The distribution of operating lease revenue by geographic region for the three months ended March 31, 2016 and 2015 is as follows:

	Three months ended March 31, 2016				Three months ended March 31, 2015
	(Dollars in thousands)
					As Restated		As Restated
Europe:
United Kingdom	$	8,103	11	%	$	11,750		10	%
Turkey		5,768	8	%		7,782		6	%
France		3,966	5	%		2,853		2	%
Germany		3,661	5	%		4,272		4	%
Russia		—	0	%		12,518		10	%
Other		5,866	7	%		11,896		11	%
Europe — Total		27,364	36	%		51,071		43	%

Asia and South Pacific:
Philippines		7,209	10	%		10,870		9	%
China		6,924	9	%		16,588		14	%
India		5,340	7	%		3,904		3	%
Other		6,538	9	%		11,047		9	%
Asia and South Pacific — Total		26,011	35	%		42,409		35	%

Mexico, South and Central America:
Chile		2,235	3	%		7,029		6	%
Other		2,299	3	%		4,566		3	%
Mexico, South and Central America — Total		4,534	6	%		11,595		9	%

North America:
United States		6,350	9	%		10,140		9	%
Other		1,554	2	%		1,729		1	%
North America — Total		7,904	11	%		11,869		10	%

Middle East and Africa:
Ethiopia		7,504	10	%		1,103		1	%
Other		1,636	2	%		2,056		2	%
Middle East and Africa — Total		9,140	12	%		3,159		3	%

Total Operating Lease Revenue	$	74,953	100	%	$	120,103		100	%

In each of the three months ended March 31, 2016 and 2015, the Company had one customer (a different customer in each period) that accounted for 10% or more of total operating lease revenue. At March 31, 2016, the Company had one lessee, which leased two aircraft, on non-accrual status, as the Company had determined that it was not probable that the economic benefits of the lease would be received by the Company, principally due to (i) the lessee’s failure to pay rent and overhaul payments and (ii) the Company’s evaluation of the lessee’s payment history. At March 31, 2015, the Company had four lessees on non-accrual status.

For the three months ended March 31, 2016 and 2015, the Company recognized end of lease revenue totaling $3.2 million and $21.9 million, respectively.

The amortization of lease premiums, net of lease discounts which have been included as a component of operating lease revenue, was $0.7 million for the three months ended March 31, 2015.

The amortization of lease incentives recorded as a reduction of operating lease revenue totaled $2.8 million and $4.0 million for the three months ended March 31, 2016 and 2015, respectively.

As of March 31, 2016 and December 31, 2015, the weighted average remaining lease term of the Company’s aircraft held for operating lease was 6.4 years and 6.6 years, respectively.

7. MAINTENANCE RIGHTS

Changes in maintenance right assets, net of maintenance right liabilities, during the three months ended March 31, 2016 and 2015 were as follows:

	March 31, 2016			March 31, 2015
	(dollars in thousands)
Maintenance rights, net beginning balance	$	94,493		$	144,920
Capitalized to aircraft improvements		—			(3,004	)
Cash receipts in settlement of maintenance rights		(6,150	)		—
Maintenance rights written off due to sale of aircraft		(3,786	)		—
Maintenance rights, net ending balance	$	84,557		$	141,916

8. INVESTMENT IN UNCONSOLIDATED SUBSIDIARY

Investment in Fly-Z/C LP

The Company has a 57.4% limited partnership interest in Fly-Z/C LP. Summit Aviation Partners LLC (“Summit”) has a 10.2% interest in the joint venture and the limited partners appointed a subsidiary of BBAM Limited Partnership (“BBAM LP”) as the general partner of the joint venture. For the three months ended March 31, 2016 and 2015, the Company recognized $0.1 million and $0.3 million, respectively, in equity earnings from its investment in Fly-Z/C LP. The Company received no distributions during the three months ended March 31, 2016 and 2015.

9. UNSECURED BORROWINGS

	Balance as of
	March 31, 2016			December 31, 2015
	(dollars in thousands)
Outstanding principal balance:
2020 Notes	$	375,000		$	375,000
2021 Notes		325,000			325,000
Total outstanding principal balance		700,000			700,000
Unamortized debt discount and loan cost		(10,096	)		(10,591	)
Unsecured borrowings, net	$	689,904		$	689,409

On December 11, 2013, the Company sold $300.0 million aggregate principal amount of unsecured 6.75% Senior Notes due 2020 (together with the Additional 2020 Notes (as defined below), the “2020 Notes”). On October 3, 2014, the Company sold $75.0 million aggregate principal amount of unsecured 6.75% Senior Notes due 2020 (the “Additional 2020 Notes”) at a price equal to 104.75% of the principal amount thereof and $325.0 million aggregate principal amount of 6.375% Senior Notes due 2021 (the “2021 Notes”) at par.

The 2020 Notes and 2021 Notes are unsecured obligations of the Company and rank pari passu in right of payment with any existing and future senior indebtedness of the Company. The 2020 Notes have a maturity date of December 15, 2020 and the 2021 Notes have a maturity date of October 15, 2021.

Interest on the 2020 Notes is payable semi-annually on June 15 and December 15 of each year. Interest on the 2021 Notes is payable semi-annually on April 15 and October 15 of each year.

Pursuant to the indentures governing the 2020 Notes and 2021 Notes, the Company is subject to restrictive covenants which relate to dividend payments, incurrence of debt and issuance of guarantees, incurrence of liens, repurchases of common shares, investments, disposition of aircraft, consolidation, merger or sale of the Company and transactions with affiliates. The Company is also subject to certain operating covenants, including reporting requirements. The Company’s failure to comply with any of the covenants under the indentures governing the 2020 Notes or 2021 Notes could result in an event of default which, if not cured or waived, may result in the acceleration of the indebtedness thereunder and other indebtedness containing cross-default or cross-acceleration provisions. Certain of these covenants will be suspended if the 2020 Notes or 2021 Notes obtain an investment grade rating. As of March 31, 2016, the Company was not in default under the indentures governing the 2020 Notes or the 2021 Notes.

10. SECURED BORROWINGS

The Company’s secured borrowings, net as of March 31, 2016 and December 31, 2015 are presented below:

	Outstanding principal balance as of						Weighted average interest rate⁽¹⁾ as of
	March 31, 2016			December 31, 2015			March 31, 2016			December 31, 2015			Maturity date
	(dollars in thousands)
Securitization Notes	$	184,525		$	295,786			3.47	%		3.38	%	November 2033
Nord LB Facility		203,628			255,278			3.90	%		4.04	%	November 2018
CBA Facility		70,951			88,190			5.17	%		5.02	%	June 2018 – October 2020
Term Loan		421,840			427,781			4.39	%		4.39	%	August 2019
Fly Acquisition III Facility		—			—			—			—		—
Other Aircraft Secured Borrowings		632,014			663,069			3.63	%		3.63	%	February 2016 – January 2027
Unamortized debt discount and loan cost		(32,835	)		(34,393	)
Total secured borrowings, net	$	1,480,123		$	1,695,711

(1)	Represents the contractual interest rates and effect of derivative instruments, and excludes the amortization of debt discounts and debt issuance costs.

The Company is subject to restrictive covenants under its secured borrowings which relate to the incurrence of debt, issuance of guarantees, incurrence of liens or other encumbrances, the acquisition, substitution, disposition and re-lease of aircraft, maintenance, registration and insurance of its aircraft, restrictions on modification of aircraft and capital expenditures, and requirements to maintain concentration limits.

The Company’s failure to comply with any of these covenants, or any other operating covenants, may trigger an event of default under the relevant loan agreement. Certain of the Company’s loan agreements also contain cross-default provisions that could be triggered by a default under another loan agreement. In addition, the Company’s loan agreements include events of default provisions that are customary for these types of secured borrowings.

Securitization Notes

As of March 31, 2016, the Company’s subsidiary, B&B Air Funding, had $184.5 million principal amount outstanding on its aircraft lease-backed Class G-1 notes (the "Securitization Notes"), which were secured by 15 aircraft, one of which was subject to a sale agreement. The final maturity date of the Securitization Notes is November 14, 2033.

The Securitization Notes bear interest at an adjustable interest rate equal to the current one-month LIBOR plus 0.77%. Interest expense also includes amounts payable to the provider of a financial guaranty insurance policy and the liquidity facility provider thereunder, as well as accretion on the Securitization Notes re-issued at a discount. Interest and any principal payments due are payable monthly. The Company has entered into interest rate swap contracts to mitigate the interest rate fluctuation risk associated with a portion of the Securitization Notes.

All cash collected, including sale proceeds from the aircraft financed by the Securitization Notes, is applied to service the outstanding balance of the Securitization Notes, after the payment of certain expenses and other costs, including interest, interest rate swap payments, and the fees to the policy provider in accordance with those agreements.

B&B Air Funding is subject to operating covenants which relate to, among other things, its operations, disposition of aircraft, lease concentration limits, and restrictions on the modification of aircraft and capital expenditures. A breach of the covenants could result in the acceleration of the Securitization Notes and exercise of remedies available in relation to the collateral, including the sale of aircraft at public or private sale.

