recognized for the year ended December 31, 2012 as compared to the year ended December 31, 2011 decreased (i) $~~193~~219.25 million due to ~~lower~~the re-lease ~~rates~~of on aircraft inand ~~our~~extension ~~fleet~~of ~~during~~expiring ~~both~~leases, ~~periods~~which ~~that~~will ~~were~~normally re-~~leased~~lease or ~~had~~extend ~~lease~~at ~~rates~~lower ~~change~~rental ~~between~~rates than the ~~two~~rates ~~periods~~on the previous leases as the aircraft will be older; and (ii) $5581.02 million related to aircraft in service during the year ended December 31, 2011 and ~~sold prior to December 31~~consigned, ~~2012;~~sold ~~and~~or ~~(iii)~~designated ~~$52.5 million related to a higher number of aircraft in transition between lessees,~~ as aheld ~~result~~for ofsale ~~a higher~~prior ~~number~~to ~~of early returns of aircraft from lessees who ceased operations or filed for bankruptcy~~December 31, ~~or the equivalent~~2012. These decreases in revenue were ~~partly~~ offset by increases of (i) $88.1 million from new aircraft added to our fleet ~~after December 31, 2011 and from aircraft in our fleet as of December 31, 2011,~~ that earned revenue for a greater number of days during the year ended December 31, 2012 than during the same period in 2011; (ii) $60.9 million in lease revenue ~~from~~earned through AeroTurbine, transactions, which we did not acquire until October 7, 2011; and (iii) $42.9 million in net overhaul rental revenue recognized, resulting from less overhaul rentals deferred for the year ended December 31, 2012, as compared to the same period in 2011. Our 2012 revenues from rentals of flight equipment include $62.6 million (1.4% of total revenue) from lessees who filed for bankruptcy protection or ceased operations during 2012. During the year ended December 31, 2012, 11 of our customers, including one with two separate operating certificates, ceased operations or filed for bankruptcy, or its equivalent, and returned 55 of our aircraft.

At December 31, 2012, seven customers operating 12 aircraft were 60 days or more past due on minimum lease payments aggregating $9.1 million relating to some of those aircraft, $7.1 million of which related to two customers. Of this amount, we recognized $5.8 million in rental income through December 31, 2012. In comparison, at December 31, 2011, 14 customers operating 52 aircraft were 60 days or more past due on minimum lease payments aggregating $13.8 million relating to some of those aircraft, $13.0 million of which we recognized in rental income through December 31, 2011. We refined our delinquency disclosures in 2012 to reflect those customers that are 60 days or more past due. We believe this measurement is a better indicator of potential credit concerns with our lessees and more closely aligns with how management monitors significant delinquencies.

~~In addition,~~ Flight ~~during~~Equipment ~~the~~Marketing ~~year~~and ~~ended~~Gain ~~December 31,~~on ~~2012,~~Aircraft 11Sales: Flight ofequipment ~~our~~marketing ~~customers,~~and ~~including~~gain ~~one~~on ~~with~~aircraft ~~two~~sales ~~separate~~increased ~~operating~~by $21.0 million ~~certificates, ceased operations or filed~~ for ~~bankruptcy, or~~ ~~its~~the ~~equivalent,~~year ~~and~~ended ~~returned 55 of our aircraft. As of February~~December 2531, ~~2013~~2012, 42as ofcompared to the 55same ~~returned~~period ~~aircraft~~in ~~have~~2011, ~~been~~primarily ~~committed~~due to ~~lease~~gains ~~and~~recorded 13on 15 aircraft ~~have been~~sold, orseven ~~are intended to be, parted-out or sold. One~~ of ~~these~~which ~~customers,~~were ~~Kingfisher~~converted ~~Airlines,~~into ~~ceased~~sales-type ~~operations~~leases induring the year ~~last~~ended ~~quarter~~December 31, of 2012. ~~While~~as wecompared ~~have~~to ~~been~~gains ~~successful~~recorded inon ~~deregistering~~one ~~our six affected~~ aircraft, ~~we have~~sold ~~experienced~~and ~~difficulty~~two ~~repossessing the~~ aircraft ~~from~~converted ~~India~~to asfinance aleases ~~result~~for ofthe ~~bureaucratic~~same ~~and~~period ~~regulatory~~in ~~obstacles~~2011.

~~Our 2012 revenues from rentals of flight equipment include $62.6 million (1.4% of total revenue) from lessees who filed for bankruptcy protection or ceased operations during 2012.~~ 60

At December 31, 2012, seven aircraft in our fleet were not subject to a signed lease agreement or a signed letter of intent, including four aircraft previously operated by the aforementioned customers who had ceased operations or filed for bankruptcy. Five of these seven aircraft have been or may be parted out or sold but did not meet the criteria for being classified as held for sale and we are considering our options for the remaining two aircraft, which were formerly on lease to Kingfisher Airlines.

Flight Equipment Marketing and Gain on Aircraft Sales: Flight equipment marketing and gain on aircraft sales increased by $21.0 million for the year ended December 31, 2012, as compared to the same period in 2011, primarily due to gains recorded on 15 aircraft sold, seven of which were sold

Table of Contents

under sales-type leases during the year ended December 31, 2012 as compared to gains recorded on one aircraft sold and two aircraft converted to finance leases for the same period in 2011.

Other Income: Other income increased to $123.3 million for the year ended December 31, 2012, compared to $57.9 million for the same period in 2011 due to (i) a $43.4 million increase in revenue recognized by AeroTurbine, net of cost of sales, from the sale of engines, airframes, parts and supplies; (ii) a $17.6 million increase in early termination fees, bankruptcy settlements and security deposit forfeitures; (iii) a $5.0 million gain recorded on an aircraft sold under an asset value guarantee during the year ended December 31, 2012; and (iv) a $3.1 million increase in foreign exchange gains, net of losses. These increases were partially offset by minor fluctuations aggregating a decrease of $3.7 million.

Interest Expense: Interest expense decreased to $1,555.6 million for the year ended December 31, 2012, compared to $1,569.5 million for the same period in 2011. Our average debt outstanding, net of deferred debt discount, decreased to $24.4 billion during the year ended December 31, 2012, compared to $26.0 billion during the same period in 2011~~, while our weighted average effective cost of borrowing, which excludes the effect of amortization of deferred debt issue cost, remained relatively constant~~.

Depreciation: Depreciation of flight equipment increased to $1,918.7 million for the year ended December 31, 2012, compared to $1,864.7 million for the same period in 2011, due to (i) an increase of $30.1 million primarily driven by changes in the estimated useful lives and residual values of certain aircraft types resulting from our annual fleet assessment performed in the third quarter of 2011, which accelerated depreciation and (ii) an increase of $23.9 million of depreciation expense recorded by AeroTurbine, which we did not acquire until October 7, 2011.

Aircraft Impairment Charges on Flight Equipment Held for Use: Aircraft impairment charges on flight equipment held for use decreased to $102.7 million relating to ten aircraft for the year ended December 31, 2012, as compared to $1,567.2 million relating to 100 aircraft recorded for the year ended December 31, 2011. The 2011 impairment charges were primarily due to changes in the estimated holding period and residual values of certain out-of-production aircraft or ~~aircraft~~ aircraft impacted by new technology developments, resulting from our analysis of then-current macro-economic factors and our acquisition of AeroTurbine when performing our 2011 annual ~~recoverability~~ recoverability assessment. See "Critical Accounting Policies and Estimates—Flight Equipment."

5761

Table of Contents

Aircraft Impairment Charges and Fair Value Adjustments on Flight Equipment Sold or to Be Disposed: During the years ended December 31, 2012 and 2011, respectively, we recorded the following aircraft impairment charges and fair value adjustments on flight equipment sold or to be disposed:

	Year Ended
	December 31, 2012						December 31, 2011
	Aircraft Impaired or Adjusted			Impairment Charges and Fair Value Adjustments			Aircraft Impaired or Adjusted		Impairment Charges and Fair Value Adjustments
	(Dollars in millions)
Loss/(Gain)
Impairment charges and fair value adjustments on aircraft likely to be sold or sold (including sales-type leases)		10		$	43.3			17	$	163.1
Impairment charges and fair value adjustments on aircraft likely to be sold or sold (including sales-type leases)		10	(a)	$	43.3			17	$	163.1
Fair value adjustments on held for sale aircraft sold or transferred from held for sale back to flight equipment		4			4.1			10		(3.7	)(a)
Fair value adjustments on held for sale aircraft sold or transferred from held for sale back to flight equipment(b)		4			4.1			10		(3.7	)
Impairment charges on aircraft intended to be or designated for part-out		12			42.3	(b)		3		10.9
Impairment charges on aircraft intended to be or designated for part-out		12			42.3	(c)		3		10.9

Total Impairment charges and fair value adjustments on flight equipment sold or to be disposed		26		$	89.7	~~(c)~~		30	$	170.3

(a)~~One of the ten aircraft was impaired twice during 2012. (b)~~Included in ~~these~~this ~~amounts~~amount are net positive fair value adjustments related to aircraft previously held for sale, but which no longer met such criteria and ~~were~~ were subsequently reclassified to Flight equipment. Also included in ~~these~~this ~~amounts~~amount are net positive fair value adjustments related to sales price adjustments for aircraft that were previously held for ~~sale~~ sale and sold during ~~periods~~the period presented. (cb)Includes charges relating to 13 engines for the year ended December 31, 2012.

Aircraft impairment charges and fair value adjustments on flight equipment sold or to be disposed decreased to $89.7 million for the year ended December 31, 2012, compared to $170.3 million for 2011. The decrease was primarily due to seven fewer aircraft sold or identified as likely to be sold at December 31, 2012, resulting in lower impairment charges, as compared to the same period in 2011. This decrease was partially offset by impairment charges on 12 aircraft intended to be or designated for part-out at December 31, 2012, as compared to three aircraft at December 31, 2011. During the year ended December 31, 2012, we recorded impairment charges and fair value adjustments on 26 aircraft and 13 engines that were sold or to be disposed, compared to 30 aircraft during the year ended December 31, 2011. See Note G of Notes to Consolidated Financial Statements.

Loss on Extinguishment of Debt: During the year ended December 31, 2012, we prepaid the remaining $456.9 million outstanding under our secured credit facility dated October 13, 2006. We also prepaid in full the $750 million outstanding under one of our secured term loans, and we refinanced our $550 million secured term loan at a lower interest rate. In connection with these prepayments and refinancing, we recognized charges aggregating $22.9 million from the write off of unamortized deferred financing costs and deferred debt discount.

During the year ended December 31, 2011, we issued unsecured senior notes and used a portion of the proceeds from these notes in cash tender offers to repurchase existing outstanding notes, incurring a loss of $61.1 million from the early extinguishment of debt. See Note K of Notes to Consolidated Financial Statements.

5862

Table of Contents

Aircraft Costs: Aircraft costs increased to $134.8 million for the year ended December 31, 2012, compared to $49.7 million for the same period in 2011 primarily due to a higher number of aircraft that were repossessed from customers that ceased operations or filed for bankruptcy, or its equivalent.

Selling, General and Administrative Expenses: Selling, general and administrative expenses increased to $~~257~~259.54 million for the year ended December 31, 2012, compared to $~~188~~190.40 million for 2011 due to (i) a $40.8 million increase in salaries and employee related expenses due to an increase in share-based compensation resulting from a significant improvement in AIG's stock price, an increase in employee headcount and an out of period credit adjustment in 2011 relating to pension expenses covering employee services from 1996 to 2010, with no such credit recorded for the year ended December 31, 2012; (ii) a $32.9 million increase due to expenses incurred by AeroTurbine, which we did not acquire until October 7, 2011; (iii) a $43.71 million increase in ~~bank~~professional ~~fees~~ and ~~financing~~consulting costs; ~~related~~and (iv) a to$1.9 million ~~the~~net ~~modification~~increase ofin ~~one of our debt~~other ~~facilities~~expense categories. These increases were partially offset by a decrease of $9.3 million relating to the write-down of spare parts and computer equipment during 2011 with no such costs incurred for the year ended December 31, 2012.

Other Expenses: Other expenses for the years ended December 31, 2012 and 2011 ~~consisted~~were of$49.3 million and $88.2 million respectively. The results for the ~~following:~~year ended December 31, 2012, were primarily impacted by a $31.3 million provision recorded for asset value guarantees associated with three aircraft. The results for the year ended December 31, 2011, were primarily impacted by a $21.9 million provision recorded for loss on notes receivable, a $23.1 million provision recorded for loss on finance and sales-type leases and a $20 million charge on aircraft engine order cancellation.

	2012
	(Dollars in thousands)
Lease charges		1,350	(3,062	)
Effect of derivatives(a)(b)		654	9,808
Provision for loss on asset value guarantees(c)		31,266	—
Provision for loss on notes receivable		—	21,898
Provision for loss on finance and sales-type leases		—	23,088
Flight equipment rent(b)		18,000	18,000
Aircraft engine order cancellation		—	20,000
		51,270	89,732

Provision for Income Taxes: Our effective tax rate for the year ended December 31, 2012, decreased to (10.6)% from (30.0)% for the same period in 2011. Our effective tax rate was significantly impacted by a net adjustment of $162.6 million as a result of adjustments in the tax basis of certain flight equipment. The adjustment related to depreciation deductions allocable to tax-exempt foreign trade income and was made as a result of a recent court decision which ruled in favor of a taxpayer. See Note O of Notes to Consolidated Financial Statements. In addition, our effective tax rate continues to be impacted by minor permanent items and interest accrued on unrecognized tax benefits and IRS audit adjustments. Our unrecognized tax benefits increased by $469 million for the year ended December 31, 2012, the benefits of which, if recognized, would have a significant impact on our effective tax rate.

(a)See Note U—Derivative Financial Instruments for more information on derivative transactions. (b)Previously presented separately on the Consolidated Income Statement. (c)Reserves recorded on three aircraft asset value guarantees in 2012.

