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Management's Discussion of Results of Operations (Excerpts)

For purposes of readability, Zenith attempts to strip out all tables in excerpts from the Management Discussion. That information is contained elsewhere in our articles. The idea of this summary is simply to review how well we believe Management does its reporting. Also, this highlights what Management believes is important.

In our Decision Matrix at the end of each article, a company with 0 to 2 gets a "-1", and 3 to 5 gets a "+1."

On a scale of 0 to 5, 5 being best, Zenith rates this company's Management's Discussion as a 2.


Many important factors could cause our actual results to differ substantially from those anticipated in our forward looking statements,
including, among other things: • the availability of capital to us and to our customers and changes in interest rates;

• the ability of our lessees and potential lessees to make operating lease 
payments to us;

• our ability to successfully negotiate aircraft purchases, sales and leases, 
to collect outstanding amounts due and to repossess aircraft under defaulted 
leases, and to control costs and expenses;

• changes in the overall demand for commercial aircraft leasing and aircraft 
management services;

• the effects of terrorist attacks on the aviation industry and on our 
operations;

• the economic condition of the global airline and cargo industry and economic 
and political conditions;

• competitive pressures within the industry;

• the negotiation of aircraft management services contracts;

• regulatory changes affecting commercial aircraft operators, aircraft 
maintenance, engine standards, accounting standards and taxes; and

RISK FACTORS

Risks related to our business

We require significant capital to fund our business.

As of December 31, 2016, we had 420 new aircraft on order. Due to the 
capital-intensive nature of our business, we expect that we will incur 
additional indebtedness in the future and continue to maintain substantial 
levels of indebtedness. We have significant principal and interest payments on 
our outstanding indebtedness and substantial aircraft forward purchase contract 
payments. In order to meet these commitments and to maintain an adequate level 
of unrestricted cash, we will need to raise additional funds by accessing 
committed debt facilities, securing additional financing from banks or through 
capital market transactions, or possibly by selling aircraft. Our typical 
sources of funding may not be sufficient to meet our liquidity needs, in which 
case we may be required to raise capital from new sources, including by issuing 
new types of debt, equity or hybrid securities.

Despite our substantial indebtedness, we might incur significantly more debt.

Despite our current indebtedness levels, we expect to incur additional debt in 
the future to finance our operations, including purchasing aircraft and meeting 
our contractual obligations. The agreements relating to our debt, including our 
indentures, term loan facilities, ECA guaranteed financings, revolving credit 
facilities, securitizations, and other financings, limit but do not prohibit 
our ability to incur additional debt. As of December 31, 2016, we had 
approximately $7.3 billion of undrawn lines of credit available under our 
credit and term loan facilities, subject to certain conditions, including 
compliance with certain financial covenants. We regularly consider market 
conditions and our ability to incur indebtedness to either refinance existing 
indebtedness or for working capital. If we increase our total indebtedness, our 
debt service obligations will increase, and we will become more exposed to the 
risks arising from our substantial level of indebtedness.

Our level of indebtedness requires significant debt service payments.

The principal amount of our outstanding indebtedness, which excludes fair value 
adjustments of $0.5 billion and debt issuance costs and debt discounts of $0.2 
billion, was approximately $27.4 billion as of December 31, 2016 (approximately 
66% of our total assets as of December 31, 2016), and our interest payments 
were $1.3 billion for the year ended December 31, 2016. Due to the 
capital-intensive nature of our business, we expect that we will incur 
additional indebtedness in the future and continue to maintain significant 
levels of indebtedness. Our level of indebtedness: • requires a substantial 
portion of our cash flows from operations to be dedicated to interest and 
principal payments and therefore not available to fund our operations, working 
capital, capital expenditures, expansion, acquisitions or general corporate or 
other purposes;

• restricts the ability of some of our subsidiaries and joint ventures to make 
distributions to us;

• may impair our ability to obtain additional financing on favorable terms or 
at all in the future;

• may limit our flexibility in planning for, or reacting to, changes in our 
business and industry; and

• may make us more vulnerable to downturns in our business, our industry or the 
economy in general.


An increase in our cost of borrowing or changes in interest rates may adversely 
affect our net income.

We use a mix of fixed rate and floating rate debt to finance our business. Any 
increase in our cost of borrowing directly impacts our net income. Our cost of 
borrowing is affected primarily by the market's assessment of our credit risk 
and fluctuations in interest rates and general market conditions. Interest 
rates that we obtain on our debt financings can fluctuate based on, among other 
things, changes in views of our credit risk, fluctuations in U.S. Treasury 
rates and LIBOR rates, as applicable, changes in credit spreads and swap 
spreads, and the duration of the debt being issued. If we incur significant 
debt in the future, increased interest rates prevailing in the market at the 
time of the incurrence or refinancing of such debt will also increase our 
interest expense. If interest rates increase, we would be obligated to make 
higher interest payments to our lenders on the floating rate debt to the extent 
that it is not hedged. Please refer to "Item 11—Quantitative and Qualitative 
Disclosures About Market Risk—Interest rate risk" for further details on our 
interest rate risk. In addition, we are exposed to the credit risk that the 
counterparties to our derivative contracts will default in their obligations.

Moreover, if interest rates were to rise sharply, we would not be able to fully 
offset immediately the negative impact on our net income by increasing lease 
rates, even if the market were able to bear such increases in lease rates. Our 
leases are generally for multiple years with fixed lease rates over the life of 
the lease and, therefore, lags will exist because our lease rates with respect 
to a particular aircraft cannot generally be increased until the expiration of 
the lease.

Decreases in interest rates may also adversely affect our interest revenue on 
cash deposits as well as lease revenue generated from leases with lease rates 
tied to floating interest rates. During the year ended December 31, 2016, 
approximately 3.7% of our basic lease rents from aircraft under operating 
leases was derived from such leases. Therefore, if interest rates were to 
decrease, our lease revenue would decrease. In addition, since our fixed rate 
leases are based, in part, on prevailing interest rates at the time we enter 
into the lease, if interest rates decrease, new fixed rate leases we enter into 
may be at lower lease rates than if no interest rate decrease had occurred and 
our lease revenue will be adversely affected.

The agreements governing our debt contain various covenants that impose 
restrictions on us that may affect our ability to operate our business.

Our indentures, term loan facilities, ECA guaranteed financings, revolving 
credit facilities, securitizations, other commercial bank financings, and other 
agreements governing our debt impose operating and financial restrictions on 
our activities that limit or prohibit our ability to, among other things: • 
incur additional indebtedness;

• create liens on assets;

• sell certain assets;

• make certain investments, loans, guarantees or advances;

• declare or pay certain dividends and distributions;

• make certain acquisitions;

• consolidate, merge, sell or otherwise dispose of all or substantially all of 
our assets;

• enter into transactions with our affiliates;

• change the business conducted by the borrowers and their respective 
subsidiaries;

• enter into a securitization transaction unless certain conditions are met; 
and

• access cash in restricted bank accounts.

The agreements governing certain of our indebtedness also contain financial 
covenants, such as requirements that we comply with certain loan-to-value, 
interest coverage and leverage ratios. These restrictions could impede our 
ability to operate our business by, among other things, limiting our ability to 
take advantage of financing, merger and acquisition and other corporate 
opportunities.

Various risks, uncertainties and events beyond our control could affect our 
ability to comply with these covenants and maintain these financial tests and 
ratios. Failure to comply with any of the covenants in our existing or future 
financing agreements would result in a default under those agreements and under 
other agreements containing cross default provisions. Under these 
circumstances, we may have insufficient funds or other resources to satisfy all 
our obligations.

To service our debt and meet our other cash needs, we will require a 
significant amount of cash, which may not be available.

Our ability to make payments on, or repay or refinance, our debt and to fund 
planned aircraft purchases and other cash needs, will depend largely upon our 
future operating performance. Our future performance, to a certain extent, is 
subject to general economic, financial, competitive, legislative, regulatory 
and other factors that are beyond our control. In addition, our ability to 
borrow funds in the future to make payments on our debt will depend on our 
maintaining specified financial ratios and satisfying financial condition tests 
and other covenants in the agreements governing our debt now and in the future. 
Our business may not generate sufficient cash flow from operations and future 
borrowings may not be available in amounts sufficient to pay our debt or to 
satisfy our other liquidity needs.

If our cash flows and capital resources are insufficient to fund our debt 
service obligations, we may be forced to seek alternatives, such as to reduce 
or delay investments and aircraft purchases, or to sell assets, seek additional 
capital or restructure or refinance our indebtedness. Our ability to 
restructure or refinance our debt will depend on the condition of the capital 
markets and our financial condition at such time. Any refinancing of our debt 
could be at higher interest rates and might require us to comply with more 
onerous covenants, which could further restrict our business operations. The 
terms of our existing or future debt instruments may restrict us from adopting 
some of these alternatives. These alternative measures may not be successful 
and may not permit us to meet our scheduled debt service obligations or to meet 
our aircraft purchase commitments as they come due.

If we are unable to obtain sufficient cash, we might fail to meet our aircraft 
purchase commitments.

If we are unable to meet our aircraft purchase commitments as they come due, we 
will be subject to several risks, including: • forfeiting deposits and progress 
payments to manufacturers and having to pay certain significant costs related 
to these commitments such as actual damages and legal, accounting and financial 
advisory expenses;

• defaulting on our lease commitments, which could result in monetary damages 
and strained relationships with lessees;

• failing to realize the benefits of purchasing and leasing such aircraft; and

• risking harm to our business reputation, which would make it more difficult 
to purchase and lease aircraft in the future on agreeable terms, if at all.

Any of these events could materially and adversely affect our financial 
results.

We may be unable to generate sufficient returns on our aircraft investments.

Our results depend on our ability to consistently acquire strategically 
attractive aircraft, continually and profitably lease and re-lease them, and 
finally sell or otherwise dispose of them, in order to generate returns on the 
investments we have made, provide cash to finance our growth and operations, 
and service our existing debt. Upon acquiring new aircraft we may not be able 
to enter into leases that generate sufficient cash flow to justify the cost of 
purchase. When our leases expire or our aircraft are returned prior to the date 
contemplated in the lease, we bear the risk of re-leasing, selling or 
parting-out the aircraft. Because our leases are predominantly operating 
leases, only a portion of an aircraft's value is recovered by the revenues 
generated from the lease and we may not be able to realize the aircraft's 
residual value after lease expiration.

Our ability to profitably purchase, lease, re-lease, sell or otherwise dispose 
of our aircraft will depend on conditions in the airline industry and general 
market and competitive conditions at the time of purchase, lease, and 
disposition. In addition to factors linked to the aviation industry in general, 
other factors that may affect our ability to generate adequate returns from our 
aircraft include the maintenance and operating history of the airframe and 
engines, the number of operators using the particular type of aircraft, and 
aircraft age.

Customer demand for certain types of our aircraft may decline.

Aircraft are long-lived assets and demand for a particular model and type of 
aircraft can change over time. Demand may decline for a variety of reasons, 
including obsolescence following the introduction of newer technologies, market 
saturation due to increased production rates, technical problems associated 
with a particular model, new manufacturers entering the marketplace or existing 
manufacturers entering new market segments, additional governmental regulation 
such as environmental rules or aircraft age limitations, or the overall health 
of the airline industry.

The supply and demand for aircraft is affected by various factors that are 
outside of our control, including: • passenger and air cargo demand;

• fuel costs and general economic conditions;

• geopolitical events, including war, prolonged armed conflict and acts of 
terrorism;

• epidemics and natural disasters;

• governmental regulation, including regulation of trade, such as the 
imposition of import and export controls, tariffs and other trade barriers;

• interest rates;

• the availability and cost of financing;

• airline restructurings and bankruptcies;

• manufacturer production levels and technological innovation;

• manufacturers merging, entering or exiting the industry;

• retirement and obsolescence of aircraft models;

• increases in production rates from manufacturers;

• reintroduction into service of aircraft previously in storage; and

• airport and air traffic control infrastructure constraints.


Over recent years, the airline industry has committed to a significant number 
of aircraft deliveries through order placements with manufacturers, and in 
response, aircraft manufacturers have raised their production output. The 
increase in these production levels could result in an oversupply of relatively 
new aircraft if growth in airline traffic does not meet airline industry 
expectations.

In addition, recent and future political developments, including the change of 
U.S. presidential administration and 2017 elections in Europe, could result in 
increased regulation of trade, which could adversely impact demand for 
aircraft.

As demand for particular aircraft declines as a result of any of these factors, 
lease rates are likely to correspondingly decline, the residual values of that 
type of aircraft could be negatively impacted, and we may be unable to lease 
such aircraft on favorable terms, if at all. In addition, the risks associated 
with a decline in demand for particular aircraft model or type increase if we 
acquire a high concentration of such aircraft. For example, as of December 31, 
2016, we had 420 new aircraft on order, including 204 Airbus A320neo Family 
aircraft, 109 Boeing 737MAX aircraft, 50 Embraer E-Jets E2 aircraft, 38 Boeing 
787 aircraft and 19 Airbus A350 aircraft. If demand declines for a model or 
type of aircraft of which we own or will acquire a relatively high 
concentration, it could materially and adversely affect our financial results.

The value and lease rates of our aircraft could decline.

Aircraft values and lease rates have occasionally experienced sharp decreases 
due to a number of factors, including, but not limited to, decreases in 
passenger air travel and air cargo demand, changes in fuel costs, government 
regulation and changes in interest rates. In addition to factors linked to the 
aviation industry generally, many other factors may affect the value and lease 
rates of our aircraft, including: • the particular maintenance, operating 
history and documentary records of the aircraft;

• the geographical area where the aircraft is based and operates;

• the number of operators using a particular type of aircraft;

• the regulatory authority under which the aircraft is operated;

• whether the aircraft is subject to a lease and, if so, whether the lease 
terms are favorable to the lessor;

• the age of the aircraft;

• any renegotiation of a lease on less favorable terms;

• the negotiability of clear title free from mechanics liens and encumbrances;

• any regulatory and legal requirements that must be satisfied before the 
aircraft can be purchased, sold or re-leased;

• decrease in the credit-worthiness of lessees;

• compatibility of aircraft configurations or specifications with other 
aircraft owned by operators of that type;

• comparative value based on newly manufactured competitive aircraft; and

• the availability of spare parts.

