Investments

6 Months Ended

Jun. 30, 2023

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 June 30, 2023, WMES owned a lease portfolio, inclusive of 35 engines and five aircraft with a net book value of $231.7 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 June 30, 2023, CASC Willis owned a lease portfolio of four engines with a net book value of $40.2 million.


As of June 30, 2023	WMES		CASC Willis		Total
	(in thousands)
Investment in joint ventures as of December 31, 2022	$	41,014	$	15,175	$	56,189
Loss from joint ventures	(1,507)		(128)		(1,635)

Foreign currency translation adjustment	—		(695)		(695)
Other comprehensive loss from joint ventures	(143)		—		(143)
Investment in joint ventures as of June 30, 2023	$	39,364	$	14,352	$	53,716

“Other revenue” on the Condensed Consolidated Statements of Income includes $0.6 million and $0.5 million during the three months ended June 30, 2023 and 2022, respectively, and $1.1 million and $1.0 million during the six months ended June 30, 2023 and 2022, respectively, consisting of management fees related to the servicing of engines for the WMES lease portfolio.

During the six months ended June 30, 2023, WMES sold an engine to the Company for $22.3 million, and the Company sold an engine to WMES for $15.5 million. There were no aircraft sales by the Company to WMES or CASC Willis during the six months ended June 30, 2023 and 2022.

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


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
	(in thousands)				(in thousands)
Revenue	$	10,972	$	21,185	$	21,850	$	30,726
Expenses	11,387		17,687		22,552		32,690
WMES net (loss) income	$	(415)	$	3,498	$	(702)	$	(1,964)


	June 30, 2023		December 31, 2022
	(in thousands)
Total assets	$	245,027	$	267,580
Total liabilities	160,901		183,083
Total WMES net equity	$	84,126	$	84,497

The difference between the Company’s investment in WMES and 50% of total WMES net equity is primarily attributable to the recognition of deferred gains, which are related to engines sold by WMES to the Company, and prior to the adoption of ASU 2017-05, related to engines sold by the Company to WMES.