Nord LB Facility

As of March 31, 2016, the Company had $203.6 million principal amount outstanding under its debt facility with Norddeutsche Landesbank Gironzentrale (the "Nord LB Facility"), which was secured by seven aircraft, one of which was subject to a sale agreement. The Nord LB Facility is structured with loans secured by each aircraft individually. The loans are cross-collateralized and contain cross-default provisions. Borrowings are secured by Fly’s equity interests in the aircraft owning and leasing subsidiaries, the related leases, and certain deposits.

The loans under the Nord LB Facility bear interest at one month LIBOR plus 3.30% until the final maturity date of November 14, 2018. As of March 31, 2016 and December 31, 2015, the blended weighted average interest rate for the facility was 3.90% and 4.04%, respectively, excluding the debt discount amortization.

Under the terms of the Nord LB Facility, the Company applies 95% of lease rentals collected towards interest and principal. If no lease rental payments are collected in the applicable period for any financed aircraft, no payment is due under the loan associated with that aircraft during such period. Any unpaid interest increases the principal amount of the associated loan.

In the event the Company sells any of the financed aircraft, substantially all sale proceeds (after payment of certain expenses) must first be used to repay the debt associated with such aircraft and second to repay the outstanding amounts which finance the remaining aircraft. In addition, any maintenance reserve amounts retained by the Company will be used to prepay the Nord LB Facility, provided such reserves are not required for future maintenance of such aircraft.

CBA Facility

As of March 31, 2016, the Company had $71.0 million principal amount outstanding under its debt facility with Commonwealth Bank of Australia and CommBank Europe Limited (the "CBA Facility"), which was secured by five aircraft. Fly has guaranteed all payments under the CBA Facility. These loans are cross-collateralized and contain cross-default provisions. One loan matures in 2018 and the remaining four loans mature in 2020.

The Company makes scheduled monthly payments of principal and interest on each loan in accordance with a fixed amortization schedule. If, upon the repayment of any loan, the ratio of the remaining principal amount outstanding under the CBA Facility to the aggregate appraised value of the financed aircraft is equal to or greater than 80%, the Company will be required to pay into a collateral account an amount as is necessary to reduce this ratio to less than 80%.

Borrowings under the CBA Facility accrue interest at either a fixed or variable interest rate. Variable borrowings bear interest based on one-month LIBOR plus an applicable composite margin of 2.50%. As of March 31, 2016 and December 31, 2015, the weighted average interest rates on the tranche loans, excluding the debt discount amortization, are presented below:

	As of
	March 31, 2016			December 31, 2015
Fixed rate loans:
Tranche A		5.44	%		5.57	%
Tranche B		4.47	%		4.47	%
Facility weighted average interest rate		5.17	%		5.02	%

There are no financial covenants in the CBA Facility. However, the CBA Facility includes certain operating covenants, including reporting requirements.

Term Loan

As of March 31, 2016, the Company had $421.8 million principal amount outstanding under its senior secured term loan (the "Term Loan"), which was secured by 25 aircraft, one of which was subject to a sale agreement. Fly has guaranteed all payments under the Term Loan. The Term Loan matures in August 2019.

As of March 31, 2016, the Term Loan bore interest at LIBOR, plus a margin of 2.75%, with a LIBOR floor of 0.75%.

The Term Loan requires that the Company maintain a maximum loan-to-value ratio of 70.0% based on the lower of the mean or median of half-life adjusted base value of the financed aircraft as determined by three independent appraisers, and includes other customary covenants, including reporting requirements and maintenance of public ratings.

Fly Acquisition III Facility

In February 2016, the Company, through a wholly-owned subsidiary, Fly Acquisition III, entered into a revolving $385 million credit facility (the "Fly Acquisition III Facility") to finance the acquisition of aircraft. Borrowings are secured by the beneficial interests in Fly Acquisition III and each of its subsidiaries, the aircraft and related leases. The Fly Acquisition III Facility has an availability period expiring on February 26, 2019 and a final maturity date of February 26, 2022. The Company provides a guaranty of Fly Acquisition III’s obligations under the facility.

As of March 31, 2016, the Company had not drawn on the facility.

The Company pays a commitment fee of 0.50% per annum on a monthly basis to each lender on the undrawn amount of its commitment until the termination of the availability period; provided that at any time from and after March 26, 2017 through the end of the availability period, the commitment fee will increase to 0.75% per annum if at least 50% of the total amount of commitments have not been drawn.

The interest rate under the facility is based on one-month LIBOR plus an applicable margin. The applicable margin will be 2.00% through the expiration of the availability period, and will increase to 2.50% from February 27, 2019 through February 26, 2020 and 3.00% from February 27, 2020 through the maturity date of the facility.

Aircraft financed by the Fly Acquisition III Facility may not be more than eight years of age for a narrow-body aircraft and five years of age for a wide-body aircraft at the time of funding, among other conditions.

The Fly Acquisition III Facility contains restrictive, financial and operating covenants, including a covenant that the Company maintain a tangible net worth of at least $325.0 million and a specified interest coverage ratio, as well as customary reporting requirements. Violation of any of these covenants could result in an event of default under the facility. Also, upon the occurrence of certain conditions, including a failure by the Company to maintain a minimum liquidity of at least $25.0 million, Fly Acquisition III will be required to deposit certain amounts of maintenance reserves and security deposits received under the respective leases into accounts pledged to the security trustee.

In connection with the facility, Fly Acquisition III also entered into a servicing agreement with BBAM pursuant to which it will pay an administrative fee of $10,000 per month as well as servicing fees of 3.5% of monthly rent actually collected, plus $1,000 per aircraft per month.

Other Aircraft Secured Borrowings

The Company has entered into other aircraft secured borrowings to finance the acquisition of aircraft, one of which is denominated in Euros. As of March 31, 2016, the Company had $632.0 million principal amount outstanding, which was secured by 19 aircraft, one of which was subject to a sale agreement. As of March 31, 2016, $416.9 million of the principal amount outstanding of these borrowings was recourse to the Company.

These borrowings are usually structured as individual loans secured by pledges of the Company’s rights, title and interests in the financed aircraft and leases. The maturity date on each loan ranges from February 2016 to January 2027. As of March 31, 2016, the weighted average interest rate of other aircraft secured borrowings was 3.63%.

11. DERIVATIVES

Derivatives are used by the Company to manage its exposure to interest rate fluctuations. The Company uses interest rate swap contracts to hedge variable interest payments due on loans associated with aircraft with fixed rate rentals. As of March 31, 2016, the Company’s total unsecured and secured debt balance, excluding unamortized debt discount and loan fees, was $2.2 billion. Debt with floating interest rates totaled $1.3 billion, of which $0.9 billion was associated with aircraft with fixed rate rentals.

Interest rate swap contracts allow the Company to pay fixed interest rates and receive variable interest rates with the swap counterparty based on the one-month and three-month LIBOR on the notional amounts over the life of the contracts. As of March 31, 2016 and December 31, 2015, the Company had interest rate swap contracts with notional amounts aggregating $0.9 billion and $1.0 billion, respectively. The unrealized fair value gain on the interest rate swap contracts, reflected as derivative assets, was $0.2 million as of December 31, 2015. The unrealized fair value loss on the interest rate swap contracts, reflected as derivative liabilities, was $25.8 million and $19.3 million as of March 31, 2016 and December 31, 2015, respectively.

The Company determines the fair value of derivative instruments using a discounted cash flow model. The model incorporates an assessment of the risk of non-performance by the swap counterparty in valuing derivative assets and an evaluation of the Company’s credit risk in valuing derivative liabilities.

The Company considers in its assessment of non-performance risk, if applicable, netting arrangements under master netting agreements, any collateral requirement, and the derivative payment priority in the Company’s debt agreements. The valuation model uses various inputs including contractual terms, interest rate curves, credit spreads and measures of volatility.

Designated Derivatives

Certain of the Company’s interest rate derivatives have been designated as cash flow hedges. The effective portion of changes in fair value of these derivatives are recorded as a component of accumulated other comprehensive income, net of a provision for income taxes. Changes in the fair value of these derivatives are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. For the three months ended March 31, 2016, the Company recorded a net unrealized loss of $6.3 million, after the applicable net tax benefit of $0.8 million. For the three months ended March 31, 2015, the Company recorded a net unrealized loss of $5.9 million, after the applicable net tax benefit of $0.9 million.