Provision for Income Taxes: Our effective tax rate for the year ended December 31, 2012, decreased to (10.6)% from (30.0)% for the same period in 2011. Our effective tax rate was significantly impacted by a net adjustment of $(162.6) million as a result of adjustments in the tax basis of certain flight equipment. The adjustment related to depreciation deductions allocable to tax-exempt foreign trade income and was made as a result of a recent court decision which ruled in favor of a taxpayer. See Note O of Notes to Consolidated Financial Statements. In addition, our effective tax rate continues to be impacted by minor permanent items and interest accrued on unrecognized tax benefits and IRS audit adjustments. Our unrecognized tax benefits increased by $469 million for the year ended December 31, 2012, the benefits of which, if recognized, would have a significant impact on our effective tax rate.

Other Comprehensive Income: Other comprehensive income decreased to $7.1 million for the year ended December 31, 2012, compared to $39.3 million for the same period in 2011. This decrease was primarily due to maturities of swaps and changes in the market values on derivatives qualifying for and designated as cash flow hedges.

59 Liquidity

~~Table~~ We generally fund our operations, which primarily consist of ~~Contents~~aircraft purchases, debt principal and interest payments and operating expenses, through a variety of sources. These sources include available cash balances, internally generated funds, including lease rental payments and proceeds from aircraft sales and part-outs, and debt issuance proceeds. In addition to these sources of funds, we have $2.3 billion available under our unsecured revolving credit facility. As part of our liquidity management strategy, we strive to maintain, and believe we currently have, sufficient liquidity to cover our debt maturities over the next 18 to 24 months and our capital expenditures over the next 12 months. We also target a ratio of adjusted net debt to adjusted shareholders' equity between 2.5-to-1.0 and 3.0-to-1.0, and our ratio was 2.5-to-1.0 at December 31, 2013. Adjusted net debt to adjusted shareholders' equity is a non-GAAP financial measure; see Non-GAAP Financial Measurements for a reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures. We are also focused on aligning our operating cash flows with the principal obligations due on our debt on

Year Ended December 31, 2011 Versus 2010

Flight Equipment. During the year ended December 31, 2011, we had the following activity related to Flight equipment:


Flight equipment at December 31, 2010	933
Aircraft reclassified to Net investment in finance and sales-type leases	(2	)
Aircraft purchases	8
Aircraft sold from Flight equipment	(7	)
Aircraft designated for part-out	(3	)
Aircraft designated for part-out and subsequently transferred to Investment in finance leases	(1	)
Aircraft transferred from Flight equipment to Flight equipment held for sale	(1	)
Aircraft transferred from Flight equipment held for sale to Flight equipment	3
Flight equipment at December 31, 2011(a)	930

(a)Excludes nine aircraft owned and leased by AeroTurbine.

Income before Income Taxes: Our income before income taxes decreased by approximately $269.3 million for the year ended December 31, 2011, as compared to the same period in 2010, primarily due to the following:

These increases were partially offset by a $98.4 million decrease in depreciation expense. See below for a detailed analysis of each category affecting income before income taxes.

Rental of Flight Equipment: Revenues from rentals of flight equipment decreased to $4,454.4 million for the year ended December 31, 2011, from $4,726.5 million for the same period in 2010. The average number of aircraft we owned during the year ended December 31, 2011, decreased to 932 compared to 963 for the year ended December 31, 2010, primarily due to aircraft sales. Revenues from rentals of flight equipment recognized for the year ended December 31, 2011, decreased as compared to the same period in 2010 due to (i) a $107.8 million decrease related to aircraft in service during the year ended December 31, 2010, and sold prior to December 31, 2011; (ii) a $103.1 million decrease due to lower lease rates on aircraft in our fleet during both periods, that were re-leased or had lease rates change between the two periods; (iii) a $71.5 million decrease in net overhaul rentals recognized as a result of an increase in expected overhaul related reimbursements; and (iv) a $15.7 million decrease related to more aircraft in transition between lessees primarily resulting from repossessions of aircraft. These decreases in revenue were partly offset by increases aggregating $26.0 million related to lease activity from AeroTurbine and the addition of eight new aircraft to our fleet after December 31, 2010, and aircraft in our fleet as of December 31, 2010 that earned revenue for a greater number of days during the year ended December 31, 2011, than during the same period in 2010.

Table of Contents

At December 31, 2011, 14 customers operating 52 aircraft were 60 days or more past due on minimum lease payments aggregating $13.8 million relating to some of those aircraft. Of this amount, we recognized $13.0 million in rental income through December 31, 2011. In comparison, at December 31, 2010, four customers operating nine aircraft were 60 days or more past due on minimum lease payments aggregating $2.2 million relating to some of those aircraft, all of which we recognized in rental income through December 31, 2010. More customers were past due on minimum lease payments in 2011 as a result of challenging global economic conditions and significant volatility in oil prices, which negatively impacted the profitability of certain airlines. We have refined our disclosures related to delinquencies to more closely align our disclosures with how management monitors significant delinquencies.

Flight Equipment Marketing and Gain on Aircraft Sales: Flight equipment marketing and gain on aircraft sales increased by $3.7 million for the year ended December 31, 2011, as compared to the same period in 2010, primarily due to gains recorded on one aircraft sold and two aircraft converted to finance leases.

Other Income: Other income decreased to $57.9 million for the year ended December 31, 2011, compared to $61.7 million for 2010 due to (i) a decrease in interest and dividend income of $10.5 million mainly attributable to repayment of our notes receivable; (ii) a $10.4 million decrease in other income recorded due to proceeds related to the loss of two aircraft during the year ended December 31, 2010, with no such proceeds received in the year ended December 31, 2011; and (iii) other minor changes aggregating a decrease of $2.6 million. These decreases were partially offset by (i) $10.0 million of other income related to the cancellation of aircraft under order (see Note H of Notes to Consolidated Financial Statements) and (ii) a $9.7 million increase due to AeroTurbine revenue, net of cost of sales, from the sale of engines, aircraft and aircraft parts since the acquisition of AeroTurbine on October 7, 2011 (see Note H of Notes to Consolidated Financial Statements).

Interest Expense: Interest expense remained relatively constant at $1,569.5 million for the year ended December 31, 2011, compared to $1,567.4 million for 2010. Our weighted average effective cost of borrowing, which excludes the effect of amortization of deferred debt issue cost, increased 0.42%, which was partially offset by a decrease in average debt outstanding, net of deferred debt discount, to $26.0 billion during the year ended December 31, 2011, compared to $28.6 billion during the same period in 2010.

Depreciation: Depreciation of flight equipment decreased to $1,864.7 million for the year ended December 31, 2011, compared to $1,963.2 million for the year ended December 31, 2010, due to a combination of sales of aircraft and a reduction in the aggregate net book value of our fleet resulting from impairment charges and fair value adjustments.

Table of Contents

Aircraft Impairment Charges on Flight Equipment Held for Use: During the years ended December 31, 2011 and 2010, respectively, we recorded the following aircraft impairment charges and fair value adjustments on flight equipment held for use:

	Year Ended
	December 31, 2011					December 31, 2010
	Aircraft Impaired or Adjusted			Impairment Charges and Fair Value Adjustments		Aircraft Impaired or Adjusted		Impairment Charges and Fair Value Adjustments
	(Dollars in millions)
Impairment charges due to Airbus' announcement of its neo aircraft		—		$	—		61	$	602.3
Impairment charges on aircraft due to recurring assessments		97	(a)		1,523.3		21		508.1
Impairment charges on aircraft under lease with customers that ceased operations		3	(b)		43.9		—		—
Total Impairment charges on flight equipment held for use		100		$	1,567.2		82	$	1,110.4

(a)Includes impairments on one aircraft owned by our AeroTurbine subsidiary. (b)Two of the three aircraft were impaired twice during 2011.

Aircraft impairment charges on flight equipment held for use increased to $1,567.2 million for the year ended December 31, 2011, as compared to $1,110.4 million recorded for 2010, primarily due to changes in the holding period and residual values of certain out-of-production aircraft, or aircraft impacted by new technology developments, resulting from our analysis of current macro-economic factors and our acquisition of AeroTurbine when performing our 2011 annual recoverability assessment. See "Critical Accounting Policies and Estimates—Flight Equipment."

Between December 31, 2011 and March 7, 2012, four of our customers, including one with two separate operating certificates, declared bankruptcy or ceased operations or its equivalent. As a result, we performed a revised analysis of the recoverability of all aircraft that were under lease with these customers, and determined that the book value of three additional aircraft was not fully recoverable. We recorded impairment charges of $43.9 million to record these three aircraft at their fair market value. Additionally, we recorded impairment charges of $7.9 million related to recurring recoverability assessments during the year.

Table of Contents

Aircraft Impairment Charges and Fair Value Adjustments on Flight Equipment Sold or to Be Disposed: During the years ended December 31, 2011 and 2010, respectively, we recorded the following aircraft impairment charges and fair value adjustments on flight equipment sold or to be disposed:

	Year Ended
	December 31, 2011					December 31, 2010
	Aircraft Impaired Or Adjusted		Impairment Charges and Fair Value Adjustments			Aircraft Impaired Or Adjusted		Impairment Charges and Fair Value Adjustments
	(Dollars in millions)
Loss/(Gain)
Impairment charges and fair value adjustments on aircraft likely to be sold or sold		17	$	163.1			15	$	155.1
Fair value adjustments on held for sale aircraft sold or transferred from held for sale back to flight equipment(a)		10		(3.7	)		60		372.1
Impairment charges on aircraft designated for part-out		3		10.9			2		25.6
Total Impairment charges and fair value adjustments on flight equipment sold or to be disposed		30	$	170.3			77	$	552.8

(a)Included in these amounts are net positive fair value adjustments related to aircraft previously held for sale, but which no longer met such criteria and were subsequently reclassified to Flight equipment. Also included in these amounts are net positive fair value adjustments related to sales price adjustments for aircraft that were previously held for sale and sold during periods presented.

Aircraft impairment charges and fair value adjustments on flight equipment sold or to be disposed decreased to $170.3 million for the year ended December 31, 2011, compared to $552.8 million for 2010. The decrease was primarily due to fewer aircraft impaired or adjusted that were sold or to be disposed at December 31, 2011, as compared to the same period in 2010. During the year ended December 31, 2011, we recorded impairment charges and fair value adjustments on 30 such aircraft, compared to 77 such aircraft during the year ended December 31, 2010. See Note G of Notes to Consolidated Financial Statements.

Loss on Extinguishment of Debt: During the year ended December 31, 2011, we issued unsecured senior notes and used a portion of the proceeds from these notes in cash tender offers to repurchase existing outstanding notes, incurring a loss of $61.1 million from the early extinguishment of debt. See Note K of Notes to Consolidated Financial Statements.

Aircraft Costs: Aircraft costs increased to $49.7 million for the year ended December 31, 2011, compared to $33.4 million for the same period in 2010 primarily due to costs to support the aging aircraft in our fleet.

Selling, General and Administrative Expenses: Selling, general and administrative expenses increased to $188.4 million for the year ended December 31, 2011, compared to $179.4 million for 2010 due to (i) a $23.7 million increase in professional costs relating primarily to the acquisition of AeroTurbine on October 7, 2011 (See Note C of Notes to Consolidated Financial Statements) and cost incurred by us in preparation for a potential future partial or complete divestiture by AIG; and (ii) a $4.4 million increase due to charges relating to asset value guarantee reserves. These increases were partially offset by (i) a $17.7 million decrease in salaries and employee related expenses due to an out-of-period charge recognized during 2010 related to pension expenses covering employee services from 1996 to 2010 and (ii) other minor fluctuations aggregating a decrease of $1.4 million.

Table of Contents

~~Other~~an annual ~~Expenses: Other~~basis ~~expenses~~and ~~for~~ the weighted average maturities on our debt financing was 6.3 years ~~ended~~as of December 31, ~~2011~~2013. We have also continued to diversify our funding sources to include both secured and ~~2010,~~unsecured ~~respectively~~financings from public debt markets, ~~consisted~~commercial ofbanks ~~the~~and ~~following:~~ institutional loan markets, among others.

During qthe year ended December 31, 2013, we generated cash flows from operations of approximately $2.4 billion and we raised approximately $1.8 billion of net proceeds from the issuance of unsecured notes. In addition, we refinanced our secured term loan due June 30, 2017 at a lower interest rate and prepaid $150 million of the $900 million outstanding principal amount as part of the refinancing agreement, and we prepaid in full our $550 million secured term loan originally scheduled to mature in April 2016.

	2011			2010
	(Dollars in thousands)
Lease related (income) charges	$	(3,062	)	$	91,216
Effect of derivatives(a)(b)		9,808			47,787
Provision for loss on notes receivable		21,898			—
Provision for loss on finance and sales-type leases		23,088			—
Flight equipment rent(b)		18,000			18,000
Aircraft engine order cancellation costs		20,000			—
	$	89,732		$	157,003

At December 31, 2013, we had approximately $1.4 billion in cash and cash equivalents available for use in our operations. We also had $464.8 million of cash restricted from general use in our operations, but which we can use to satisfy certain obligations under our operating leases and to pay principal and interest primarily on our 2004 ECA facility. At February 24, 2014, we had the full $2.3 billion available to us under our revolving credit facility and approximately $64.5 million of the $430.0 million was available under AeroTurbine's credit facility. We also have the potential ability to increase the AeroTurbine credit facility by an additional $70 million either by adding new lenders or allowing existing lenders to increase their commitments if they choose to do so.

