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data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand FTAI Aviation Ltd. (the “Company,” “we,” “our” or “us”). Our MD&A should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes, and with Part II, Item 1A, “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.
Overview
We are a leading independent engine maintenance platform focused on the CFM56-5B, CFM56-7B and V2500 aircraft engines which power the 737NG and A320ceo aircraft. We repair and rebuild engines in our maintenance facilities and with our joint venture partners, and sell or lease the engines to airlines and asset owners around the world. Our primary business model is to sell engines via exchange through our proprietary Maintenance, Repair and Exchange (“MRE”) model which is reported under our Aerospace Products segment.
We also own and manage a portfolio of on- and off-lease aircraft and engines through our Aviation Leasing segment. While historically these investment activities have been primarily held on balance sheet, at the end of 2024, we launched our Strategic Capital Initiative, which consists of an asset management business that manages third-party capital to invest in on-lease aircraft. We expect our primary investment activities to be through our Strategic Capital Initiative going forward.
As of June 30, 2026, we had total consolidated assets of $4.5 billion and total equity of $404.0 million.
Internalization of Management
On May 28, 2024, the Company entered into definitive agreements with the Former Manager and Master GP to internalize the Company’s management function. As part of the termination of the Management Agreement, the Company (i) paid the Former Manager (for itself and on behalf of the Master GP, as applicable) the Cash Consideration, the compensation accrued and payable, but not yet paid, under the Management Agreement and the expenses that were reimbursable, but not yet reimbursed, under the Management Agreement; (ii) issued to the Former Manager (for itself and on behalf of the Master GP, as applicable) the Share Consideration; (iii) purchased from Master GP all of its partnership interests in FTAI Aviation Holdco Ltd., a subsidiary of the Company, in exchange for $30 thousand. Following the Internalization, the Company no longer pays management fees or incentive distributions to the Former Manager and Master GP.
In connection with the termination of the Management Agreement, the Company also entered into a Transition Services Agreement with the Former Manager. Under the Transition Services Agreement, the Former Manager was required to continue to provide the Company and its affiliates with all of the Services for a transition period until October 31, 2024, during which the Company procured replacements for the Services. In addition, the Former Manager was required to continue to provide the services that were reasonably required by the Company to prepare its quarterly and annual financial statements until May 31, 2025. The Services were provided to the Company for a fee equal to the Former Manager’s cost of providing the Services, including the allocated cost of, among other things, overhead, employee wages and compensation, rent and related real estate expenses and actually incurred out-of-pocket expenses, plus a mark-up of ten percent (10%).
Strategic Capital Initiative
On December 30, 2024, we announced the launch of a Strategic Capital Initiative in collaboration with third-party institutional investors. The Strategic Capital Initiative, and its related partnerships, allows us to maintain an asset-light business model while the partnerships actively acquire on-lease narrowbody aircraft at scale. The first partnership under the initiative (the “2025 Partnership”) focuses on acquiring 737NG and A320ceo aircraft. The 2025 Partnership completed its fundraise in October 2025 with $2.0 billion of equity commitments.
The 2025 Partnership, and follow-on partnerships, is the primary buyer of on-lease 737NG and A320ceo aircraft. The Company, as the Servicer, provides aircraft management services to the 2025 Partnership, and the Company receives customary, market-based compensation for providing such services. The Company made minority capital commitments to the 2025 Partnership in the same proportion relative to additional third-party institutional investors.
Operating Segments
The key factors used to identify the reportable segments are the organization and alignment of our internal operations and the nature of our products and services. Our two reportable segments are (i) Aerospace Products and (ii) Aviation Leasing. The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B and V2500 commercial aircraft engines. The Aviation Leasing segment owns and manages aviation assets, including aircraft and aircraft engines, which it leases and sells to lessees, directly and also through its equity method investment.
Corporate and Other primarily consists of debt, unallocated corporate general and administrative expenses, internalization fee and management fees and incentive compensation pursuant to the Management Agreement prior to the Internalization effective May 28, 2024. Additionally, Corporate and Other also includes offshore energy related assets, which consist of equipment that support offshore oil and gas activities and production, and expenses relating to FTAI Power.