As of March 31, 2016, the Company had the following designated derivative instruments classified as derivative liabilities on the balance sheet (dollars in thousands):

Type	Quantity		Maturity Date	Hedge Interest Rate			Swap Contract Notional Amount		Fair Market Value of Derivative Liability			Credit Risk Adjustment		Adjusted Fair Market Value of Derivative Liability			Gain Recognized in Accumulated Comprehensive Loss			Gain Recognized into Earnings
Interest rate swap contracts		16	2/9/18-9/27/25		0.90% - 6.22	%	$	851,385	$	(26,298	)	$	1,440	$	(24,858	)	$	(22,524	)	$	348
Accrued interest								—		(759	)		—		(759	)		—			—
Total – designated derivative liabilities		16					$	851,385	$	(27,057	)	$	1,440	$	(25,617	)	$	(22,524	)	$	348

Dedesignated Derivatives

As of March 31, 2016, the Company had the following dedesignated derivative instruments classified as derivative liabilities on the balance sheet (dollars in thousands):

Type	Quantity		Maturity Date	Hedge Interest Rates			Swap Contract Notional Amount		Fair Market Value of Derivative Liability			Credit Risk Adjustment		Adjusted Fair Market Value of Derivative Liability			Loss Recognized into Earnings
Interest rate swap contract		1	11/14/2018		1.10	%	$	20,018	$	(167	)	$	7	$	(160	)	$	(247	)
Accrued interest								—		(6	)		—		(6	)		—
Total – dedesignated derivative liability		1					$	20,018	$	(173	)	$	7	$	(166	)	$	(247	)

Terminated Derivatives

During the first quarter of 2016, the Company terminated three interest rate swap contracts and recognized a loss into earnings totaling $0.4 million.

12. INCOME TAXES

Fly is a tax resident of Ireland and has wholly-owned subsidiaries in Ireland, France, Luxembourg, Australia, Singapore and Labuan that are tax residents in those jurisdictions. In general, Irish resident companies pay corporation tax at the rate of 12.5% on trading income and 25.0% on non-trading income. Historically, most of the Company’s operating income has been trading income in Ireland.

The effective tax rate was 2.1% and 14.2% for the three months ended March 31, 2016 and 2015, respectively. The lower effective tax rate for the three months ended March 31, 2016 was primarily due to the effect of lower tax rates on income earned in foreign jurisdictions. The effective tax rate in any period is impacted by the source and amount of income earned by the Company in different tax jurisdictions.

The Company had no unrecognized tax benefits as of March 31, 2016 and December 31, 2015.

13. SHAREHOLDERS’ EQUITY

During the three months ended March 31, 2016, the Company repurchased 2,071,910 shares at an average price of $12.04 per share, or $24.9 million, before commissions and fees. No shares were repurchased during the three months ended March 31, 2015. As of March 31, 2016, there were 33,599,490 shares outstanding.

14. SHARE-BASED COMPENSATION

On April 29, 2010, the Company adopted the 2010 Omnibus Incentive Plan (“2010 Plan”) permitting the issuance of up to 1,500,000 share grants in the form of (i) SARs; (ii) RSUs; (iii) nonqualified stock options; and (iv) other stock-based awards. The Company has issued all shares available under the 2010 Plan.

At March 31, 2016, the Company had 821,117 SARs outstanding and exercisable with a weighted average exercise price of $12.74.

Share-based compensation expense related to SARs and RSUs is recorded as a component of selling, general and administrative expenses, and totaled $0.2 million for the three months ended March 31, 2015. Since December 31, 2015, all RSUs and SARs granted under the 2010 Plan have vested.

15. EARNINGS PER SHARE

The following table sets forth the calculation of basic and diluted earnings per common share using the two-class method:

	Three months ended March 31,
	2016		2015
	(Dollars in thousands, except per share data)
			As restated
Numerator
Net income	$	7,100	$	19,865
Less:
Dividends declared and paid to shareholders		—		(10,358	)
Dividend equivalents paid to vested RSUs and SARs		—		(191	)
Net income attributable to common shareholders	$	7,100	$	9,316
Denominator
Weighted average shares outstanding-Basic		34,287,783		41,432,998
Dilutive common equivalent shares:
RSUs		—		32,241
SARs		825		80,048
Weighted average shares outstanding-Diluted		34,288,608		41,545,287
Earnings per share:
Basic
Distributed earnings	$	—	$	0.25
Undistributed income	$	0.21	$	0.22
Basic earnings per share	$	0.21	$	0.47
Diluted
Distributed earnings	$	—	$	0.25
Undistributed income	$	0.21	$	0.22
Diluted earnings per share	$	0.21	$	0.47

Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income available to common shareholders by the sum of the weighted average number of common shares outstanding and the potential number of dilutive common shares outstanding during the period, excluding the effect of any anti-dilutive securities.

SARs and RSUs granted by the Company that contain non-forfeitable rights to receive dividend equivalents are deemed participating securities (see Note 14). Net income available to common shareholders is determined by reducing the Company’s net income for the period by dividend equivalents paid on vested RSUs and SARs during the period.

16. COMMITMENTS AND CONTINGENCIES

From time to time, the Company contracts with third-party service providers to perform maintenance or overhaul activities on its off-lease aircraft.

As of March 31, 2016, the Company had commitments to sell four aircraft, two of which were sold in April 2016 and the remaining two are expected to close later in 2016.

Litigation

On March 25, 2016, Gerald Margolis filed a putative class action lawsuit in the United States District Court for the Southern District of New York, asserting that the Company, its Chief Executive Officer and its Chief Financial Officer violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making materially false and misleading statements regarding the Company's business, operational and compliance policies, particularly concerning our accounting with respect to intangible assets and liabilities for aircraft acquired with in-place leases. The complaint seeks an unspecified amount of monetary damages on behalf of the putative class and an award of attorney's fees, expert fees and other costs. The Company believes this lawsuit is without merit, and will defend it.

17. RELATED PARTY TRANSACTIONS

Fly has no employees and has outsourced the daily operations of the Company by entering into management, servicing and administrative agreements (the “Agreements”) with BBAM. Services to be rendered under the Agreements include acquiring and disposing of aircraft; marketing of aircraft for lease and re-lease; collecting rent and other payments from the lessees; monitoring maintenance, insurance and other obligations under the leases; enforcing the Company’s rights under the lease terms; and maintaining the books and records of the Company and its subsidiaries. The Manager manages the Company under the direction of its chief executive officer and chief financial officer. Pursuant to the terms of the Agreements, certain fees and expenses that may be payable to the Manager may be reduced for any like payments made to other BBAM affiliates. In connection with its services, the Manager may also incur expenses such as travel, insurance and other professional fees on behalf of the Company. The Company reimburses the Manager for these expenses. The Company had $0.2 million and $0.3 million of reimbursable expenses due to the Manager at March 31, 2016 and December 31, 2015, respectively.

BBAM received servicing fees pursuant to the Agreements totaling $3.7 million and $4.4 million for the years ended March 31, 2016 and 2015, respectively.

The Company did not purchase any aircraft during the three months ended March 31, 2016. During the three months ended March 31, 2015, the Company incurred $2.1 million of origination fees, of which $0.6 million were expensed. During the three months ended March 31, 2016 and 2015, the Company incurred $2.6 million and $2.0 million of fees, respectively, in connection with the sale of aircraft.

The Company pays an annual management fee of $5.7 million to the Manager as compensation for providing the services of the chief executive officer, the chief financial officer and other personnel, and for certain corporate overhead costs related to the Company (“Management Expenses”). The management fee will be adjusted each calendar year by (i) 0.3% of the change in the book value of the Company's aircraft portfolio during the preceding year, up to a $2.0 billion increase over the book value of the post-ECAF-I Transaction portfolio and (ii) 0.25% of the change in the book value of the Company's aircraft portfolio in excess of $2.0 billion, with a minimum management fee of $5.0 million. The management fee is subject to an annual adjustment tied to the Consumer Price Index applicable to the prior calendar year. For the three months ended March 31, 2016 and 2015, the Company incurred Management Expenses of $1.4 million and $2.7 million, respectively.

18. FAIR VALUE OF FINANCIAL INSTRUMENTS

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. The hierarchy levels give the highest priority to quoted prices in active markets and the lowest priority to unobservable data. Fair value measurements are disclosed by level within the following fair value hierarchy:

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The Company’s financial instruments consist principally of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, derivative instruments, accounts payable and borrowings. Fair value of an asset is defined as the price a seller would receive in a current transaction between knowledgeable, willing and able parties. A liability’s fair value is defined as the amount that an obligor would pay to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor.

The fair value of the Company’s cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, and accounts payable approximate their carrying value. (The fair values of cash, restricted cash and cash equivalents are a Level 1 hierarchy. The fair values of accounts receivable and accounts payable are Level 2 hierarchy.) Where available, the fair value of the Company’s notes payable and debt facilities are based on observable market prices or parameters or derived from such prices or parameters (Level 2). Where observable prices or inputs are not available, valuation models are applied, using the net present value of cash flow streams over the term using estimated market rates for similar instruments and remaining terms (Level 3). These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. The Company determines the fair value of its derivative instruments using a discounted cash flow model which incorporates an assessment of the risk of non-performance by the swap counterparty and an evaluation of its credit risk in valuing derivative liabilities. The valuation model uses various inputs including contractual terms, interest rate curves, credit spreads and measures of volatility.

The Company also measures the fair value for certain assets and liabilities on a non-recurring basis, when GAAP requires the application of fair value, including events or changes in circumstances that indicate that the carrying amounts of assets may not be recoverable. Assets subject to these measurements include Fly’s investment in an unconsolidated subsidiary and flight equipment held for operating lease, net. Fly accounts for its investment in an unconsolidated subsidiary under the equity method and records impairment when its fair value is less than its carrying value (Level 3).

