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���������ֳ� - Toronto - 16 Jun 2023: ���������ֳ� has affirmed the Long-Term Issuer Default Rating (IDR) of Air Lease Corporation (Air Lease) at 'BBB'. The Rating Outlook is at Stable. ���������ֳ� has also affirmed Air Lease and Air Lease Corporation Sukuk LTD's (Air Lease Sukuk) senior unsecured sukuk rating at 'BBB', and Air Lease's preferred shares rating at 'BB+'.

These rating actions are being taken in conjunction with ���������ֳ�'s global aircraft leasing sector review, covering 10 publicly rated firms. For more information on the sector review, please see "���������ֳ� Completes Aircraft Lessor Peer Review, Sector Outlook Remains Neutral", available at .

Key Rating Drivers

AIR LEASE

The ratings affirmation reflects Air Lease's favorable portfolio relative to peers, comprised largely of young and liquid, tier 1 aircraft, solid asset quality performance historically and a peer-superior funding profile with 99% of its funding unsecured and approximately $27.9 billion of assets being unencumbered at March 31, 2023. Air Lease's ratings also remain supported by its scale and franchise as a leading lessor, leverage consistent with the risk profile of the portfolio, and an experienced senior management team.

Rating constraints applicable to Air Lease include funding and placement risks associated with the company's order book and elevated key person risk. Rating constraints applicable to the aircraft leasing industry more broadly include the monoline nature of the business; vulnerability to exogenous shocks; sensitivity to higher oil prices, inflation and unemployment, which negatively impact travel demand; potential exposure to residual value risk; and reliance on wholesale funding sources.

As of March 31, 2023, Air Lease was one of the largest aircraft lessors in the world with a net book value (NBV) of $25.7 billion and an order book of 376 aircraft. The company has good customer diversification, serving 118 airline customers in 63 countries, with no single customer representing more than 6% of the total portfolio by market value, as estimated by ���������ֳ�. Air Lease's widebody exposure is above the peer average, but mitigated by the portfolio's high quality, as the majority of customers are flag carriers and 77% of the widebody aircraft, by value, are comprised of new technology, as estimated by ���������ֳ�. The average age of the owned portfolio was 4.5 years at March 31, 2023, which is consistent with Air Lease's strategic focus on owning young aircraft.

The large size of Air Lease's orderbook and the associated funding requirement are among the company's primary rating constraints. Air Lease's orderbook represented 86% of the owned fleet by count at 1Q23, but the company had long-term leases in place for approximately 93% of its committed aircraft deliveries through 2024, which ���������ֳ� views favorably.

Historically, Air Lease has had solid asset quality performance, having taken no impairments on its aircraft since inception through 2021. However, in 2022, the company recorded an $771.5 million impairment charge (3.5% of NBV), which represented a full write-down of its owned and managed fleet that remained in Russia, net of the recovery of one B737 MAX aircraft. ���������ֳ� believes the eventual receipt of insurance proceeds (timing and amount to be determined) will help to eventually offset at least a portion of the impairment charge. ���������ֳ� views this as a one-time event, and does not anticipate any material impairments going forward, as ���������ֳ� considers the company's fleet to be among the highest quality in the industry.

Air Lease's core operating performance has improved in line with a recovery in global aviation, supported by post-pandemic pent-up travel demand. In 1Q23, Air Lease reported pre-tax income of $158 million, up from a loss of $602 million a year ago. This translated to pre-tax ROAAs of 2.2%; up from a loss of 8.9% during 1Q22, but consistent with the average of 2.0% from 2019-2022. Net spread (lease yield - funding costs), was 6.4%, down from 7.1% a year ago, but relatively consistent with the average of 6.8% from 2019-2022 as improving lease yields did not fully offset higher funding costs. Still, ���������ֳ� expects Air Lease's net spread will remain within the 'bbb' benchmark range of 5%-15% for aircraft lessors with a sector risk operating environment (SROE) score in the 'bbb' category over the Outlook horizon.

Air Lease's leverage, measured as gross debt to tangible common equity (which affords 100% equity credit to the $850 million in preferred shares), was 2.9x as of March 31, 2023; above its stated target of 2.5x. Leverage ticked up given debt-funded portfolio growth, and was also negatively impacted by the non-cash impairment charge taken in 2022. ���������ֳ� expects leverage will revert toward management's long-term target by 2023 given operating cash flow generation, proceeds from asset sales, and retained earnings growth. Any potential proceeds arising from the receipt of insurance claims related to Russia aircraft, could also support retained earnings in the future.

At March 31, 2023, Air Lease had $8.0 billion of liquidity comprised of cash on hand, committed borrowing capacity and expected operating cash flow over the next 12 months. These sources of liquidity covered the next 12 months of debt maturities and purchase commitments of $6.3 billion by 1.3x. Over the medium term, as manufacturer production delays abate, ���������ֳ� expects the liquidity coverage ratio to remain comfortably above 1.0x. Subsequent to quarter end, the company increased its revolving credit facility by $325 million to $7.2 billion, which incrementally improves Air Lease's liquidity coverage metrics. In February 2023, Air Lease issued $600 million in sukuk trust certificates, increasing diversity of funding sources. Air Lease's debt maturity profile is well laddered and the next maturity is in July 2023 when $500 million of senior unsecured notes comes due, which can be repaid with available liquidity.

