8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 26, 2014 (February 25, 2014)

Aircastle Limited

(Exact name of registrant as specified in its charter)

Bermuda	001-32959	98-0444035
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

c/o Aircastle Advisor LLC, 300 First Stamford Place, Stamford, Connecticut	06902
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (203) 504-1020

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02 Results of Operations and Financial Condition.

On February 25, 2014, Aircastle Limited announced financial results for its fourth quarter and full year 2013 as described in the press release furnished hereto as Exhibit 99.1, which is incorporated herein by reference.

The information furnished pursuant to this Current Report on Form 8-K, including the exhibit hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth as being incorporated by reference into such filing.

Section 8 –Other Events

Item 8.01 Other Events.

On February 25, 2014, the Company issued a press release, attached hereto and incorporated herein by reference as Exhibit 99.2, announcing that certain subsidiaries of the Company agreed to acquire eight Boeing 777-300ER aircraft, of which four were manufactured in 2012 (each a “2012 Aircraft” and collectively the “2012 Aircraft”) and four were manufactured in 2008 (each a “2008 Aircraft” and collectively the “2008 Aircraft” and, together with the 2012 Aircraft, the “Aircraft”) from affiliates of LATAM Airlines Group S.A. (the “Lessee”) for a total purchase price of approximately $900 million.

Purchase Agreements

Each of the 2012 Aircraft will be purchased pursuant to a Purchase Agreement (each a “Purchase Agreement” and together the “Purchase Agreements”), between Wells Fargo Bank Northwest, N.A., as owner trustee (for purposes of each Purchase Agreement, a “Buyer”), in trust for Aircastle Investment Holdings 2 Limited, a wholly owned indirect subsidiary of the Company, and the Lessee. Aircastle Holding Corporation Limited (“AHCL”), a wholly owned subsidiary of the Company, will guarantee the obligations of the Buyer under each Purchase Agreement. Prior to the execution of the Purchase Agreements, there were no material relationships between the Company and the Lessee.

Each Aircraft Purchase Agreement provides that the Lessee will procure that an affiliate of the Lessee will sell and deliver the relevant Aircraft to the applicable Buyer (for each Aircraft, its “Delivery”) on an “as-is, where-is” basis. Either party may terminate its obligations under the relevant Purchase Agreement if the related Aircraft suffers a total loss or any damage beyond a certain threshold after the pre-delivery inspection by the Buyer but prior to Delivery, or if the Delivery fails to occur prior to April 30, 2014.

Delivery of each 2012 Aircraft is anticipated, subject to customary closing conditions, to occur in March 2014.

Lease Agreements

As a condition to the purchase of the 2012 Aircraft pursuant to each Aircraft Purchase Agreement, each Buyer and the Lessee have also entered into an Aircraft Lease Agreement (each a “Lease Agreement”). Each Lease Agreement provides that the applicable Buyer (for the purposes of each Lease Agreement, a “Lessor”) will lease the relevant Aircraft to the Lessee for a term ending on a date, specified for such Aircraft, between November 2018 and September 2019.

Under each Lease Agreement, rentals are required to be paid monthly in advance, in U.S. dollars. Aircastle believes that the rentals to be paid under each Lease represent market lease rates for the Aircraft based on the other parameters of the transaction. Return compensation payments are required to be paid by Lessor or Lessee, as applicable, for certain components based on utilization at the end of the lease term. Each Lessor will also agree to reimburse the Lessee for certain airworthiness directive and similar compliance costs for the relevant Aircraft during the lease term.

2

Under each Lease Agreement, the Lessee makes a number of customary covenants, including that it will ensure that maintenance is performed on the relevant Aircraft and that the relevant Aircraft is insured for casualty loss, that it provides liability insurance for the benefit of the relevant Lessor and certain related parties, and that the relevant Aircraft remains free of liens (subject to customary exceptions). Each Lease Agreements provides to the Lessee the right to “wet lease” or sublease the relevant Aircraft, provided that agreed standards are satisfied, including the right to sublease the relevant Aircraft to certain affiliates of the Lessee without the Lessor’s consent. The obligations of the Lessee under each Lease are required to be secured by commitment fees or letters of credit. The Lessee also has agreed to indemnify the Lessor and certain related parties for liabilities arising out of or associated with the Aircraft and for certain tax liabilities, in each case subject to customary exclusions. Each Lease also provides a listing of customary events of default and specifies the remedies that the relevant Lessor may exercise if any such event of default occurs and is continuing, including termination of the lease and repossession of the relevant Aircraft.