The Company records flight equipment at fair value when the carrying value may not be recoverable. Such fair value measurements are based on management’s best estimates and judgment, and uses Level 3 inputs which include assumptions as to future cash flows associated with the use of an aircraft and eventual disposition of such aircraft. The Company will also record an impairment charge if the expected sale proceeds of an aircraft are less than its carrying value. During each of the three months ended March 31, 2016 and 2015, no impairment was recorded by the Company with respect to its flight equipment held for operating lease, net.

The principal amounts outstanding and fair values of the Company’s financial instruments are as follows:

	As of March 31, 2016				As of December 31, 2015
	Principal Amount Outstanding		Fair Value		Principal Amount Outstanding		Fair Value
	(Dollars in thousands)
Securitization Notes	$	184,525	$	172,531	$	295,786	$	252,897
Nord LB Facility		203,628		203,628		255,278		251,849
CBA Facility		70,951		70,951		88,190		87,070
Term Loan		421,840		415,766		427,781		421,921
Other Aircraft Secured Borrowings		632,014		632,014		663,069		653,992
2020 Notes		375,000		369,375		375,000		375,000
2021 Notes		325,000		307,938		325,000		333,125
Derivative asset		—		—		241		241
Derivative liabilities		25,784		25,784		19,327		19,327

As of March 31, 2016 and December 31, 2015, the categorized asset and liabilities measured at fair value on a recurring basis, based upon the lowest level of significant inputs to the valuations are as follows:

	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
March 31, 2016:
Derivative asset		—	$	—		—	$	—
Derivative liabilities		—		25,784		—		25,784
December 31, 2015:
Derivative asset		—	$	241		—	$	241
Derivative liabilities		—		19,327		—		19,327

19. SUBSEQUENT EVENTS

Subsequent to March 31, 2016, the Company acquired one narrow-body aircraft and sold four narrow-body aircraft.

Item 2.

Management’s Discussion & Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our (i) consolidated financial statements and related notes included elsewhere in this Interim Report and (ii) Annual Report on Form 20-F for the year ended December 31, 2015. The consolidated financial statements have been prepared in accordance with U.S. GAAP and are presented in U.S. dollars. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. See “Preliminary Note”.

Overview

Fly Leasing Limited is a Bermuda exempted company that was incorporated on May 3, 2007, under the provisions of Section 14 of the Companies Act 1981 of Bermuda. We are principally engaged in purchasing commercial aircraft, which we lease under multi-year contracts to a diverse group of airlines throughout the world.

Although we are organized under the laws of Bermuda, we are a resident of Ireland for tax purposes and are subject to Irish corporation tax on our income in the same way, and to the same extent, as if we were organized under the laws of Ireland.

For the three months ended March 31, 2016, we had net income of $7.1 million, or diluted earnings per share of $0.21. Net cash flows provided by operating activities for the three months ended March 31, 2016 totaled $55.6 million. Net cash flows provided by investing activities totaled $153.0 million and net cash flows used in financing activities totaled $155.6 million for the three months ended March 31, 2016.

Restatement of Prior Financial Statements

The accompanying Management’s Discussion & Analysis of Financial Condition and Results of Operations gives effect to the accounting adjustments made with the restatement of our previously filed consolidated financial statements for the three months ended March 31, 2015. For this reason the data set forth in this section may not be comparable to discussions and data in our previously filed Quarterly Reports. See Note 2, “Restatement of Consolidated Financial Statements” to the Consolidated Financial Statements for a discussion of the restatement.

The following table presents the impact of the restatement adjustments on our previously reported consolidated retained earnings at January 1, 2015 (dollars in thousands).

Retained earnings at January 1, 2015 – as previously reported	$	117,402
Adjustments		(2,620	)
Retained earnings at January 1, 2015 – as restated	$	114,782

Selected Financial Data:

The following table presents the impact of the restatement adjustments on our previously reported consolidated statement of income for the three months ended March 31, 2015 (dollars in thousands except per share data).

	As previously reported		Maintenance rights adjustments			Other adjustments			As restated
Gain on sale of aircraft	$	1,897	$	(7	)	$	747		$	2,637
Depreciation		50,074		(2,722	)		(149	)		47,203
Provision for income taxes		2,273		321			691			3,285
Earnings per share:
Basic	$	0.41							$	0.47
Diluted	$	0.41							$	0.47

Market Conditions

The airline industry has been profitable every year since 2012, with profits each year exceeding the last. It is predicted that airline profitability in 2016 will exceed that of 2015. In addition, oil prices fell significantly in 2015, resulting in lower jet fuel prices and positively impacting airline profitability.

Despite macroeconomic concerns, there continue to be overall positive trends in world air traffic and demand for commercial aircraft, which we believe will continue to drive growth in the aircraft leasing market. Passenger demand is robust, and aircraft manufacturers have increased their production rates to meet demand for commercial aircraft, potentially leading to oversupply should demand falter. In addition, manufacturers are producing new models of their narrow-body aircraft which currently make up about 80% of the worldwide fleet which could lead to a quicker obsolescence of older models.

Despite the favorable market conditions, the airline industry is cyclical, and macroeconomic, geopolitical and other risks may negatively impact airline profitability or create unexpected volatility in the aircraft leasing market. Although we expect the airline industry to be profitable in 2016, profits are not uniformly distributed among airlines, and certain airlines, particularly smaller airlines and start-up carriers, struggle financially. These lessees may be unable to make lease rental and other payments on a timely basis. In addition, an increase in new aircraft production rates by aircraft manufacturers may reduce the demand for used aircraft, and could lead to a reduction in the lease rates and the values of used aircraft.

Critical Accounting Policies and Estimates

Fly prepares its consolidated financial statements in accordance with U.S. GAAP, which requires the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The use of estimates is a significant factor affecting the reported carrying values of flight equipment, investments, deferred assets, accruals and reserves. We utilize third party appraisers and industry valuation professionals, where possible, to support estimates, particularly with respect to flight equipment. Despite our best efforts to accurately estimate such amounts, actual results could differ from those estimates. We have made no significant changes in our critical accounting policies and significant estimates from those disclosed in our Annual Report on Form 20-F for the year ended December 31, 2015.

New Accounting Pronouncements

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers. The guidance specifically notes that lease contracts with customers are a scope exception. In August 2015, FASB issued ASU 2015-14, deferring the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606), by one year for all entities and permitting early adoption on a limited basis. Specifically, for public business entities, the standard will be effective for annual reporting periods (including interim periods) beginning after December 15, 2017. Early adoption will be permitted as of the annual reporting period (including interim periods) beginning after December 15, 2016. We will adopt the guidance effective January 1, 2018. We anticipate that the adoption of the standard will not have a material effect on our consolidated financial condition, results of operations or cash flows.

In August 2014, FASB issued ASU 2014-15, update to Accounting Standards Codification (ASC) subtopic 250-40, Presentation of Financial Statements-Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in the U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term “substantial doubt”, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 will be effective for annual reporting periods (including interim periods) ending after December 15, 2016, and early adoption will be permitted. We will adopt the guidance effective January 1, 2017. We are currently evaluating the potential impact the adoption of the standard will have on our consolidated financial condition, results of operations or cash flows.

In February 2016, FASB issued its new lease standard, ASU 2016-02, Leases. Under the new standard, the accounting for leases by lessors would basically remain unchanged from the existing concepts in ASC 840, Leases. In addition, FASB has decided that lessors would be precluded from recognizing selling profit and revenue at lease commencement for any sales-type or direct finance lease that does not transfer control of the underlying asset to the lessee. The standard will be effective for annual periods (including interim periods), beginning after December 15, 2018, and early adoption will be permitted. We are currently evaluating the potential impact the adoption of the standard will have on our consolidated financial condition, results of operations or cash flows.

Operating Results

Management’s discussion and analysis of operating results presented below pertain to the consolidated statements of income of Fly for the three months ended March 31, 2016 and 2015.

Consolidated Statements of Income of Fly for the three months ended March 31, 2016 and 2015

	Three months ended March 31, 2016		Three months ended March 31, 2015
	(Dollars in thousands)
			As restated
Revenues
Operating lease revenue	$	74,953	$	120,103
Finance lease income		892		—
Equity earnings from unconsolidated subsidiary		133		340
Gain on sale of aircraft		5,143		2,637
Interest and other income		87		206
Total revenues		81,208		123,286
Expenses
Depreciation		28,839		47,203
Interest expense		30,834		39,297
Selling, general and administrative		8,269		8,264
Ineffective, dedesignated and terminated derivatives		286		(264	)
Net loss on extinguishment of debt		4,527		4,050
Maintenance and other costs		1,199		1,586
Total expenses		73,954		100,136
Net income before provision for income taxes		7,254		23,150
Provision for income taxes		154		3,285
Net income	$	7,100	$	19,865

As of March 31, 2016, we had 79 aircraft in our portfolio, 78 of which were held for operating lease and one of which was recorded as an investment in direct finance lease. As of March 31, 2015, we had 128 aircraft in our portfolio. During the three months ended March 31, 2016, we sold ten aircraft, nine of which were held for sale.