Our bank credit facilities and indentures limit our ability to incur secured indebtedness. The most restrictive covenant in our bank credit facilities permits us and our subsidiaries to ~~(a)See~~incur secured indebtedness totaling up to 30% of our consolidated net tangible assets, as defined in the credit agreement, and such limit currently totals approximately $9.7 billion. This ~~Note~~limitation is subject to certain exceptions, including the ability to incur secured indebtedness to finance the purchase of aircraft. As of February ~~U—Derivative~~24, ~~Financial~~2014, ~~Instruments~~we ~~for~~were ~~more~~able ~~information~~to onincur ~~derivative~~an ~~transactions~~additional $7. 4 billion of secured indebtedness under this covenant. Our debt indentures also restrict us and our subsidiaries from incurring secured indebtedness in excess of 12.5% of our ~~Previously presented~~consolidated ~~separately~~net ontangible assets, as defined in the ~~Consolidated~~indentures. ~~Income~~However, ~~Statement~~we may obtain secured financing without regard to the 12.5% consolidated net tangible asset limit under our indentures by doing so through subsidiaries that qualify as non-restricted under such indentures.

~~Provision~~In addition ~~for~~to ~~Income~~addressing ~~Taxes: Our~~our ~~effective~~liquidity ~~tax~~needs ~~rate~~through ~~for~~debt ~~the year ended December 31~~financings, ~~2011,~~we ~~was~~may aalso ~~tax~~pursue ~~benefit~~potential ofaircraft ~~30.0%~~sales asand ~~compared to a tax benefit of 35~~part-outs.2% ~~for~~During the year ended December 31, ~~2010.~~2013, ~~The~~we ~~decrease~~sold 26 inaircraft ~~tax~~and ~~benefit~~one ~~was~~engine ~~primarily~~for ~~due~~approximately to$744 million ~~an increase~~ in ~~state~~aggregate ~~taxes,~~gross anproceeds ~~out-of-period~~in ~~adjustment~~connection ~~related to~~with ~~the~~our ~~forfeiture~~ongoing offleet ~~share-based~~management ~~deferred~~strategy. ~~compensation~~As ~~awards~~of February 24, ~~various other permanent items~~2014, ~~and~~we ~~interest~~had ~~accrued~~sold onone additional ~~unrecognized~~aircraft ~~tax~~in ~~benefits~~2014 and ~~IRS~~we ~~audit~~anticipate ~~adjustments.~~sales ~~Our~~of ~~unrecognized~~additional ~~tax~~aircraft ~~benefits increased~~during bythe ~~$31.2 million~~remainder ~~for~~of ~~the~~2014. ~~year~~In ~~ended~~evaluating ~~December 31,~~potential ~~2011,~~sales ~~the~~or ~~benefits~~part-outs of ~~which~~aircraft, ifwe ~~recognized,~~balance ~~would~~maximization ~~have~~of acash ~~significant~~today with ~~impact~~the onlong-term ~~our~~value ~~effective~~of ~~tax~~holding ~~rate~~aircraft.

~~Other~~On December 16, ~~Comprehensive~~2013, ~~Income: Other~~AIG ~~comprehensive~~entered ~~income~~into ~~decreased~~an toagreement with AerCap and AerCap Ireland Limited, a wholly-owned subsidiary of AerCap, for the sale of 100 percent of our common stock for consideration consisting of $~~39.~~3.0 billion in cash, a portion of which will be funded by a special distribution of $600.0 million ~~for~~to be paid by us to AIG upon consummation of the transaction, ~~year~~and ~~ended~~approximately ~~December~~97.6 ~~31,~~million ~~2011, compared~~newly-issued toAerCap common shares. The consideration has a value of approximately $5.4 billion based on AerCap's pre-announcement closing price per share of $7924.393 on December ~~million~~13, ~~for~~2013. ~~the~~The ~~same~~transaction ~~period~~is insubject ~~2010~~to required regulatory approvals, including all applicable U.S. ~~This~~and ~~decrease~~foreign regulatory reviews and approvals, as well as other customary closing conditions. The transaction was ~~primarily~~approved ~~due~~by toAerCap ~~maturities~~shareholders ofon ~~swaps~~February 13, 2014 and ~~changes~~is expected to close in 2014. In connection with the ~~market~~financing ~~values~~of onthe transaction, ~~derivatives~~AerCap ~~qualifying~~has ~~for~~entered into a $2.75 billion bridge credit agreement. At the closing of the transaction, we and ~~designated~~certain asof ~~cash~~our ~~flow hedges~~subsidiaries will become guarantors of the facility. Additionally, AIG has entered into a credit agreement for a senior

Liquidity

We generally fund our operations, which primarily consist of aircraft purchases, debt principal and interest payments and operating expenses, through a variety of sources. These sources include available cash balances, internally generated funds, including lease rental payments and proceeds from aircraft sales and part-outs, and debt issuance proceeds. In addition to these sources of funds, we have $2.3 billion available under our unsecured revolving credit facility. As part of our liquidity management strategy, we strive to maintain, and believe we currently have, sufficient liquidity to cover 18 to 24 months of debt maturities and operating expenses and 12 months of capital expenditures, and a ratio of adjusted net debt to adjusted shareholders' equity between 2.5-to-1.0 and 3.0-to-1.0. We are also focused on aligning our operating cash flows with the principal obligations due on our debt on an annual basis and, in furtherance of this objective, we have extended our debt maturities to a weighted average of 6.3 years as of December 31, 2012. We have also continued to diversify our funding sources to include both secured and unsecured financings from public debt markets, commercial banks and institutional loan markets, among others.

During the year ended December 31, 2012, we generated cash flows from operations of approximately $2.8 billion and we raised $4.2 billion of gross proceeds from debt financings consisting of $2.3 billion of unsecured notes and $1.9 billion of secured financings, including $287 million of pre-funded secured notes guaranteed by the Export-Import Bank of the United States. We primarily used these proceeds to: (i) finance aircraft purchases; (ii) prepay in full all amounts outstanding under

Table of Contents

~~our~~unsecured ~~$750 million~~revolving ~~secured~~credit ~~term~~facility ~~loan~~between ~~originally~~AerCap ~~scheduled~~Ireland toas ~~mature~~borrower inand ~~2015;~~AIG ~~(iii)~~as ~~prepay the remaining $456~~lender.~~9 million~~ ~~outstanding~~The ~~under~~revolving ~~our secured~~ credit facility ~~scheduled~~provides tofor ~~mature~~an inaggregate ~~October~~commitment ~~2012~~of ~~and terminate the facility; and (iv) refinance our~~ $~~550~~1 ~~million~~billion ~~secured~~and ~~term~~permits ~~loan scheduled~~loans ~~to mature in 2016 at a lower interest rate. We plan to use the remaining proceeds~~ for general corporate purposes, ~~including~~after ~~aircraft purchases and~~ the ~~repayment~~closing of ~~maturing~~the ~~debt~~transaction. We ~~also (i) increased~~will ~~the~~become ~~aggregate amount available under AeroTurbine's credit facility by $95 million to~~ a ~~maximum~~guarantor ~~aggregate available amount~~ of ~~$430 million;~~ ~~and~~the ~~(ii) entered into a new $2.3 billion revolving credit~~ facility ~~that~~after ~~matures~~the inclosing ~~October~~of ~~2015~~the ~~and terminated our previous $2~~transaction.~~0 billion~~ ~~revolving credit facility.~~

AtIn ~~December 31~~addition, ~~2012,~~ we ~~had~~recently ~~approximately~~amended our $32.03 billion inrevolving ~~cash~~credit ~~and~~facility. ~~cash~~The ~~equivalents~~amendment ~~available~~will ~~for~~only ~~use~~become ineffective ~~our~~upon ~~operations.~~the Weoccurrence ~~also~~of ~~had~~certain ~~$695.4 million~~conditions, ofincluding ~~cash~~the ~~restricted~~consummation ~~from~~of ~~general~~the ~~use~~pending insale ~~our~~of ~~operations,~~us ~~$288~~to AerCap.~~3 million~~ ofAs ~~which~~part ~~will~~of bethe ~~made~~amendments ~~available~~ to ~~finance~~our ~~two~~revolving ~~aircraft~~credit infacility, ~~April~~AerCap ~~2013.~~and Wecertain ~~can~~of ~~use~~its ~~the~~subsidiaries ~~remaining~~will ~~funds~~be required to ~~satisfy~~guarantee ~~certain~~ our obligations under the ~~our~~revolving ~~operating~~credit ~~leases~~facility and tothe ~~pay~~cross-default ~~principal~~provision ~~and~~will ~~interest~~extend to defaults on ~~our~~certain ~~2004~~indebtedness ~~ECA~~of ~~facility.~~AerCap Ator ~~February 25,~~any ~~2013,~~of weits ~~had~~subsidiaries ~~the~~that ~~full~~are ~~$2.3 billion~~guarantors ~~available~~at tosuch ustime under ~~our~~the revolving credit ~~facility~~agreement. ~~and~~The ~~approximately~~amendments ~~$174.0 million~~to of the ~~$430.0 million~~revolving ~~was available under AeroTurbine's~~ credit facility. We also ~~have~~add ~~the~~financial ~~potential~~covenants ~~ability~~and torevise ~~increase~~other ~~the~~financial ~~AeroTurbine credit~~and ~~facility~~restrictive bycovenants. anThe ~~additional~~new ~~$70 million~~and ~~either~~revised byfinancial ~~adding~~covenants ~~new~~will ~~lenders~~be measured oron ~~allowing~~a ~~existing~~consolidated ~~lenders~~basis tofor ~~increase~~AerCap ~~their~~and ~~commitments~~its subsidiaries.

~~Our~~We ~~bank~~believe ~~credit~~the ~~facilities~~sources ~~and~~of ~~indentures~~liquidity ~~limit~~mentioned ~~our~~above, ~~ability~~together towith ~~incur secured indebtedness. The most restrictive covenant in~~ our ~~bank~~cash ~~credit~~generated ~~facilities~~from ~~permits~~operations, uswill ~~and~~be ~~our~~sufficient ~~subsidiaries~~ to ~~incur~~ ~~secured~~operate ~~indebtedness~~our ~~totaling~~business upand torepay ~~30% of~~ our ~~consolidated~~debt ~~net~~maturities ~~tangible~~for ~~assets, as defined in the credit agreement, which limit currently totals approximately $10.8 billion. This~~at ~~limitation~~least ~~is subject to certain exceptions, including~~ the ~~ability~~next to18 ~~incur secured indebtedness~~ to ~~finance the purchase of aircraft. As of February~~24 ~~25,~~months ~~2013,~~and ~~we were able~~ to ~~incur~~cover ~~an additional $7.6 billion of secured indebtedness under this covenant. Our debt indentures also restrict us and~~ our ~~subsidiaries~~capital ~~from~~expenditures ~~incurring~~for ~~secured~~at ~~indebtedness~~least ~~in excess of 12.5% of our consolidated net tangible assets, as defined in~~ the ~~indentures.~~next ~~However, we may obtain secured financing without regard to the~~ 12 months.5% ~~consolidated net tangible asset limit under our indentures by doing so through subsidiaries that qualify as non-restricted under such indentures.~~

In addition to addressing our liquidity needs through debt financings, we may also pursue potential aircraft sales or, for some of our older aircraft that are out of production, part-outs. During the year ended December 31, 2012, we sold 18 aircraft and eight engines for approximately $521 million in aggregate gross proceeds in connection with our ongoing fleet management strategy. As of February 25, 2013, we had sold three additional aircraft in 2013 and we anticipate sales of additional aircraft during the remainder of 2013. In evaluating potential sales or part-outs of aircraft, we balance maximization of cash today with the long-term value of holding aircraft.

We believe the sources of liquidity mentioned above, together with our cash generated from operations, will be sufficient to operate our business and repay our debt maturities for at least the next twelve months.

Debt Financings

We have borrowed funds on both a secured and unsecured basis from various sources. Significant capital resources and liquidity developments in ~~2012~~2013 include:

•: issuances of $750 million of unsecured 3.875% notes due 2018 and $500 million of unsecured 4.625% notes due 2021;
•: the issuance of $550 million of unsecured floating rate notes due 2016, bearing interest at three-month LIBOR plus a margin of 1.95%;
•: prepayment in full of our $550 million secured term loan originally scheduled to mature in April 2016, which was bearing interest at LIBOR plus a margin of 3.75%; and
•: partial prepayment and amendment of our secured term loan due June 30, 2017, reducing the outstanding principal amount from $900 million to $750 million and lowering the interest rate to LIBOR plus a margin of 2.75%, with a LIBOR floor of 0.75%, from the initial interest rate of LIBOR plus a margin of 4.0% with a 1.0% LIBOR floor.

Table of Contents

~~scheduled~~ Our todebt ~~mature~~financing inwas ~~2015;~~comprised ~~and (ii) $750 million~~ of ~~5.875%~~the ~~notes~~following ~~due~~at ~~2022~~December 31, ~~issued~~2013 inand ~~August~~December 31, 2012;:

Our debt financing was comprised of the following at December 31, 2012 and December 31, 2011:

	December 31, 2013			December 31, 2012

	(Dollars in thousands)
Secured
Senior secured bonds	$	3,900,000		$	3,900,000
ECA and Ex-Im financings		1,746,144			2,193,229
Secured bank debt(a)		1,811,705			1,961,143
Institutional secured term loans		750,000			1,450,000
Less: Deferred debt discount(b)		(5,058	)		(15,125	)


		8,202,791			9,489,247
Unsecured
Bonds and medium-term notes		12,269,522			13,890,747
Less: Deferred debt discount(b)		(31,456	)		(37,207	)


		12,238,066			13,853,540


Total Senior Debt Financings		20,440,857			23,342,787
Subordinated debt		1,000,000			1,000,000


	$	21,440,857		$	24,342,787




Selected interest rates and ratios which include the economic effect of derivative instruments:
Weighted average effective cost of borrowing(c)		5.94	%		6.09	%
Percentage of total debt at fixed rates		78.64	%		79.16	%
Weighted average effective cost of borrowing on fixed rate debt(c)		6.74	%		6.77	%

	December 31, 2012			December 31, 2011
	(Dollars in thousands)
Secured
Senior secured bonds	$	3,900,000		$	3,900,000
ECA and Ex-Im financings		2,193,229			2,335,147
Secured bank debt(a)		1,961,143			2,246,936
Institutional secured term loans		1,450,000			1,300,000
Less: Deferred debt discount		(15,125	)		(17,452	)
		9,489,247			9,764,631
Unsecured
Bonds and medium-term notes		13,890,747			13,658,769
Less: Deferred debt discount		(37,207	)		(39,128	)
		13,853,540			13,619,641
Total Senior Debt Financings		23,342,787			23,384,272
Subordinated debt		1,000,000			1,000,000
	$	24,342,787		$	24,384,272
Selected interest rates and ratios which include the economic effect of derivative instruments:
Weighted average effective cost of borrowing(b)		6.09	%		6.11	%
Percentage of total debt at fixed rates		79.16	%		76.08	%
Weighted average effective cost of borrowing on fixed rate debt(b)		6.72	%		6.49	%

(a): Of these amounts, $173.5 million (2013) and $270.5 million (2012) are non-recourse to ILFC. These secured financings were incurred by VIEs, and consolidated into our consolidated financial statements.
(b): During the year ended December 31, 2013, we recorded a $19.5 million adjustment to correct and fully align amortization of deferred debt issue costs and debt discounts in prior periods with the effective interest method, of which $4.4 million related to debt discounts and is reflected herein. See Note A of Notes to Consolidated Financial Statements.
(c): Excludes the effect of amortization of deferred debt issue cost.