AHCL will guarantee the obligations of the Lessor under each Lease Agreement. The Lease Agreements contain customary representations and warranties and are subject to customary closing conditions. Each Lease Agreement will terminate automatically if the Purchase Agreement related thereto is terminated for any reason.

Framework Deed

With respect to the 2008 Aircraft, AHCL and the Lessee have entered into a Framework Deed (the “Framework Deed”). Under the Framework Deed, subject to the Lessee’s ability to make arrangements for the prepayment and unwind of its existing financing with respect to the 2008 Aircraft, the Lessee will give AHCL six months’ notice of the delivery date for each 2008 Aircraft, which will occur on or prior to July 1, 2015. Following such notice, the Lessee (or an affiliate of the Lessee whose obligations are guaranteed by the Lessee) and a wholly owned subsidiary of the Company will enter into a purchase agreement and lease agreement for such Aircraft, in the forms attached to the Framework Deed, which are substantially similar to the forms of Lease Agreements and Purchase Agreement for the 2012 Aircraft. The lease term for each 2008 Aircraft will end on a date, specified for such Aircraft, between September 2017 and March 2018.

Section 9 – Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release dated February 25, 2014 which is being furnished hereto pursuant to Item 2.02.

99.2 Press Release dated February 25, 2014 which is being furnished hereto pursuant to Item 8.01.

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

AIRCASTLE LIMITED

(Registrant)

/s/ David Walton

David Walton

General Counsel, Chief Operating Officer and Secretary

Date: February 26, 2014

4

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated February 25, 2014
99.2	Press Release dated February 25, 2014

5

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Contact:

Frank Constantinople, SVP Investor Relations

Tel: +1-203-504-1063

fconstantinople@aircastle.com

The IGB Group

Leon Berman

Tel: +1-212-477-8438

lberman@igbir.com

Aircastle Announces Fourth Quarter and Full Year 2013 Results

Board Declares First Quarter 2014 Dividend of $0.20 Per Common Share

Highlights

• Operating and finance lease revenue of $173.3 million for the fourth quarter and $661.1 million for the full year

• Net income of $48.4 million, or $0.60 per diluted common share for the fourth quarter, and $29.8 million, or $0.40 per diluted common share, for the full year

• Adjusted EBITDA¹ of $196.0 million for the fourth quarter and $717.2 million for the full year

• Adjusted net income¹ of $54.9 million, or $0.68 per diluted common share, for the fourth quarter and $59.3 million, or $0.80 per diluted common share, for the full year

• Fleet utilization of 99.5% for the fourth quarter and 98.7% the full year, with aircraft portfolio yield of 13.6% for both the fourth quarter and the full year

• Purchased eight aircraft during the fourth quarter for $472 million, and closed 25 aircraft investments in 2013 with a total cost of $1.45 billion

• Sold 22 aircraft during 2013 for $548 million; realized gain on sale of $37.2 million for the year

• Issued $400 million of 4.625% unsecured Senior Notes due 2018 during the fourth quarter

• 31^st consecutive quarterly dividend declared by Aircastle’s Board of Directors

• Established a joint venture with Ontario Teachers’ Pension Plan and we sold two A330 family aircraft to the joint venture in the fourth quarter

¹  Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers.

Stamford, CT. February 25, 2014 – Aircastle Limited (the “Company” or “Aircastle”) (NYSE: AYR) reported fourth quarter 2013 net income of $48.4 million, or $0.60 per diluted common share and adjusted net income of $54.9 million, or $0.68 per diluted common share. Net income for the year ended December 31, 2013 was $29.8 million, or $0.40 per diluted common share, and adjusted net income was $59.3 million, or $0.80 per diluted common share. The fourth quarter results included total revenues of $192.0 million, an increase of 9%, versus $176.6 million in the fourth quarter of 2012. For the full year 2013 total revenues were $708.6 million, up 3% versus $686.6 million in 2012.

Commenting on the results, Ron Wainshal, Aircastle’s CEO, stated “Thanks to a strong fourth quarter, 2013 was a successful and important year for Aircastle, as we grew and upgraded our portfolio with $1.5 billion of investments and significant and profitable asset sales, including many end-of-life aircraft. We strengthened our shareholder base and capital structure through Marubeni’s strategic investment, a larger unencumbered asset base, several well priced debt financings and an expanded unsecured revolver. Aircastle delivered strong results including a full-year cash ROE of 12.1% and asset utilization of nearly 99%.

All in all, over the past twelve months I believe we significantly enhanced the Company’s competitive standing as a nimble and flexible value-oriented investor. As we enter 2014, we remain well positioned to capitalize on a robust acquisition pipeline, very attractive financial market conditions, a terrific team and operating platform and an improving demand environment for leased aircraft.”