	Three months ended March 31,							Increase/
	2016			2015				(Decrease)
	(Dollars in thousands)
				As restated
Operating lease revenue:
Operating lease rental revenue	$	74,633			$	103,148		$	(28,515	)
End of lease revenue		3,206				21,936			(18,730	)
Amortization of lease incentives		(2,773	)			(4,036	)		1,263
Amortization of lease premiums, discounts & other		(113	)			(945	)		832
Total operating lease revenue	$	74,953			$	120,103		$	(45,150	)

For the three months ended March 31, 2016, operating lease revenue totaled $75.0 million, a decrease of $45.2 million compared to the three months ended March 31, 2015. The decrease was primarily due to (i) a decrease of $36.9 million in lease revenue from aircraft sold in 2015 and 2016, (ii) a decrease of $18.7 million in end of lease revenue recognized and (iii) a decrease of $1.5 million in lease revenue from off-lease aircraft and lower lease rates on lease extensions and remarketings. The decrease was partially offset by (i) an increase of $9.8 million from aircraft purchased in 2015, (ii) a decrease of $1.3 million in lease incentive amortization and (iii) other increases of $0.8 million. For the three months ended March 31, 2016, operating lease revenue recognized with respect to aircraft held for sale was $1.9 million.

For the three months ended March 31, 2016, finance lease income totaled $0.9 million, which was attributable to one lease recorded as an investment in direct finance lease. During the three months ended March 31, 2015, we had no investment in direct finance lease.

For the three months ended March 31, 2016 and 2015, we recorded equity earnings from our investment in unconsolidated subsidiary of $0.1 million and $0.3 million, respectively. In the first quarter of 2015, two aircraft held in Fly-Z/C LP were transferred to the airline. Two aircraft remain in the joint venture.

During the three months ended March 31, 2016, we sold ten aircraft and recognized a gain on sale of aircraft totaling $5.1 million. During the three months ended March 31, 2015, we sold three aircraft and recognized a gain on sale of aircraft of $2.6 million.

In 2015, we agreed to sell 45 aircraft in two portfolio sales (the “Sale Transactions”). As of May 19, 2016, we have delivered all but two of these aircraft. Due to unforeseen delays and customary closing conditions in the sale contracts, it is possible the two remaining aircraft may not be delivered as originally contemplated. In this event, we may record a reduction of previously recognized gains of up to $8 million in the second quarter of 2016 due to treatment of each of the Sale Transactions as a pooled transaction with gains recognized as aircraft in the relevant portfolio are delivered based on the net book value of the aircraft.

Depreciation expense during the three months ended March 31, 2016 was $28.8 million, compared to $47.2 million for the three months ended March 31, 2015, a decrease of $18.4 million. The decrease was primarily due to stoppage of depreciation on (i) aircraft held for sale and (ii) aircraft sold in 2016 and 2015. These decreases were partially offset by depreciation on aircraft acquired in 2015.

Interest expense totaled $30.8 million and $39.3 million for the three months ended March 31, 2016 and 2015, respectively. The decrease of $8.5 million was primarily due to (i) a reduction in interest due to debt repayments, (ii) re-pricing of the Term Loan in April 2015 and (iii) loan fees and commitment fees paid on the Fly Acquisition II Facility prior to its termination in the first quarter of 2015. This decrease was partially offset by one additional secured borrowing in 2016.

During the three months ended March 31, 2016, we wrote off unamortized loan costs and debt discounts totaling $4.5 million as debt extinguishment costs primarily due to repayment of debt associated with aircraft sold. During the three months ended March 31, 2015, we wrote off unamortized loan costs of approximately $4.0 million in connection with the termination of the Fly Acquisition II Facility.

Selling, general and administrative expenses totaled $8.3 million for each of the three months ended March 31, 2016 and 2015. In the three months ended March 31, 2016, we recognized an unrealized foreign currency exchange loss of $1.0 million as the result of borrowings under our Euro-denominated debt facility. In the three months ended March 31, 2015, we recognized an unrealized foreign currency exchange gain of $1.7 million for the same debt facility. The resulting increase was partially offset by a reduction in annual management expenses in connection with the amendment to the management agreement effective July 1, 2015.

Maintenance and other costs totaled $1.2 million and $1.6 million during the three months ended March 31, 2016 and 2015, respectively. The decrease was primarily due to a reduction in required remarketing activities.

Provision for income taxes was $0.2 million and $3.3 million for the three months ended March 31, 2016 and 2015, respectively. We are a tax resident in Ireland and expect to pay the corporation tax rate of 12.5% on trading income and 25.0% on non-trading income. Our effective tax rate was 2.1% for the three months ended March 31, 2016 primarily due to the effect of lower tax rates on income earned in foreign jurisdictions. The effective tax rate in any period is impacted by the source and amount of income earned by us in different tax jurisdictions. For the three months ended March 31, 2015, we recorded net valuation allowances of $0.5 million against deferred tax assets and our effective tax rate was 14.2%.

Our net income was $7.1 million and $19.9 million for the three months ended March 31, 2016 and 2015, respectively.

Liquidity and Capital Resources

Overview

Our business is very capital intensive, requiring significant investment to maintain and expand our fleet. We have pursued a strategy of fleet growth. Since the beginning of 2013, we have spent approximately $2.2 billion to acquire 46 aircraft. We plan to continue our growth strategy through 2016.

We continue to pursue opportunistic aircraft sales to rejuvenate our fleet. In 2015, we sold 44 aircraft. We sold an additional ten aircraft during the first quarter of 2016, generating $59.8 million of cash, after repayment of associated debt. We intend to use such cash together with debt financings to acquire additional aircraft.

We finance our business with unrestricted cash, cash generated from operating leases, aircraft sales and debt financings. At March 31, 2016, we had $329.3 million of unrestricted cash. We also had 12 unencumbered aircraft with an aggregate value of $610.2 million.

In recent years, our debt financing strategy has focused on funding our business on an unsecured basis, which provides us with greater operational flexibility, and through secured, recourse debt financing, which enables us to take advantage of improved pricing and other terms compared to non-recourse debt. In addition, we continue to utilize secured, non-recourse indebtedness under our debt facilities and other aircraft secured borrowings.

During the first quarter of 2016, we closed the Fly Acquisition III Facility, which provides up to $385.0 million of borrowing capacity, with an availability period expiring on February 26, 2019 and a final maturity date of February 26, 2022. We provide a guaranty of all of the borrower's obligations under the facility.

Our sole source of operating cash flows is from distributions made to us from our subsidiaries. Distributions of cash to us from our subsidiaries are subject to compliance with local law and applicable debt covenants. Substantially all revenue collected during each monthly period from aircraft financed by certain of our debt facilities are applied to service the outstanding debt under those facilities, after the payment of certain expenses and other costs.

During the first quarter of 2016, we repurchased 2,071,910 shares at an average price of $12.04 per share, or $24.9 million. In March 2016, our board of directors authorized an additional $30.0 million share repurchase program.

We expect that cash on hand and cash from operations will satisfy our liquidity needs through at least the next twelve months.

Our liquidity plans are subject to a number of risks and uncertainties, including those described under Item 1A "Risk Factors" of Part II in this interim report and Item 3 “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2015.

Cash Flows of Fly for the three months ended March 31, 2016 and 2015

We generated cash from operations of $55.6 million and $61.8 million for the three months ended March 31, 2016 and 2015, respectively, a decrease of $6.2 million.

Cash provided by investing activities was $153.0 million for the three months ended March 31, 2016. Cash used in investing activities was $22.7 million for the three months ended March 31, 2015. During the three months ended March 31, 2016, we sold ten aircraft for net cash proceeds of $155.4 million. During the three months ended March 31, 2015, used $137.1 million of cash to purchase four aircraft and sold three aircraft for net cash proceeds of $126.5 million. Payment for maintenance totaled $0.5 million and $7.7 million for the three months ended March 31, 2016 and 2015, respectively.

Cash used in financing activities for the three months ended March 31, 2016 and 2015 totaled $155.6 million and $96.0 million, respectively. During the three months ended March 31, 2016, we (i) made repayments on our secured borrowings totaling $239.6 million and (ii) used $25.2 million to repurchase 2,071,910 shares and to pay fees and related expenses. These were partially offset by (i) a decrease in our restricted cash accounts by $76.1 million, (ii) net proceeds of $16.8 million from secured borrowings and (iii) net maintenance reserve receipts of $17.3 million. During the three months ended March 31, 2015, we (i) made repayments on our secured borrowings totaling $162.9 million and (ii) paid dividends and dividend equivalents of $10.5 million. These were partially offset by (i) net proceeds of $67.8 million from secured borrowings and (iii) net maintenance reserve receipts of $9.2 million.