(a)Of this amount, $270.5 million (2012) and $97.0 million (2011) is non-recourse to ILFC. These secured financings were incurred by VIEs, and consolidated into our consolidated financial statements. (b)Excludes the effect of amortization of deferred debt issue cost.

Table of Contents

The following table presents information regarding the collateral provided for our secured debt as of December 31, ~~2012.~~2013:

	As of December 31, 2012
	As of December 31, 2013
	Debt Outstanding		Net Book Value		Number of Aircraft
	(Dollars in thousands)
Senior secured bonds	$	3,900,000	$	65,~~485~~864,~~121~~796		174
ECA and Ex-Im financings		21,~~193~~746,~~229~~144		54,~~338~~938,~~188~~321		~~119~~118	~~(a)~~
Secured bank debt		1,961,143		2,925,637		63	(b)
Secured bank debt(a)		1,811,705		2,591,814		61
Institutional secured term loans		1750,~~450,~~000		21,~~801~~266,~~330~~438		9752
Total	$	9,504,372	$	17,550,276		453

Total	$	8,207,849	$	14,661,369		405

(a)~~Excludes the two aircraft we intend to finance with the Ex-Im notes, as they had not yet been assigned as collateral as of December 31, 2012. (b)~~Amounts represent net book value and number of aircraft securing ILFC secured bank term debt and do not include the book value or number of AeroTurbine ~~other~~ assets securing the AeroTurbine revolving credit agreement, under which $~~260~~380.05 million is included in the total ~~Debt~~debt outstanding. ILFC guarantees the AeroTurbine revolving credit agreement on an unsecured basis.

Our debt agreements contain various affirmative and restrictive covenants. See Note K of Notes to Consolidated Financial Statements for a description of each financing arrangement. As of December 31, ~~2012~~2013, we were in compliance with the covenants in our debt agreements.

Derivatives

WeFrom time to time, we may employ a variety of derivative products to manage our exposure to interest rate risks and foreign currency risks. We enter into derivative transactions only to economically hedge interest rate risk and currency risk and not to speculate on interest rates or currency fluctuations. These derivative products include interest rate swap agreements, foreign currency swap agreements and interest rate cap agreements. At December 31, ~~2012~~2013, our derivative portfolio consisted of interest rate swaps ~~and caps~~. All of our interest rate swap agreements ~~were~~have been designated as and accounted for as cash flow hedges. ~~and~~We wedid ~~had~~ not ~~designated~~designate our interest rate cap agreements as hedges when they were outstanding.

When interest rate and foreign currency swaps are effective as cash flow hedges, they offset the variability of expected future cash flows, both economically and for financial reporting purposes. We have historically used such instruments to effectively mitigate foreign currency and interest rate risks. The effect of our ability to apply hedge accounting for the swap agreements is that changes in their fair values are recorded in OCI instead of in earnings for each reporting period, when they were outstanding. As a result, reported net income will not be directly influenced by changes in interest rates and currency rates.

The counterparty to all our interest rate swaps at December 31, ~~2012~~2013, is AIG Markets, Inc., a wholly owned subsidiary of AIG. The swap agreements are subject to a bilateral security agreement and a master netting agreement, which would allow the netting of derivative assets and liabilities in the case of default under any one contract. Failure of the counterparty to perform under the derivative contracts would not have a material impact on our results of operations and cash flows, as weall of our derivatives were in a ~~net~~ liability position at December 31, ~~2012~~2013. ~~The counterparty to our interest rate cap agreements is an independent third party with whom we do not have a master netting agreement.~~

Credit Ratings

Because of our current long-term debt ratings, the 2004 ECA facility imposes the following restrictions: (i) we must segregate all security deposits, overhaul rentals and rental payments related to the aircraft financed under the 2004 ECA Facility into separate accounts controlled by the security

Table of Contents

~~trustee (segregated~~ ~~rental~~Credit payments are used to make scheduled principal and interest payments on the outstanding debt) and (ii) we must file individual mortgages on the aircraft funded under both the 1999 and 2004 ECA facilities in the local jurisdictions in which the respective aircraft are registered. Ratings

While a ratings downgrade does not result in a default under any of our debt agreements, it could adversely affect our ability to issue debt and obtain new financings, or renew existing financings, and it would increase the cost of such financings.

The following table summarizes our current ratings by Fitch, Moody's and S&P, the nationally recognized rating agencies:

Unsecured Debt Ratings

Rating Agency	~~Long-term~~Senior Unsecured Debt Rating	Corporate Rating	Outlook/Watch	Date of Last Ratings Action
Fitch	BB	BB	~~Stable~~Rating Watch Positive	~~November~~December 416, ~~2011~~2013
Moody's	Ba3	Ba3	~~Positive~~Negative Outlook	~~December~~January 1017, ~~2012~~2014
S&P	BBB-	BBB-	CreditWatch Negative	December 716, ~~2012~~2013

Secured Debt Ratings

Rating Agency	$~~900~~750 Million 2012 Term Loan	$~~550~~3.9 ~~Million~~Billion ~~2012~~Senior ~~Term~~Secured ~~Loan~~Notes	~~$3.9 Billion Senior Secured Notes~~
Fitch	BB	BBBBB-	~~BBB-~~
Moody's	Ba2	Ba2	~~Ba2~~
S&P	BBB-	BBB-	~~BBB-~~

These credit ratings are the current opinions of the rating agencies and ~~our current BBB- rating by S&P takes into consideration our ownership by AIG. As such,~~ they may be changed, suspended or withdrawn at any time by the rating agencies as a result of various circumstances ~~including changes in, or unavailability of, information~~.

Existing Commitments

The following table summarizes our contractual obligations at December 31, 2013:

	Commitments Due by Fiscal Year

	Total		2014		2015		2016		2017		2018		Thereafter
	(Dollars in thousands)
Bonds and medium-term notes	$	12,269,522	$	1,039,502	$	2,010,020	$	1,550,000	$	2,000,000	$	770,000	$	4,900,000
Senior secured bonds		3,900,000		1,350,000		—		1,275,000		—		1,275,000		—
Secured bank loans(a)		1,811,705		208,387		514,528		172,566		173,537		742,687		—
ECA and Ex-Im financings		1,746,144		448,029		359,960		282,492		226,188		192,448		237,027
Other secured financings		750,000		—		—		—		750,000		—		—
Subordinated debt		1,000,000		—		—		—		—		—		1,000,000
Estimated interest payments including the effect of derivative instruments(b)		7,766,329		1,231,312		1,075,387		881,027		670,272		506,179		3,402,152
Operating leases(c)		56,994		14,704		11,463		4,389		3,643		3,308		19,487
Pension obligations(d)		6,476		999		1,066		1,105		1,153		1,105		1,048
Commitments under ILFC flight equipment purchase agreements(e)		21,845,113		2,161,915		2,994,152		3,152,739		4,540,758		4,374,655		4,620,894
Commitments under AeroTurbine flight equipment purchase agreements		31,250		31,250		—		—		—		—		—


Total	$	51,183,533	$	6,486,098	$	6,966,576	$	7,319,318	$	8,365,551	$	7,865,382	$	14,180,608

(a): Includes $380.5 million outstanding under AeroTurbine's revolving credit facility.

Table of Contents

~~Existing~~ (b)Estimated interest ~~Commitments~~ payments for floating rate debt included in this table are based on rates at December 31, 2013. Estimated interest payments include the estimated impact of our interest rate swap agreements. For floating rate debt that has been swapped into fixed rate debt, the estimated interest payments reflect the swapped fixed rate. (c)Consists primarily of office buildings under lease. Minimum rentals have not been reduced by future minimum sublease rentals of $1.9 million receivable under non-cancellable subleases. (d)Our pension obligations are part of intercompany expenses, which AIG allocates to us on an annual basis. The amount is an estimate of such allocation. The column "2014" consists of total estimated allocations for 2014 and the column "Thereafter" consists of the 2019 estimated allocation. The amount allocated has not been material to date. (e)Includes sale-leaseback transactions in 2014 and 2015 and commitments to purchase 13 new spare engines. Our obligation to purchase nine of the total aircraft is contingent upon the occurrence of certain events.

The following table summarizes our contractual obligations at December 31, 2012:

	Commitments Due by Fiscal Year
	Total		2013		2014		2015		2016		2017		Thereafter
	(Dollars in thousands)
Bonds and medium-term notes	$	13,890,747	$	3,421,225	$	1,039,502	$	2,010,020	$	1,000,000	$	2,000,000	$	4,420,000
Senior secured bonds		3,900,000		—		1,350,000		—		1,275,000		—		1,275,000
Secured bank loans(a)		1,961,143		186,185		207,472		442,010		183,702		178,672		763,102
ECA and Ex-Im financings		2,193,229		447,085		448,029		359,960		282,492		226,188		429,475
Other secured financings		1,450,000		—		—		—		550,000		900,000		—
Subordinated debt		1,000,000		—		—		—		—		—		1,000,000
Estimated interest payments including the effect of derivative instruments(b)		8,675,815		1,407,978		1,206,741		1,050,364		843,215		623,020		3,544,497
Operating leases(c)(d)		71,388		17,626		17,831		13,085		3,195		2,619		17,032
Pension obligations(e)		10,187		1,652		1,669		1,730		1,799		1,738		1,599
Commitments under ILFC flight equipment purchase agreements(f)(g)		17,491,458		1,497,214		1,619,102		2,527,097		3,139,968		4,233,873		4,474,204
Commitments under AeroTurbine flight equipment purchase agreements		19,424		19,424		—		—		—		—		—
Total	$	50,663,391	$	6,998,389	$	5,890,346	$	6,404,266	$	7,279,371	$	8,166,110	$	15,924,909

(a)Includes $260.0 million outstanding under AeroTurbine's revolving credit facility. (b)Estimated interest payments for floating rate debt included in this table are based on rates at December 31, 2012. Estimated interest payments include the estimated impact of our interest rate swap agreements. For floating rate debt that has been swapped into fixed rate debt, the estimated interest payments reflect the swapped fixed rate. (c)Excludes fully defeased aircraft sale-leaseback transactions. (d)Minimum rentals have not been reduced by minimum sublease rentals of $3.5 million receivable in the future under non-cancellable subleases. (e)Our pension obligations are part of intercompany expenses, which AIG allocates to us on an annual basis. The amount is an estimate of such allocation. The column "2013" consists of total estimated allocations for 2013 and the column "Thereafter" consists of the 2018 estimated allocation. The amount allocated has not been material to date. (f)Includes sale-leaseback transactions in 2013 and commitments to purchase nine new spare engines. In addition, we were called upon to perform under five of our asset value guarantees outstanding as of December 31, 2012, and we may purchase the aircraft under the guarantees. The value of the five aircraft is included in 2013. (g)Excludes amounts related to our purchase rights for 50 aircraft which we have not yet exercised and excludes 15 Boeing 737-800 and one Boeing 777-300ER, with delivery dates in 2013 and 2014, we agreed to purchase from and lease back to American Airlines on March 1, 2013.

Contingent Commitments

From time to time, we ~~participate~~have previously participated with airlines, banks and other financial institutions in the financing of aircraft by providing aircraft asset value guarantees~~, put options or loan guarantees collateralized by aircraft~~. As a result, if we are called upon to fulfill our obligations, we have recourse to the value of the underlying aircraft. The table below reflects our potential payments for these contingent obligations, without any offset for the projected value of the aircraft.

	Contingency Expiration by Fiscal Year

	Total		2014			2015		2016		2017		2018		Thereafter
	(Dollars in thousands)
Asset Value Guarantees	$	333,219	$	2,654	(a)	$	157,132	$	—	$	46,140	$	31,000	$	96,293

(a): Represents a loan guarantee collateralized by aircraft that expires in 2014.

The table above does not include $809 million of unrecognized tax benefits, consisting primarily of FSC and ETI benefits, and any effect of our net tax liabilities, the timing of which is uncertain.

Non-GAAP Financial Measurements

Adjusted net debt and adjusted shareholders' equity are not defined under GAAP, and may not be comparable to similarly titled measures reported by other companies. Investors should consider adjusted net debt and adjusted shareholders' equity in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. We have presented these measures of financial leverage because it is the way we present our leverage to investors and because it aligns, in part, with definitions under certain of our debt covenants.