Any decrease in the value and lease rates of our aircraft that results from the 
above factors or other factors may have a material adverse effect on our 
financial results.


Strong competition from other aircraft lessors could adversely affect our 
financial results.

The aircraft leasing industry is highly competitive. Our competition is 
primarily comprised of major aircraft leasing companies, but we may also 
encounter competition from other entities such as: • airlines;

• aircraft manufacturers;

• financial institutions, including those seeking to dispose of re-possessed 
aircraft at distressed prices;

• aircraft brokers;

• public and private partnerships, investors and funds with excess capital to 
invest in aircraft and engines; and

• emerging aircraft leasing companies that we do not currently consider our 
major competitors.

Some of these competitors may have greater operating and financial resources 
than we do. We may not always be able to compete successfully with such 
competitors and other entities, which could materially and adversely affect our 
financial results.

Our financial condition is dependent, in part, on the financial strength of our 
lessees.

Our financial condition depends on the ability of lessees to perform their 
payment and other obligations to us under our leases. We generate the primary 
portion of our revenue from leases to the aviation industry, and as a result we 
are indirectly affected by all the risks facing airlines today. The ability of 
our lessees to perform their obligations depends primarily on their financial 
condition and cash flows, which may be affected by factors outside our control, 
including: • passenger air travel and air cargo demand;

• competition;

• economic conditions and currency fluctuations in the countries and regions in 
which a lessee operates;

• price and availability of jet fuel;

• availability and cost of financing;

• fare levels;

• geopolitical and other events, including war, acts of terrorism, outbreaks of 
epidemic diseases and natural disasters;

• increases in operating costs, including labor costs and other general 
economic conditions affecting our lessees' operations;

• labor difficulties;

• the availability of financial or other governmental support extended to a 
lessee; and

• governmental regulation and associated fees affecting the air transportation 
business, including restrictions on carbon emissions and other environmental 
regulations, and fly-over restrictions imposed by route authorities.

Generally, airlines with high financial leverage are more likely than airlines 
with stronger balance sheets to be affected, and affected more quickly, by the 
factors listed above. Such airlines are also more likely to seek operating 
leases.

Any downturns in the aviation industry could greatly exacerbate the weakened 
financial condition and liquidity problems of some of our lessees and further 
increase the risk that they will delay, reduce or fail to make rental payments 
when due. At any point in time, our lessees may be significantly in arrears. 
Some lessees encountering financial difficulties may seek a reduction in their 
lease rates or other concessions, such as a decrease in their contribution 
toward maintenance obligations. Moreover, we may not correctly assess the 
credit risk of each lessee or charge lease rates that incorrectly reflect 
related risks. Many of our lessees are not rated investment grade by the 
principal U.S. rating agencies and may be more likely to suffer liquidity 
problems than those that are so rated.

If lessees of a significant number of our aircraft fail to perform their 
obligations to us, our financial results and cash flows will be materially and 
adversely affected.

A return to historically high fuel prices or continued volatility in fuel 
prices could affect the profitability of the aviation industry and our lessees' 
ability to meet their lease payment obligations to us.

Historically, fuel prices have fluctuated widely depending primarily on 
international market conditions, geopolitical and environmental events and 
currency exchange rates. Factors such as natural disasters can also 
significantly affect fuel availability and prices. The cost of fuel represents 
a major expense to airlines that is not within their control, and significant 
increases in fuel costs or hedges that inaccurately assess the direction of 
fuel costs can materially and adversely affect their operating results. Due to 
the competitive nature of the aviation industry, operators may be unable to 
pass on increases in fuel prices to their customers by increasing fares in a 
manner that fully offsets the increased fuel costs they may incur. In addition, 
they may not be able to manage this risk by appropriately hedging their 
exposure to fuel price fluctuations. The profitability and liquidity of those 
airlines that do hedge their fuel costs can also be adversely affected by swift 
movements in fuel prices, if such airlines are required as a result to post 
cash collateral under hedge agreements. Therefore, if for any reason fuel 
prices return to historically high levels or show significant volatility, our 
lessees are likely to incur higher costs or generate lower revenues, which may 
affect their ability to meet their obligations to us.

Interruptions in the capital markets could impair our lessees' ability to 
finance their operations, which could prevent the lessees from complying with 
payment obligations to us.

The global financial markets have been highly volatile and the availability of 
credit from financial markets and financial institutions can vary substantially 
depending on developments in the global financial markets. Many of our lessees 
have expanded their airline operations through borrowings and are leveraged. 
These lessees will depend on banks and the capital markets to provide working 
capital and to refinance existing indebtedness. To the extent such funding is 
unavailable, or available only at high interest costs or on unfavorable terms, 
and to the extent financial markets do not allow equity financing as an 
alternative, our lessees' operations and operating results may be materially 
and adversely affected and they may not comply with their respective payment 
obligations to us.

A sovereign debt crisis could result in higher borrowing costs and more limited 
availability of credit, as well as impact the overall airline industry and the 
financial health of our lessees.

In recent years, the European Union (the "EU") has faced both financial and 
political turmoil which, if it continues or worsens, could have a material 
adverse effect on our business. For example, following the global financial 
crisis of 2008, several countries in Europe faced a sovereign debt crisis 
(commonly referred to as the "European Debt Crisis") that negatively affected 
economic activity in that region and adversely affected the strength of the 
euro versus the U.S. dollar and other currencies. Although some of these 
countries are no longer facing a serious debt crisis, the lingering effects of 
the European Debt Crisis are unclear and may have a material adverse effect on 
our business, particularly if any European countries face sovereign debt 
default. Furthermore, concerns exist regarding the sovereign debt of certain 
Latin American countries, including Venezuela. If Venezuela or any other 
country faces a sovereign debt crisis, it could adversely affect the global 
banking system, due to its exposure to the sovereign debt and the imposition of 
stricter capital requirements. A sovereign debt crisis may also lower consumer 
confidence, which could adversely affect global economic conditions, and 
adverse changes in the global banking system or global economy may have a 
material adverse effect on our business.

Adverse conditions and disruptions in European economies could have a material 
adverse effect on our business.

Our business can be affected by a number of factors that are beyond our 
control, such as general geopolitical, economic and business conditions. 
Political uncertainty has created financial and economic uncertainty, most 
recently as a result of the United Kingdom's June 2016 referendum to withdraw 
from the EU (commonly referred to as "Brexit"). The economic consequences of 
Brexit, including the possible repeal of open-skies agreements, could have a 
material adverse effect on our business. Further, many of the structural issues 
facing the EU following the European Debt Crisis and Brexit remain, and 
problems could resurface that could affect financial market conditions, and, 
possibly, our business, results of operations, financial condition and 
liquidity, particularly if they lead to the exit of one or more countries from 
the European Monetary Union (the "EMU") or the exit of additional countries 
from the EU. If one or more countries exited the EMU, there would be 
significant uncertainty with respect to outstanding obligations of 
counterparties and debtors in any exiting country, whether sovereign or 
otherwise, and it would likely lead to complex and lengthy disputes and 
litigation. Additionally, it is possible that the recent political events in 
Europe may lead to the complete dissolution of the EMU or EU. The partial or 
full breakup of the EMU or EU would be unprecedented and its impact highly 
uncertain, including with respect to our business.

If the effects of terrorist attacks, war or armed hostilities adversely affect 
the financial condition of the airline industry, our lessees might not be able 
to meet their lease payment obligations to us.

Terrorist attacks, war or armed hostilities, or the fear of such events, have 
historically had a negative impact on the aviation industry and could result 
in: • higher costs to the airlines due to the increased security measures;

• decreased passenger demand and revenue due to the inconvenience of additional 
security measures or concerns about the safety of flying;

• the imposition of "no-fly zone" or other restrictions on commercial airline 
traffic in certain regions;

• uncertainty of the price and availability of jet fuel and the cost and 
practicability of obtaining fuel hedges;

• higher financing costs and difficulty in raising the desired amount of 
proceeds on favorable terms, if at all;

• significantly higher costs of aviation insurance coverage for future claims 
caused by acts of war, terrorism, sabotage, hijacking and other similar perils, 
or the unavailability of certain types of insurance;

• inability of airlines to reduce their operating costs and conserve financial 
resources, taking into account the increased costs incurred as a consequence of 
such events;

• special charges recognized by some operators, such as those related to the 
impairment of aircraft and engines and other long-lived assets stemming from 
the grounding of aircraft as a result of terrorist attacks, economic conditions 
and airline reorganizations; and

• an airline's becoming insolvent and/or ceasing operations.

For example, as a result of the September 11, 2001 terrorist attacks in the 
United States and subsequent terrorist attacks abroad, notably in the Middle 
East, Southeast Asia and Europe, increased security restrictions were 
implemented on air travel, costs for aircraft insurance and security measures 
increased, passenger and cargo demand for air travel decreased, and operators 
faced difficulties in acquiring war risk and other insurance at reasonable 
costs. Sanctions against Russia and, in the future, uncertainty regarding 
tensions between Ukraine and Russia, the situation in Iraq, Syria, the 
Israeli/Palestinian conflict, tension over the nuclear program of North Korea, 
political instability in the Middle East and North Africa, the territorial 
disputes between Japan and China and the recent tensions in the South China Sea 
could lead to further instability in these regions.

Terrorist attacks, war or armed hostilities, or the fear of such events, in 
these or any other regions, could adversely affect the aviation industry and 
the financial condition and liquidity of our lessees, as well as aircraft 
values and rental rates. In addition, such events might cause certain aviation 
insurance to become available only at significantly increased premiums or with 
reduced amounts of coverage that are insufficient to comply with the current 
requirements of aircraft lenders and lessors or with applicable government 
regulations, or not to be available at all. Although some governments provide 
for limited coverage under government programs for specified types of aviation 
insurance, these programs may not be available at the relevant time or 
governments may not pay under these programs in a timely fashion.

Such events are likely to cause our lessees to incur higher costs and to 
generate lower revenues, which could result in a material adverse effect on 
their financial condition and liquidity, including their ability to make rental 
and other lease payments to us or to obtain the types and amounts of insurance 
we require. This in turn could lead to aircraft groundings or additional lease 
restructurings and repossessions, increase our cost of re-leasing or selling 
aircraft, impair our ability to re-lease or otherwise dispose of aircraft on 
favorable terms or at all, or reduce the proceeds we receive for our aircraft 
in a disposition.

The effects of epidemic diseases and natural disasters, such as extreme weather 
conditions, floods, earthquakes and volcano eruptions, may adversely affect our 
lessees' ability to meet their lease payment obligations to us.

The outbreak of epidemic diseases, such as previously experienced with Ebola, 
measles, Severe Acute Respiratory Syndrome (SARS), H1N1 (swine flu) and Zika 
virus, could materially and adversely affect passenger demand for air travel. 
Similarly, the lack of air travel demand or the inability of airlines to 
operate to or from certain regions due to severe weather conditions and natural 
disasters, including floods, earthquakes and volcano eruptions, could impact 
the financial health of certain airlines, including our lessees. These 
consequences could result in our lessees' inability to satisfy their lease 
payment obligations to us, which in turn would materially and adversely affect 
our financial results.

Airline reorganizations could impair our lessees' ability to comply with their 
lease payment obligations to us.

In recent years, several airlines have filed for protection under their local 
bankruptcy and insolvency laws and, over the past several years, certain 
airlines have gone into liquidation. Historically, airlines involved in 
reorganizations have undertaken substantial fare discounting to maintain cash 
flows and to encourage continued customer loyalty. The bankruptcies have led to 
the grounding of significant numbers of aircraft, rejection of leases and 
negotiated reductions in aircraft lease rentals, with the effect of depressing 
aircraft market values. Additional reorganizations or liquidations by airlines 
under applicable bankruptcy or reorganization laws or further rejection or 
abandonment of aircraft by airlines in bankruptcy proceedings may depress 
aircraft values and aircraft lease rates. Additional grounded aircraft and 
lower market values would adversely affect our ability to sell certain of our 
aircraft or re-lease other aircraft at favorable rates if at all.

Our lessees may fail to properly maintain our aircraft.

We may be exposed to increased maintenance costs for our leased aircraft if 
lessees fail to properly maintain the aircraft or pay supplemental maintenance 
rents. Under our leases, our lessees are primarily responsible for maintaining 
our aircraft and complying with all governmental requirements applicable to the 
lessee and the aircraft, including operational, maintenance, government agency 
oversight, registration requirements and airworthiness directives. We also 
require many of our lessees to pay us supplemental maintenance rents. If a 
lessee fails to perform required maintenance on our aircraft during the term of 
the lease, its market value may decline, which would result in lower revenues 
from its subsequent lease or sale, or the aircraft might be grounded. 
Maintenance failures by a lessee would also likely require us to incur 
maintenance and modification costs, which could be substantial, upon the 
termination of the applicable lease to restore the aircraft to an acceptable 
condition prior to sale or re-leasing. Supplemental maintenance rents paid by 
our lessees may not be sufficient to fund such maintenance costs. If our 
lessees fail to meet their obligations to pay supplemental maintenance rents or 
fail to perform required scheduled maintenance, or if we are required to incur 
unexpected maintenance costs, our financial results may be materially and 
adversely affected.

Our lessees may fail to adequately insure our aircraft.