Maintenance Cash Flows

Under our leases, the lessee is generally responsible for maintenance and repairs, airframe and engine overhauls, and compliance with return conditions of aircraft on lease. In connection with the lease of a used aircraft we may agree to contribute additional amounts to the cost of certain major overhauls or modifications, which usually reflect the usage of the aircraft prior to the commencement of the lease. In many cases, we also agree to share with our lessees the cost of compliance with airworthiness directives.

We expect that the aggregate maintenance reserve and lease end adjustment payments we receive from lessees will meet the aggregate maintenance contributions and lease end adjustment payments that we will be required to make. For the three months ended March 31, 2016, we received $18.0 million of maintenance payments from lessees, made maintenance payment disbursements of $0.7 million and also made maintenance payments of $0.5 million.

Share Repurchases

During the three months ended March 31, 2016, we repurchased 2,071,910 shares at an average price of $12.04 per share, or $24.9 million.

In March 2016, our board of directors approved a new $30.0 million share repurchase program expiring in March 2017. Under this program, we may make share repurchases from time to time in the open market or in privately negotiated transactions. The timing of the repurchases under this program will depend upon a variety of factors, including market conditions, and the program may be suspended or discontinued at any time.

Financing

We finance our business with unsecured and secured borrowings. As of March 31, 2016, we were not in default under any of our borrowings.

Unsecured Borrowings

On December 11, 2013, we sold $300.0 million aggregate principal amount of unsecured 6.75% Senior Notes due 2020 (together with the Additional 2020 Notes (as defined below), the “2020 Notes”). On October 3, 2014, we sold $75.0 million aggregate principal amount of unsecured 6.75% Senior Notes due 2020 (the “Additional 2020 Notes”) at a price equal to 104.75% of the principal amount thereof and $325.0 million aggregate principal amount of 6.375% Senior Notes due 2021 (the “2021 Notes”) at par.

The 2020 Notes and 2021 Notes are our unsecured obligations and rank pari passu in right of payment with any of our existing and future senior indebtedness. The 2020 Notes have a maturity date of December 15, 2020 and the 2021 Notes have a maturity date of October 15, 2021.

Interest on the 2020 Notes is payable semi-annually on June 15 and December 15 of each year. Interest on the 2021 Notes is payable semi-annually on April 15 and October 15 of each year.

Pursuant to the indentures governing the 2020 Notes and 2021 Notes, we are subject to restrictive covenants which relate to dividend payments, incurrence of debt and issuance of guarantees, incurrence of liens, repurchases of common shares, investments, disposition of aircraft, consolidation, merger or sale of our company and transactions with affiliates. We are also subject to certain operating covenants, including reporting requirements. Our failure to comply with any of the covenants under the indentures governing the 2020 Notes or 2021 Notes could result in an event of default which, if not cured or waived, may result in the acceleration of the indebtedness thereunder and other indebtedness containing cross-default or cross-acceleration provisions. Certain of these covenants will be suspended if the 2020 Notes or 2021 Notes obtain an investment grade rating. As of March 31, 2016, we were not in default under the indentures governing the 2020 Notes or the 2021 Notes.

Secured Borrowings

As of March 31, 2016, we had $1.5 billion principal amount outstanding on our secured borrowings.

We are subject to restrictive covenants under our secured borrowings which relate to the incurrence of debt, issuance of guarantees, incurrence of liens or other encumbrances, the acquisition, substitution, disposition and re-lease of aircraft, maintenance, registration and insurance of our aircraft, restrictions on modification of aircraft and capital expenditures, and requirements to maintain concentration limits.

Our failure to comply with any of these covenants, or any other operating covenants, may trigger an event of default under the relevant loan agreement. Certain of our loan agreements also contain cross-default provisions that could be triggered by a default under another loan agreement. In addition, our loan agreements include events of default provisions that are customary for these types of secured borrowings.

Securitization Notes

As of March 31, 2016, our subsidiary, B&B Air Funding, had $184.5 million principal amount outstanding on its aircraft lease-backed Class G-1 notes (the "Securitization Notes"), which were secured by 15 aircraft, one of which was subject to a sale agreement. The final maturity date of the Securitization Notes is November 14, 2033.

The Securitization Notes bear interest at an adjustable interest rate equal to the current one-month LIBOR plus 0.77%. Interest expense also includes amounts payable to the provider of a financial guaranty insurance policy and the liquidity facility provider thereunder, as well as accretion on the Securitization Notes re-issued at a discount. Interest and any principal payments due are payable monthly. We have entered into interest rate swap contracts to mitigate the interest rate fluctuation risk associated with a portion of the Securitization Notes.

Nord LB Facility

As of March 31, 2016, we had $203.6 million principal amount outstanding under our debt facility with Norddeutsche Landesbank Gironzentrale (the "Nord LB Facility"), which was secured by seven aircraft, one of which was subject to a sale agreement. The Nord LB Facility is structured with loans secured by each aircraft individually. The loans are cross-collateralized and contain cross-default provisions. Borrowings are secured by our equity interests in the aircraft owning and leasing subsidiaries, the related leases, and certain deposits.

Under the terms of the Nord LB Facility, we apply 95% of lease rentals collected towards interest and principal. If no lease rental payments are collected in the applicable period for any financed aircraft, no payment is due under the loan associated with that aircraft during such period. Any unpaid interest increases the principal amount of the associated loan.

In the event we sell any of the financed aircraft, substantially all sale proceeds (after payment of certain expenses) must first be used to repay the debt associated with such aircraft and second to repay the outstanding amounts which finance the remaining aircraft. In addition, any maintenance reserve amounts retained by us will be used to prepay the Nord LB Facility, provided such reserves are not required for future maintenance of such aircraft.

CBA Facility

As of March 31, 2016, we had $71.0 million principal amount outstanding under our debt facility with Commonwealth Bank of Australia and CommBank Europe Limited (the "CBA Facility"), which was secured by five aircraft. We have guaranteed all payments under the CBA Facility. These loans are cross-collateralized and contain cross-default provisions. One loan matures in 2018 and the remaining four loans mature in 2020.

We make scheduled monthly payments of principal and interest on each loan in accordance with a fixed amortization schedule. If, upon the repayment of any loan, the ratio of the remaining principal amount outstanding under the CBA Facility to the aggregate appraised value of the financed aircraft is equal to or greater than 80%, we will be required to pay into a collateral account an amount as is necessary to reduce this ratio to less than 80%.

Borrowings under the CBA Facility accrue interest at either a fixed or variable interest rate. Variable borrowings bear interest based on one-month LIBOR plus an applicable composite margin of 2.50%. Fixed interest rates range between 3.67% and 7.75%. The weighted average interest rate on all outstanding amounts was 5.17% as of March 31, 2016, excluding the debt discount amortization and debt issuance costs.

There are no financial covenants in the CBA Facility. However, the CBA Facility includes certain operating covenants, including reporting requirements.

Term Loan

As of March 31, 2016, we had $421.8 million principal amount outstanding under our senior secured term loan (the "Term Loan"), which was secured by 25 aircraft, one of which was subject to a sale agreement. We have guaranteed all payments under the Term Loan. The Term Loan matures in August 2019.

As of March 31, 2016, the Term Loan bore interest at LIBOR, plus a margin of 2.75% with a LIBOR floor of 0.75%.

The Term Loan requires that we maintain a maximum loan-to-value ratio of 70.0% based on the lower of the mean or median of half-life adjusted base value of the financed aircraft as determined by three independent appraisers, and includes other customary covenants, including reporting requirements and maintenance of public ratings.

Fly Acquisition III Facility

In February 2016, we, through a wholly-owned subsidiary, Fly Acquisition III, entered into a revolving $385.0 million credit facility (the "Fly Acquisition III Facility") to finance the acquisition of aircraft. Borrowings are secured by the beneficial interests in Fly Acquisition III and each of its subsidiaries, the aircraft and related leases. The Fly Acquisition III Facility has an availability period expiring on February 26, 2019 and a final maturity date of February 26, 2022. We provide a guaranty of Fly Acquisition III’s obligations under the facility.

As of March 31, 2016, we had not drawn on the facility.

We pay a commitment fee of 0.50% per annum on a monthly basis to each lender on the undrawn amount of its commitment until the termination of the availability period; provided that at any time from and after March 26, 2017 through the end of the availability period, the commitment fee will increase to 0.75% per annum if at least 50% of the total amount of commitments have not been drawn.

The Fly Acquisition III Facility contains restrictive, financial and operating covenants, including a covenant that we maintain a tangible net worth of at least $325.0 million and a specified interest coverage ratio, as well as customary reporting requirements. Violation of any of these covenants could result in an event of default under the facility. Also, upon the occurrence of certain conditions, including a failure by us to maintain a minimum liquidity of at least $25.0 million, Fly Acquisition III will be required to deposit certain amounts of maintenance reserves and security deposits received under the respective leases into accounts pledged to the security trustee.

Other Aircraft Secured Borrowings

We have entered into other aircraft secured borrowings to finance the acquisition of aircraft, one of which is denominated in Euros. As of March 31, 2016, we had $632.0 million principal amount outstanding, which was secured by 19 aircraft, one of which was subject to a sale agreement. As of March 31, 2016, $416.9 million of the principal amount outstanding of these borrowings was recourse to us.