Fourth Quarter Results

Lease rental and finance lease revenues for the fourth quarter were $173.3 million, up $11.3 million or 7% year over year, due primarily to the impact of new aircraft acquisitions of $33.5 million, partially offset by lower revenue due to aircraft sales of $16.8 million and the net year over year impact of lease extensions, transitions and terminations and other changes of $5.5 million.

Total revenues for the fourth quarter were $192.0 million, an increase of $15.4 million, or 9% from the previous year, reflecting higher lease rental and finance lease revenue of $11.3 million and higher maintenance revenue of $9.2 million associated with a year over year increase in lease transitions. These increases were partially offset by a decline in other revenues of $4.7 million reflecting early lease termination fees earned in the fourth quarter of 2012 and the maturity of a debt investment in the first quarter of 2013.

Adjusted EBITDA for the fourth quarter was $196.0 million, up $23.7 million, or 14% from the fourth quarter of 2012, due primarily to higher total revenues excluding amortization of net lease discounts and incentives of $15.8 million and higher gains from aircraft sales of $8.9 million. These improvements were partially offset by an increase in net operating expenses of $1.2 million.

Adjusted net income for the quarter was $54.9 million, up $18.5 million or 51%, year over year. The change reflects higher total revenues of $15.4 million, higher gains from the sale of aircraft of $8.9 million and lower aircraft impairment charges of $2.7 million. These improvements were partially offset by higher adjusted interest expense of $5.2 million, higher depreciation of $2.6 million and higher net operating expenses of $1.2 million.

Full Year Results

Lease rental and finance lease revenues for the full year were $661.1 million, up $29.2 million, or 5% year over year, reflecting the net impact of 41 aircraft acquisitions made during 2013 and 2012 totaling $103.0 million and higher full year finance lease revenues of $7.8 million. These increases were offset by lower lease rentals due to aircraft sales and disposals of $52.7 million and the impact of transitions, extensions and terminations and other changes totaling $28.8 million.

Total revenues for 2013 were $708.6 million, an increase of $22.1 million, up 3% from the previous year. The increase reflects higher lease rental and finance lease revenue of $29.2 million and higher maintenance revenue from lease terminations of $15.0 million. These increases were partially offset by an increase in the amortization of net lease discounts and lease incentives of $19.6 million associated with fleet expansion, and $2.6 million of lower other revenue, primarily from a debt investment which matured in the first quarter of 2013.

During the year we recorded maintenance revenue from seven scheduled lease terminations of $20.6 million versus $18.4 million for five scheduled lease terminations in 2012. In addition, we recorded $47.7 million of maintenance revenue from ten aircraft returned ahead of schedule in 2013, versus $34.9 million from ten aircraft that were returned early in 2012.

We recorded total non-cash impairment charges of $117.3 million in 2013 versus $96.5 million in 2012. The year over year increase was primarily driven by impairment charges taken during the third quarter 2013 annual fleet review, where we wrote down the value of six 747-400 converted freighters coming off lease in 2014. To date, three of these six converted freighters have been placed.

Adjusted EBITDA for the full year was $717.2 million, up $69.6 million or 11% versus 2012, due primarily to higher total revenues excluding amortization of net lease discounts and incentives of $41.6 million and higher gains from aircraft sales of $31.5 million. These improvements were partially offset by an increase in net operating expenses of $3.7 million.

Adjusted net income for the full year was $59.3 million compared to $57.0 million in 2012, an increase of $2.3 million. Higher total revenues of $22.1 million, higher gains from sale of aircraft of $31.5 million and higher other net income of $5.5 million were partially offset by higher aircraft impairment charges of $20.9 million, higher adjusted interest expense of $15.9 million, higher depreciation of $15.0 million, and higher SG&A, taxes and other expenses, net of $5.1 million.

Aviation Assets

During 2013, we acquired 25 aircraft investments for $1.45 billion. We also sold 22 aircraft for $548 million which resulted in a pre-tax gain of approximately $37.2 million for the year.

As of December 31, 2013, Aircastle owned 162 aircraft having a net book value of $5.2 billion.

	Owned Aircraft as of December 31, 2011(1)			Owned Aircraft as of December 31, 2012(1)			Owned Aircraft as of December 31, 2013(1)
Flight Equipment Held for Lease ($ mils.)	$	4,388		$	4,783		$	5,190
Unencumbered Flight Eqt. included in Flight Eqt. Held for Lease ($ mils.)	$	677		$	2,092		$	2,655
Number of Aircraft		144			159			162
Number of Unencumbered Aircraft		27			72			80
Passenger Aircraft (% of NBV)		69	%		71	%		81	%
Freighter Aircraft (% of NBV)		31	%		29	%		19	%
Weighted Average Fleet Age – Combined (years)(2)		10.9			10.7			9.9
Weighted Average Remaining Combined Lease Term (years)(3)		4.9			5.0			5.0
Weighted Average Fleet Utilization for the year ended(4)		99	%		99	%		99	%
Portfolio Yield for the year ended(5)		14	%		14	%		14	%

(1) Calculated using net book value of flight equipment held for lease and net investment in finance leases at period end.