The Stable Outlook reflects ���������ֳ�'s belief that Air Lease will maintain sufficient headroom relative to ���������ֳ�'s downgrade triggers for liquidity coverage and leverage over the Outlook horizon, despite ���������ֳ�'s expectations for increased macro challenges, including elevated market volatility, higher interest rates relative to recent years and growing inflation, that lead to a downturn in economic conditions.

AIR LEASE SUKUK

Air Lease Sukuk, in its capacity as issuer and trustee of Air Lease's sukuk issuance, is an exempted company with limited liability incorporated in the Cayman Islands under the Companies Act (as amended) on Oct. 27, 2022. Air Lease Sukuk has been incorporated solely for the purpose of participating in the sukuk transaction governed by the underlying Transaction Documents to which it is a party.

DEBT RATINGS

The ratings on the senior unsecured debt are equalized with the Long-Term IDR of Air Lease, reflecting the unsecured funding profile and availability of sufficient unencumbered assets, which provide support to unsecured creditors and suggest average recovery prospects in a stressed scenario.

Air Lease's preferred shares are rated two notches below the company's Long-Term IDR, in accordance with ���������ֳ�'s "Corporate Hybrids Treatment and Notching Criteria," dated Nov. 12, 2020. The preferred share rating reflects the deep subordination and heightened risk of non-performance relative to other obligations, namely unsecured debt. ���������ֳ� has afforded the issuance 100% equity credit given i) the noncumulative nature of the distributions, ii) the preferred shares are perpetual and iii) the lack of change of control provisions and events of default.

The senior unsecured sukuk rating is in line with Air Lease's Long-Term IDR and senior unsecured debt rating of 'BBB'. The sukuk ratings are driven solely by Air Lease's IDR. This reflects ���������ֳ�'s view that default of these senior unsecured obligations would reflect the default of Air Lease in accordance with the agency's rating definitions.

���������ֳ� has given no consideration to any underlying assets or any collateral provided, as the agency believes that Air Lease's Sukuk's ability to satisfy payments due on the certificates will ultimately depend on Air Lease satisfying its unsecured payment obligations to the trustee as per the applicable transaction documents.

RATING SENSITIVITIES

IDR

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Differentiated risk management and asset quality performance, while maintaining leverage around 2.5x, unsecured debt to total debt at-or-around current levels, a robust funding profile from revolver availability and sustained liquidity coverage well in excess of 1.0x could yield positive rating actions. A material reduction in the size of the orderbook relative to the owned fleet and proactive management of near-term debt maturities could also drive positive rating momentum.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Negative rating pressure could arise from a material increase in secured debt levels, leverage exceeding 3.0x resulting from capital returns, impairments or a higher risk appetite; liquidity coverage approaching 1.0x; or an inability to maintain a fleet profile compromising highly liquid Tier 1 aircraft and manageable widebody exposure. Macroeconomic headwinds which pressure airlines and negatively impact the company's cash flow generation, profitability, and liquidity position, could also yield negative rating action.

A key person event with respect to Executive Chairman of the Board, Steven Udvar-Hazy or CEO and President, John Plueger would not lead to an immediate downgrade, but would be evaluated in the context of the potential impacts on Air Lease's strategic direction, industry relationships and risk appetite.

DEBT RATINGS

The ratings of the senior unsecured debt are primarily sensitive to changes in Air Lease's Long-Term IDR and secondarily to the level of unencumbered balance sheet assets in a stressed scenario, relative to outstanding debt. A decline in the level of unencumbered asset coverage, combined with a material increase in the use of secured debt, could result in the notching of the unsecured debt down from the Long-Term IDR.

The rating on the preferred shares is primarily sensitive to changes in Air Lease's Long-Term IDR and is expected to move in tandem. However, the preferred shares rating could be downgraded by an additional notch to reflect further structural subordination should the firm consider other hybrid issuances. ���������ֳ� has afforded Air Lease's preferred shares 100% equity credit given the noncumulative nature of the distributions, the fact that the preferred shares are perpetual and the lack of change of control provisions and events of default.

The rating of the sukuk issuance is principally sensitive to changes in Air Lease's Long-Term IDR. The ratings could also be sensitive to changes to the roles and obligations of Air Lease under the sukuk's structure and documents.

���������ֳ� will review the sukuk rating if the IDR drops from current levels, or upon the emergence of any information or events which could jeopardize the payment conditions under the indemnity.

Best/Worst Case Rating Scenario

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit /site/re/10111579

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on ���������ֳ�'s ESG Relevance Scores, visit .

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