These borrowings are usually structured as individual loans secured by pledges of our rights, title and interests in the financed aircraft and leases. The maturity date on each loan ranges from February 2016 to January 2027. As of March 31, 2016, the weighted average interest rate of other aircraft secured borrowings was 3.63%.

Capital Expenditures

In addition to aircraft acquisitions, we expect to make capital expenditures from time to time in connection with improvements to our aircraft. These expenditures include the cost of major overhauls and modifications. In general, the costs of operating an aircraft, including capital expenditures, increase with the age of the aircraft. As of March 31, 2016, the weighted average age of our aircraft portfolio was 6.8 years.

Inflation

The effects of inflation on our operating expenses have been minimal. We do not consider inflation to be a significant risk to direct expenses in the current economic environment.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

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 due to many factors, including U.S. monetary and tax policies, U.S. and international 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 lease agreements and our floating rate debt obligations such as the Securitization Notes, the Term Loan and other borrowings. As of March 31, 2016, we had 75 lease agreements associated with our flight equipment held for operating lease. 66 out of our 75 lease agreements require the payment of a fixed rent amount during the lease term, and the remaining nine leases require a floating rent amount based on LIBOR. Our floating rate indebtedness requires payments based on a variable interest rate index such as LIBOR. Therefore, increases in interest rates may reduce our net income by increasing the cost of our debt without any corresponding proportional increase in rents or cash flow from our leases.

We have entered into interest rate swap contracts to mitigate the interest rate fluctuation risk associated with our debt. We expect that these interest rate swap contracts will significantly reduce the additional interest expense that would be caused by an increase in variable interest rates.

Sensitivity Analysis

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 financial condition and results of operations. A 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 a 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 impacts on our financial instruments and our variable rate leases. It does not include a variety of other potential factors that could affect our business as a result of changes in interest rates.

Assuming we do not hedge our exposure to interest rate fluctuations, a hypothetical 100 basis-point increase or decrease in our variable interest rates would have increased or decreased our interest expense by $13.8 million, and would have increased or decreased our revenues by $2.9 million and $1.8 million, respectively, on an annualized basis.

The fair value of our interest rate swap contracts is affected by changes in interest rates and credit risk of the parties to the swap. 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 the swap counterparty and an evaluation of Fly’s credit risk in valuing derivative liabilities. The valuation model uses various inputs including contractual terms, interest rate curves, credit spreads and measures of volatility. Changes in fair value of the derivatives are recorded as a component of accumulated other comprehensive income, net of a provision for income taxes. As of March 31, 2016, the fair value of our interest rate swap derivative liabilities, excluding accrued interest, was $25.0 million. A 100 basis-point increase in the interest rate would reduce the fair value of our derivative liabilities by approximately $20.3 million. A 100 basis-point decrease in the interest rate would increase the fair value of our derivative liabilities by approximately $15.3 million.

Foreign Currency Exchange Risk

We receive substantially all of our revenue in U.S. Dollars. Commencing in 2015, we have one lease pursuant to which we receive a portion of the rent amount in Euros and a portion of the debt associated with the underlying aircraft is required to be paid in Euros. We may enter into a foreign currency derivative related to this lease.

We pay substantially all of our expenses in U.S. Dollars. However, we incur some of our expenses in other currencies, primarily the Euro. Changes in the value of the U.S. Dollar relative to the Euro and other currencies may increase the U.S. Dollar cost to us of paying such expenses. The portion of our business conducted in other currencies could increase in the future, which could expand our exposure to losses arising from currency fluctuations. Volatility in foreign exchange rates could have a material impact on our results of operations.

We have one debt facility that is partially denominated in Euros. During the three months ended March 31, 2016, we recorded an unrealized foreign currency exchange loss of $1.0 million, resulting from a decrease of the U.S. Dollar value relative to the Euro. During the three months ended March 31, 2015, we recorded an unrealized foreign currency exchange gain of $1.7 million for the same debt facility. A 10% increase in the Euro to U.S. Dollar exchange rate would result in a $2.5 million unrealized foreign exchange gain. A 10% decrease in the Euro to U.S. Dollar exchange rate would result in a $2.5 million unrealized foreign exchange loss.

Item 4.

Controls and Procedures

Not applicable.

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings

On March 25, 2016, Gerald Margolis filed a putative class action lawsuit in the United States District Court for the Southern District of New York, asserting that Fly Leasing Limited, Colm Barrington (our Chief Executive Officer), and Gary Dales (our Chief Financial Officer) violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making materially false and misleading statements regarding the Company’s business, operational and compliance policies, particularly concerning our accounting with respect to intangible assets and liabilities for aircraft acquired with in-place leases. The complaint seeks an unspecified amount of monetary damages on behalf of the putative class and an award of attorney’s fees, expert fees and other costs.

We believe this lawsuit is without merit, and intend to defend it; however, failure by us to obtain a favorable resolution of the claims set forth in the complaint could have a material adverse effect on our business, results of operations and financial condition. Currently, the amount of such material adverse effect cannot be reasonably estimated, and no provision or liability has been recorded for these claims. The costs associated with defending and resolving the lawsuit and ultimate outcome cannot be predicted. These matters are subject to inherent uncertainties and the actual cost, as well as the distraction from the conduct of our business, will depend upon many unknown factors and management’s view of these factors may change in the future.

Except as disclosed above, we are not currently a party to any litigation or other legal proceeding that may have a material adverse impact on our business, results of operations or financial condition. However, we are and may continue to be subject to various claims and legal actions arising in the ordinary course of business. We maintain insurance policies which we believe provide adequate coverage, subject to customary deductions, based on the nature and risks of our business and industry standards.

Item 1A.

Risk Factors

Other than described below, there have been no material changes in our risk factors from those disclosed under “Risk Factors” under the heading Item 3. “Key Information” in our Annual Report on Form 20-F for the year ended December 31, 2015, filed with the SEC on May 2, 2016 which is accessible on the SEC’s website at www.sec.gov as well as our website at www.flyleasing.com. The information on our website or that can be accessed through our website neither constitutes a part of this interim report nor is incorporated by reference herein. The risks described below and the risks disclosed in our Annual Report on Form 20-F are not the only risks facing us. Additional risks and uncertainties, not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Our aircraft portfolio sales may fail to be completed as anticipated.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Repurchased Plan		Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs ⁽¹⁾
January 2016		1,053,400	$	12.17		1,053,400	$	12.2 million
February 2016		836,240	$	11.65		836,240	$	2.4 million
March 2016		182,270	$	13.06		182,270	$	30.0 million

(1)

The $25.0 million share repurchase program previously announced in November 2015 was completed in the first quarter of 2016. In March 2016, our board of directors approved a new $30.0 million share repurchase program expiring in March 2017. Under this program, we may make share repurchases from time to time in the open market or in privately negotiated transactions.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

None.

Item 5.

Other Information

None.

Item 6.

Exhibits

Exhibit	Title
4.1	Servicing Agreement dated as of February 26, 2016, among BBAM US LP, BBAM Aviation Services Limited and Fly Acquisition III Limited.
10.1	Facility Agreement [Fly 2016A Warehouse] dated as of February 26, 2016 among Fly Acquisition III Limited, the Subsidiary Guarantors party thereto, the Lenders party thereto, Commonwealth Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee.
10.2	Note Purchase Agreement [Fly 2016A Warehouse] dated as of February 26, 2016 among Fly Acquisition III Limited, the Purchasers party thereto, Commonwealth Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee.
10.3	Credit Agreement [Fly 2016A Warehouse] dated as of February 26, 2016 among Fly Acquisition III Limited, the Banks party thereto, Commonwealth Bank of Australia, New York Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Security Trustee.