(2) Weighted average age (years) by net book value.

(3) Weighted average remaining lease term (years) by net book value.

(4) Aircraft on-lease days as a percent of total days in period weighted by net book value.

(5) Lease rental revenue for the period as a percent of the average net book value of flight equipment held for lease for the period.

2013 Financing Activity

During 2013 we raised approximately $971 million of capital, including the following:

• Issuing 12,320,000 common shares to an affiliate of Marubeni Corporation, for gross proceeds of approximately $209 million, in the third quarter of 2013. Combined with additional subsequent purchases of Aircastle common shares in the secondary market, as of February 14, 2014, Marubeni Corporation owned approximately 20% of Aircastle’s issued and outstanding common shares.

• Issuing $400 million in aggregate principal amount of unsecured 4.625% Senior Notes due 2018, in the fourth quarter of 2013.

• Entering into $177 million of secured borrowings related to various aircraft.

• Increasing our unsecured revolving credit from $150 million to $335 million, expanding the bank group from four to seven global financial institutions and extending the maturity of the facility to a three year term expiring in August 2016. This revolving credit facility is currently undrawn.

In February 2014, we repaid the outstanding amount, plus accrued interest and fees, due under Securitization No. 1 and terminated the related swap for a total cash payment of $255 million. In February 2014, we also raised $303 million in secured financing for two B777-300ER and one A330-200 aircraft we acquired in 2013.

Joint Venture with Ontario Teachers’ Pension Plan

In December 2013, Aircastle formed a joint venture to invest in leased aircraft with an affiliate of Ontario Teachers’ Pension Plan. The joint venture’s first investment is two Airbus A330 family aircraft manufactured in 2013 that we sold to the joint venture, also in December 2013.

Teachers’ holds more than 5% of our common shares and, therefore, the joint venture and the sale of the initial Airbus A330 family aircraft are related party transactions under our related party policy. Accordingly, the formation of the joint venture and the sale of these aircraft was submitted to, and approved by, our Audit Committee under that policy.

Common Dividend

On February 21, 2014, Aircastle’s Board of Directors declared a first quarter 2014 cash dividend on its common shares of $0.20 per share, payable on March 14, 2014 to shareholders of record on March 7, 2014. This is our 31^st consecutive dividend. During 2013, Aircastle increased the dividend to common shareholders to the current quarterly rate of $0.20 per share, a 21% increase over the quarterly rate at the end of 2012.

Conference Call

In connection with this earnings release, management will host an earnings conference call on Tuesday, February 25, 2014 at 10:00 A.M. Eastern time. All interested parties are welcome to participate on the live call. The conference call can be accessed by dialing (888) 556-4997 (from within the U.S. and Canada) or (719) 457-2628 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode “6185816”.

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for one month following the call. In addition to this earnings release an accompanying power point presentation has been posted to the Investor Relations section of Aircastle’s website.

For those who are not available to listen to the live call, a replay will be available until 1:00 P.M. Eastern time on Thursday, March 27, 2014 by dialing (888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820 (from outside of the U.S. and Canada); please reference passcode “6185816”.

About Aircastle Limited

Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of December 31, 2013, Aircastle’s aircraft portfolio consisted of 162 aircraft on lease with 64 customers located in 37 countries.

Safe Harbor

Certain items in this press release and other information we provide from time to time, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted EBITDA and Adjusted Net Income and the global aviation industry and aircraft leasing sector. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “may,” “will,” “would,” “could,” “should,” “seeks,” “estimates” and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this report. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from Aircastle expectations include, but are not limited to, capital markets disruption or volatility which could adversely affect our continued ability to obtain additional capital to finance new investments or our working capital needs; government fiscal or tax policies, general economic and business conditions or other factors affecting demand for aircraft or aircraft values and lease rates; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay dividends; high or volatile fuel prices, lack of access to capital, reduced load factors and/or reduced yields, operational disruptions caused by political unrest and other factors affecting the creditworthiness of our airline customers and their ability to continue to perform their obligations under our leases and other risks detailed from time to time in Aircastle’s filings with the SEC, including as previously disclosed in Aircastle’s 2012 Annual Report on Form 10-K, and elsewhere in this report. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this report. Aircastle Limited expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