While an aircraft is on lease, we do not directly control its operation. 
Nevertheless, because we hold title to such aircraft, we could be held liable 
for losses resulting from its operation under one or more legal theories in 
certain jurisdictions around the world, or at a minimum, we might be required 
to expend resources in our defense. We require our lessees to obtain specified 
levels of insurance and indemnify us for, and insure against, such operational 
liabilities. However, some lessees may fail to maintain adequate insurance 
coverage during a lease term, which, although constituting a breach of the 
lease, would require us to take some corrective action, such as terminating the 
lease or securing insurance for the aircraft.

In addition, there are certain risks of losses our lessees face that insurers 
may be unwilling to cover or for which the cost of coverage would be 
prohibitively expensive. For example, following the terrorist attacks of 
September 11, 2001, aviation insurers significantly reduced the amount of 
coverage available to airlines for liability to persons other than airline 
employees or passengers for claims resulting from acts of terrorism, war or 
similar events and significantly increased the premiums for third party war 
risk and terrorism liability insurance and coverage in general. Therefore, our 
lessees' insurance coverage may not be sufficient to cover all claims that 
could be asserted against us arising from the operation of our aircraft.

Inadequate insurance coverage or default by lessees in fulfilling their 
indemnification or insurance obligations to us will reduce the insurance 
proceeds that would be received by us in the event we are sued and are required 
to make payments to claimants. Moreover, our lessees' insurance coverage is 
dependent on the financial condition of insurance companies, which might not be 
able to pay claims. A reduction in insurance proceeds otherwise payable to us 
as a result of any of these factors could materially and adversely affect our 
financial results.

If our lessees fail to cooperate in returning our aircraft following lease 
terminations, we may encounter obstacles and are likely to incur significant 
costs and expenses conducting repossessions.

Our legal rights and the relative difficulty of repossession vary significantly 
depending on the jurisdiction in which an aircraft is located and the 
applicable law. We may need to obtain a court order or consents for 
de-registration or re-export, a process that can differ substantially in 
different countries. Where a lessee or other operator flies only domestic 
routes in the jurisdiction in which the aircraft is registered, repossessing 
and exporting the aircraft may be challenging, especially if the jurisdiction 
permits the lessee or the other operator to resist de-registration. When a 
defaulting lessee is in bankruptcy, protective administration, insolvency or 
similar proceedings, additional limitations may apply. For example, certain 
jurisdictions give rights to the trustee in bankruptcy or a similar officer to 
assume or reject the lease or to assign it to a third party, or entitle the 
lessee or another third party to retain possession of the aircraft without 
paying lease rentals or performing all or some of the obligations under the 
relevant lease. Certain of our lessees are partially or wholly owned by 
government-related entities, which can complicate our efforts to repossess our 
aircraft in that government's jurisdiction. If we encounter any of these 
difficulties, we may be delayed in, or prevented from, enforcing certain of our 
rights under a lease and in re-leasing the affected aircraft.

When conducting a repossession, we are likely to incur significant costs and 
expenses that are unlikely to be recouped. These include legal and other 
expenses of court or other governmental proceedings, including the cost of 
posting security bonds or letters of credit necessary to effect repossession of 
the aircraft, particularly if the lessee is contesting the proceedings or is in 
bankruptcy. We must absorb the cost of lost revenue for the time the aircraft 
is off-lease. We may incur substantial maintenance, refurbishment or repair 
costs that a defaulting lessee has failed to pay and are necessary to put the 
aircraft in suitable condition for re-lease or sale. We may incur significant 
costs in retrieving or recreating aircraft records required for registration of 
the aircraft, and in obtaining the certificate of airworthiness for an 
aircraft. It may be necessary to pay to discharge liens or pay taxes and other 
governmental charges on the aircraft to obtain clear possession and to remarket 
the aircraft effectively, including, in some cases, liens that the lessee may 
have incurred in connection with the operation of its other aircraft. We may 
also incur other costs in connection with the physical possession of the 
aircraft.

Based on historical rates of airline defaults and bankruptcies, at least some 
of our lessees are likely to default on their lease obligations or file for 
bankruptcy in the ordinary course of our business. If we incur significant 
costs in repossessing our aircraft, our financial results may be materially and 
adversely affected.

If our lessees fail to discharge aircraft liens for which they are responsible, 
we may be obligated to pay to discharge the liens.

In the normal course of their business, our lessees are likely to incur 
aircraft and engine liens that secure the payment of airport fees and taxes, 
custom duties, Eurocontrol and other air navigation charges, landing charges, 
crew wages, and other liens that may attach to our aircraft. Aircraft may also 
be subject to mechanic's liens as a result of routine maintenance performed by 
third parties on behalf of our customers. Some of these liens can secure 
substantial sums, and if they attach to entire fleets of aircraft, as permitted 
in certain jurisdictions for certain kinds of liens, they may exceed the value 
of the aircraft itself. Although the financial obligations relating to these 
liens are the contractual responsibility of our lessees, if they fail to 
fulfill their obligations, the liens may ultimately become our financial 
responsibility. Until they are discharged, these liens could impair our ability 
to repossess, re-lease or sell our aircraft or engines. In some jurisdictions, 
aircraft and engine liens may give the holder thereof the right to detain or, 
in limited cases, sell or cause the forfeiture of the aircraft. If we are 
obliged to pay a large amount to discharge a lien, or if we are unable take 
possession of our aircraft subject to a lien in a timely and cost-effective 
manner, it could materially and adversely affect our financial results.

In certain countries, an engine affixed to an aircraft may become an accession 
to the aircraft and we may not be able to exercise our ownership rights over 
the engine.

In some jurisdictions, an engine affixed to an aircraft may become an accession 
to the aircraft, whereby the ownership rights of the owner of the aircraft 
supersede the ownership rights of the owner of the engine. If an aircraft is 
security for the owner's obligations to a third party, the security interest in 
the aircraft may supersede our rights as owner of the engine. This legal 
principle could limit our ability to repossess an engine in the event of a 
lease default while the aircraft with our engine installed remains in such 
jurisdiction. We would suffer a substantial loss if we were not able to 
repossess engines leased to lessees in these jurisdictions, which would 
materially and adversely affect our financial results.

If our lessees encounter financial difficulties and we restructure or terminate 
our leases, we are likely to obtain less favorable lease terms.

If a lessee delays, reduces, or fails to make rental payments when due, or has 
advised us that it will do so in the future, we may elect or be required to 
restructure or terminate the lease. A restructured lease will likely contain 
terms less favorable to us. If we are unable to agree on a restructuring deal 
and we terminate the lease, we may not receive all or any payments still 
outstanding, and we may be unable to re-lease the aircraft promptly and at 
favorable rates, if at all. We have conducted restructurings and terminations 
in the ordinary course of our business, and we expect more will occur in the 
future. If we are obligated to perform a significant number of restructurings 
and terminations, the associated reduction in lease revenue could materially 
and adversely affect our financial results and cash flows.

The advent of superior aircraft and engine technology or the introduction of a 
new line of aircraft could cause our existing aircraft portfolio to become 
outdated and therefore less desirable.

As manufacturers introduce technological innovations and new types of aircraft 
and engines, some of the aircraft and engines in our aircraft portfolio may 
become less desirable to potential lessees. New aircraft manufacturers, such as 
Mitsubishi Aircraft Corporation in Japan, JSC United Aircraft Corporation in 
Russia and Commercial Aircraft Corporation of China, Ltd. in China could 
produce aircraft that compete with current offerings from Airbus, Aerei da 
Trasporto Regionale (ATR), Boeing, Bombardier and Embraer. Additionally, new 
manufacturers may develop a narrowbody aircraft that competes with established 
aircraft types from Airbus and Boeing, putting downward price pressure on and 
decreasing the marketability of aircraft from Airbus and Boeing. New aircraft 
types that are introduced into the market could be more attractive for the 
target lessees of our aircraft. The development of more fuel-efficient engines 
could make aircraft in our portfolio with engines that are not as 
fuel-efficient less attractive to potential lessees. In addition, the 
imposition of increasingly stringent noise or emissions regulations may make 
some of our aircraft and engines less desirable in the marketplace. A decrease 
in demand for our aircraft as a result of any of these factors could materially 
and adversely affect our financial results.

Airbus and Boeing have launched new aircraft types, which could decrease the 
value and lease rates of aircraft in our fleet.

Airbus and Boeing have launched several new aircraft types in recent years, 
including the Boeing 787 Family, the Boeing 737MAX Family, the Boeing 777X, the 
Airbus A320neo Family, the Airbus A330neo Family, and the Airbus A350 Family. 
The availability of these new aircraft types, and potential variants of these 
new aircraft types, may have an adverse effect on residual value and future 
lease rates of older aircraft types and variants. The development of these new 
types and variants of such new types could decrease the desirability of the 
older types and variants and thereby increase the supply of the older types and 
variants in the marketplace. This increase in supply could, in turn, reduce 
both future residual values and lease rates for such older aircraft types and 
variants.

From time to time, Airbus and Boeing have announced scheduled production 
increases, which could result in overcapacity and decrease the value and lease 
rates of aircraft in our fleet.

The market may not be able to absorb the scheduled production increases 
announced by Airbus and Boeing. If the additional capacity scheduled to be 
produced by the manufacturers exceeds demand, the resulting overcapacity could 
have a negative effect on aircraft values and lease rates. If lending capacity 
does not increase in line with the increased aircraft production, the cost of 
lending or the ability to obtain debt could be negatively affected. Any such 
decrease in aircraft values and lease rates, or increase in the cost or 
availability of funding, could materially and adversely affect our financial 
results.

There are a limited number of aircraft and engine manufacturers and we depend 
on their ability to meet their obligations.

The supply of commercial jet aircraft is dominated by a small number of 
airframe and engine manufacturers. As a result, we are dependent on their 
ability to remain financially stable, manufacture products and related 
components that meet the airlines' demands and fulfill their contractual 
obligations to us. In the past we have experienced delays by the manufacturers 
in meeting their obligations to us and other third parties. If in the future 
the manufacturers fail to fulfill their contractual obligations to us, bring 
aircraft to market that do not meet customers' expectations, or do not respond 
appropriately to changes in the market environment, we may experience, among 
other things:

• missed or late delivery of aircraft and engines ordered by us and an 
inability to meet our contractual obligations to our customers, resulting in 
lost or delayed revenues, lower growth rates and strained customer 
relationships;

• an inability to acquire aircraft and engines and related components on terms 
that will allow us to lease those aircraft and engines to customers at a 
profit, resulting in lower growth rates or a contraction in our aircraft 
portfolio;

• a market environment with too many aircraft and engines available, creating 
downward pressure on demand for the aircraft and engines in our fleet and 
reduced market lease rates and sale prices;

• poor customer support or reputational damage from the manufacturers of 
aircraft, engines and components resulting in reduced demand for a particular 
manufacturer's product, creating downward pressure on demand for those aircraft 
and engines in our fleet and reduced market lease rates and sale prices for 
those aircraft and engines; and

• reduction in our competitiveness due to deep discounting by the 
manufacturers, which may lead to reduced market lease rates and sale prices and 
may affect our ability to remarket or sell some of the aircraft and engines in 
our portfolio.

Moreover, our purchase agreements with manufacturers and the leases we have 
signed with our customers for future lease commitments are all subject to 
cancellation rights related to delays in delivery dates. Any manufacturer 
delays for aircraft that we have committed to lease could strain our relations 
with our customers, and cancellation of such leases by the lessees could have a 
material adverse effect on our financial results.

Existing and future litigation against us could materially and adversely affect 
our business, financial position, liquidity or results of operations.

We are, and from time to time in the future may be, a defendant in lawsuits 
relating to our business. We cannot accurately predict the ultimate outcome of 
any litigation due to its inherent uncertainties. An unfavorable outcome could 
materially and adversely affect our business, financial position, liquidity or 
results of operations. In addition, regardless of the outcome of any 
litigation, we may be required to devote substantial resources and executive 
time to the defense of such actions. For a description of certain pending 
litigation involving our business, please refer to Note 30—Commitments and 
contingencies to our Consolidated Financial Statements included in this annual 
report.

Our international operations expose us to geopolitical, economic and legal 
risks associated with a global business.

We conduct our business in many countries. There are risks inherent in 
conducting our business internationally, including: • general political and 
economic instability in international markets;

• limitations in the repatriation of our assets;

• expropriation of our international assets; and

• different liability standards and legal systems that may be less developed 
and less predictable than those in advanced economies.

Furthermore, the new U.S. presidential administration has proposed or is 
considering various actions that could affect U.S. trade policy or practices, 
which could, among other things, adversely affect travel to or from the United 
States. These factors may have a material and adverse effect on our financial 
results.

We are indirectly subject to many of the economic and political risks 
associated with emerging markets.

We derive substantial lease revenue (approximately 59% in 2016, 60% in 2015 and 
58% in 2014) from airlines in emerging market countries. Emerging market 
countries have less developed economies and are more vulnerable to economic and 
political problems and may experience significant fluctuations in gross 
domestic product, interest rates and currency exchange rates, as well as civil 
disturbances, government instability, nationalization and expropriation of 
private assets and the imposition of taxes or other charges by government 
authorities. The occurrence of any of these events in markets served by our 
lessees and the resulting economic instability that may arise as a result of 
these events could adversely affect the value of our ownership interest in 
aircraft subject to lease in such countries, or the ability of our lessees that 
operate in these markets to meet their lease obligations. As a result, lessees 
that operate in emerging market countries may be more likely to default than 
lessees that operate in developed countries. In addition, legal systems in 
emerging market countries may be less developed, which could make it more 
difficult for us to enforce our legal rights in such countries. For these and 
other reasons, our financial results may be materially and adversely affected 
by economic and political developments in emerging market countries.

Because our lessees are concentrated in certain geographical regions, we have 
concentrated exposure to the political and economic risks associated with those 
regions.