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Adjusted EBITDA (Non-GAAP)
Besides net income (loss), the chief operating decision maker (“CODM”), who is the Company’s Chief Executive Officer, utilizes Adjusted EBITDA as a key performance measure. Adjusted EBITDA is not a financial measure in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). This performance measure provides the CODM with the information necessary to assess operational performance and make resource and allocation decisions. We believe Adjusted EBITDA is a useful metric for investors and analysts for similar purposes of assessing our operational performance.
Adjusted EBITDA is defined as net income (loss) attributable to shareholders from continuing operations, adjusted (a) to exclude the impact of provision for (benefit from) income taxes, equity-based compensation expense, acquisition and transaction expenses, losses on the modification or extinguishment of debt and preferred shares and capital lease obligations, asset impairment charges, incentive allocations, depreciation and amortization expense, interest expense and dividends on preferred shares, internalization fee to affiliate, (b) to include the impact of our pro-rata share of Adjusted EBITDA from unconsolidated entities and (c) to exclude the impact of equity in earnings (losses) of unconsolidated entities, if any.
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Results of Operations
Comparison of the three and six months ended June 30, 2026 and 2025
The following table presents our consolidated results of operations:
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Aerospace products revenue | $ | 692,229 | $ | 420,686 | $ | 271,543 | $ | 1,214,814 | $ | 685,111 | $ | 529,703 | ||||||||||||||||||||
| MRE Contract revenue | 182,799 | 69,585 | 113,214 | 404,029 | 170,223 | 233,806 | ||||||||||||||||||||||||||
| Lease income | 27,765 | 62,439 | (34,674) | 67,657 | 130,879 | (63,222) | ||||||||||||||||||||||||||
| Maintenance revenue | 25,793 | 73,104 | (47,311) | 56,392 | 122,711 | (66,319) | ||||||||||||||||||||||||||
| Asset sales revenue | 16,925 | 47,915 | (30,990) | 27,109 | 66,854 | (39,745) | ||||||||||||||||||||||||||
Other revenue (1) | 7,574 | 2,508 | 5,066 | 13,781 | 2,539 | 11,242 | ||||||||||||||||||||||||||
| Total revenues | 953,085 | 676,237 | 276,848 | 1,783,782 | 1,178,317 | 605,465 | ||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||
| Cost of sales | 635,782 | 369,258 | 266,524 | 1,160,050 | 617,972 | 542,078 | ||||||||||||||||||||||||||
| Operating expenses | 67,567 | 34,328 | 33,239 | 132,554 | 66,766 | 65,788 | ||||||||||||||||||||||||||
| General and administrative | 2,245 | 2,442 | (197) | 4,658 | 5,558 | (900) | ||||||||||||||||||||||||||
| Acquisition and transaction expenses | 5,699 | 4,489 | 1,210 | 22,060 | 11,781 | 10,279 | ||||||||||||||||||||||||||
| Depreciation and amortization | 46,986 | 55,236 | (8,250) | 99,275 | 114,798 | (15,523) | ||||||||||||||||||||||||||
| Total expenses | 758,279 | 465,753 | 292,526 | 1,418,597 | 816,875 | 601,722 | ||||||||||||||||||||||||||
| Other (expense) income | ||||||||||||||||||||||||||||||||
| Interest expense | (64,102) | (63,965) | (137) | (125,509) | (126,005) | 496 | ||||||||||||||||||||||||||
Equity in earnings (losses) of unconsolidated entities (2) | 9,970 | (5,003) | 14,973 | 7,607 | (12,617) | 20,224 | ||||||||||||||||||||||||||
| Gain on sale to the 2025 Partnership | 2,465 | 34,604 | (32,139) | 17,633 | 45,474 | (27,841) | ||||||||||||||||||||||||||
| Other income | 7,574 | 27,156 | (19,582) | 55,156 | 60,227 | (5,071) | ||||||||||||||||||||||||||
| Total other expense | (44,093) | (7,208) | (36,885) | (45,113) | (32,921) | (12,192) | ||||||||||||||||||||||||||
Income before income taxes | 150,713 | 203,276 | (52,563) | 320,072 | 328,521 | (8,449) | ||||||||||||||||||||||||||
Provision for income taxes | 25,619 | 37,878 | (12,259) | 57,079 | 60,737 | (3,658) | ||||||||||||||||||||||||||
Net income | 125,094 | 165,398 | (40,304) | 262,993 | 267,784 | (4,791) | ||||||||||||||||||||||||||
| Less: Dividends on preferred shares | 3,709 | 3,709 | — | 7,418 | 9,824 | (2,406) | ||||||||||||||||||||||||||
| Less: Loss on redemption of preferred shares | 3,800 | — | 3,800 | 3,800 | 6,327 | (2,527) | ||||||||||||||||||||||||||
Net income attributable to shareholders | $ | 117,585 | $ | 161,689 | $ | (44,104) | $ | 251,775 | $ | 251,633 | $ | 142 | ||||||||||||||||||||
(1)Includes servicing fees of $6,988 and $12,849 for the three and six months ended June 30, 2026, respectively (2025 - $2,052 and $2,600, respectively), from the 2025 Partnership.