Aircastle Limited and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)

	December 31,
	2012			2013
ASSETS
Cash and cash equivalents	$	618,217		$	654,613
Accounts receivable		5,625			2,825
Restricted cash and cash equivalents		111,942			122,773
Restricted liquidity facility collateral		107,000			107,000
Flight equipment held for lease, net of accumulated depreciation of $1,305,064 and $1,430,325		4,662,661			5,044,410
Net investment in finance leases		119,951			145,173
Unconsolidated equity method investment		—			21,123
Aircraft purchase deposits		131			10,000
Other assets		186,633			143,976
Total assets	$	5,812,160		$	6,251,893
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Borrowings from secured financings (including borrowings of ACS Ireland VIEs of $207,926 and $152,545, respectively)	$	1,848,034		$	1,586,835
Borrowings from unsecured financings		1,750,642			2,150,527
Accounts payable, accrued expenses and other liabilities		108,593			111,661
Lease rentals received in advance		53,189			49,235
Liquidity facility		107,000			107,000
Security deposits		87,707			118,804
Maintenance payments		379,391			442,432
Fair value of derivative liabilities		61,978			39,992
Total liabilities		4,396,534			4,606,486
Commitments and Contingencies
SHAREHOLDERS’ EQUITY
Preference shares, $.01 par value, 50,000,000 shares authorized, no shares issued and outstanding		—			—
Common shares, $.01 par value, 250,000,000 shares authorized, 68,639,729 shares issued and outstanding at December 31, 2012; and 80,806,975 shares issued and outstanding at December 31, 2013		686			808
Additional paid-in capital		1,360,555			1,562,106
Retained earnings		180,675			158,398
Accumulated other comprehensive loss		(126,290	)		(75,905	)
Total shareholders’ equity		1,415,626			1,645,407
Total liabilities and shareholders’ equity	$	5,812,160		$	6,251,893

Aircastle Limited and Subsidiaries

Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2012			2013			2012			2013
Revenues:
Lease rental revenue	$	158,090		$	169,273		$	623,503		$	644,929
Finance lease revenue		3,919			4,045			8,393			16,165
Amortization of lease premiums, discounts and lease incentives		(6,452	)		(6,884	)		(12,844	)		(32,411	)
Maintenance revenue		16,194			25,359			53,320			68,342
Total lease rentals		171,751			191,793			672,372			697,025
Other revenue		4,859			195			14,200			11,620
Total revenues		176,610			191,988			686,572			708,645
Expenses:
Depreciation		69,896			72,476			269,920			284,924
Interest, net		55,605			60,106			222,808			243,757
Selling, general and administrative (including non-cash share based payment expense of $999 and $1,638 for the three months ended, and $4,232 and $4,569 for the twelve months ended December 31, 2012 and 2013, respectively)		11,754			14,139			48,370			53,436
Impairment of Aircraft		7,667			4,971			96,454			117,306
Maintenance and other costs		2,713			2,167			14,656			13,631
Total expenses		147,635			153,859			652,208			713,054
Other income:
Gain on sale of flight equipment		2,685			11,619			5,747			37,220
Other		(2	)		1,116			602			6,132
Total other income		2,683			12,735			6,349			43,352
Income from continuing operations before income taxes		31,658			50,864			40,713			38,943
Income tax provision		1,869			2,496			7,845			9,215
Earnings of unconsolidated equity method investment		—			53			—			53
Net income	$	29,789		$	48,421		$	32,868		$	29,781
Earnings per common share — Basic:
Net income per share	$	0.43		$	0.60		$	0.46		$	0.40
Earnings per common share — Diluted:
Net income per share	$	0.43		$	0.60		$	0.46		$	0.40
Dividends declared per share	$	0.165		$	0.20		$	0.615		$	0.695

Aircastle Limited and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands)