Adjusted net debt means our total debt, net of deferred debt discount, less cash and cash equivalents, excluding restricted cash, and less a 50% equity credit for our $1.0 billion outstanding in hybrid instruments, as of the corresponding period. Adjusted shareholders' equity means our total shareholders' equity less AOCI, and including a 50% equity credit for our $1.0 billion outstanding in hybrid instruments. AOCI, which principally reflects aggregate changes in the market value of our cash flow hedges, has been excluded from adjusted shareholders' equity because it is excluded from shareholders' equity in determining compliance with our debt covenants. Total debt has been adjusted by cash and cash equivalents, excluding restricted cash, to better evaluate our financial condition and our future obligations that would not be readily satisfied by cash and cash equivalents on hand. Total debt and shareholders' equity are adjusted by a 50% equity credit for our $1.0 billion outstanding in hybrid instruments to reflect the equity nature of that financing arrangement and to provide information in line with our debt covenant calculations.

Table of Contents

~~the~~ The ~~underlying~~following ~~aircraft.~~table ~~The~~reconciles ~~table~~adjusted ~~below~~net ~~reflects~~debt ~~our~~to ~~potential~~the ~~payments~~most ~~for~~directly ~~these~~comparable ~~contingent~~GAAP ~~obligations~~measure, ~~without~~total ~~any~~debt: ~~offset for the projected value of the aircraft.~~

	Contingency Expiration by Fiscal Year
	December 31,
	Total		2013		2014		2015		2016		2017		Thereafter
	2013		2012		2011		2010		2009
	(Dollars in thousands)
Asset Value Guarantees	$	330,565	$	—	$	—	$	157,132	$	—	$	46,140	$	127,293
Total debt, net of deferred debt discount, including current portion	$	21,440,857	$	24,342,787	$	24,384,272	$	27,554,100	$	29,711,739
Less: Cash and cash equivalents, excluding restricted cash		1,351,405		3,027,587		1,975,009		3,067,697		336,911
Less: 50% equity credit for $1.0 billion in hybrid instruments		500,000		500,000		500,000		500,000		500,000

Adjusted net debt	$	19,589,452	$	20,815,200	$	21,909,263	$	23,986,403	$	28,874,828

The following table ~~above~~reconciles ~~does~~adjusted ~~not~~shareholder's ~~include~~equity ~~contingent payments for $725.7 million of uncertain tax liabilities, consisting primarily of ETI benefits, and any effect of our net tax liabilities as we are unable~~ to ~~reasonably estimate~~ the ~~timing~~most ofdirectly ~~the~~comparable ~~liability~~GAAP inmeasure, ~~individual~~total ~~years~~shareholder's ~~beyond~~equity: 12 months due to uncertainties in the timing of the effective settlement of the tax positions. The future cash flows to these tax liabilities are uncertain and we are unable to make reasonable estimates of the outflows.

	December 31,

	2013			2012			2011			2010			2009
	(Dollars in thousands)
Total shareholders' equity	$	7,442,885		$	7,942,868		$	7,531,869		$	8,225,007		$	8,655,089
Less: Accumulated other comprehensive loss		(4,184	)		(12,491	)		(19,637	)		(58,944	)		(138,206	)
Plus: 50% equity credit for $1.0 billion in hybrid instruments		500,000			500,000			500,000			500,000			500,000


Adjusted shareholders' equity	$	7,947,069		$	8,455,359		$	8,051,506		$	8,783,951		$	9,293,295

Variable Interest Entities

Our leasing and financing activities require us to use many forms of SPEs to achieve our business objectives and we have participated to varying degrees in the design and formation of these SPEs. AThe majority of these entities are wholly owned; we are the primary or only variable interest holder, we are the only decision maker and we we guarantee all the activities of the entities. However, these entities meet the definition of a VIE because they do not have sufficient equity to operate without our subordinated financial support in in the form of intercompany notes and loans which serve as equity. We have a variable interest in other entities in which we have determined that we are the PB, because we control and manage all ~~aspects~~ aspects of the entities, including directing the activities that most significantly affect these entities' economic performance, and we absorb the majority of the risks and rewards of these entities. We We consolidate these entities into our consolidated financial statements and the related aircraft are included in Flight equipment and the related borrowings are included in Secured debt financings on our Consolidated Balance Sheets.

We have variable interests in the following entities, in which we have determined we are not the PB because we do not have the power to direct the activities that most significantly affect the entity's economic performance: (i) one entity ~~we previously sold one aircraft to, in which our variable interests include debt financings and preferential equity interests; (ii) two entities~~ that we have previously sold aircraft to and for which we manage 19the aircraft, in ~~which~~ which our variable interest consists of the servicing fee we receive for the management of 19those aircraft; and (~~iii~~ii) two affiliated entities we sold aircraft to in ~~2004~~2003 and ~~2005~~2004, which aircraft we continue to manage, in which our variable interests consist of the servicing fee we receive for the management of those aircraft. These two affiliated entities, for which we manage aircraft, are consolidated into AIG's financial statements. ~~We do not believe that we will have any future material liquidity obligations to any of these entities.~~

Table of Contents

Off-Balance-Sheet Arrangements

We have not established any unconsolidated entities for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. We have, however, from time to time established subsidiaries, entered into joint ventures or created other partnership arrangements or trusts with the limited purpose of leasing aircraft or facilitating borrowing arrangements. See Note S of Notes to Consolidated Financial Statements for more information regarding our involvement with VIEs.

Recent Accounting Pronouncements

For information with respect to recent accounting guidance, accounting guidance adopted in prior years and their application to us, see Note B of Notes to Consolidated Financial Statements.

Table of Contents

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Market risk represents the risk of changes in value of a financial instrument, caused by fluctuations in interest rates and foreign exchange rates. Changes in these factors could cause fluctuations in our results of operations and cash flows. We are exposed to the market risks described below.

Interest Rate Risk

Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread between different interest rates. Interest rate risk is highly sensitive to many factors, including the U.S. government's monetary and tax policies, global economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates. Our primary interest rate exposures relate to our floating rate debt obligations, which are based on interest rate indices such as LIBOR. Increases in the interest rate index would ~~reduce~~increase ~~our pre-tax income by increasing~~ the cost of our debt, ifand wereduce ~~were not able to proportionally increase~~ our ~~lease~~pre-tax ~~rates~~income.

We mitigate our floating interest rate risk by entering into interest rate swap contracts as appropriate. After taking our swap agreements into consideration, which in effect have fixed the interest rates of the hedged debt, our floating rate debt comprised approximately 2021.84% of our total outstanding debt obligations, or approximately $54.16 billion in aggregate principal amount, at December 31, ~~2012~~2013.

The fair market value of our interest rate swaps is affected by changes in interest rates, the credit risk of us and our counterparties to the swaps, and the liquidity of those instruments. We determine the fair value of our derivative instruments using a discounted cash flow model, which incorporates an assessment of the risk of non-performance by our swap counterparties. The model uses various inputs including contractual terms, interest rate, credit spreads and volatility rates, as applicable. We record the effective part of the changes in fair value of derivative instruments designated as cash flow hedges in Other comprehensive income.

The following discussion about the potential effects of changes in interest rates is based on a sensitivity analysis, which models the effects of hypothetical interest rate shifts on our results of operation and cash flows. This sensitivity analysis is constrained by several factors, including the necessity to conduct the analysis based on a single point in time and by the inability to include the extraordinarily complex market reactions that normally would arise from the market shifts. Although the following results of our sensitivity analysis for changes in interest rates may have some limited use as a benchmark, they should not be viewed as a forecast. This forward-looking disclosure also is selective in nature and addresses only the potential impact on our debt obligations. It does not include a variety of other potential impacts that a change in interest rates could have on our business.

Assuming we do not hedge our exposure to interest rate fluctuations related to our outstanding floating rate debt, a hypothetical 100 basis-point increase or decrease in our variable interest rates would have increased or decreased our interest expense, and accordingly our cash flows, by approximately $50.8 million on an annualized basis. The same hypothetical 100 basis-point increase or decrease in interest rates on our total outstanding debt obligations, including fixed and floating rate debt, would have increased or decreased our interest expense, and accordingly our cash flows, by approximately $244.0 million on an annualized basis.

Foreign Currency Exchange Risk

Table of Contents

of Assuming ~~our~~we ~~expenses~~do innot ~~U.S.~~hedge ~~dollars.~~our Weexposure ~~currently~~to ~~have~~interest arate ~~limited~~fluctuations ~~number~~related ofto ~~leases denominated in foreign currencies, maintain part of~~ our ~~cash~~outstanding infloating ~~foreign~~rate ~~currencies~~debt, ~~pay~~a ~~taxes~~hypothetical in100 ~~foreign~~basis-point ~~currencies,~~increase ~~and incur~~or ~~some of our expenses in foreign currencies, primarily the Euro. A~~ decrease in ~~the~~our ~~U.S.~~variable interest ~~dollar~~rates inwould ~~relation~~have toincreased ~~foreign~~or ~~currencies~~decreased ~~increases~~ our ~~expenses~~interest ~~paid~~expense, ~~in foreign currencies~~ and anaccordingly ~~increase in the U.S. dollar in relation to foreign currencies decreases~~ our ~~lease~~cash ~~revenue~~flows, ~~received~~by ~~from~~approximately ~~foreign~~$46.0 million ~~currency~~on ~~denominated~~an ~~leases~~annualized basis. ~~Because~~The wesame ~~currently~~hypothetical ~~receive~~100 basis-point ~~most~~increase ofor ~~our~~decrease ~~revenues~~ in ~~U.S.~~interest ~~dollars and~~rates ~~pay~~on ~~most of~~ our ~~expenses~~total inoutstanding ~~U.S.~~debt ~~dollars~~obligations, aincluding ~~change~~fixed inand ~~foreign~~floating ~~exchange~~rate ~~rates~~debt, would ~~not~~ have aincreased ~~material~~or ~~impact~~decreased on our ~~results~~interest ofexpense, ~~operations~~and accordingly orour cash flows., Weby doapproximately ~~not~~$215.0 million ~~have~~on ~~any~~an ~~restrictions~~annualized ~~or repatriation issues associated with our foreign cash accounts~~basis.

Foreign Currency Exchange Risk

Our functional currency is U.S. dollars. Foreign exchange risk arises from our and our lessees' operations in multiple jurisdictions. All of our aircraft purchase agreements are negotiated in U.S. dollars, we currently receive substantially all of our revenue in U.S. dollars and we pay substantially all of our expenses in U.S. dollars. We currently have a limited number of leases denominated in foreign currencies, maintain part of our cash in foreign currencies, pay taxes in foreign currencies, and incur some of our expenses in foreign currencies, primarily the Euro. A decrease in the U.S. dollar in relation to foreign currencies increases our expenses paid in foreign currencies and an increase in the U.S. dollar in relation to foreign currencies decreases our lease revenue received from foreign currency denominated leases. Because we currently receive most of our revenues in U.S. dollars and pay most of our expenses in U.S. dollars, a change in foreign exchange rates would not have a material impact on our results of operations or cash flows. We do not have any restrictions or repatriation issues associated with our foreign cash accounts.

Item 8. Financial Statements and Supplementary Data

The response to this Item is submitted as a separate section of this report.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

(A): Evaluation of Disclosure Controls and Procedures

(A) Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to our management, including the Chief Executive Officer and the Senior Vice President and Chief Financial Officer (collectively the "Certifying Officers"), as appropriate, to allow timely decisions regarding required disclosure.

In conjunction with the close of each fiscal quarter, we conduct a review and evaluation, under the supervision and with the participation of our management, including the Certifying Officers, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on that evaluation, our Certifying Officers have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, ~~2012~~2013, the end of the year covered by this annual report.

(B): Management's Report on Internal Control over Financial Reporting

~~(B)~~ Management's ~~Report~~of onILFC ~~Internal~~is ~~Control~~responsible for establishing and maintaining adequate internal control over ~~Financial~~financial ~~Reporting~~reporting. ILFC's internal control over financial reporting is a process, under the

Management of ILFC is responsible for establishing and maintaining adequate internal control over financial reporting. ILFC's internal control over financial reporting is a process, under the supervision of the Certifying Officers, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of ILFC's financial statements for external purposes in accordance with GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

ILFC management, including the Certifying Officers, conducted an assessment of the effectiveness of ILFC's internal control over financial reporting as of December 31, 2012, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). ILFC management has concluded that, as of

Table of Contents

~~December 31,~~supervision ~~2012~~of the Certifying Officers, ~~ILFC's~~designed ~~internal~~to ~~control~~provide ~~over~~reasonable assurance regarding the reliability of financial reporting ~~was~~and ~~effective~~the ~~based~~preparation onof ~~the~~ILFC's ~~criteria~~financial instatements ~~Internal~~for ~~Control—Integrated~~external ~~Framework~~purposes ~~issued~~in byaccordance ~~the~~with ~~COSO~~GAAP.

ILFC management, including the Certifying Officers, conducted an assessment of the effectiveness of ILFC's internal control over financial reporting as of December 31, 2013, based on the criteria established in the 1992 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). ILFC management has concluded that, as of December 31, 2013, ILFC's internal control over financial reporting was effective based on the criteria in the 1992 Internal Control—Integrated Framework issued by the COSO.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.

(C): Changes in Internal Control Over Financial Reporting

~~(C) Changes~~There have been no changes in ~~Internal~~our ~~Control~~internal ~~Over~~controls ~~Financial~~over ~~Reporting~~financial reporting during the quarter ended December 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no changes in our internal controls over financial reporting during the quarter ended December 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III

Item 14. Principal Accountant Fees and Services

Aggregate fees for professional services rendered to us by PricewaterhouseCoopers LLP ("PwC") for the years ended December 31, ~~2012~~2013 and ~~2011~~2012 were:

	2012		2011
	2013		2012
Audit Fees(a)	$	3,~~953~~450,~~014~~000	$	23,~~778~~953,~~048~~014
Tax and Other Fees(b)		13,~~746~~656,~~916~~816		~~326~~1,~~669~~746,916
Total Fees	$	5,699,930	$	3,104,717

Total Fees	$	7,106,816	$	5,699,930

(a)Audit Fees consist of fees for professional services provided in connection with the audits of our financial statements, services rendered in connection with our registration statements filed with the Securities and Exchange Commission, the delivery of consents and the issuance of comfort letters. This also includes Sarbanes-Oxley Section 404 work performed at ILFC for AIG's ~~2012~~2013 and ~~2011~~2012 assessment. (b)Tax and Other Fees consist of the aggregate fees for services rendered for tax compliance, tax planning, tax advice, customs related services and services related to AIG's planned divesture of us.