(2)Includes the profit elimination of $(6,597) and $(16,597) for the three and six months ended June 30, 2026, respectively (2025 - $(4,935) and $(11,885), respectively), for sales to the 2025 Partnership.
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The following table sets forth a reconciliation of net income (loss) attributable to shareholders to Adjusted EBITDA:
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
Net income attributable to shareholders | $ | 117,585 | $ | 161,689 | $ | (44,104) | $ | 251,775 | $ | 251,633 | $ | 142 | ||||||||||||||||||||
Add: Provision for income taxes | 25,619 | 37,878 | (12,259) | 57,079 | 60,737 | (3,658) | ||||||||||||||||||||||||||
| Add: Equity-based compensation expense | 7,332 | 5,515 | 1,817 | 13,679 | 10,404 | 3,275 | ||||||||||||||||||||||||||
| Add: Acquisition and transaction expenses | 5,699 | 4,489 | 1,210 | 22,060 | 11,781 | 10,279 | ||||||||||||||||||||||||||
| Add: Losses on the modification or extinguishment of debt and preferred shares and capital lease obligations | 3,800 | — | 3,800 | 3,800 | 6,327 | (2,527) | ||||||||||||||||||||||||||
| Add: Asset impairment charges | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Add: Incentive allocations | — | — | — | — | — | — | ||||||||||||||||||||||||||
Add: Depreciation and amortization expense (1) | 52,118 | 65,677 | (13,559) | 111,631 | 134,064 | (22,433) | ||||||||||||||||||||||||||
| Add: Interest expense and dividends on preferred shares | 67,812 | 67,674 | 138 | 132,928 | 135,829 | (2,901) | ||||||||||||||||||||||||||
| Add: Internalization fee to affiliate | — | — | — | — | — | — | ||||||||||||||||||||||||||
Add: Pro-rata share of Adjusted EBITDA from unconsolidated entities (2) | 28,046 | 4,815 | 23,231 | 48,273 | 4,856 | 43,417 | ||||||||||||||||||||||||||
Less: Equity in (earnings) losses of unconsolidated entities (3) | (16,567) | 68 | (16,635) | (24,204) | 732 | (24,936) | ||||||||||||||||||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 291,444 | $ | 347,805 | $ | (56,361) | $ | 617,021 | $ | 616,363 | $ | 658 | ||||||||||||||||||||
(1)Includes the following items for the three months ended June 30, 2026: (i) depreciation and amortization expense of $46,986 (2025 - $55,236), (ii) lease intangible amortization of $(89) (2025 - $2,153) and (iii) amortization for lease incentives of $5,221 (2025 - $8,288).
Includes the following items for the six months ended June 30, 2026: (i) depreciation and amortization expense of $99,275 (2025 - $114,798), (ii) lease intangible amortization of $248 (2025 - $5,359) and (iii) amortization for lease incentives of $12,108 (2025 - $13,907).
(2)Includes the following items for the three months ended June 30, 2026: (i) net income of $16,567 (2025 - net loss of $68), (ii) interest expense of $5,771 (2025 - $1,490), (iii) depreciation and amortization expense of $5,680 (2025 - $3,470), (iv) acquisition and transaction expenses of $0 (2025 - $(77)), and (v) tax expense of $28 (2025 - $0).
Includes the following items for the six months ended June 30, 2026: (i) net income of $24,204 (2025 - net loss of $732), (ii) interest expense of $9,267 (2025 - $1,490), (iii) depreciation and amortization expense of $14,747 (2025 - $3,628), (iv) acquisition and transaction expenses of $0 (2025 - $470), and (v) tax expense of $55 (2025 - $0).