Through our lessees and the countries in which they operate, we are exposed to 
the specific economic and political conditions and associated risks of those 
jurisdictions. For example, we have large concentrations of lessees in Russia, 
and therefore have increased exposure to the economic and political conditions 
in that country. These risks can include economic recessions, burdensome local 
regulations or, in extreme cases, increased risks of requisition of our 
aircraft. An adverse political or economic event in any region or country in 
which our lessees are concentrated or where we have a large number of aircraft 
could affect the ability of our lessees in that region or country to meet their 
obligations to us, or expose us to various legal or political risks associated 
with the affected jurisdictions, all of which could have a material and adverse 
effect on our financial results.

We are subject to various risks and requirements associated with transacting 
business in many countries.

Our international operations expose us to trade and economic sanctions, export 
controls and other restrictions imposed by the United States, the United 
Kingdom, or other governments or organizations. For example, the U.S. 
Departments of Justice, Commerce, State and Treasury and other U.S. federal 
agencies and authorities have a broad range of civil and criminal penalties 
they may seek to impose against corporations and individuals for violations of 
economic sanctions laws, export control laws, the Foreign Corrupt Practices Act 
("FCPA"), and other U.S. federal statutes and regulations, including those 
established by the Office of Foreign Asset Control ("OFAC"). Under these laws 
and regulations, the U.S. government may require export licenses, may seek to 
impose modifications to business practices, including cessation of business 
activities in sanctioned countries, and modifications to compliance programs, 
which may increase compliance costs, and may subject us to fines, penalties and 
other sanctions. A violation of any of these laws or regulations could 
materially and adversely impact our business, operating results, and financial 
condition.

As disclosed previously, on May 27, 2015, OFAC issued a subpoena to the Company 
requesting information related to prior transactions with Al Naser Airlines 
that may have led to aircraft being diverted to Iran. Al Naser had been 
designated by OFAC as a blocked person on May 21, 2015, and had been added by 
the U.S. Department of Commerce's Bureau of Industry and Security ("BIS") to 
its Denied Persons List on the same date. The Company has cooperated fully with 
the investigations by OFAC and BIS.

We have implemented and maintain in effect policies and procedures designed to 
ensure compliance by us, our subsidiaries and our directors, officers, 
employees, consultants and agents with respect to various export control, 
anti-corruption, anti-terrorism and anti-money laundering laws and regulations. 
However, such personnel could engage in unauthorized conduct for which we may 
be held responsible. Violations of such laws and regulations may result in 
severe criminal or civil sanctions, and we may be subject to other liabilities, 
which could materially and adversely affect our financial results.

Our ability to operate in some countries is restricted by foreign regulations 
and controls on investments.

Many countries restrict, or in the future might restrict, foreign investments 
in a manner adverse to us. These restrictions and controls have limited, and 
may in the future restrict or preclude, our investment in joint ventures or the 
acquisition of businesses in certain jurisdictions or may increase the cost to 
us of entering into such transactions. Various governments, particularly in the 
Asia/Pacific region, require governmental approval before foreign persons may 
make investments in domestic businesses and also limit the extent of any such 
investments. Furthermore, various governments may reserve the right to approve 
the repatriation of capital by, or the payment of dividends to, foreign 
investors. Restrictive policies regarding foreign investments may increase our 
costs of pursuing growth opportunities in foreign jurisdictions, which could 
materially and adversely affect our financial results.

Our aircraft are subject to various environmental regulations.

Governmental regulations regarding aircraft and engine noise and emissions 
levels apply based on where the relevant airframe is registered and where the 
aircraft is operated. For example, jurisdictions throughout the world have 
adopted noise regulations which require all aircraft to comply with noise level 
standards. In addition, the United States and the International Civil Aviation 
Organization ("ICAO") have adopted a more stringent set of standards for noise 
levels that apply to engines manufactured or certified beginning in 2006. 
Currently, United States regulations do not require any phase-out of aircraft 
that qualify with the older standards, but the European Union has established a 
framework for the imposition of operating limitations on aircraft that do not 
comply with the newer standards. These regulations could limit the economic 
life of certain of our aircraft and engines, reduce their value, limit our 
ability to lease or sell the non-compliant aircraft and engines or, if engine 
modifications are permitted, require us to make significant additional 
investments in the aircraft and engines to make them compliant.

In addition to more stringent noise restrictions, the United States, European 
Union and other jurisdictions have imposed more stringent limits on the 
emission of nitrogen oxide, carbon monoxide and carbon dioxide from engines. 
Although current emissions control laws generally apply to newer engines, new 
laws could be passed in the future that also impose limits on older engines, 
and therefore any new engines we purchase, as well as our older engines, could 
be subject to existing or new emissions limitations or indirect taxation. For 
example, the European Union issued a directive in January 2009 to include 
aviation within the scope of its greenhouse gas emissions trading scheme, 
thereby requiring that all flights arriving, departing or flying within any 
European Union country, beginning on January 1, 2012, comply with the scheme 
and surrender allowances for emissions, regardless of the age of the engine 
used in the aircraft. In addition, the United States Environmental Protection 
Agency recently ruled that jet engine exhaust endangers public health by 
contributing to climate change, increasing the likelihood that regulations will 
be proposed in this regard. Limitations on emissions such as the one in the 
European Union could favor younger, more fuel efficient aircraft since they 
generally produce lower levels of emissions per passenger, which could 
adversely affect our ability to re-lease or otherwise dispose of less efficient 
aircraft on a timely basis, at favorable terms, or at all. This is an area of 
law that is rapidly changing and as of yet remains specific to certain 
jurisdictions. While we do not know at this time whether new emission control 
laws will be passed, and if passed what impact such laws might have on our 
business, any future emissions limitations could adversely affect us.

Our operations are subject to various environmental regulations.

Our operations are subject to various federal, state and local environmental, 
health and safety laws and regulations in the United States, including those 
relating to the discharge of materials into the air, water and ground, the 
generation, storage, handling, use, transportation and disposal of hazardous 
materials, and the health and safety of our employees. A violation of these 
laws and regulations or permit conditions can result in substantial fines, 
permit revocation or other damages. Many of these laws impose liability for 
clean-up of contamination that may exist at our facilities (even if we did not 
know of or did not cause the contamination) or related personal injuries or 
natural resource damages or costs relating to contamination at third party 
waste disposal sites where we have sent or may send waste. We may not be in 
complete compliance with these laws, regulations or permits at all times. We 
may have liability under environmental laws or be subject to legal actions 
brought by governmental authorities or other parties for actual or alleged 
violations of, or liability under, environmental, health and safety laws, 
regulations or permits.

If a decline in demand for certain aircraft causes a decline in its projected 
lease rates, or if we dispose of an aircraft for a price that is less than its 
depreciated book value on our balance sheet, then we will recognize impairments 
or make fair value adjustments.

We test long-lived assets for impairment whenever events or changes in 
circumstances indicate that the assets' carrying amounts are not recoverable 
from their undiscounted cash flows. If the gross cash flow test fails, the 
difference between the fair value and the carrying amount of the aircraft is 
recognized as an impairment loss. Factors that may contribute to impairment 
charges include, but are not limited to, unfavorable airline industry trends 
affecting the residual values of certain aircraft types, high fuel prices and 
development of more fuel efficient aircraft shortening the useful lives of 
certain aircraft, management's expectations that certain aircraft are more 
likely than not to be parted-out or otherwise disposed of sooner than their 
expected life, and new technological developments. Cash flows supporting 
carrying values of older aircraft are more dependent upon current lease 
contracts. In addition, we believe that residual values of older aircraft are 
more exposed to non-recoverable declines in value in the current economic 
environment.

If economic conditions deteriorate, we may be required to recognize impairment 
losses. In that event, our estimates and assumptions regarding forecasted cash 
flows from our long-lived assets would need to be reassessed, including the 
duration of the economic downturn and the timing and strength of the pending 
recovery, both of which are important variables for purposes of our long-lived 
asset impairment tests. Any of our assumptions may prove to be inaccurate, 
which could adversely impact forecasted cash flows of certain long-lived 
assets, especially for older aircraft. If so, it is possible that an impairment 
may be triggered for other long-lived assets in the future and that any such 
impairment amounts may be material. As of December 31, 2016, 182 of our owned 
aircraft under operating leases were 15 years of age or older. These aircraft 
represented approximately 6% of the net book value of our total flight 
equipment and lease-related assets and liabilities as of December 31, 2016.

A cyber-attack could lead to a material disruption of our IT systems and the 
loss of business information, which may hinder our ability to conduct our 
business effectively and may result in lost revenues and additional costs.

Parts of our business depend on the secure operation of our computer systems to 
manage, process, store and transmit information associated with aircraft 
leasing. Like other global companies, we have, from time to time, experienced 
threats to our data and systems, including malware and computer virus attacks, 
internet network scans, systems failures and disruptions. A cyber-attack that 
bypasses our information technology, or IT, security systems, causing an IT 
security breach, could lead to a material disruption of our IT systems and 
adversely impact our daily operations and cause the loss of sensitive 
information, including our own proprietary information and that of our 
customers, suppliers and employees. Such losses could harm our reputation and 
result in competitive disadvantages, litigation, regulatory enforcement 
actions, lost revenues, additional costs and liability. While we devote 
substantial resources to maintaining adequate levels of cyber-security, our 
resources and technical sophistication may not be adequate to prevent all types 
of cyber-attacks.

We could suffer material damage to, or interruptions in, our IT systems as a 
result of external factors, staffing shortages or difficulties in updating our 
existing software or developing or implementing new software.

We depend largely upon our IT systems in the conduct of all aspects of our 
operations. Such systems are subject to damage or interruption from power 
outages, computer and telecommunications failures, computer viruses, security 
breaches, fire and natural disasters. Damage or interruption to our information 
systems may require a significant investment to fix or replace them, and we may 
suffer interruptions in our operations in the interim. In addition, we are 
currently pursuing a number of IT related projects that will require ongoing IT 
related development and conversion of existing systems. Costs and potential 
problems and interruptions associated with the implementation of new or 
upgraded systems and technology or with maintenance or adequate support of 
existing systems could also disrupt or reduce the efficiency of our operations. 
Any material interruptions or failures in our information systems may have a 
material adverse effect on our business or results of operations.

Risks related to our organization and structure

We are a public limited liability company incorporated in the Netherlands 
("naamloze vennootschap" or "N.V.") and it may be difficult to obtain or 
enforce judgments against us or our executive officers, some of our directors 
and some of our named experts in the United States.

We were incorporated under the laws of the Netherlands and, as such, the rights 
of holders of our ordinary shares and the civil liability of our directors will 
be governed by the laws of the Netherlands and our articles of association. The 
rights of shareholders under the laws of the Netherlands may differ from the 
rights of shareholders of companies incorporated in other jurisdictions. Many 
of our directors and executive officers and most of our assets and the assets 
of our directors are located outside the United States. In addition, our 
articles of association do not provide for U.S. courts as a venue for, or for 
the application of U.S. law to, lawsuits against us, our directors and 
executive officers. As a result, you may not be able to serve process on us or 
on such persons in the United States or obtain or enforce judgments from U.S. 
courts against us or them based on the civil liability provisions of the 
securities laws of the United States. There is doubt as to whether the Dutch 
courts would enforce certain civil liabilities under U.S. securities laws in 
original actions and enforce claims for punitive damages.

Under our articles of association, we indemnify and hold our directors, 
officers and employees harmless against all claims and suits brought against 
them, subject to limited exceptions. Under our articles of association, to the 
extent allowed by law, the rights and obligations among or between us, any of 
our current or former directors, officers and employees and any current or 
former shareholder shall be governed exclusively by the laws of the Netherlands 
and subject to the jurisdiction of the Dutch courts, unless such rights or 
obligations do not relate to or arise out of their capacities listed above. 
Although there is doubt as to whether U.S. courts would enforce such provision 
in an action brought in the United States under U.S. securities laws, such 
provision could make judgments obtained outside of the Netherlands more 
difficult to enforce against our assets in the Netherlands or jurisdictions 
that would apply Dutch law.

If our subsidiaries do not make distributions to us we will not be able to pay 
dividends.

Substantially all of our assets are held by, and substantially all of our 
revenues are generated by our subsidiaries. While we do not currently, and do 
not currently intend to, pay dividends, we will be limited in our ability to 
pay dividends unless we receive dividends or other cash flow from our 
subsidiaries. A substantial portion of our owned aircraft are held through SPEs 
or finance structures that borrow funds to finance or refinance the aircraft. 
The terms of such financings place restrictions on distributions of funds to 
us. If these limitations prevent distributions to us or our subsidiaries do not 
generate positive cash flows, we will be limited in our ability to pay 
dividends and may be unable to transfer funds between subsidiaries if required 
to support our subsidiaries.

As a foreign private issuer, we are permitted to file less information with the 
SEC than a company incorporated in the United States. Accordingly, there may be 
less publicly available information concerning us than there is for companies 
incorporated in the United States.

As a foreign private issuer, we are exempt from certain rules under the U.S. 
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which impose 
disclosure requirements, as well as procedural requirements, for proxy 
solicitations under Section 14 of the Exchange Act. Moreover, we are not 
required to file periodic reports and financial statements with the SEC as 
frequently or as promptly as U.S. companies whose securities are registered 
under the Exchange Act, nor are we generally required to comply with the SEC's 
Regulation FD, which restricts the selective disclosure of material non-public 
information.

The effect of purchases and sales of our ordinary shares by the hedge 
counterparties (or their affiliates or agents) to modify or terminate their 
hedge positions may have a negative effect on the market price of our ordinary 
shares.