AIG's audit committee approves all audit and non-audit services rendered by PwC.

Table of Contents

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) and (2): Financial Statements and Financial Statement Schedule: The response to this portion of Item 15 is submitted as a separate section of this report.

(a)(3) and (b): Exhibits: The response to this portion of Item 15 is submitted as a separate section of this report.

7374

Table of Contents

INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-K
Items 8, 15(a), and 15(b)
INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

The following consolidated financial statements of the Company and its subsidiaries required to be included in Item 8 are listed below:

		Page
Report of Independent Registered Public Accounting Firm			7981
Consolidated Financial Statements:
Balance Sheets at December 31, 2012 and 2011			80
Balance Sheets at December 31, 2013 and 2012			82
Statements of Operations for the years ended December 31, 2012, 2011 and 2010			81
Statements of Operations for the years ended December 31, 2013, 2012 and 2011			83
Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010			82
Statements of Comprehensive (Loss) Income for the years ended December 31, 2013, 2012 and 2011			84
Statements of Shareholders' Equity for the years ended December 31, 2012, 2011 and 2010			83
Statements of Shareholders' Equity for the years ended December 31, 2013, 2012 and 2011			85
Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010			84
Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011			86
Notes to Consolidated Financial Statements			86
Notes to Financial Statements			88

All other financial statements and schedules not listed have been omitted since the required information is included in the consolidated financial statements or the notes thereto, or is not applicable or required.

The following exhibits of the Company and its subsidiaries are included in Item 15(b):

Exhibit Number			Description
	2.1		AerCap Share Purchase Agreement, dated as of December 916, ~~2012~~2013 by and among AIG Capital Corporation, American International Group, Inc., AerCap Holdings N.V., and ~~Jumbo~~AerCap ~~Acquisition~~Ireland Limited (filed as an exhibit to AIG's Current Report on Form 8-K (file no. 001-8787) filed on December 1016, ~~2012~~2013 and incorporated herein by reference).
	3.1		Restated Articles of Incorporation of the Company (filed as an exhibit to Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference).
	3.2		Amended and Restated By-Laws of the Company, as adopted on April 13, 2010 (filed as an exhibit to Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference).
	4.1		Indenture dated as of November 1, 1991, between the Company and U.S. Bank Trust National Association (successor to Continental Bank, National Association), as Trustee (filed as an exhibit to Registration Statement No. 33-43698 and incorporated herein by reference).
	4.2		First Supplemental Indenture, dated as of November 1, 2000, to the indenture between the Company and U.S. Bank Trust National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).
	4.3		Second Supplemental Indenture, dated as of February 28, 2001, to the indenture between the Company and U.S. Bank Trust National Association (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2001 and incorporated herein by reference).
	4.4		Third Supplemental Indenture, dated as of September 26, 2001, to the indenture between the Company and U.S. Bank Trust National Association (filed as an exhibit to Form 10-Q for the quarter ended September 30, 2000 and incorporated herein by reference).

Table of Contents

Exhibit Number			Description
	4.5		Fourth Supplemental Indenture, dated as of November 6, 2002, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2002 and incorporated herein by reference).
	4.6		Fifth Supplemental Indenture, dated as of December 27, 2002, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2002 and incorporated herein by reference).
	4.7		Sixth Supplemental Indenture, dated as of June 2, 2003, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference).
	4.8		Seventh Supplemental Indenture, dated as of October 8, 2004, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 8-K filed on October 14, 2004 and incorporated herein by reference).
	4.9		Eighth Supplemental Indenture, dated as of October 5, 2005, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	4.10		Ninth Supplemental Indenture, dated as of October 5, 2006, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2007 and incorporated herein by reference).
	4.11		Tenth Supplemental Indenture, dated as of October 9, 2007, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2007 and incorporated herein by reference).
	4.12		Indenture dated as of November 1, 2000, between the Company and the Bank of New York, as Trustee (filed as an exhibit to Registration No. 333-49566 and incorporated herein by reference).
	4.13		First Supplemental Indenture, dated as of August 16, 2002 to the indenture between the Company and the Bank of New York (filed as Exhibit 4.2 to Registration Statement No. 333-100340 and incorporated herein by reference).
	4.14		Indenture, dated as of August 1, 2006, between the Company and Deutsche Bank Trust Company Americas, as Trustee (filed as Exhibit 4.1 to Registration Statement No. 333-136681 and incorporated herein by reference).
	4.15		First Supplemental Indenture, dated as of August 20, 2010, to the indenture dated as of August 1, 2006 between the Company and Deutsche Bank Trust Company Americas as trustee (filed as an exhibit to Form 8-K filed on August 20, 2010 and incorporated herein by reference).
	4.16		Second Supplemental Indenture, dated as of December 7, 2010, to the indenture dated as of August 1, 2006 between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on December 7, 2010 and incorporated herein by reference).
	4.17		Third Supplemental Indenture, dated as of May 24, 2011, to an indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on May 24, 2011, and incorporated herein by reference).

Table of Contents

Exhibit Number			Description
	4.18		Fourth Supplemental Indenture, dated as of December 22, 2011, to an indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on December 22, 2011 and incorporated herein by reference).
	4.5		Fourth Supplemental Indenture, dated as of November 6, 2002, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2002 and incorporated herein by reference).
	4.19		Fifth Supplemental Indenture, dated as of March 19, 2012, to the indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on March 19, 2012 and incorporated herein by reference).
	4.6		Fifth Supplemental Indenture, dated as of December 27, 2002, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2002 and incorporated herein by reference).
	4.20		Sixth Supplemental Indenture, dated as of August 21, 2012, to the Indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on August 21, 2012 and incorporated herein by reference).
	4.7		Sixth Supplemental Indenture, dated as of June 2, 2003, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference).
	4.21		Officers' Certificate, dated as of August 20, 2010, establishing the terms of the 8.875% senior notes due 2017 (filed as an exhibit to Form 8-K filed on August 20, 2010 and incorporated herein by reference).
	4.8		Seventh Supplemental Indenture, dated as of October 8, 2004, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 8-K filed on October 14, 2004 and incorporated herein by reference).
	4.22		Officers' Certificate, dated as of December 7, 2010, establishing the terms of the 8.25% senior notes due 2020 (filed as an exhibit to Form 8-K filed on December 7, 2010 and incorporated herein by reference).
	4.9		Eighth Supplemental Indenture, dated as of October 5, 2005, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2005 and incorporated herein by reference).
	4.23		Officers' Certificate, dated as of May 24, 2011, establishing the terms of the 5.75% senior notes due 2016 and the 6.25% senior notes due 2019 (filed as an exhibit to Form 8-K filed on May 24, 2011 and incorporated herein by reference).
	4.10		Ninth Supplemental Indenture, dated as of October 5, 2006, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2007 and incorporated herein by reference).
	4.24		Officers' Certificate, dated as of December 22, 2011, establishing the terms of the 8.625% senior notes due 2022 (filed as an exhibit to Form 8-K filed on December 22, 2011 and incorporated herein by reference).
	4.11		Tenth Supplemental Indenture, dated as of October 9, 2007, to the indenture between the Company and U.S. Bank National Association (filed as an exhibit to Form 10-K for the year ended December 31, 2007 and incorporated herein by reference).
	4.25		Officers' Certificate, dated as of March 19, 2012, establishing the terms of the 4.875% senior notes due 2015 and the 5.875% senior notes due 2019 (filed as an exhibit to Form 8-K filed on March 19, 2012 and incorporated herein by reference).
	4.12		Indenture dated as of November 1, 2000, between the Company and the Bank of New York, as Trustee (filed as an exhibit to Registration No. 333-49566 and incorporated herein by reference).
	4.26		Officers' Certificate, dated as of August 21, 2012, establishing the terms of the 5.875% senior notes due 2012 (filed as an exhibit to Form 8-K filed on August 21, 2012 and incorporated herein by reference).
	4.13		First Supplemental Indenture, dated as of August 16, 2002 to the indenture between the Company and the Bank of New York (filed as Exhibit 4.2 to Registration Statement No. 333-100340 and incorporated herein by reference).
	4.27		Indenture, dated as of March 22, 2010, among the Company, Wilmington Trust FSB, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authentication agent (filed as an exhibit to Form 8-K filed on March 24, 2010 and incorporated herein by reference).
	4.14		Indenture, dated as of August 1, 2006, between the Company and Deutsche Bank Trust Company Americas, as Trustee (filed as Exhibit 4.1 to Registration Statement No. 333-136681 and incorporated herein by reference).
	4.28		Indenture, dated as of August 11, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A., as paying agent, security registrar and authentication agent and trustee (filed as an exhibit to Form 8-K filed on August 20, 2010 and incorporated herein by reference).
	4.15		First Supplemental Indenture, dated as of August 20, 2010, to the indenture dated as of August 1, 2006 between the Company and Deutsche Bank Trust Company Americas as trustee (filed as an exhibit to Form 8-K filed on August 20, 2010 and incorporated herein by reference).
	4.29		The Company agrees to furnish to the Commission upon request a copy of each instrument with respect to issues of long-term debt of the Company and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of the Company and its subsidiaries.
	4.16		Second Supplemental Indenture, dated as of December 7, 2010, to the indenture dated as of August 1, 2006 between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on December 7, 2010 and incorporated herein by reference).
	4.17		Third Supplemental Indenture, dated as of May 24, 2011, to an indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on May 24, 2011, and incorporated herein by reference).

Table of Contents

Exhibit Number			Description
	10.1		Aircraft Facility Agreement, dated as of May 18, 2004, among Whitney Leasing Limited, as borrower, the Company, as guarantor and the Bank of Scotland and the other banks listed therein providing up to $2,643,660,000 (plus related premiums) for the financing of aircraft (filed as an exhibit to Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference) and, as amended as of May 30, 2006, to increase the size of the facility to $3,643,660,000, as of May 30, 2007, to extend the termination until May 2008, as of May 29, 2008, to extend the termination until May 2009, and as of May 11, 2009 to increase the size of the facility to $4,643,660,000 and to extend the termination until June 2010 (filed as an exhibit to Form 10-Q for the quarter ended June 30, 2009 and incorporated herein by reference).
	4.18		Fourth Supplemental Indenture, dated as of December 22, 2011, to an indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on December 22, 2011 and incorporated herein by reference).
	10.2		Side Letter Agreement, dated as of February 27, 2010, among the Company, Whitney Leasing Limited, Aircraft SPC-12, Inc., Bank of Scotland PLC, Bank of Scotland PLC, Paris Branch, and Bank of Scotland PLC, Frankfurt Branch (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2010 and incorporated herein by reference).
	4.19		Fifth Supplemental Indenture, dated as of March 19, 2012, to the indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on March 19, 2012 and incorporated herein by reference).
	10.3		Aircraft Mortgage and Security Agreement and Guaranty, dated as of August 11, 2010, among the Company, ILFC Ireland Limited, ILFC (Bermuda) III, Ltd., the additional grantors referred to therein, and Wells Fargo Bank Northwest, National Association (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended September 30, 2010 and incorporated herein by reference).
	4.20		Sixth Supplemental Indenture, dated as of August 21, 2012, to the Indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on August 21, 2012 and incorporated herein by reference).
	10.4		Term Loan Credit Agreement, dated as of March 30, 2011, among Temescal Aircraft Inc., as borrower, the Company, Park Topanga Aircraft Inc., Charmlee Aircraft Inc., and Ballysky Aircraft Ireland Limited, as obligors, the lenders identified therein, Citibank N.A., as administrative agent and collateral agent, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC, as joint lead structuring agents and joint lead placement agents, and BNP Paribas, as joint placement agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
	4.21		Seventh Supplemental Indenture, dated as of March 11, 2013, to the Indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on March 11, 2013 and incorporated herein by reference).
	10.5		Aircraft Mortgage and Security Agreement, dated as of March 30, 2011, among Park Topanga Aircraft Inc., Temescal Aircraft Inc., Ballysky Aircraft Ireland Limited, Charmlee Aircraft Inc., the additional grantors referred to therein, and Citibank, N.A., as collateral agent (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
	4.22		Eighth Supplemental Indenture, dated as of May 24, 2013, to the Indenture, dated August 1, 2006, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on May 24, 2013 and incorporated herein by reference).
	10.6		Incremental Lender Assumption Agreement, dated as of April 21, 2011, among Temescal Aircraft Inc., the Company, Park Topanga Aircraft Inc., Charmlee Aircraft Inc., Ballysky Aircraft Ireland Limited, KfW IPEX-Bank GmbH, as the incremental lender, and Citibank, N.A., as administrative agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).
	4.23		Officers' Certificate, dated as of August 20, 2010, establishing the terms of the 8.875% senior notes due 2017 (filed as an exhibit to Form 8-K filed on August 20, 2010 and incorporated herein by reference).
	10.7		Term Loan Credit Agreement, dated as of February 23, 2012, among Flying Fortress Inc., as borrower, the Company, Flying Fortress Financing Inc., Flying Fortress US Leasing Inc., and Flying Fortress Ireland Leasing Limited, as obligors, the lenders identified therein, Bank of America, N.A., as administrative agent and collateral agent, and Deutsche Bank Securities Inc., as syndication agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).
	4.24		Officers' Certificate, dated as of December 7, 2010, establishing the terms of the 8.25% senior notes due 2020 (filed as an exhibit to Form 8-K filed on December 7, 2010 and incorporated herein by reference).
	4.25		Officers' Certificate, dated as of May 24, 2011, establishing the terms of the 5.75% senior notes due 2016 and the 6.25% senior notes due 2019 (filed as an exhibit to Form 8-K filed on May 24, 2011 and incorporated herein by reference).
	4.26		Officers' Certificate, dated as of December 22, 2011, establishing the terms of the 8.625% senior notes due 2022 (filed as an exhibit to Form 8-K filed on December 22, 2011 and incorporated herein by reference).
	4.27		Officers' Certificate, dated as of March 19, 2012, establishing the terms of the 4.875% senior notes due 2015 and the 5.875% senior notes due 2019 (filed as an exhibit to Form 8-K filed on March 19, 2012 and incorporated herein by reference).
	4.28		Officers' Certificate, dated as of August 21, 2012, establishing the terms of the 5.875% senior notes due 2012 (filed as an exhibit to Form 8-K filed on August 21, 2012 and incorporated herein by reference).
	4.29		Officers' Certificate, dated as of March 11, 2013, establishing the terms of the 3.875% senior notes due 2018 and the 4.625% senior notes due 2021 (filed as an exhibit to Form 8-K filed on March 11, 2013 and incorporated herein by reference).