(3)Excludes the profit elimination of $6,597 and $16,597 for the three and six months ended June 30, 2026, respectively (2025 - $4,935 and $11,885, respectively), for sales to the 2025 Partnership.
Revenues
Comparison of the three months ended June 30, 2026 and 2025
Total revenues increased by $276.8 million, driven by the following:
•Aerospace products revenue increased by $271.5 million, primarily due to a $262.6 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
•MRE Contract revenue increased by $113.2 million, primarily due to an increase in engine and module sales made to the 2025 Partnership.
•Lease income decreased by $34.7 million, due to decreases in aircraft lease revenue of $19.5 million, driven by the sale of Seed Assets to the 2025 Partnership, and decreases in engine lease revenue of $15.2 million, driven by a decrease in revenue generating assets on lease.
•Maintenance revenue decreased by $47.3 million, due to decreases in aircraft maintenance revenue of $31.0 million and engine maintenance revenue of $16.3 million, both driven by a decrease in revenue generating assets on lease.
•Asset sales revenue decreased by $31.0 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
Comparison of the six months ended June 30, 2026 and 2025
Total revenues increased by $605.5 million, driven by the following:
•Aerospace Products revenue increased by $529.7 million, primarily due to a $509.4 million increase in CFM56-5B, CFM56-7B and V2500 engine and module sales.
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•MRE Contract revenue increased by $233.8 million, primarily due to an increase in engine and module sales made to the 2025 Partnership.
•Maintenance revenue decreased by $66.3 million, primarily due to a decrease in aircraft maintenance revenue of $39.1 million and a decrease in engine maintenance revenue of $27.2 million, both driven by a decrease in revenue generating assets on lease.
•Lease income decreased by $63.2 million, primarily due to a decrease in aircraft lease revenue of $44.2 million, and a decrease in engine lease revenue of $19.0 million, both driven by a decrease in revenue generating assets on lease.
•Asset sales revenue decreased by $39.7 million, primarily due to an overall decrease in the number of sales transactions of commercial aircraft and engines in the current period as compared to the prior period.
Expenses
Comparison of the three months ended June 30, 2026 and 2025
Total expenses increased by $292.5 million, driven by the following:
•Cost of sales increased by $266.5 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
•Operating expenses increased by $33.2 million, primarily due to increases in compensation and benefits expense and shipping and logistics expense across our operating segments, as well as increased technology development costs and general corporate expenses.
Comparison of the six months ended June 30, 2026 and 2025
Total expenses increased by $601.7 million, driven by the following:
•Cost of sales increased by $542.1 million, primarily due to increases in CFM56-5B, CFM56-7B and V2500 engine and module sales, and parts inventory sales, which directly corresponds to components of increases in Aerospace products revenue over the same period.
•Operating expenses increased by $65.8 million, primarily due to an increase in compensation and benefits expense due to an increase in employee headcount and increased overall compensation, technology development costs and general corporate expenses.
Other (expense) income
Comparison of the three months ended June 30, 2026 and 2025
Total other expense increased by $36.9 million driven by the following:
•Gain on sale to the 2025 Partnership decreased by $32.1 million, driven by the lower number of Seed Assets sold to the 2025 Partnership in the current period as compared to the prior period.
•Other income decreased $19.6 million, driven by a decrease in insurance settlements in the current period as compared to the prior period.
•Equity in earnings of unconsolidated entities increased by $15.0 million, driven by net income earned by the 2025 Partnership in the current period, compared to losses in the prior period.
Comparison of the six months ended June 30, 2026 and 2025
Total other expense increased by $12.2 million driven by the following:
•Gain on sale to the 2025 Partnership decreased by $27.8 million, driven by the lower number of Seed Assets sold to the 2025 Partnership in the current period as compared to the prior period.
•Other income decreased by $5.1 million, primarily due a decrease in insurance settlements in the current period as compared to the prior period.
•Equity in earnings of unconsolidated entities increased by $20.2 million, driven by net income earned by the 2025 Partnership in the current period, compared to losses in the prior period.
Provision for income taxes
The provision for income taxes decreased $12.3 million and $3.7 million for the three and six months ended June 30, 2026, as compared to the prior period, primarily driven by lower income generated in the Aviation Leasing segment within taxable jurisdictions.
Net income
Net income decreased by $40.3 million and $4.8 million for the three and six months ended June 30, 2026, as compared to the prior period, primarily due to the changes noted above.