We have been advised that Waha, which previously was a significant direct 
AerCap shareholder, has entered into funded collar transactions relating to its 
AerCap ordinary shares, pursuant to which, we have been advised, collar 
counterparties (or their affiliates or agents) have borrowed from Waha and 
re-sold, and may continue to purchase and sell, our ordinary shares. The 
purchases and sales of our ordinary shares by the collar counterparties (or 
their affiliates or agents) to modify the collar counterparties' hedge 
positions from time to time during the term of the funded collar transactions 
may variously have a positive, negative or neutral impact on the market price 
of our ordinary shares and may affect the volatility of the market price of our 
ordinary shares, depending on market conditions at such times. In addition, 
purchases of our ordinary shares by the collar counterparties (or their 
affiliates or agents) in connection with the termination by Waha of any portion 
of the loan of our ordinary shares to the collar counterparties under the 
funded collar transactions, or cash settlement of any funded collar 
transaction, may have the effect of increasing, or limiting a decrease in, the 
market price of our ordinary shares during the relevant unwind period.

Risks related to taxation

We may become a passive foreign investment company ("PFIC") for U.S. federal 
income tax purposes.

We do not believe we will be classified as a PFIC for 2016. We cannot yet make 
a determination as to whether we will be classified as a PFIC for 2017 or 
subsequent years. The determination as to whether a foreign corporation is a 
PFIC is a complex determination based on all of the relevant facts and 
circumstances and depends on the classification of various assets and income 
under PFIC rules. In our case, the determination is further complicated by the 
application of the PFIC rules to leasing companies and to joint ventures and 
financing structures common in the aircraft leasing industry. It is unclear how 
some of these rules apply to us. Further, this determination must be tested 
annually and our circumstances may change in any given year. We do not intend 
to make decisions regarding the purchase and sale of aircraft with the specific 
purpose of reducing the likelihood of our becoming a PFIC. Accordingly, our 
business plan may result in our engaging in activities that could cause us to 
become a PFIC. If we are or become a PFIC, U.S. shareholders may be subject to 
increased U.S. federal income taxes on a sale or other disposition of our 
ordinary shares and on the receipt of certain distributions and will be subject 
to increased U.S. federal income tax reporting requirements. See "Item 10. 
Additional Information—Taxation—U.S. tax considerations" for a more detailed 
discussion of the consequences to you if we are treated as a PFIC and a 
discussion of certain elections that may be available to mitigate the effects 
of that treatment. We urge you to consult your own tax advisors regarding the 
application of the PFIC rules to your particular circumstances.

We may become subject to income or other taxes in jurisdictions which would 
adversely affect our financial results.

We and our subsidiaries are subject to the income tax laws of Ireland, the 
Netherlands, the United States and other jurisdictions in which our 
subsidiaries are incorporated or based. Our effective tax rate in any period is 
impacted by the source and the amount of earnings among our different tax 
jurisdictions. A change in the division of our earnings among our tax 
jurisdictions could have a material impact on our effective tax rate and our 
financial results. In addition, we or our subsidiaries may be subject to 
additional income or other taxes in these and other jurisdictions by reason of 
the management and control of our subsidiaries, our activities and operations, 
where our aircraft operate, where the lessees of our aircraft (or others in 
possession of our aircraft) are located or changes in tax laws, regulations or 
accounting principles. Although we have adopted guidelines and operating 
procedures to ensure our subsidiaries are appropriately managed and controlled, 
we may be subject to such taxes in the future and such taxes may be 
substantial. The imposition of such taxes could have a material adverse effect 
on our financial results.

We may incur current tax liabilities in our primary operating jurisdictions in 
the future.

We expect to make current tax payments in some of the jurisdictions where we do 
business in the normal course of our operations. Our ability to defer the 
payment of some level of income taxes to future periods is dependent upon the 
continued benefit of accelerated tax depreciation on our flight equipment in 
some jurisdictions, the continued deductibility of external and intercompany 
financing arrangements and the application of tax losses prior to their 
expiration in certain tax jurisdictions, among other factors. The level of 
current tax payments we make in any of our primary operating jurisdictions 
could adversely affect our cash flows and have a material adverse effect on our 
financial results.

We may become subject to additional Irish taxes based on the extent of our 
operations carried on in Ireland.

Our Irish tax resident group companies are currently subject to Irish corporate 
income tax on trading income at a rate of 12.5%, on capital gains at 33% and on 
other income at 25%. We expect that substantially all of our Irish income will 
be treated as trading income for tax purposes in future periods. As of December 
31, 2016, we had significant Irish tax losses available to carry forward 
against our trading income. The continued application of the 12.5% tax rate to 
trading income generated in our Irish tax resident group companies and the 
ability to carry forward Irish tax losses to offset future taxable trading 
income depends in part on the extent and nature of activities carried on in 
Ireland both in the past and in the future. Our Irish tax resident group 
companies intend to carry on their activities in Ireland so that the 12.5% rate 
of tax applicable to trading income will apply and that they will be entitled 
to offset future income with tax losses arising from the same trading activity.

We may fail to qualify for benefits under one or more tax treaties.

We do not expect that our subsidiaries located outside of the United States 
will have any material U.S. federal income tax liability by reason of 
activities we carry out in the United States and the lease of assets to lessees 
that operate in the United States. This conclusion will depend, in part, on 
continued qualification for the benefits of income tax treaties between the 
United States and other countries in which we are subject to tax (particularly 
Ireland). That in turn may depend on, among others, the nature and level of 
activities carried on by us and our subsidiaries in each jurisdiction, the 
identity of the owners of equity interests in subsidiaries that are not wholly 
owned and the identities of the direct and indirect owners of our indebtedness.

The nature of our activities may be such that our subsidiaries may not continue 
to qualify for the benefits under income tax treaties with the United States 
and that may not otherwise qualify for treaty benefits. Failure to so qualify 
could result in the imposition of U.S. federal and state taxes, which could 
have a material adverse effect on our financial results. Additionally, in light 
of the recent change in the U.S. political landscape, U.S. tax laws and U.S. 
tax treaties may change significantly in the future, and such changes could 
have a material adverse effect on our business.

Changes in tax laws may result in additional taxes for us or for our 
shareholders.

Tax laws and the practice of the local tax authorities in the jurisdictions in 
which we reside, in which we conduct activities or operations, or where our 
aircraft or lessees of our aircraft are located may change in the future. These 
changes would include changes introduced or otherwise applicable in such 
jurisdictions as a result, direct or indirectly, of the Organisation for 
Economic Co-operation and Development initiative on Base Erosion and Profit 
Shifting or by the European Commission. Such changes could include new measures 
regarding the availability of double tax treaty relief, the deductibility of 
interest costs and the determination of permanent establishments. Changes may 
also be introduced due to the implementation of the EU Anti-Tax Avoidance 
Directive ("ATAD"). Most of the measures contained in the EU ATAD are due to be 
implemented with effect from January 1, 2019, though some measures may be 
deferred to 2024 in certain circumstances. Such changes in tax law or practice 
could result in additional taxes for us or our shareholders.

Information on the Company

History and development of the company

AerCap Holdings N.V. is incorporated in the Netherlands as a public limited 
liability company ("naamloze vennootschap" or "N.V.") on July 10, 2006. On 
November 27, 2006, we completed the initial public offering of 26.1 million of 
our ordinary shares on the New York Stock Exchange (the "NYSE"). On August 6, 
2007, we completed the secondary offering of 20.0 million additional ordinary 
shares on the NYSE. Pursuant to our recent migration from the Netherlands to 
Ireland, we moved our headquarters and executive officers from Amsterdam to 
Dublin, effective as of February 1, 2016. We continue to have offices in 
Amsterdam, Los Angeles, Shannon, Fort Lauderdale, Miami, Singapore, Shanghai 
and Abu Dhabi. We also have representative offices at the world's largest 
aircraft manufacturers, Boeing in Seattle and Airbus in Toulouse.

On May 14, 2014 (the "Closing Date"), we issued 97,560,976 new ordinary shares 
and paid $2.4 billion in cash to AIG to successfully complete the ILFC 
Transaction. Immediately following the ILFC Transaction, AIG owned 
approximately 46% of AerCap. Following the ILFC Transaction, we effected a 
reorganization of ILFC's corporate structure and assets, pursuant to which ILFC 
transferred its assets substantially as an entirety to AerCap Trust, a legal 
entity formed on February 5, 2014, and AerCap Trust assumed substantially all 
the liabilities of ILFC, including liabilities in respect of ILFC's 
indebtedness.

On June 9, 2015, AIG sold 71,184,686 of its AerCap ordinary shares in a 
secondary public offering and AerCap completed the Share Repurchase from AIG of 
15,698,588 ordinary shares. On August 24, 2015, AIG sold 10,677,702 of its 
AerCap ordinary shares in a secondary public offering. Following this sale, AIG 
no longer owns any of our outstanding ordinary shares and has no designees on 
our Board of Directors.

As of December 31, 2016, we had 187,847,345 ordinary shares issued, including 
176,247,154 ordinary shares issued and outstanding, and 11,600,191 ordinary 
shares held as treasury shares. Our issued and outstanding ordinary shares 
included 3,426,810 unvested restricted stock.

Our principal executive offices are located at AerCap House, 65 St. Stephen's 
Green, Dublin 2, Ireland, and our general telephone number is +353 1 819 2010. 
Our website address is www.aercap.com. Information contained on our website 
does not constitute a part of this annual report. Puglisi & Associates is our 
authorized representative in the United States. The address of Puglisi & 
Associates is 850 Liberty Avenue, Suite 204, Newark, DE 19711 and their general 
telephone number is +1 (302) 738-6680.


Business overview

Aircraft leasing

We are the world's largest independent aircraft leasing company. We focus on 
acquiring in-demand aircraft at attractive prices, funding them efficiently, 
hedging interest rate risk conservatively and using our platform to deploy 
these assets with the objective of delivering superior risk adjusted returns. 
We believe that by applying our expertise, we will be able to identify and 
execute on a broad range of market opportunities that we expect will generate 
attractive returns for our shareholders. We are an independent aircraft lessor, 
and, as such, we are not affiliated with any airframe or engine manufacturer. 
This independence provides us with purchasing flexibility to acquire aircraft 
or engine models regardless of the manufacturer.

We operate our business on a global basis, leasing aircraft to customers in 
every major geographical region. As of December 31, 2016, we owned 1,022 
aircraft and AeroTurbine did not own any aircraft. In addition, we managed 95 
aircraft and AerDragon, a non-consolidated joint venture, owned another 29 
aircraft. As of December 31, 2016, we also had 420 new aircraft on order, 
including 204 Airbus A320neo Family aircraft, 109 Boeing 737MAX aircraft, 50 
Embraer E-Jets E2 aircraft, 38 Boeing 787 aircraft and 19 Airbus A350 aircraft. 
As of December 31, 2016, the average age of our 1,022 owned aircraft fleet, 
weighted by net book value, was 7.4 years and as of December 31, 2015, the 
average age of our 1,109 owned aircraft fleet, weighted by net book value, was 
7.7 years.

We have the infrastructure, expertise and resources to execute a large number 
of diverse aircraft transactions in a variety of market conditions. During the 
year ended December 31, 2016, we executed 458 aircraft transactions. Our teams 
of dedicated marketing and asset trading professionals have been successful in 
leasing and managing our aircraft portfolio. During the year ended December 31, 
2016, our weighted average owned aircraft utilization rate was 99.5%, 
calculated based on the number of days each aircraft was on lease during the 
year, weighted by the net book value of the aircraft.

Aircraft leases and transactions

We lease most of our aircraft to airlines under operating leases. Under an 
operating lease, the lessee is responsible for the maintenance and servicing of 
the equipment during the lease term and the lessor receives the benefit, and 
assumes the risk, of the residual value of the equipment at the end of the 
lease. Rather than purchase all of their aircraft, many airlines acquire 
aircraft under operating leases because this reduces their capital requirements 
and costs and allows them to manage their fleet more efficiently as aircraft 
are returned over time. Since the 1970's and the creation of aircraft leasing 
pioneers Guinness Peat Aviation ("GPA") and ILFC, the world's airlines have 
increasingly turned to operating leases to meet their aircraft needs. As of 
December 31, 2016, our owned and managed aircraft were leased to approximately 
200 customers in approximately 80 countries. Over the life of our aircraft, we 
seek to increase the returns on our investments by managing the lease rates, 
time off-lease and financing and maintenance costs, and by carefully timing 
their sale.

Our current operating aircraft leases have initial terms ranging in length up 
to approximately 16 years. By varying our lease terms, we mitigate the effects 
of changes in cyclical market conditions at the time aircraft become eligible 
for re-lease. In periods of strong aircraft demand, we seek to enter into 
medium and long-term leases to lock-in the generally higher market lease rates 
during those periods, while in periods of low aircraft demand we seek to enter 
into shorter-term leases to mitigate the effects of the generally lower market 
lease rates during those periods.

Well in advance of the expiration of an operating lease, we prioritize entering 
into a lease extension with the then-current operator. This reduces our risk of 
aircraft downtime as well as aircraft transition costs. The terms of our lease 
extensions reflect the market conditions at the time and typically contain 
different terms from the original lease. Should a lessee not be interested in 
extending a lease, or if we believe we can obtain a more favorable return on 
the aircraft, we will explore other options, including the sale of the 
aircraft. If we enter into a lease agreement for the same aircraft with a 
different lessee, that usually occurs 10 to 18 months prior to the scheduled 
return date of the aircraft. When the aircraft is returned, there is usually 
maintenance work to be performed before the aircraft transitions to the next 
lessee. Upon redelivery, an aircraft is usually delivered to the next lessee in 
less than two months.

Our extensive experience, global reach and operating capabilities allow us to 
rapidly complete numerous aircraft transactions, which enables us to increase 
the returns on our aircraft investments and minimize any time that our aircraft 
are not generating revenue for us. We successfully executed 458 aircraft 
transactions during the year ended December 31, 2016.

Leases of new aircraft generally have longer terms than used aircraft on 
re-lease. In addition, leases of more expensive aircraft generally have longer 
lease terms than those for less expensive aircraft. Lease terms for owned 
aircraft tend to be longer than those for managed aircraft because the average 
age of our owned fleet is lower than that of our managed fleet.

