Investments

9 Months Ended

Sep. 30, 2019

In 2011, the Company entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company - Willis Mitsui & Company Engine Support Limited (“WMES”) for the purpose of acquiring and leasing jet engines. Each partner holds a fifty percent interest in the joint venture and the Company uses the equity method in recording investment activity. As of September 30, 2019, WMES owned a lease portfolio of 32 engines and six aircraft with a net book value of $299.3 million.

In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to participate in a joint venture named CASC Willis Engine Lease Company Limited (“CASC Willis”), a joint venture based in Shanghai, China. Each partner holds a fifty percent interest in the joint venture and the Company uses the equity method in recording investment activity. CASC Willis acquires and leases jet engines to Chinese airlines and concentrates on the demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. As of September 30, 2019, CASC Willis owned a lease portfolio of four engines with a net book value of $48.7 million.



Nine Months Ended September 30, 2019	WMES			CASC Willis			Total
	(in thousands)
Investment in joint ventures as of December 31, 2018	$	34,183		$	13,758		$	47,941
Earnings from joint ventures	4,882			(95		)	4,787
Investment	5,013			—			5,013
Distribution	(3,300		)	—			(3,300		)
Foreign currency translation adjustment	—			(489		)	(489		)
Investment in joint ventures as of September 30, 2019	$	40,778		$	13,174		$	53,952

“Other revenue” on the Condensed Consolidated Statements of Income includes management fees earned of $0.7 million and $0.6 million during the three months ended September 30, 2019 and 2018, respectively, and $1.8 million during the nine months ended September 30, 2019 and 2018, respectively. These fees are related to the servicing of engines for the WMES lease portfolio.

During the nine months ended September 30, 2019, the Company sold five aircraft and other equipment to WMES for $76.4 million. Additionally, during the nine months ended September 30, 2019, WMES sold one engine to Willis Aeronautical Services, Inc., a wholly-owned subsidiary of the Company, for $2.6 million. During the nine months ended September 30, 2018, the Company sold two engines to WMES for $23.2 million.

There were no aircraft or engine sales to CASC Willis during the nine months ended September 30, 2019 and 2018.

Summarized financial information for 100% of WMES is presented in the following tables:



	Three Months Ended September 30				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in thousands)				(in thousands)
Revenue	$	13,007	$	9,987	$	36,144	$	26,633
Expenses	9,657		8,408		27,378		22,762
WMES income before income taxes	$	3,350	$	1,579	$	8,766	$	3,871



	September 30, 2019		December 31, 2018
	(in thousands)
Total assets	$	313,073	$	274,744
Total liabilities	225,727		198,534
Total WMES net equity	$	87,346	$	76,210