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Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA decreased by $56.4 million and increased by $0.7 million for the three and six months ended June 30, 2026, as compared to the prior period, primarily due to the changes noted above.
Aerospace Products Segment
The Aerospace Products segment, through our maintenance facilities and joint ventures, among other investments, develops and manufactures, repairs/refurbishes, and sells aircraft engines and aftermarket components primarily for the CFM56-7B, CFM56-5B, and V2500 commercial aircraft engines. Our engine, module, and parts sales are facilitated through a dedicated commercial maintenance program designed to focus on modular and parts repair and refurbishment of CFM56-7B and CFM56-5B engines. In addition, other serviceable used modules and parts are sold through our exclusive partnership, which is responsible for the teardown, repair, marketing, and sales of parts from our CFM56 engine pool.
In 2023, we acquired the remaining interest in Quick Turn Engine Center LLC (“QuickTurn”), a dedicated hospital maintenance and testing facility specializing in the CFM56-7B and CFM56-5B engines.
In 2024, we acquired Lockheed Martin Commercial Engine Solutions (“LMCES”) to establish permanent engine and module manufacturing capabilities.
In 2025, we entered into an agreement within our MRE business to supply replacement aircraft engines and modules for the life of the 2025 Partnership. We also acquired Pacific Aerodynamic Inc. (“Pac Aero”), a specialist in CFM56 compressor blade and vane repairs, expanding our repair capabilities, and the MRE business of AerotechOPS (“ATOPS”), expanding our MRE business in Miami.
Additionally, we maintain a (i) 25% equity interest in the Advanced Engine Repair joint venture, which focuses on developing innovative cost-saving programs for engine repairs, (ii) 50% equity interest in QuickTurn Europe, which operates as a dedicated maintenance, repair, and overhaul facility for CFM56 engines, and (iii) 50% equity interest in Prime Engine Accessories LLC, which focuses on developing in-house CFM56 accessory maintenance repairs.
The following table presents our results of operations:
| Three Months Ended June 30, | Change | Six Months Ended June 30, | Change | |||||||||||||||||||||||||||||
| (in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Aerospace products revenue | $ | 692,229 | $ | 420,686 | $ | 271,543 | $ | 1,214,814 | $ | 685,111 | $ | 529,703 | ||||||||||||||||||||
| MRE Contract revenue | 182,799 | 69,585 | 113,214 | 404,029 | 170,223 | 233,806 | ||||||||||||||||||||||||||
| Total revenues | 875,028 | 490,271 | 384,757 | 1,618,843 | 855,334 | 763,509 | ||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||
| Cost of sales | 614,529 | 317,469 | 297,060 | 1,125,541 | 546,224 | 579,317 | ||||||||||||||||||||||||||
| Operating expenses | 10,997 | 8,989 | 2,008 | 21,836 | 14,676 | 7,160 | ||||||||||||||||||||||||||
| Acquisition and transaction expenses | 144 | 1,414 | (1,270) | 129 | 2,546 | (2,417) | ||||||||||||||||||||||||||
| Depreciation and amortization | 4,903 | 3,704 | 1,199 | 9,581 | ||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-07-31 | Moreno David | President | Buy | +2,475 | $201.27 | $498,143 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-29 10-Q expected by 2026-11-07 (in 46 days)
- ~2027-02-26 10-K expected by 2027-02-27 (in 166 days)
- ~2027-05-01 10-Q expected by 2027-05-10 (in 230 days)
- ~2027-07-31 10-Q expected by 2027-08-09 (in 321 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-31 10-Q Quarterly Report
- 2026-07-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-01 10-Q Quarterly Report
- 2026-05-01 S-3ASR S-3ASR
- 2026-04-30 8-K Material Agreement Entered; Material Financial Obligation; Other Events; Financial Statements and Exhibits
- 2026-04-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-15 DEF 14A Proxy Statement
- 2026-03-06 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-27 10-K Annual Report
- 2026-02-25 8-K Earnings Release; Financial Statements and Exhibits
- 2026-02-12 8-K Officer/Director Change
- 2026-01-28 8-K Officer/Director Change
- 2025-10-29 10-Q Quarterly Report
- 2025-09-05 8-K Completion of Acquisition/Disposition; Financial Statements and Exhibits
- 2025-07-31 10-Q Quarterly Report