Before making any decision to lease an aircraft, we perform a review of the 
prospective lessee, which generally includes reviewing financial statements, 
business plans, cash flow projections, maintenance capabilities, operational 
performance histories, hedging arrangements for fuel, foreign currency and 
interest rates and relevant regulatory approvals and documentation. We perform 
on-site credit reviews for new lessees, which typically include extensive 
discussions with the prospective lessee's management before we enter into a new 
lease. We also evaluate the jurisdiction in which the lessee operates to ensure 
we are in compliance with any regulations and evaluate our ability to repossess 
our assets in the event of a lessee default. Depending on the credit quality 
and financial condition of the lessee, we may require the lessee to obtain 
guarantees or other financial support from an acceptable financial institution 
or other third parties.

We typically require our lessees to provide a security deposit for their 
performance under their leases, including the return of the aircraft in the 
specified maintenance condition at the expiration of the lease. The size of the 
security deposit historically has been, on average, three months' rent and is 
based on the creditworthiness and the jurisdiction of the lessee.

All of our lessees are responsible for the maintenance and repair of the leased 
aircraft as well as other operating costs during the lease term. Based on the 
credit quality of the lessee, we require some of our lessees to pay 
supplemental maintenance rents to cover major scheduled maintenance costs. If a 
lessee pays supplemental maintenance rents, we reimburse them for their 
maintenance costs up to the amount of their supplemental maintenance rent 
payments. Under the terms of our leases, at lease expiration, to the extent 
that a lessee has paid us more supplemental maintenance rents than we have 
reimbursed them for their maintenance costs, we retain the excess rent. In most 
lease contracts that do not require the payment of supplemental maintenance 
rents, the lessee is generally required to redeliver the aircraft in a similar 
maintenance condition (normal wear and tear excepted) as when accepted under 
the lease. To the extent that the redelivery condition is different from the 
acceptance condition, we generally receive EOL cash compensation for the value 
difference at the time of redelivery. As of December 31, 2016, 510 
(approximately 50%) of our 1,022 owned aircraft leases and as of December 31, 
2015, 575 (approximately 52%) out of our 1,109 owned aircraft leases, provided 
for the payment of supplemental maintenance rents. Regardless of whether a 
lessee pays supplemental maintenance rents, we usually agree to compensate a 
lessee for scheduled maintenance on airframe and engines related to the prior 
utilization of the aircraft. For this prior utilization, we have normally 
received cash compensation from prior lessees of the aircraft, which was 
recognized as revenue during or at the end of the prior lease.

In all cases, we require the lessee to reimburse us for any costs we incur if 
the aircraft is not in the required condition upon redelivery. All of our 
leases contain provisions regarding our remedies and rights in the event of 
default by the lessee, and also include specific provisions regarding the 
required condition of the aircraft upon its redelivery.

Our lessees are also responsible for compliance with all applicable laws and 
regulations governing the leased aircraft and all related costs. We require our 
lessees to comply with either the Federal Aviation Administration, European 
Aviation Safety Agency or their equivalent standards in other jurisdictions.

During the term of our leases, some of our lessees have experienced financial 
difficulties resulting in the need to restructure their leases. Generally, our 
restructurings have involved a number of possible changes to the lease terms, 
including the voluntary termination of leases prior to their scheduled 
expiration, the arrangement of subleases from the primary lessee to a 
sublessee, the rescheduling of lease payments and the exchange of lease 
payments for other consideration, including convertible bonds, warrants, shares 
and promissory notes. We generally seek to receive these and other marketable 
securities from our restructured leases, rather than deferred receivables. In 
some cases, we have been required to repossess a leased aircraft and, in those 
cases, we have usually exported the aircraft from the lessee's jurisdiction to 
prepare it for remarketing. In the majority of these situations, we have 
obtained the lessee's cooperation and the return and export of the aircraft 
were completed without significant delay, generally within two months. In some 
situations, however, our lessees have not cooperated in returning aircraft and 
we have been required to take legal action. In connection with the repossession 
of an aircraft, we may be required to settle claims on the aircraft or to which 
the lessee is subject, including outstanding liens on the repossessed aircraft.

Aircraft services

We provide aircraft asset management and corporate services to securitization 
vehicles, joint ventures and other third parties. As of December 31, 2016, we 
had aircraft management and administration and/or cash management service 
contracts with eight parties, including AerDragon, that owned 124 aircraft. 
During the year ended December 31, 2016, three parties accounted for 73% of our 
aircraft services revenue. We categorize our aircraft services into aircraft 
asset management, administrative services and cash management services. Since 
we have an established operating system to manage our own aircraft, the 
incremental cost of providing aircraft management services to securitization 
vehicles, joint ventures and third parties is limited. Our primary aircraft 
asset management activities include: • remarketing aircraft;

• collecting rental and supplemental maintenance rent payments, monitoring 
aircraft maintenance, monitoring and enforcing contract compliance and 
accepting delivery and redelivery of aircraft;

• conducting ongoing lessee financial performance reviews;

• periodically inspecting the leased aircraft;

• coordinating technical modifications to aircraft to meet new lessee 
requirements;

• conducting restructuring negotiations in connection with lease defaults;

• repossessing aircraft;

• arranging and monitoring insurance coverage;

• registering and de-registering aircraft;

• arranging for aircraft and aircraft engine valuations; and

• providing market research.

We charge fees for our aircraft management services based on a mixture of fixed 
and rental-based amounts, but we also receive performance-based fees related to 
the managed aircraft lease revenues or sale proceeds, or specific upside 
sharing arrangements.

We provide cash management and administrative services to securitization 
vehicles and joint ventures. Cash management services consist primarily of 
treasury services such as the financing, refinancing, hedging and ongoing cash 
management of these vehicles. Our administrative services consist primarily of 
accounting and corporate secretarial services, including the preparation of 
budgets and financial statements and, in the case of some securitization 
vehicles, liaising with the rating agencies.

Engine, parts and supply chain solutions

At the end of 2015, we made the decision to restructure and downsize the 
AeroTurbine business. Please refer to Note 26—AeroTurbine restructuring to our 
Consolidated Financial Statements included in this annual report for detail of 
the AeroTurbine related restructuring expenses we recorded during the years 
ended December 31, 2016 and 2015. We expect to complete the downsizing within 
the next year and do not expect the remaining restructuring related expenses to 
be material.

Prior to the restructuring and downsizing, AeroTurbine provided engine leasing, 
certified aircraft engines, airframes, and engine parts, and supply chain 
solutions, and was capable of disassembling aircraft and engines into parts. 
AeroTurbine sold airframe parts primarily to airlines, maintenance, repair and 
overhaul service providers, and aircraft parts distributors. AeroTurbine also 
provided us with part-out and engine leasing capabilities.

Our business strategy

We develop our aircraft leasing business by executing on our focused business 
strategy, the key components of which are as follows:

Manage the profitability of our aircraft portfolio

Manage the profitability of our aircraft portfolio by selectively: • purchasing 
aircraft directly from manufacturers;

• entering into purchase and leaseback transactions with aircraft operators;

• using our global customer relationships to obtain favorable lease terms for 
aircraft and maximizing aircraft utilization;

• maintaining diverse sources of global funding;

• optimizing our portfolio by selling select aircraft; and

• providing management services to securitization vehicles, our joint ventures 
and other aircraft owners at limited incremental cost to us.


Our ability to profitably manage aircraft throughout their lifecycle depends in 
part on our ability to successfully source acquisition opportunities of new and 
used aircraft at favorable terms, as well as secure long-term funding for such 
acquisitions, lease aircraft at profitable rates, minimize downtime between 
leases and associated technical expenses and opportunistically sell aircraft.

Efficiently manage our liquidity

Our management analyzes sources of financing based on pricing and other terms 
and conditions in order to optimize the return on our investments. We have the 
ability to access a broad range of liquidity sources globally, and since 2010, 
we have raised approximately $31 billion of financing, including through bank 
debt, revolving credit facilities, governmental secured debt, securitization 
and note issuances in the debt capital markets.

We have access to liquidity in the form of our revolving credit facilities and 
our term loan facilities, which provide us with flexibility in raising capital 
and enable us to deploy capital rapidly to accretive purchasing opportunities 
that arise in the market. As of December 31, 2016, we had approximately $7.3 
billion of undrawn lines of credit available under our credit and term loan 
facilities and $2.0 billion of unrestricted cash. We strive to maintain a 
diverse financing strategy, both in terms of capital providers and structure, 
through the use of bank debt, securitization structures, note issuance and 
export credit, including ECA guaranteed loans, in order to maximize our 
financial flexibility. We also leverage our long-standing relationships with 
the major aircraft financers and lenders to secure access to capital. In 
addition, we attempt to maximize the cash flows and continue to pursue the sale 
of aircraft to generate additional cash flows. Please refer to Note 16—Debt to 
our Consolidated Financial Statements included in this annual report for a 
detailed description of our outstanding indebtedness.

Manage our aircraft portfolio

We intend to maintain an attractive portfolio of in-demand aircraft by 
acquiring new aircraft directly from aircraft manufacturers, executing purchase 
and leasebacks through the airlines, assisting airlines with refleetings, and 
through other opportunistic transactions. We will rely on our experienced team 
of portfolio management professionals to identify and purchase assets we 
believe are being sold at attractive prices or that we believe will experience 
an increase in demand and value. In addition, we intend to continue to 
rebalance our aircraft portfolio through sales to maintain the appropriate mix 
of aviation assets by customer concentration, age and aircraft type.

Maintain a diversified and satisfied customer base

We currently lease our owned and managed aircraft to approximately 200 
customers in approximately 80 countries. We monitor our exposure concentrations 
by both lessee and country jurisdiction and intend to maintain a 
well-diversified customer base. We believe we offer a quality product, both in 
terms of asset and customer service, to all of our customers. We have 
successfully worked with many airlines to find mutually beneficial solutions to 
operational and financial challenges. We believe we maintain excellent 
relations with our customers. We have been able to achieve a high utilization 
rate on our aircraft assets as a result of our customer reach, quality product 
offering and strong portfolio management capabilities.

Joint ventures

We conduct some of our business through joint ventures. The joint venture 
arrangements allow us to: • order new aircraft in larger quantities to increase 
our buying power and economic leverage;

• increase the geographical and product diversity of our portfolio;

• obtain stable servicing revenues; and

• diversify our exposure to the economic risks related to aircraft.


Relationship with Airbus and Boeing and other manufacturers

We are one of the largest customers of Airbus and Boeing measured by deliveries 
of aircraft through 2016 and our order backlog. We are also the launch customer 
of the Embraer E2 program, with an order for 50 E-Jets E2 aircraft which are 
scheduled for entry into service in 2018. We are also among the largest 
purchasers of engines from each of CFM International, GE Aviation, 
International Aero Engines, Pratt & Whitney and Rolls-Royce. These extensive 
manufacturer relationships and the scale of our business enable us to place 
large orders with favorable terms and conditions, including pricing and 
delivery terms. In addition, these strategic relationships with manufacturers 
and market knowledge allow us to participate in new aircraft designs, which 
gives us increased confidence in our airframe and engine selections. AerCap 
cooperates broadly with manufacturers seeking mutually beneficial 
opportunities, including additional orders, purchasing selective new aircraft 
on short notice, and facilitating manufacturer targets by purchasing used 
aircraft from airlines seeking to renew their fleets.

Competition

The aircraft leasing and sales business is highly competitive. We face 
competition from aircraft manufacturers, financial institutions, other leasing 
companies, aircraft brokers and airlines. Competition for a leasing transaction 
is based on a number of factors, including delivery dates, lease rates, term of 
lease, other lease provisions, aircraft condition and the availability in the 
market place of the types of aircraft that can meet the needs of the customer. 
As a result of our geographical reach, diverse aircraft portfolio and success 
in remarketing our aircraft, we believe we are a strong competitor in all of 
these areas. Our primary competitor is GE Capital Aviation Services, and we 
compete, to a lesser extent, with a number of smaller aircraft leasing 
companies.

Insurance

Our lessees are required under our leases to bear responsibility, through an 
operational indemnity subject to customary exclusions, and to carry insurance 
for any liabilities arising out of the operation of our aircraft or engines, 
including any liabilities for death or injury to persons and damage to property 
that ordinarily would attach to the operator of the aircraft. In addition, our 
lessees are required to carry other types of insurance that are customary in 
the air transportation industry, including hull all risks insurance for both 
the aircraft and each engine whether or not installed on our aircraft, hull war 
risks insurance covering risks such as hijacking, terrorism, confiscation, 
expropriation, nationalization and seizure (in each case at a value stipulated 
in the relevant lease which typically exceeds the net book value by 10%, 
subject to adjustment or fleet aggregate limits in certain circumstances) and 
aircraft spares insurance and aircraft third party liability insurance, in each 
case subject to customary deductibles and exclusions. We are named as an 
additional insured on liability insurance policies carried by our lessees, and 
we or our lenders are designated as a loss payee in the event of a total loss 
of the aircraft or engine. We monitor the compliance by our lessees with the 
insurance provisions of our leases by securing confirmation of coverage from 
the lessee's insurance brokers. We also purchase insurance which provides us 
with coverage when our aircraft or engines are not subject to a lease or where 
a lessee's policy fails to indemnify us. In addition, we carry customary 
insurance for our property. Such insurance is subject to customary deductibles 
and exclusions. Insurance experts advise and make recommendations to us as to 
the appropriate amount of insurance coverage that we should obtain.

