Risk Factors Affecting International Lease Finance Corporation

Our business is subject to numerous risks and uncertainties, as described below and in the section titled

“Item 7A. Quantitative and Qualitative Disclosures about Market Risk.”

Overall Airline Industry Risk

We operate as a supplier and financier to airlines. The risks affecting our airline customers are generally

out of our control and impact our customers to varying degrees. As a result, we are indirectly impacted by all

the risks facing airlines today. Our ability to succeed is dependent upon the financial strength of our

customers. Their ability to compete effectively in the market place and manage these risks has a direct impact

on us. These risks include:

• Demand for air travel

• Competition between carriers

• Fuel prices and availability

• Labor costs and stoppages

• Maintenance costs

• Employee labor contracts

• Air traffic control infrastructure constraints

• Airport access

• Insurance costs and coverage

• Geopolitical events

• Security, terrorism and war

• Worldwide health concerns

• Equity and borrowing capacity

• Environmental concerns

• Government regulation

• Interest rates

• Overcapacity

• Natural disasters

To the extent that our customers are affected by these risk factors, we may experience:

• a downward pressure on demand for the aircraft in our fleet and reduced market lease rates and lease


• a higher incident of lessee defaults, lease restructurings and repossessions affecting net income due to

maintenance, consulting and legal costs associated with the repossession, as well as lost revenue for the

time the aircraft are off lease and possibly lower lease rates from the new lessees;

• a higher incident of situations where we engage in restructuring lease rates for our troubled customers

which reduces overall lease revenue;

• an inability to immediately place new and used aircraft when they become available through our

purchase commitments and regular lease terminations on commercially acceptable terms, resulting in

lower lease margins due to aircraft not earning revenue and resulting in payments of storage, insurance

and maintenance costs; and

• a loss if our aircraft is damaged or destroyed by an event specifically excluded from the insurance

policy such as dirty bombs, bio-hazardous materials and electromagnetic pulsing.


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