	March 31, 2016			December 31, 2015
Assets
Cash and cash equivalents	$	329,273		$	275,998
Restricted cash and cash equivalents		98,875			174,933
Rent receivables		875			124
Investment in unconsolidated subsidiary		7,303			7,170
Investment in direct finance lease, net		34,531			34,878
Flight equipment held for sale, net		57,673			237,262
Flight equipment held for operating lease, net		2,550,957			2,585,426
Maintenance rights, net		84,557			94,493
Fair market value of derivative assets		—			241
Other assets, net		6,240			6,450
Total assets	$	3,170,284		$	3,416,975

Liabilities
Accounts payable and accrued liabilities	$	30,101		$	17,548
Rentals received in advance		13,211			14,560
Payable to related parties		2,504			7,170
Security deposits		44,741			48,876
Maintenance payment liability		190,842			194,543
Unsecured borrowings, net		689,904			689,409
Secured borrowings, net		1,480,123			1,695,711
Deferred tax liability, net		20,030			20,741
Fair market value of derivative liabilities		25,784			19,327
Other liabilities		40,389			52,126
Total liabilities		2,537,629			2,760,011

Shareholders’ equity
Common shares, $0.001 par value; 499,999,900 shares authorized; 33,599,490 and 35,671,400 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively		34			36
Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding		—			—
Additional paid-in capital		552,158			577,290
Retained earnings		102,238			95,138
Accumulated other comprehensive loss, net		(21,775	)		(15,500	)
Total shareholders’ equity		632,655			656,964
Total liabilities and shareholders’ equity	$	3,170,284		$	3,416,975

	Three months ended March 31, 2016			Three months ended March 31, 2015
Cash Flows from Operating Activities				As restated
Net Income	$	7,100		$	19,865
Adjustments to reconcile net income to net cash flows provided by operating activities:
Equity in earnings from unconsolidated subsidiary		(133	)		(340	)
Direct finance lease income		(892	)		—
Gain on sale of aircraft		(5,143	)		(2,637	)
Depreciation		28,839			47,203
Amortization of debt discounts and debt issuance costs		2,360			3,110
Amortization of lease incentives		2,773			4,036
Amortization of lease discounts, premiums and other items		113			719
Amortization of fair value adjustments associated with the GAAM acquisition		672			1,237
Net loss on debt modification and extinguishment		3,679			4,050
Share-based compensation		—			152
Unrealized foreign exchange loss (gain)		1,001			(1,670	)
Provision for deferred income taxes		94			3,038
Unrealized gain (loss) on derivative instruments		216			(264	)
Cash receipts in settlement of maintenance rights		6,150			—
Security deposits and maintenance payment liability recognized into earnings		(400	)		(21,936	)
Security deposits and maintenance payment claims applied towards operating lease revenues		(805	)		—
Changes in operating assets and liabilities:
Rent receivables		(751	)		(1,685	)
Other assets		(141	)		2,375
Payable to related parties		(7,239	)		(3,632	)
Accounts payable, accrued liabilities and other liabilities		18,065			8,134
Net cash flows provided by operating activities		55,558			61,755
Cash Flows from Investing Activities
Rent received from direct finance lease		1,230			—
Purchase of flight equipment		—			(137,113	)
Proceeds from sale of aircraft, net		155,359			126,503
Payments for aircraft improvement		(3,034	)		(4,403	)
Payments for maintenance		(514	)		(7,730	)
Net cash flows provided by (used in) investing activities		153,041			(22,743	)
Cash Flows from Financing Activities
Restricted cash and cash equivalents		76,058			2,803
Security deposits received		—			845
Security deposits returned		—			(2,868	)
Maintenance payment liability receipts		17,968			17,514
Maintenance payment liability disbursements		(662	)		(8,332	)
Net swap termination payments		(538	)		23
Debt issuance costs		(349	)		(343	)
Proceeds from secured borrowings		16,756			67,802
Repayment of secured borrowings		(239,645	)		(162,852	)
Shares repurchased		(25,191	)		—
Dividends		—			(10,358	)
Dividend equivalents		—			(191	)
Net cash flows used in financing activities		(155,603	)		(95,957	)
Effect of exchange rate changes on cash and cash equivalents		279			(330	)
Net increase (decrease) in cash and cash equivalents		53,275			(57,275	)
Cash and cash equivalents at beginning of year		275,998			337,560
Cash and cash equivalents at end of year	$	329,273		$	280,285
Supplemental Disclosure:
Cash paid during the period for:
Interest	$	16,573		$	24,059
Taxes		18			110
Noncash Activities:
Security deposits applied to maintenance payment liability and rent receivables		—			2,542
Maintenance payment liability applied to rent receivables		—			2,108
Other liabilities applied to maintenance payment liability and rent receivables		—			240
Noncash investing activities:
Aircraft improvement		2,338			2,510
Noncash activities in connection with purchase of aircraft		—			8,468
Noncash activities in connection with sale of aircraft		27,432			9,061

	Three months ended March 31, 2015
Net income – As previously reported	$	17,266
Adjustments		2,599
Net income – As restated	$	19,865

	As previously reported			Adjustments			As restated
Cash Flows from Operating Activities
Net Income	$	17,266		$	2,599		$	19,865
Adjustments to reconcile net income to net cash flows provided by operating activities:
Equity in earnings from unconsolidated subsidiary		(340	)		—			(340	)
Gain on sale of aircraft		(1,897	)		(740	)		(2,637	)
Depreciation		50,074			(2,871	)		47,203
Amortization of debt discounts and debt issuance costs		3,110			—			3,110
Amortization of lease incentives		4,036			—			4,036
Amortization of lease discounts, premiums and other items		719			—			719
Amortization of fair value adjustments associated with the GAAM acquisition		1,237			—			1,237
Net loss on debt modification and extinguishment		4,050			—			4,050
Share-based compensation		152			—			152
Unrealized foreign exchange gain		(1,670	)		—			(1,670	)
Provision for deferred income taxes		2,026			1,012			3,038
Unrealized gain on derivative instruments		(264	)		—			(264	)
Security deposits and maintenance payment liability recognized into earnings		(21,936	)		—			(21,936	)
Changes in operating assets and liabilities:
Rent receivables		(1,685	)		—			(1,685	)
Other assets		2,375			—			2,375
Payable to related parties		(3,632	)		—			(3,632	)
Accounts payable, accrued liabilities and other liabilities		8,134			—			8,134
Net cash flows provided by operating activities	$	61,755		$	—		$	61,755

	March 31, 2016				December 31, 2015
	(Dollars in thousands)
Total minimum lease payments receivable		$	44,671		$	45,901
Estimated unguaranteed residual value of leased asset			15,000			15,000
Unearned finance income			(25,140	)		(26,023	)
Net Investment in Direct Finance Lease		$	34,531		$	34,878

	Page

PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	3
Item 2. Management’s Discussion & Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	31
Item 4. Controls and Procedures	32

PART II OTHER INFORMATION
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3. Default Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	33
Item 6. Exhibits	33

	Three months ended March 31, 2016		Three months ended March 31, 2015
			As restated
Revenues
Operating lease revenue	$	74,953	$	120,103
Finance lease revenue		892		—
Equity earnings from unconsolidated subsidiary		133		340
Gain on sale of aircraft		5,143		2,637
Interest and other income		87		206
Total revenues		81,208		123,286
Expenses
Depreciation		28,839		47,203
Interest expense		30,834		39,297
Selling, general and administrative		8,269		8,264
Ineffective, dedesignated and terminated derivatives		286		(264	)
Net loss on extinguishment of debt		4,527		4,050
Maintenance and other costs		1,199		1,586
Total expenses		73,954		100,136
Net income before provision for income taxes		7,254		23,150
Provision for income taxes		154		3,285
Net income	$	7,100	$	19,865

Weighted average number of shares:
Basic		34,287,783		41,432,998
Diluted		34,288,608		41,545,287
Earnings per share (net income per common share):
Basic and Diluted	$	0.21	$	0.47
Dividends declared and paid per share	$	—	$	0.25

	Manager Shares				Common Shares				Additional Paid-in		Retained Earnings			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital		(Deficit)			Loss, net			Equity
Balance December 31, 2014 as previously reported		100	$	—		41,432,998	$	41	$	658,522	$	117,402		$	(17,091	)	$	758,874
Adjustment to ending balance		—		—		—		—		—		(2,620	)		—			(2,620	)
Balance December 31, 2014 as restated		100		—		41,432,998		41		658,522		114,782			(17,091	)		756,254
Dividends to shareholders		—		—		—		—		—		(10,358	)		—			(10,358	)
Dividend equivalents		—		—		—		—		—		(191	)		—			(191	)
Share-based compensation		—		—		—		—		152		—			—			152
Net income as restated		—		—		—		—		—		19,865			—			19,865
Net change in the fair value of derivatives, net of deferred tax asset of $0.9 million ⁽¹⁾		—		—		—		—		—		—			(5,927	)		(5,927	)
Reclassification from other comprehensive loss into earnings due to termination of derivative liabilities, net of deferred tax asset of $19,000⁽¹⁾		—		—		—		—		—		—			(130	)		(130	)
Balance March 31, 2015 as restated (unaudited)		100	$	—		41,432,998	$	41	$	658,674	$	124,098		$	(23,148	)	$	759,665

	As previously reported			Maintenance rights adjustments			Other adjustments			As restated
Revenues
Operating lease revenue	$	120,103		$	—		$	—		$	120,103
Equity earnings from unconsolidated subsidiary		340			—			—			340
Gain on sale of aircraft		1,897			(7	)		747			2,637
Interest and other income		206			—			—			206
Total revenues		122,546			(7	)		747			123,286
Expenses
Depreciation		50,074			(2,722	)		(149	)		47,203
Interest expense		39,297			—			—			39,297
Selling, general and administrative		8,264			—			—			8,264
Ineffective, dedesignated and terminated derivatives		(264	)		—			—			(264	)
Net loss on extinguishment of debt		4,050			—			—			4,050
Maintenance and other costs		1,586			—			—			1,586
Total expenses		103,007			(2,722	)		(149	)		100,136
Net income before provision for income taxes		19,539			2,715			896			23,150
Provision for income taxes		2,273			321			691			3,285
Net income	$	17,266		$	2,394		$	205		$	19,865
Earnings per share:
Basic	$	0.41								$	0.47
Diluted	$	0.41								$	0.47