Regulation

While the air transportation industry is highly regulated, since we do not 
operate aircraft, we generally are not directly subject to most of these 
regulations. Our lessees are subject, however, to extensive regulation under 
the laws of the jurisdictions in which they are registered and in which they 
operate. These regulations, among other things, govern the registration, 
operation and maintenance of our aircraft and engines. Most of our aircraft are 
registered in the jurisdiction in which the lessee of the aircraft is certified 
as an air operator. Both our aircraft and engines are subject to the 
airworthiness and other standards imposed by our lessees' jurisdictions of 
operation. Laws affecting the airworthiness of aviation assets are generally 
designed to ensure that all aircraft, engines and related equipment are 
continuously maintained in proper condition to enable safe operation of the 
aircraft. Most countries' aviation laws require aircraft and engines to be 
maintained under an approved maintenance program having defined procedures and 
intervals for inspection, maintenance and repair.

In addition, under our leases, we may be required in some instances to obtain 
specific licenses, consents or approvals for different aspects of the leases. 
These required items include consents from governmental or regulatory 
authorities for certain payments under the leases and for the import, re-export 
or deregistration of the aircraft and engines. Also, to perform some of our 
cash management services and insurance services from Ireland under our 
management arrangements with our joint ventures and securitization entities, we 
are required to have a license from the Irish regulatory authorities, which we 
have obtained.

Please refer to "Item 3—Risk Factors—Risks related to our business—We are 
subject to various risks and requirements associated with transacting business 
in many countries", "Item 3—Risk Factors—Risks related to our business—Our 
ability to operate in some countries is restricted by foreign regulations and 
controls on investments", "Item 3—Risk Factors—Risks related to our 
business—Our aircraft are subject to various environmental regulations", and 
"Item 3—Risk Factors—Risks related to our business—Our operations are subject 
to various environmental regulations" for a detailed discussion of government 
sanctions, export controls and other regulations that could affect our 
business.

Litigation

Please refer to Note 30—Commitments and contingencies to our Consolidated 
Financial Statements included in this annual report for a detailed description 
of material litigation to which we are a party.

Trademarks

We have registered the "AerCap" name with The European Union Trademark Office 
("EUIPO") and the United States Patent and Trademark Office ("USPTO"), as well 
as filed the "AerCap" trademark with the World Intellectual Property 
Organization International (Madrid) Registry ("WIPO") and various local 
trademark authorities. The "AeroTurbine" trademark has been registered with 
WIPO and USPTO.

Corporate social responsibility

During 2016, the Board discussed and reviewed our corporate social 
responsibility ("CSR") objectives and activities. Although our aircraft are 
generally used for activities that have significant impact on the environment, 
updating our aircraft portfolio through the acquisition of new, modern 
technology aircraft while disposing of older aircraft has a positive impact on 
the environment, as these new technology aircraft generate significantly less 
pollution than older aircraft and engines. In addition, the Board discussed our 
participation in a number of industry related educational schemes and 
charitable donations. In addition, the Board discussed and reviewed our 
activities and conduct as they relate to ethics, labor environment, 
citizenship, governance and transparency and financial reporting.

Flight equipment

We have certain contractual rights for aircraft type substitutions.

Aircraft acquisitions and dispositions

We purchase new and used aircraft directly from aircraft manufacturers, 
airlines, financial investors and other aircraft leasing and finance companies. 
The aircraft we purchase are both on-lease and off-lease, depending on market 
conditions and the composition of our portfolio. The buyers of our aircraft 
include airlines, financial investors and other aircraft leasing companies. We 
primarily acquire aircraft at attractive prices in three ways: by purchasing 
large quantities of aircraft directly from manufacturers to take advantage of 
volume discounts, by purchasing portfolios consisting of aircraft of varying 
types and ages and by entering into purchase and leaseback transactions with 
airlines. In addition, we also opportunistically purchase individual aircraft 
that we believe are being sold at attractive prices, or that we expect will 
experience an increase in demand. Through our airline marketing team, which is 
in frequent contact with airlines worldwide, we are also able to identify 
attractive acquisition and disposition opportunities. We sell aircraft when we 
believe the market price for the type of aircraft has reached its peak, or to 
rebalance the composition of our portfolio.

Prior to a purchase or disposition, our dedicated portfolio management group 
analyzes the aircraft's price, fit in our portfolio, specification and 
configuration, maintenance history and condition, the existing lease terms, 
financial condition and creditworthiness of the existing lessee, the 
jurisdiction of the lessee, industry trends, financing arrangements and the 
aircraft's redeployment potential and value, among other factors. During the 
year ended December 31, 2016, we executed 38 aircraft purchases and 141 
aircraft sales from our owned and managed portfolios.

Facilities

We moved into our new headquarters in Dublin, Ireland (61,000 square feet) in 
the third quarter of 2016 and commenced the 25-year office facility lease 
contracted in 2015. We have an option to terminate the lease in 2031. We lease 
our office facility in Amsterdam, The Netherlands (39,000 square feet) under a 
lease that expires in March 2018. We lease our Shannon, Ireland office facility 
under a 21-year lease (11,000 square feet) and a 19-year lease (6,000 square 
feet) that began in March 2008 and June 2010, respectively, and have an option 
to terminate both leases in 2018. We occupy space in Los Angeles, California 
(21,000 square feet) under a lease that expires in August 2025. We lease our 
Singapore office facility under two leases that expire in December 2018 (17,000 
square feet). In addition to the above facilities, we also lease small offices 
in New York, New York, Fort Lauderdale, Florida, Shanghai, China and Abu Dhabi, 
United Arab Emirates.

Through our AeroTurbine subsidiary, as of December 31, 2016, we occupied 
approximately 264,000 square feet of space near Miami, Florida that was used as 
the corporate office and warehouse, under a lease that expires in March 2024. 
In March 2017, AeroTurbine executed an amendment to the existing lease 
agreement for this facility. Pursuant to the amendment, the square footage of 
the leased premises was reduced from approximately 264,000 square feet to 
approximately 64,000 square feet. As of December 31, 2016, we also leased 
approximately 1,100,000 square feet in AeroTurbine's Goodyear facility in 
Arizona, which included two hangars and substantial additional space for 
outdoor storage of aircraft, pursuant to long-term leases that expire in 2018 
and 2026. In January 2017, AeroTurbine sold its operations at Goodyear, and the 
buyer assumed all obligations with respect to the leases arising as of the 
closing date.

Organizational structure

AerCap Holdings N.V. is a holding company that holds directly and indirectly 
consolidated subsidiaries, which in turn own our aircraft assets. As of 
December 31, 2016, AerCap Holdings N.V. did not own significant assets other 
than its direct and indirect investments in its subsidiaries.

Unresolved Staff Comments

Operating and Financial Review and Prospects

You should read this discussion in conjunction with our audited Consolidated 
Financial Statements and the related notes included in this annual report. Our 
financial statements are presented in accordance with accounting principles 
generally accepted in the United States of America, or U.S. GAAP. The 
discussion below contains forward looking statements that are based upon our 
current expectations and are subject to uncertainty and changes of 
circumstances. See "Item 3. Key Information—Risk Factors" and "Special Note 
About Forward Looking Statements".

Overview

Net income attributable to AerCap Holdings N.V. for the year ended December 31, 
2016 was $1,046.6 million, as compared to $1,178.7 million for the year ended 
December 31, 2015. For the year ended December 31, 2016, diluted earnings per 
share was $5.52. The weighted average number of diluted shares outstanding was 
189.7 million for the year ended December 31, 2016. Net interest margin, or net 
spread, the difference between basic lease rents and interest expense, 
excluding the mark-to-market of interest rate caps and swaps, was $3,305.0 
million for the year ended December 31, 2016. Please refer to "Item 5. 
Operating and Financial Review and Prospects—Non-GAAP measures" for a 
reconciliation of net interest margin or net spread to the most closely related 
U.S. GAAP measure for the years ended December 31, 2016 and 2015.

Major developments in 2016 • In January 2016, AerCap executed its first 
placement of ten Boeing 737MAX aircraft from its order book, leased to Travel 
Service, the largest airline in the Czech Republic.

• In February 2016, AerCap announced a new $400 million share repurchase 
program. The share repurchase program was completed on June 1, 2016.

• In April 2016, AerCap closed a new $0.7 billion secured credit facility, 
which will be used to finance nine aircraft.

• In May 2016, AerCap Trust and AICDC co-issued $1.0 billion aggregate 
principal amount of senior unsecured notes due 2022.

• In May 2016, AerCap announced a new $250 million share repurchase program. 
The share repurchase program was completed on September 7, 2016.

• In July 2016, AerCap closed a $0.7 billion secured credit facility, which 
will be used to finance 13 aircraft.

• In August 2016, AerCap announced a new $250 million share repurchase program. 
The share repurchase program was completed on December 8, 2016.

• In September 2016, AerCap delivered its first Airbus A320neo on lease to 
Volaris, making the airline the first carrier in North America to operate the 
aircraft type.

• In September 2016, AerCap executed the placement of three Embraer E190-E2 
aircraft and two E195-E2 aircraft to Turkish carrier, Borajet Airlines.

• In November 2016, AerCap announced a new $250 million share repurchase 
program. The share repurchase program was completed on March 6, 2017.

• In November 2016, AerCap closed a $0.6 billion secured credit facility, which 
will be used to finance eight aircraft.

• During 2016, AerCap executed portfolio sale transactions for the sale of 72 
aircraft at an aggregate sale price of approximately $2 billion.


Aviation assets

During the year ended December 31, 2016, we acquired $3.9 billion of aviation 
assets, primarily related to the acquisition of 38 aircraft. As of December 31, 
2016, we owned 1,022 aircraft. In addition, we managed 95 aircraft and 
AerDragon, a non-consolidated joint venture, owned another 29 aircraft. As of 
December 31, 2016, we also had 420 new aircraft on order, which included 204 
Airbus A320neo Family aircraft, 109 Boeing 737MAX aircraft, 50 Embraer E-Jets 
E2 aircraft, 38 Boeing 787 aircraft and 19 Airbus A350 aircraft. The average 
age of our 1,022 owned aircraft fleet, weighted by net book value, was 7.4 
years as of December 31, 2016.

Significant components of revenues and expenses

Revenues and other income

Our revenues and other income consist primarily of lease revenue from aircraft 
leases, net gain on sale of assets and other income.

Lease revenue

Nearly all of our aircraft lease agreements provide for the periodic payment of 
a fixed or a floating amount of rent. Floating rents are tied to interest rates 
during the terms of the respective leases. During the year ended December 31, 
2016, approximately 3.7% of our basic lease rents from aircraft under operating 
leases was attributable to leases tied to floating interest rates. In limited 
circumstances, our leases may require a basic rental payment based partially or 
exclusively on the amount of usage during a period. In addition, our leases 
require the payment of supplemental maintenance rent based on aircraft 
utilization during the lease term, or EOL compensation calculated with 
reference to the technical condition of the aircraft at lease expiration. The 
amount of lease revenue we recognize is primarily influenced by the following 
five factors: • the contracted lease rate, which is highly dependent on the 
age, condition and type of the leased aircraft;

• for leases with rates tied to floating interest rates, interest rates during 
the term of the lease;

• the number of aircraft currently subject to lease contracts;

• the lessee's performance of its lease obligations; and

• the amount of EOL compensation payments we receive and the amount of accrued 
maintenance liabilities released to revenue during and at the end of a lease.

In addition to aircraft-specific factors such as the type, condition and age of 
the aircraft, the lease rates for our leases with fixed rental payments are 
determined in part by reference to the prevailing interest rate for a debt 
instrument with a term similar to the lease term and with a similar credit 
quality as the lessee at the time we enter into the lease. Many of the factors 
described above are influenced by global and regional economic trends, airline 
market conditions, the supply and demand balance for the type of aircraft we 
own and our ability to remarket our aircraft subject to expiring lease 
contracts under favorable economic terms.

As of December 31, 2016, 1,015 of our 1,022 owned aircraft were on lease to 181 
customers in 77 countries, with no lessee accounting for more than 10% of total 
lease revenue for the year ended December 31, 2016. As of December 31, 2016, 
our owned aircraft portfolio included seven aircraft that were off-lease; six 
of these off-lease aircraft were classified as held for operating leases and 
one aircraft was classified as held for sale. As of March 15, 2017, five of the 
off-lease aircraft were re-leased or under commitments for re-lease, one 
aircraft was sold and one aircraft was designated for part-out.

Net gain on sale of assets

Our net gain on sale of assets is generated from the sale of our aircraft, 
engines and other aircraft assets, and is largely dependent on the condition of 
the asset being sold, prevailing interest rates, airline market conditions and 
the supply and demand balance for the type of asset we are selling. The timing 
of the closing of aircraft and engine sales is often uncertain, as a sale may 
be concluded swiftly or negotiations may extend over several weeks or months. 
As a result, even if net gain on sale of assets is comparable over a long 
period of time, during any particular reporting period we may close 
significantly more or fewer sale transactions than in other reporting periods. 
Accordingly, net gain on sale of assets recorded in one reporting period may 
not be comparable to net gain on sale of assets in other reporting periods.

Other income

Our other income includes management fee revenue, interest revenue and other 
income.

We generate management fee revenue by providing management services to 
non-consolidated aircraft securitization vehicles, joint ventures, and other 
third parties. Our management services include aircraft asset management 
services, such as leasing and remarketing services and technical advisory 
services, cash management and treasury services, and accounting and 
administrative services.

Our interest revenue is derived primarily from deposit interest on unrestricted 
and restricted cash balances and on financial instruments we hold, such as 
subordinated debt investments in unconsolidated securitization vehicles or 
affiliates. The amount of interest revenue we recognize in any period is 
influenced by our unrestricted or restricted cash balances, the principal 
balance of financial instruments we hold, contracted or effective interest 
rates, and movements in provisions for financial instruments which can affect 
adjustments to valuations or provisions.

Our other income primarily includes income we generate from the sale of, or 
lower of cost or market adjustments related to, non-aircraft assets, including 
inventories of AeroTurbine, net gain on sale of equity investments accounted 
for under the equity method, lease termination penalties, insurance proceeds 
and other miscellaneous activities.