	Year Ended December 31,
	2011			2012			2013
Cash flows from operating activities:
Net income	$	124,270		$	32,868		$	29,781
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		242,103			269,920			284,924
Amortization of deferred financing costs		15,271			12,449			14,719
Amortization of net lease discounts and lease incentives		16,445			12,844			32,411
Deferred income taxes		5,615			6,828			4,416
Non-cash share based payment expense		5,786			4,232			4,569
Net derivative loss reclassified into earnings		23,078			30,777			33,265
Ineffective portion of cash flow hedges		(101	)		2,893			371
Security deposits and maintenance payments included in earnings		(35,500	)		(54,180	)		(60,112	)
Gain on the sale of flight equipment		(39,092	)		(5,747	)		(37,220	)
Impairment of aircraft		6,436			96,454			117,306
Earnings of unconsolidated equity method investment, net of tax		—			—			(53	)
Other		742			(2,218	)		(5,641	)
Changes on certain assets and liabilities:
Accounts receivable		(4,818	)		(2,530	)		3,397
Restricted cash and cash equivalents related to operating activities		4,418			—			—
Other assets		(2,675	)		919			1,164
Accounts payable, accrued expenses and other liabilities		(1,848	)		17,732			3,016
Lease rentals received in advance		(753	)		4,036			(2,276	)
Net cash provided by operating activities		359,377			427,277			424,037
Cash flows from investing activities:
Acquisition and improvement of flight equipment		(776,750	)		(693,227	)		(1,263,706	)
Proceeds from sale of flight equipment		489,196			61,489			568,045
Restricted cash and cash equivalents related to sale of flight equipment		(35,762	)		35,762			—
Aircraft purchase deposits and progress payments, net of returned deposits and aircraft sales deposits		(122,069	)		(20,553	)		(6,094	)
Net investment in finance leases		—			(91,500	)		(11,595	)
Collections on finance leases		—			3,852			9,508
Unconsolidated equity method investment and associated costs		—			—			(20,189	)
Purchase of debt investment		—			(43,626	)		—
Principal repayments on debt investment		—			6,585			42,001
Other		(35	)		(691	)		(903	)
Net cash used in investing activities		(445,420	)		(741,909	)		(682,933	)
Cash flows from financing activities:
Issuance of shares net of repurchases		(91,610	)		(44,180	)		197,437
Proceeds from notes and term debt financings		669,047			1,459,690			563,230
Securitization and term debt financing repayments		(390,945	)		(847,415	)		(510,162	)
Deferred financing costs		(20,179	)		(31,691	)		(10,865	)
Restricted secured liquidity facility collateral		(35,000	)		3,000			—
Secured liquidity facility collateral		35,000			(3,000	)		—
Restricted cash and cash equivalents related to security deposits and maintenance payments		(25,056	)		99,748			(10,831	)
Security deposits received		20,574			17,453			20,889
Security deposits returned		(7,914	)		(6,152	)		(5,104	)
Maintenance payments received		122,050			142,122			179,789
Maintenance payments returned		(89,300	)		(57,822	)		(77,033	)
Payments for terminated cash flow hedges and payment for option		—			(50,757	)		—
Dividends paid		(45,059	)		(43,669	)		(52,058	)
Net cash provided by financing activities		141,608			637,327			295,292
Net increase in cash and cash equivalents		55,565			322,695			36,396
Cash and cash equivalents at beginning of year		239,957			295,522			618,217
Cash and cash equivalents at end of year	$	295,522		$	618,217		$	654,613

Aircastle Limited and Subsidiaries

Supplemental Financial Information

(Amount in thousands, except per share amounts)

(Unaudited)

	Three Months Ended December 31,				Twelve Months Ended December 31,
	2012		2013		2012		2013
Revenues	$	176,610	$	191,988	$	686,572	$	708,645
EBITDA	$	163,611	$	190,383	$	546,285	$	600,088
Adjusted EBITDA	$	172,279	$	195,965	$	647,622	$	717,209
Adjusted net income	$	36,372	$	54,899	$	57,009	$	59,260
Adjusted net income allocable to common shares	$	36,079	$	54,433	$	56,539	$	58,786
Per common share - Basic	$	0.52	$	0.68	$	0.80	$	0.80
Per common share - Diluted	$	0.52	$	0.68	$	0.80	$	0.80
Basic common shares outstanding		69,120		80,154		70,717		73,653
Diluted common shares outstanding		69,120		80,154		70,717		73,653

Refer to the selected information accompanying this press release for a reconciliation of GAAP to Non-GAAP information.

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

EBITDA and Adjusted EBITDA Reconciliation

(Dollars in thousands)

(Unaudited)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2012		2013			2012			2013
Net income	$	29,789	$	48,421		$	32,868		$	29,781
Depreciation		69,896		72,476			269,920			284,924
Amortization of net lease discounts and lease incentives		6,452		6,884			12,844			32,411
Interest, net		55,605		60,106			222,808			243,757
Income tax provision		1,869		2,496			7,845			9,215
EBITDA		163,611		190,383			546,285			600,088
Adjustments:
Impairment of aircraft		7,667		4,971			96,454			117,306
Non-cash share based payment expense		999		1,638			4,232			4,569
Loss (gain) on mark to market of interest rate derivative contracts		2		(1,027	)		(597	)		(4,754	)
Contract termination expense		—		—			1,248			—
Adjusted EBITDA	$	172,279	$	195,965		$	647,622		$	717,209

We define EBITDA as income from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-GAAP measure is helpful in identifying trends in our performance. Using EBITDA assists us in comparing our operating performance on a consistent basis by removing the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants.