Table of Contents

		Description
10.8		Term Loan Security Agreement, dated as of February 23, 2012, among Flying Fortress Financing Inc., Flying Fortress Inc., Flying Fortress Ireland Leasing Limited, Flying Fortress US Leasing Inc., and the additional grantors referred to therein, as grantors, and Bank of America N.A., as collateral agent (filed as an exhibit to Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).
4.30		Indenture, dated as of March 22, 2010, among the Company, Wilmington Trust FSB, as trustee, and Deutsche Bank Trust Company Americas, as paying agent, security registrar and authentication agent (filed as an exhibit to Form 8-K filed on March 24, 2010 and incorporated herein by reference).
10.9		Term Loan Credit Agreement, dated as of April 12, 2012, among Delos Aircraft Inc., Hyperion Aircraft Inc., Apollo Aircraft Inc., Artemis (Delos) Limited, the additional grantors from time to time party thereto and Bank of America N.A., as administrative agent and collateral agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference).
4.31		Indenture, dated as of August 11, 2010, between the Company and The Bank of New York Mellon Trust Company, N.A., as paying agent, security registrar and authentication agent and trustee (filed as an exhibit to Form 8-K filed on August 20, 2010 and incorporated herein by reference).
10.10		Term Loan Security Agreement, dated as of April 12, 2012, among Delos Aircraft Inc., Hyperion Aircraft Inc., Apollo Aircraft Inc., Artemis (Delos) Limited, the additional grantors from time to time party thereto and Bank of America N.A., as collateral agent (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference).
4.32		Indenture, dated as of December 21, 2005, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on July 26, 2013 and incorporated herein by reference).
10.11	†	Employment Letter, dated as of June 21, 2012 between American International Group Inc., and Henri Courpron (filed as an exhibit to Form 8-K filed on June 21, 2012 and incorporated herein by reference).
4.33		First Supplemental Indenture, dated as of July 25, 2013, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on July 26, 2013 and incorporated herein by reference).
10.12	†	Employment Letter, dated as of June 21, 2012 between Laurette T. Koellner and American International Group Inc., (filed as an exhibit to Form 8-K filed on June 21, 2012 and incorporated herein by reference).
4.34		Second Supplemental Indenture, dated as of July 25, 2013, by and between the Company and Deutsche Bank Trust Company Americas, as trustee (filed as an exhibit to Form 8-K filed on July 26, 2013 and incorporated herein by reference).
10.13		Amendment No. 1 to the Term Loan Credit Agreement, dated as of July 26, 2012, between Delos Aircraft Inc. and Bank of America, N.A (filed as an exhibit to Form 10-Q for the quarter ended September 30, 2012 and incorporated herein by reference).
4.35		Amended and Restated 5.90% Junior Subordinated Debenture due 2065 (filed as an exhibit to Form 8-K filed on July 26, 2013 and incorporated herein by reference).
10.14		$2,300,000,000 Three-Year Revolving Credit Agreement, dated as of October 9, 2012, among the Company, the banks named therein and Citibank, N.A., as administrative agent (filed as an exhibit to Form 8-K filed on October 11, 2012 and incorporated herein by reference).
4.36		Amended and Restated 6.25% Junior Subordinated Debenture due 2065 (filed as an exhibit to Form 8-K filed on July 26, 2013 and incorporated herein by reference).
12		Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
4.37		The Company agrees to furnish to the Commission upon request a copy of each instrument with respect to issues of long-term debt of the Company and its subsidiaries, the authorized principal amount of which does not exceed 10% of the consolidated assets of the Company and its subsidiaries.
23		Consent of PricewaterhouseCoopers LLP.
10.1		Aircraft Facility Agreement, dated as of May 18, 2004, among Whitney Leasing Limited, as borrower, the Company, as guarantor and the Bank of Scotland and the other banks listed therein providing up to $2,643,660,000 (plus related premiums) for the financing of aircraft (filed as an exhibit to Form 10-Q for the quarter ended June 30, 2004 and incorporated herein by reference) and, as amended as of May 30, 2006, to increase the size of the facility to $3,643,660,000, as of May 30, 2007, to extend the termination until May 2008, as of May 29, 2008, to extend the termination until May 2009, and as of May 11, 2009 to increase the size of the facility to $4,643,660,000 and to extend the termination until June 2010 (filed as an exhibit to Form 10-Q for the quarter ended June 30, 2009 and incorporated herein by reference).
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
10.2		Deed of Amendment, dated as of May 8, 2013, relating to Aircraft Facility Agreement, among Bank of Scotland PLC, as security trustee and agent, the financial institutions listed therein, as lead managers, Whitney Leasing Limited, as borrower, Aircraft SPC-12 Inc., as borrower parent, and ILFC, as guarantor and subordinated lender (filed as an exhibit to Form 10-Q for the three months ended March 31, 2013 and incorporated herein by reference).
31.2		Rule 13a-14(a)/15d-14(a) Certification of Senior Vice President and Chief Financial Officer.
32.1		Certification under 18 U.S.C., Section 1350.
101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheet as of December 31, 2012 and 2011; (ii) the Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010; (iii) the Consolidated Statement of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010; (iv) the Consolidated Statement of Cash Flows for years ended December 31, 2012, 2011 and 2010; and (v) the Notes to the Consolidated Financial Statements.

†Indicates a management contract or compensatory plan or arrangement.

Table of Contents

Exhibit Number			Description

	10.3		Aircraft Mortgage and Security Agreement and Guaranty, dated as of August 11, 2010, among the Company, ILFC Ireland Limited, ILFC (Bermuda) III, Ltd., the additional grantors referred to therein, and Wells Fargo Bank Northwest, National Association (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended September 30, 2010 and incorporated herein by reference).

	10.4		Term Loan Credit Agreement, dated as of March 30, 2011, among Temescal Aircraft Inc., as borrower, the Company, Park Topanga Aircraft Inc., Charmlee Aircraft Inc., and Ballysky Aircraft Ireland Limited, as obligors, the lenders identified therein, Citibank N.A., as administrative agent and collateral agent, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC, as joint lead structuring agents and joint lead placement agents, and BNP Paribas, as joint placement agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).

	10.5		Aircraft Mortgage and Security Agreement, dated as of March 30, 2011, among Park Topanga Aircraft Inc., Temescal Aircraft Inc., Ballysky Aircraft Ireland Limited, Charmlee Aircraft Inc., the additional grantors referred to therein, and Citibank, N.A., as collateral agent (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).

	10.6		Incremental Lender Assumption Agreement, dated as of April 21, 2011, among Temescal Aircraft Inc., the Company, Park Topanga Aircraft Inc., Charmlee Aircraft Inc., Ballysky Aircraft Ireland Limited, KfW IPEX-Bank GmbH, as the incremental lender, and Citibank, N.A., as administrative agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2011 and incorporated herein by reference).

	10.7		Term Loan Credit Agreement, dated as of February 23, 2012, among Flying Fortress Inc., as borrower, the Company, Flying Fortress Financing Inc., Flying Fortress US Leasing Inc., and Flying Fortress Ireland Leasing Limited, as obligors, the lenders identified therein, Bank of America, N.A., as administrative agent and collateral agent, and Deutsche Bank Securities Inc., as syndication agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).

	10.8		Term Loan Security Agreement, dated as of February 23, 2012, among Flying Fortress Financing Inc., Flying Fortress Inc., Flying Fortress Ireland Leasing Limited, Flying Fortress US Leasing Inc., and the additional grantors referred to therein, as grantors, and Bank of America N.A., as collateral agent (filed as an exhibit to Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).

	10.9		First Amendment to Credit Agreement, dated as of April 5, 2013, among Flying Fortress Inc., as borrower, the Company, Flying Fortress Financing Inc., Flying Fortress US Leasing Inc. and Flying Fortress Ireland Leasing Limited, as the borrower parties, the Consenting Lenders named therein, the New Lenders named therein and Bank of America, N.A., as collateral agent and administrative agent (portions of this exhibit have been omitted pursuant to a request for confidential treatment) (filed as an exhibit to Form 10-Q for the quarter ended March 31, 2013 and incorporated herein by reference).

Table of Contents

		Description

10.10	†	Employment Letter, dated as of June 21, 2012 between American International Group Inc., and Henri Courpron (filed as an exhibit to Form 8-K filed on June 21, 2012 and incorporated herein by reference).

10.11	†	Employment Letter, dated as of June 21, 2012 between Laurette T. Koellner and American International Group Inc., (filed as an exhibit to Form 8-K filed on June 21, 2012 and incorporated herein by reference).

10.12		$2,300,000,000 Three-Year Revolving Credit Agreement, dated as of October 9, 2012, among the Company, the banks named therein and Citibank, N.A., as administrative agent (filed as an exhibit to Form 8-K filed on October 11, 2012 and incorporated herein by reference).

10.13		First Amendment to Three-Year Revolving Credit Agreement, dated as of January 28, 2014, by and among the Company, the banks party thereto and Citibank, N.A., as administrative agent (filed as an exhibit to Form 8-K filed on January 31, 2014 and incorporated herein by reference).

10.14		Revolving Credit Agreement, dated as of December 16, 2013 by and among American International Group, Inc., AerCap Ireland Capital Limited, AerCap Holdings N.V., AerCap Ireland Limited and certain subsidiaries of AerCap Holdings N.V., as guarantors (filed as an exhibit to AIG's Current Report on Form 8-K (file no. 001-8787) filed on December 16, 2013 and incorporated herein by reference).

12		Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.

23		Consent of PricewaterhouseCoopers LLP.

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification of Senior Vice President and Chief Financial Officer.

32.1		Certification under 18 U.S.C., Section 1350.

101		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of December 31, 2013 and 2012; (ii) the Consolidated Statements of Operations for the years ended December 31, 2013, 2012 and 2011; (iii) the Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2013, 2012 and 2011; (iv) the Consolidated Statements of Shareholders' Equity for the years ended December 31, 2013, 2012 and 2011; (v) the Consolidated Statements of Cash Flows for years ended December 31, 2013, 2012 and 2011; and (vi) the Notes to the Consolidated Financial Statements.

†: Indicates a management contract or compensatory plan or arrangement.

Table of Contents

Report of Independent Registered Public Accounting Firm

To The Shareholders and Board of Directors of International Lease Finance Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive (loss) income, shareholders' equity and cash flows present fairly, in all material respects, the financial position of International Lease Finance Corporation, a wholly-owned indirect subsidiary of American International Group, Inc. ("AIG"), and its subsidiaries (the "Company") at December 31, ~~2012~~2013 and December 31, ~~2011~~2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2012~~2013 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
Los Angeles, California

March 4, ~~2013~~2014

7981

Table of Contents

INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share amounts)

	December 31,
	2012			2011
	2013			2012
ASSETS
Cash, including interest bearing accounts of $2,964,136 (2012) and $1,909,529 (2011)	$	3,027,587		$	1,975,009
Cash and cash equivalents, including interest bearing accounts of $1,265,074 (2013) and $2,964,136 (2012)	$	1,351,405		$	3,027,587
Restricted cash, including interest bearing accounts of $406,788 (2012) and $414,807 (2011)		695,388			414,807
Restricted cash, including interest bearing accounts of $451,179 (2013) and $406,788 (2012)		464,824			695,388
Net investment in finance and sales-type leases		93211,~~936~~116			8193,~~746~~936
Flight equipment		4846,~~419~~574,~~478~~559			4748,~~620~~419,~~895~~478
Less accumulated depreciation		1314,~~951~~121,~~169~~522			1213,~~118~~951,~~607~~169
		34,468,309			35,502,288

Deposits on flight equipment purchases		470,200			298,782
		32,453,037			34,468,309
Lease receivables and other assets		785,602			599,734
Deposits on flight equipment purchases		636,483			470,200
Deferred debt issue costs, less accumulated amortization of $310,371 (2012) and $246,082 (2011)		269,335			288,878
Lease receivables and other assets		934,063			785,602
	$	39,810,357		$	39,161,244
Deferred debt issue costs, less accumulated amortization of $309,499 (2013) and $310,371 (2012)		258,189			269,335

	$	36,309,117		$	39,810,357


LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables	$	~~566~~639,~~219~~082		$	~~447~~566,~~521~~219
Current income taxes and other tax liabilities		~~269~~285,~~846~~499			~~253~~269,~~600~~846
Secured debt financing, net of deferred debt discount of $15,125 (2012) and $17,452 (2011)		9,489,247			9,764,631
Secured debt financing, net of deferred debt discount of $5,058 (2013) $15,125 (2012)		8,202,791			9,489,247
Unsecured debt financing, net of deferred debt discount of $37,207 (2012) and $39,128 (2011)		13,853,540			13,619,641
Unsecured debt financing, net of deferred debt discount of $31,456 (2013) $37,207 (2012)		12,238,066			13,853,540
Subordinated debt		1,000,000			1,000,000
Derivative liabilities		208,~~933~~348			3120,~~756~~933
Security deposits, deferred overhaul rental and other customer deposits		2,~~524~~637,~~981~~994			2,~~307~~524,~~637~~981
Deferred income taxes		43,~~142~~854,~~723~~452			4,~~204~~142,~~589~~723
Commitments and Contingencies—Note R
SHAREHOLDERS' EQUITY
Market Auction Preferred Stock, $100,000 per share liquidation value; Series A and B, each series having 500 shares issued and outstanding		100,000			100,000
Common stock—no par value; 100,000,000 authorized shares, 45,267,723 shares issued and outstanding		1,053,582			1,053,582
Paid-in capital		1,~~262~~272,~~551~~604			1,~~243~~262,~~225~~551
Accumulated other comprehensive (loss) income		(124,~~491~~184	)		(1912,~~637~~491	)
Retained earnings		5,~~539~~020,~~226~~883			5,~~154~~539,~~699~~226
Total shareholders' equity		7,942,868			7,531,869

	$	39,810,357		$	39,161,244
Total shareholders' equity		7,442,885			7,942,868

	$	36,309,117		$	39,810,357

See accompanying notes.