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Adjusted Net Income (Loss) Reconciliation

(Dollars in thousands)

(Unaudited)

	Three Months Ended December 31,					Twelve Months Ended December 31,
	2012		2013			2012			2013
	(Dollars in thousands)
Net income	$	29,789	$	48,421		$	32,868		$	29,781
Loan termination fee(1)		—		—			—			2,954
Ineffective portion and termination of hedges(1)		1,053		171			2,893			2,393
Loss (gain) on mark to market of interest rate derivative contracts(2)		2		(1,027	)		(597	)		(4,754	)
Write-off of deferred financing fees(1)		120		—			3,034			3,975
Stock compensation expense(3)		999		1,638			4,232			4,569
Term Financing No. 1 hedge loss amortization charges(1)		4,409		4,365			13,331			17,843
Securitization No. 1 hedge loss amortization charges (1)		—		1,331			—			2,499
Contract termination expense		—		—			1,248			—
Adjusted net income	$	36,372	$	54,899		$	57,009		$	59,260

(1) Included in Interest, net.

(2) Included in Other income (expense).

(3) Included in Selling, general and administrative expenses.

Management believes that ANI, when viewed in conjunction with the Company’s results under US GAAP and the below reconciliation, provides useful information about operating and period-over-period performance, and provides additional information that is useful for evaluating the underlying operating performance of our business without regard to periodic reporting elements related to interest rate derivative accounting and gains or losses related to flight equipment and debt investments.

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Cash Earnings and Cash ROE

(Dollars in thousands)

(Unaudited)

	2009			2010			2011			2012			2013
Net cash provided by operating activities	$	327,641		$	356,530		$	359,377		$	427,277		$	424,037
Collections on Finance Leases		—			—			—			3,852			9,508
Gain on Sale of Flight Equipment		1,162			7,084			39,092			5,747			37,220
Less: Depreciation		(209,481	)		(220,476	)		(242,103	)		(269,920	)		(284,924	)
Cash Earnings	$	119,322		$	143,138		$	156,366		$	166,956		$	185,841
Average Shareholder’s Equity	$	1,201,702		$	1,316,978		$	1,373,663		$	1,410,117		$	1,530,516
Cash Earnings / Average Shareholder’s Equity		9.9	%		10.9	%		11.4	%		11.8	%		12.1	%

Note: Average Shareholder’s Equity is the sum of the current and prior year shareholder’s equity divided by two. Management believes that the cash return on equity metric (Cash ROE) when viewed in conjunction with the Company’s results under US GAAP and the above reconciliation, provide useful information about operating and period-over-period performance, and provide additional information that is useful for evaluating the underlying operating performance of our business without regard to periodic reporting impacts related to non-cash revenue and expense items and interest rate derivative accounting, while recognizing the depreciating nature of our assets.

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Reconciliation of Net Income Allocable to Common Shares

(In thousands)

(Unaudited)

	Three Months Ended December 31, 2013						Twelve Months Ended December 31, 2013
	Shares			Percent(2)			Shares			Percent(2)
Weighted-average shares:
Common shares outstanding – Basic		80,154			99.15	%		73,653			99.20	%
Unvested restricted common shares		686			0.85	%		594			0.80	%
Total weighted-average shares outstanding		80,839			100.00	%		74,247			100.00	%
Net income allocation
Net income	$	48,421			100.00	%	$	29,781			100.00	%
Distributed and undistributed earnings allocated to unvested restricted shares		(411	)		(0.85	%)		(238	)		(0.80	%)
Earnings available to common shares	$	48,010			99.15	%	$	29,543			99.20	%
Adjusted net income allocation
Adjusted net income	$	54,899			100.00	%	$	59,260			100.00	%
Amounts allocated to unvested restricted shares		(466	)		(0.85	%)		(474	)		(0.80	%)
Amounts allocated to common shares	$	54,433			99.15	%	$	58,786			99.20	%

(1) For the three and twelve months ended December 31, 2013, the company had no dilutive shares.

(2) Percentages rounded to two decimal places.

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Reconciliation of Net Income Allocable to Common Shares

(In thousands)

(Unaudited)

	Three Months Ended December 31, 2012						Twelve Months Ended December 31, 2012
	Shares			Percent(2)			Shares			Percent(2)
Weighted-average shares:
Common shares outstanding – Basic		69,120			99.19	%		70,717			99.18	%
Unvested restricted common shares		561			0.81	%		588			0.82	%
Total weighted-average shares outstanding		69,681			100.00	%		71,305			100.00	%
Net income allocation
Net income	$	29,789			100.00	%	$	32,868			100.00	%
Distributed and undistributed earnings allocated to unvested restricted shares		(240	)		(0.81	%)		(271	)		(0.82	%)
Earnings available to common shares	$	29,549			99.19	%	$	32,597			99.18	%
Adjusted net income (loss) allocation
Adjusted net income	$	36,372			100.00	%	$	57,009			100.00	%
Amounts allocated to unvested restricted shares		(293	)		(0.81	%)		(470	)		(0.82	%)
Amounts allocated to common shares	$	36,079			99.19	%	$	56,539			99.18	%

(1) For the three and twelve months ended December 31, 2012, the company had no dilutive shares.

(2) Percentages rounded to two decimal places.

EX-99.2

Exhibit 99.2

FOR IMMEDIATE RELEASE

Contact:

Frank Constantinople, SVP Investor Relations

Tel: +1-203-504-1063

fconstantinople@aircastle.com

The IGB Group

Leon Berman

Tel: +1-212-477-8438

lberman@igbir.com

Aircastle Announces $900 Million Agreement for Purchase and

Leaseback of Boeing 777-300ERs with LATAM Airlines Group

Stamford, CT. February 25, 2014 – Aircastle Limited (“Aircastle”) (NYSE: AYR) announced that it reached an agreement with LATAM Airlines Group S.A. (“LATAM”) to enter into purchase and leaseback transactions involving eight Boeing 777-300ER aircraft.

The first group of four aircraft, which were manufactured in 2012, is expected to close early in the second quarter of 2014 with an average lease term of 60 months. The second group of aircraft, which were manufactured in 2008, is expected to be purchased by Aircastle once the existing financings are repaid and will be leased back to LATAM with lease terms expiring in 2017 and 2018.

Ron Wainshal, Aircastle’s CEO, commented: “LATAM is one of the world’s premier airline groups and we are very happy to have concluded this important transaction. In doing so, we are assisting LATAM by providing a complete solution for its Boeing 777-300ER fleet transition program while acquiring very attractive, well priced assets that we will be able to remarket before newer generation aircraft are available. This transaction plays to Aircastle’s balance sheet strengths and its experience as a skilled aircraft manager.”

The closing of these transactions is subject to conditions precedent customary for transactions of this type.

About Aircastle Limited

Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of December 31, 2013, Aircastle’s aircraft portfolio consisted of 162 aircraft on lease with 64 customers located in 37 countries.

About LATAM Airlines Group S.A.

LATAM Airlines Group S.A. is the new name given to LAN Airlines S.A. as a result of its association with TAM S.A. LATAM Airlines Group S.A. now includes LAN Airlines and its affiliates in Peru, Argentina, Colombia and Ecuador, and LAN Cargo and its affiliates, as well as TAM S.A. and its subsidiaries TAM Linhas Aereas S.A., including its business units TAM Transportes Aereos del Mercosur S.A. (TAM Airlines (Paraguay)) and Multiplus S.A. This association creates one of the largest airline groups in the world in terms of network connections, providing passenger transport services to about 135 destinations in 22 countries and cargo services to about 144 destinations in 27 countries, with a fleet of 322 aircraft. In total, LATAM Airlines Group S.A. has more than 52,000 employees and its shares are traded in Santiago, as well as on the New York Stock Exchange, in the form of ADRs, and Sao Paulo Stock Exchange, in the form of BDRs.

Each airline will continue to operate under their current brands and identities. For any inquiry of LAN or TAM, please visit www.lan.com or www.tam.com.br, respectively. Further information at www.latamairlinesgroup.net.

Safe Harbor

Certain items in this press release and other information we provide from time to time, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted EBITDA and Adjusted Net Income and the global aviation industry and aircraft leasing sector. Words such as “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “may,” “will,” “would,” “could,” “should,” “seeks,” “estimates” and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this report. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from Aircastle expectations include, but are not limited to, capital markets disruption or volatility which could adversely affect our continued ability to obtain additional capital to finance new investments or our working capital needs; government fiscal or tax policies, general economic and business conditions or other factors affecting demand for aircraft or aircraft values and lease rates; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay dividends; high or volatile fuel prices, lack of access to capital, reduced load factors and/or reduced yields, operational disruptions caused by political unrest and other factors affecting the creditworthiness of our airline customers and their ability to continue to perform their obligations under our leases and other risks detailed from time to time in Aircastle’s filings with the SEC, including as previously disclosed in Aircastle’s 2012 Annual Report on Form 10-K, and elsewhere in this report. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this report. Aircastle Limited expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.