8082

Table of Contents

INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
REVENUES AND OTHER INCOME:
Rental of flight equipment	$	4,~~345~~166,~~602~~033		$	4,~~454~~345,~~405~~602		$	4,~~726~~454,~~502~~405
Flight equipment marketing and gain on aircraft sales		35128,~~388~~120			1435,~~348~~388			1014,~~637~~348
Other income		123,~~250~~232			57123,~~910~~250			6157,~~741~~910
		4,504,240			4,526,663			4,798,880

		4,417,385			4,504,240			4,526,663

EXPENSES:
Interest		1,~~555~~426,~~567~~900			1,~~569~~555,~~468~~567			1,~~567~~569,~~369~~468
Depreciation of flight equipment		1,~~918~~850,~~728~~303			1,~~864~~918,~~735~~728			1,~~963~~864,~~175~~735
Aircraft impairment charges on flight equipment held for use		~~102~~1,~~662~~162,843			1102,~~567,180~~662			1,~~110~~567,~~427~~180
Aircraft impairment charges and fair value adjustments on flight equipment sold or to be disposed		89238,~~700~~557			~~170~~89,~~328~~700			~~552~~170,~~762~~328
Loss on early extinguishment of debt		2217,~~934~~695			6122,~~093~~934			—61,093
Aircraft costs		~~134~~71,~~825~~594			49134,~~673~~825			3349,~~352~~673
Selling, general and administrative		~~257~~338,~~463~~739			~~188~~259,~~433~~415			~~179~~189,~~428~~977
Other expenses		51107,~~270~~238			8949,~~732~~318			~~157~~88,~~003~~188
		4,133,149			5,560,642			5,563,516

INCOME (LOSS) BEFORE INCOME TAXES		371,091			(1,033,979	)		(764,636	)
		5,213,869			4,133,149			5,560,642
(Benefit) provision for income taxes		(39,231	)		(310,078	)		(268,968	)

NET INCOME (LOSS)	$	410,322		$	(723,901	)	$	(495,668	)
(LOSS) INCOME BEFORE INCOME TAXES		(796,484	)		371,091			(1,033,979	)
(Benefit) provision for income taxes		(279,401	)		(39,231	)		(310,078	)

NET (LOSS) INCOME	$	(517,083	)	$	410,322		$	(723,901	)

See accompanying notes.

8183

Table of Contents

INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~ (LOSS) INCOME

(Dollars in thousands)

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
NET (LOSS) INCOME	$	~~410~~(517,~~322~~083	)	$	~~(723~~410,~~901~~322	)	$	(~~495~~723,~~668~~901	)
OTHER COMPREHENSIVE INCOME:
Net changes in fair value of cash flow hedges, net of taxes of $(3,588) (2012), $(21,384) (2011) and $(42,542) (2010) and net of reclassification adjustments		6,832			39,713			79,006
Net changes in fair value of cash flow hedges, net of taxes of $(4,394) (2013), $(3,588) (2012), and $(21,384) (2011) and net of reclassification adjustments		8,054			6,832			39,713
Change in unrealized fair value adjustments of available-for-sale securities, net of taxes of $(172) (2012), $219 (2011) and $(138) (2010) and net of reclassification adjustments		314			(406	)		256
Change in unrealized fair value adjustments of available-for-sale securities, net of taxes of $(138) (2013), $(172) (2012), and $219 (2011) and net of reclassification adjustments		253			314			(406	)
		7,146			39,307			79,262

COMPREHENSIVE INCOME (LOSS)	$	417,468		$	(684,594	)	$	(416,406	)
		8,307			7,146			39,307

COMPREHENSIVE (LOSS) INCOME	$	(508,776	)	$	417,468		$	(684,594	)

See accompanying notes.

8284

Table of Contents

INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Dollars in thousands)

	Market Auction Preferred Stock
					Common Stock
												Accumulated Other Comprehensive (Loss) Income
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital						Retained Earnings			Total
Balance at December 31, 2009		1,000	$	100,000		45,267,723	$	1,053,582	$	1,248,400		$	(138,206	)	$	6,391,313			8,655,089
Balance at December 31, 2010		1,000	$	100,000		45,267,723	$	1,053,582	$	1,251,225		$	(58,944	)	$	5,879,144		$	8,225,007
Preferred stock dividends																(601	)		(601	)
Deconsolidation of VIEs																(15,900	)		(15,900	)
Comprehensive (loss) income:
Net loss																(495,668	)		(495,668	)
Other comprehensive (loss) income:
Cash flow derivative transactions (net of tax of ($42,542))													79,006						79,006
Change in unrealized fair value adjustment of available-for-sale securities (net of tax of ($138))													256						256
Comprehensive (loss) income																			(416,406	)
Other(a)										2,825									2,825
Balance at December 31, 2010		1,000		100,000		45,267,723		1,053,582		1,251,225			(58,944	)		5,879,144			8,225,007
Preferred stock dividends																(544	)		(544	)
Comprehensive (loss) income:
Net loss																(723,901	)		(723,901	)
Other comprehensive (loss) income:
Cash flow derivative transactions (net of tax of $(21,384))													39,713						39,713
Cash flow derivative transactions, net of tax of $(21,384)													39,713						39,713
Change in unrealized appreciation available-for-sale securities (net of tax of $219)													(406	)					(406	)
Change in unrealized fair value adjustment of available-for-sale securities, net of tax of $219													(406	)					(406	)

Comprehensive (loss) income																			(684,594	)
Other(a)										(8,000	)								(8,000	)
Balance at December 31, 2011		1,000	$	100,000		45,267,723	$	1,053,582	$	1,243,225		$	(19,637	)	$	5,154,699		$	7,531,869

Balance at December 31, 2011		1,000		100,000		45,267,723		1,053,582		1,243,225			(19,637	)		5,154,699			7,531,869
Preferred stock dividends																(420	)		(420	)
Comprehensive (loss) income:
Net income																410,322			410,322
Other comprehensive income (loss):
Cash flow derivative transactions (net of tax of $3,588)													6,832						6,832
Cash flow derivative transactions, net of tax of $(3,588)													6,832						6,832
Change in unrealized fair value adjustment of available-for-sale securities (net of tax of $172)													314						314
Change in unrealized fair value adjustment of available-for-sale securities, net of tax of $(172)													314						314

Comprehensive income (loss)																			417,468
Other(a)										19,326						(25,375	)		(6,049	)
December 31, 2012		1,000	$	100,000		45,267,723	$	1,053,582	$	1,262,551		$	(12,491	)	$	5,539,226		$	7,942,868

Balance at December 31, 2012		1,000		100,000		45,267,723		1,053,582		1,262,551			(12,491	)		5,539,226			7,942,868
Preferred stock dividends																(336	)		(336	)
Comprehensive (loss) income:
Net loss																(517,083	)		(517,083	)
Other comprehensive (loss) income:
Cash flow derivative transactions, net of tax of $(4,394)													8,054						8,054
Change in unrealized fair value adjustment of available-for-sale securities, net of tax of $(138)													253						253

Comprehensive (loss) income																			(508,776	)
Other(a)										10,053						(924	)		9,129

Balance at December 31, 2013		1,000	$	100,000		45,267,723	$	1,053,582	$	1,272,604		$	(4,184	)	$	5,020,883		$	7,442,885

(a)We recorded $1610,~~690,~~053 ~~net of tax of $9,211, in Paid-in capital~~ during ~~2012 when AIG contributed a corporate aircraft to us. Additionally~~2013, ~~we recorded~~ $2,636 during 2012, and $(8,000) during 2011 ~~and $2,825 during 2010~~ in Paid-in capital for compensation expenses, ~~debt~~legal ~~issue~~expenses ~~costs~~ and other expenses paid by AIG on our behalf for which we were not required to ~~pay~~reimburse. Additionally, we recorded $16,690, net of tax of $9,211, in Paid-in capital during 2012 when AIG contributed a corporate aircraft to us. The $(8,000) recorded during 2011 reflects pension benefits previously recorded as Paid-in capital and forfeited by certain employees during 2011. WeIn 2013, we transferred shares of AIG stock with a carrying value, net of taxes, of $0.9 million to AIG and recorded the transaction in Retained earnings, We recorded a $25,379 decrease, net of tax of $11,866, and other miscellaneous adjustments of $(4) in Retained earnings during 2012 when we transferred two corporate aircraft to AIG.

See accompanying notes.

8385

Table of Contents

INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Years Ended December 31,
	2012			2011			2010
	2013			2012			2011
OPERATING ACTIVITIES:
Net income (loss)	$	410,322		$	(723,901	)	$	(495,668	)
Net (loss) income	$	(517,083	)	$	410,322		$	(723,901	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of flight equipment		1,~~918~~850,~~728~~303			1,~~864~~918,~~735~~728			1,~~963~~864,~~175~~735
Deferred income taxes		(62293,~~971~~665	)		(~~468~~62,~~329~~971	)		(~~312~~468,~~461~~329	)
Derivative instruments		(~~403~~198	)		(~~117,396~~403	)		~~252~~(117,~~254~~396	)
Foreign currency adjustment of non-US$ denominated debt		—			~~104,800~~—			~~(200~~104,~~320~~800	)
Amortization of deferred debt issue costs		7360,~~935~~148			6473,~~174~~935			5664,~~227~~174
Amortization of debt discount		148,~~191~~031			1314,~~706~~191			1113,~~968~~706
Amortization of prepaid lease costs		6178,~~518~~082			6361,~~369~~518			4763,~~809~~369
Aircraft impairment charges and fair value adjustments		~~192~~1,~~362~~401,400			1192,~~737,508~~362			1,~~663~~737,~~189~~508
Lease expenses related to aircraft sales		—			(3,249	)		91,217
Forfeitures of customer deposits		(32,719	)		(42,607	)		(14,178	)
Forfeitures of customer deposits		(42,607	)		(14,178	)		(7,951	)
(Recoveries of) Provision for credit losses on notes receivable and net investment in finance and sales-type leases		—			(9,728	)		44,986
(Recoveries of) Provision for credit losses on notes receivable and net investment in finance and sales-type leases		(9,728	)		44,986			19,511
Loss on extinguishment of debt		17,695			22,934			—
Loss on extinguishment of debt		22,934			—			—
Other(a)		(102,982	)		(15,641	)		(53,945	)
Other(a)		(15,641	)		(50,696	)		(29,955	)
Changes in operating assets and liabilities:
Lease receivables and other assets		~~142~~(141,~~552~~074	)		(7142,~~986~~552	)		41(7,~~723~~986	)
Accrued interest and other payables		~~100~~92,~~343~~575			~~(33~~100,~~373~~343	)		~~119~~(33,~~391~~373	)
Current income taxes and other tax liabilities		1715,~~791~~653			9317,~~989~~791			7893,~~687~~989
Tax benefit sharing payable to AIG		—			—			(85,000	)

Net cash provided by operating activities		2,~~823~~436,~~326~~166			2,~~568~~823,~~159~~326			32,~~213~~568,~~796~~159

INVESTING ACTIVITIES:
Acquisition of flight equipment		(1,~~772~~962,~~817~~572	)		(~~377~~1,~~037~~772,817	)		(~~240~~377,~~320~~037	)
Payments for deposits and progress payments		(~~233~~306,~~677~~998	)		(~~158~~233,~~932~~677	)		(61158,~~085~~932	)
Proceeds from disposal of flight equipment		~~521~~744,~~231~~372			~~296~~521,~~384~~231			2296,~~123,581~~384
Acquisition of AeroTurbine, net of cash acquired		—			~~(138,225~~—	)		—(138,225	)
Restricted cash		~~(280~~230,~~581~~564	)		42(280,~~336~~581	)		~~(141~~42,~~897~~336	)
Collections of notes receivable		116,~~066~~830			4511,~~543~~066			7245,~~015~~543
Collections of finance and sales-type leases		4159,~~879~~303			1441,~~958~~879			3214,~~928~~958
Other		(~~230~~569	)		(~~6,225~~230	)		(56,~~370~~225	)
Net cash (used in) provided by investing activities		(1,713,129	)		(281,198	)		1,779,852

Net cash used in investing activities		(1,229,070	)		(1,713,129	)		(281,198	)

FINANCING ACTIVITIES:
Repayment of loan to AIG		—			—			(3,909,567	)
Proceeds from debt financing		1,952,244			3,759,188			4,571,526
Proceeds from debt financing		3,759,188			4,571,526			9,704,094
Payments in reduction of debt financing, net of foreign currency swap settlements		(4,870,051	)		(3,824,636	)		(8,054,223	)
Payments in reduction of debt financing, net of foreign currency swap settlements		(3,824,636	)		(8,054,223	)		(7,989,514	)
Debt issue costs		(58,851	)		(73,120	)		(121,777	)
Debt issue costs		(73,120	)		(121,777	)		(189,376	)
Security and rental deposits received		108,622			130,109			104,895
Security and rental deposits received		130,109			104,895

Filing Compare · INTERNATIONAL LEASE FINANCE CORP