Operating expenses

Our operating expenses consist primarily of depreciation and amortization, 
interest expense, leasing expenses and selling, general and administrative 
expenses.

Depreciation and amortization

Our depreciation expense is influenced by the adjusted gross book values, 
depreciable lives and estimated residual values of our flight equipment. 
Adjusted gross book value is the original cost of our flight equipment, 
including purchase expenditures, adjusted for subsequent capitalized 
improvements, impairments and accounting basis adjustments associated with a 
business combination or a purchase and leaseback transaction. In addition, we 
have definite-lived intangible assets which are amortized over the period which 
we expect to derive economic benefits from such assets.


Interest expense

Our interest expense arises from a variety of funding structures and related 
derivative financial instruments as described in "Item 11—Quantitative and 
Qualitative Disclosures About Market Risk", Note 13—Derivative assets and 
liabilities and Note 16—Debt to our Consolidated Financial Statements included 
in this annual report. Interest expense in any period is primarily affected by 
contracted interest rates, amortization of fair value adjustments, amortization 
of debt issuance costs and debt discounts, principal amounts of indebtedness 
and unrealized mark-to-market gains or losses on derivative financial 
instruments for which we did not achieve cash flow hedge accounting treatment.

Leasing expenses

Our leasing expenses consist primarily of maintenance rights expense, 
maintenance expenses on our flight equipment, which we incur during the lease 
through a lessor maintenance contribution or when we perform maintenance on our 
off-lease aircraft, technical expenses we incur to monitor the maintenance 
condition of our flight equipment during a lease, expenses to transition flight 
equipment from an expired lease to a new lease contract, non-capitalizable 
flight equipment transaction expenses, and provision for credit losses on notes 
receivables, trade receivables and receivables from net investment in finance 
and sales-type leases.

Maintenance rights intangible assets are recognized when we acquire aircraft 
subject to existing leases, primarily as a result of the ILFC Transaction. 
These intangible assets represent the contractual right to receive the aircraft 
in a specified maintenance condition at the end of the lease (EOL contracts) or 
our right to receive an aircraft in better maintenance condition due to our 
obligation to contribute towards the cost of the maintenance events performed 
by the lessee either through reimbursement of maintenance deposit rents held 
(MR contracts), or through a lessor contribution to the lessee.

For MR contracts, maintenance rights expense is recognized when the lessee 
submits a reimbursement claim and provides the required documentation related 
to the cost of a qualifying maintenance event that relates to pre-acquisition 
usage. For EOL contracts, maintenance rights expense is recognized upon lease 
termination, to the extent the lease end cash compensation paid to us is less 
than the maintenance rights intangible asset. To the extent the lease end cash 
compensation paid to us is more than the maintenance rights intangible asset, 
revenue is recognized in lease revenue in our Consolidated Income Statements, 
upon lease termination.

Selling, general and administrative expenses

Our selling, general and administrative expenses consist primarily of personnel 
expenses, including salaries, benefits and severance compensation, share-based 
compensation expense, professional and advisory costs, office facility 
expenses, and travel expenses as summarized in Note 22—Selling, general and 
administrative expenses to our Consolidated Financial Statements included in 
this annual report. The level of our selling, general and administrative 
expenses is influenced primarily by the number of our employees and the extent 
of transactions or ventures we pursue that require the assistance of outside 
professionals or advisors.

Provision for income taxes

Our operations are taxable primarily in the three main jurisdictions in which 
we manage our business: Ireland, the Netherlands and the United States. 
Deferred income taxes are provided to reflect the impact of temporary 
differences between our U.S. GAAP income before income taxes and our taxable 
income. Our effective tax rate has varied from year to year. The primary source 
of temporary differences is the availability of accelerated tax depreciation in 
our primary operating jurisdictions. Our effective tax rate in any year depends 
on the tax rates in the jurisdictions from which our income is derived, along 
with the extent of permanent differences between U.S. GAAP income before income 
taxes and taxable income.

We have tax losses in certain jurisdictions that can be carried forward, which 
we recognize as deferred income tax assets. We evaluate the recoverability of 
deferred income tax assets in each jurisdiction in each period based upon our 
estimates of future taxable income in these jurisdictions. If we determine that 
we are not likely to generate sufficient taxable income in a jurisdiction prior 
to expiration, if any, of the availability of tax losses, we establish a 
valuation allowance against the tax loss to reduce the deferred income tax 
asset to its recoverable value. We evaluate the appropriate level of valuation 
allowances annually and make adjustments as necessary. Increases or decreases 
to valuation allowances can affect our provision for income taxes in our 
Consolidated Income Statements and consequently may affect our effective tax 
rate in a given year.

Factors affecting our results

Our results of operations have also been affected by a variety of other 
factors, primarily: • the number, type, age and condition of the aircraft we 
own;

• aviation industry market conditions, including general economic and political 
conditions;

• the demand for our aircraft and the resulting lease rates we are able to 
obtain for our aircraft;

• the availability and cost of debt capital to finance purchases of aircraft 
and aviation assets;

• the purchase price we pay for our aircraft;

• the number, type and sale price of aircraft, or parts in the event of a 
part-out of an aircraft, we sell in a period;

• the ability of our lessees to meet their lease obligations and maintain our 
aircraft in airworthy and marketable condition;

• the utilization rate of our aircraft;

• the recognition of non-cash share-based compensation expense related to the 
issuance of restricted stock units or restricted stock;

• our expectations of future overhaul reimbursements and lessee maintenance 
contributions;

• interest rates, which affect our aircraft lease revenues, our interest 
expense and the market value of our interest rate derivatives; and

• our ability to fund our business.


Factors affecting the comparability of our results

Share repurchases

During 2016, our Board of Directors authorized total repurchases of up to $1.15 
billion of AerCap ordinary shares and we repurchased an aggregate of 25,012,978 
of our ordinary shares under our share repurchase programs at an average price, 
including commissions, of $38.62 per ordinary share, for a total of $966.0 
million.

Portfolio sale transactions

During 2016, AerCap executed portfolio sale transactions for the sale of 72 
aircraft at an aggregate sale price of approximately $2 billion.

AIG offering and the Share Repurchase from AIG

On June 9, 2015, AIG sold 71,184,686 of its AerCap ordinary shares in a 
secondary public offering and AerCap completed the Share Repurchase from AIG of 
15,698,588 ordinary shares. On August 24, 2015, AIG sold 10,677,702 of its 
AerCap ordinary shares in a secondary public offering. Following this sale, AIG 
no longer owns any of our outstanding ordinary shares and has no designees on 
our Board of Directors.

ILFC Transaction and related reorganization

On May 14, 2014, AerCap issued 97,560,976 new ordinary shares and paid $2.4 
billion in cash to AIG to successfully complete the ILFC Transaction. In 
addition, ILFC paid a special distribution of $600.0 million to AIG prior to 
the consummation of the ILFC Transaction. Following the ILFC Transaction, we 
effected a reorganization of ILFC's corporate structure and assets, pursuant to 
which ILFC transferred its assets substantially as an entirety to the AerCap 
Trust, and AerCap Trust assumed substantially all the liabilities of ILFC, 
including liabilities in respect of ILFC's indebtedness.

GFL Transaction

On April 22, 2014, we completed the sale of 100% of the class A common shares 
in Genesis Funding Limited to GFL Holdings, LLC, an affiliate of Wood Creek 
Capital Management, LLC. GFL had 37 aircraft in its portfolio with a net book 
value of $727 million.

Trends in our business

Global demand for air travel remains strong. Overall global air passenger 
traffic, measured in revenue passenger kilometers, grew 6.3% in 2016, according 
to IATA. Traffic growth was 4.6% in Europe, 3.2% in North America, and 9.2% in 
Asia Pacific in 2016, propelled by strong 11.7% growth in China and 23.3% 
domestic traffic growth in India. The demand stimulus from lower oil prices is 
expected to taper off in 2017, slowing traffic growth to 5.1% in 2017, 
according to IATA. This is still expected to translate into robust growth in 
large, developed markets, such as the U.S. and Europe, as well as continued 
expansion in the emerging markets where the middle class continues to expand.

While airline industry profits are not expected to surpass the 2016 peak of 
$35.6 billion, the industry is expected to remain solidly profitable and is 
expected to record a net profit of $29.8 billion in 2017, the eighth year in a 
row of aggregate airline profitability.

Passenger air traffic growth and airlines' record profitability have fueled 
steady demand for commercial passenger aircraft from airlines, including demand 
for leased aircraft. We expect that demand for leased aircraft will remain 
strong as robust traffic growth continues to fuel demand for additional 
aircraft.


Critical accounting policies and estimates

Our Consolidated Financial Statements are prepared in accordance with U.S. 
GAAP, and require us to make estimates and assumptions that affect the amounts 
reported in our Consolidated Financial Statements and accompanying notes. The 
use of estimates is or could be a significant factor affecting the reported 
amounts of assets, liabilities, revenues, expenses, and related disclosures of 
contingent assets and liabilities. We evaluate our estimates and assumptions, 
including those related to flight equipment, inventory, lease revenue, fair 
value estimates, and income taxes, on a recurring and non-recurring basis. Our 
estimates and assumptions are based on historical experiences and currently 
available information that management believes to be reasonable under the 
circumstances. We consider information available from professional appraisers, 
where possible, to support our estimates, particularly with respect to flight 
equipment. Actual results may differ from our estimates under different 
conditions, sometimes materially. A summary of our significant accounting 
policies is presented in Note 3—Summary of significant accounting policies to 
our Consolidated Financial Statements included in this annual report. Critical 
accounting policies and estimates are defined as those that are both most 
important to the portrayal of our financial condition and results of operations 
and that require our judgments, estimates and assumptions. Our most critical 
accounting policies and estimates are described below.

Flight equipment held for operating leases, net

Flight equipment held for operating leases is stated at cost less accumulated 
depreciation and impairment. Flight equipment is depreciated to its estimated 
residual value on a straight-line basis over the useful life of the aircraft, 
which is generally 25 years from the date of manufacture, or a different period 
depending on the disposition strategy. The costs of improvements to flight 
equipment are normally recorded as leasing expenses unless the improvement 
increases the long-term value or extends the useful life of the flight 
equipment. The capitalized improvement cost is depreciated over the estimated 
remaining useful life of the aircraft. The residual value of our flight 
equipment is generally 15% of estimated industry standard price, except where 
more relevant information indicates a different residual value is more 
appropriate.

We periodically review the estimated useful lives and residual values of our 
flight equipment based on our knowledge of the industry, external factors, such 
as current market conditions, and changes in our disposition strategies, to 
determine if they are appropriate, and record adjustments to depreciation rates 
prospectively on an aircraft by aircraft basis as necessary.

Impairment charges

On a quarterly basis, we perform recoverability assessments of our long-lived 
assets when events or changes in circumstances indicate that the carrying value 
of such assets may not be recoverable, such as when events or changes in 
circumstances indicate that it is more likely than not that an aircraft will be 
sold or parted-out a significant amount of time before the end of its 
previously estimated useful life. Due to the significant uncertainties 
associated with potential sales transactions, management uses its judgment to 
evaluate whether a sale or other disposal is more likely than not. The factors 
that management considers in its assessment include (i) the progress of the 
potential sales transactions through a review and evaluation of the sales 
related documents and other communications, including, but not limited to, 
letters of intent or sales agreements that have been negotiated or executed; 
(ii) our general or specific fleet strategies and other business needs and how 
those requirements bear on the likelihood of sale or other disposal; and (iii) 
the evaluation of potential execution risks, including the source of potential 
purchaser funding and other execution risks.

Annually, we perform impairment assessments for all of our aircraft held for 
operating leases that are five years of age or older. The review of 
recoverability includes an assessment of the estimated future cash flows 
associated with the use of the asset and its eventual disposal. The assets are 
grouped at the lowest level for which identifiable cash flows are largely 
independent of other groups of assets, which includes the individual aircraft 
and the lease-related assets and liabilities of that aircraft (the "Asset 
Group"). If the sum of the expected undiscounted future cash flows is less than 
the aggregate net book value of the Asset Group, an impairment loss is 
recognized. The loss is measured as the excess of the carrying amount of the 
impaired aircraft over its fair value. Fair value reflects the present value of 
cash expected to be generated from the aircraft in the future, including its 
expected residual value, discounted at a rate commensurate with the associated 
risk. Future cash flows are assumed to occur under the current market 
conditions and assume adequate time for a sale between a willing buyer and a 
willing seller. Expected future lease rates are based on all relevant 
information available, including current contracted rates for similar aircraft, 
appraisal data and industry trends.

The cash flows supporting the carrying value of aircraft that are 15 years of 
age or older are more dependent upon current lease contracts, and these leases 
are more sensitive to weaknesses in the global economic environment. 
Deterioration of the global economic environment and a decrease in aircraft 
values might have a negative effect on the undiscounted cash flows of older 
aircraft and might trigger impairments. As of December 31, 2016, we owned 966 
aircraft held for operating leases, of which 182 aircraft were 15 years of age 
or older. The Asset Group for the 182 aircraft had a carrying value of $1.9 
billion, which represented approximately 6% of our total flight equipment and 
lease-related assets and liabilities as of December 31, 2016. The undiscounted 
cash flows of these 182 aircraft were estimated at $3.2 billion, which 
represented 67% in excess of the aggregate carrying value. As of December 31, 
2016, all of these aircraft passed the recoverability test, with undiscounted 
cash flows exceeding the carrying value of the Asset Group by between 0% and 
3,596%. The following assumptions drive the undiscounted cash flows: contracted 
lease rents through current lease expiry, subsequent re-lease rates based on 
current marketing information and residual values. We review and stress-test 
our key assumptions to reflect any observed weakness in the global economic 
environment.

Aircraft that are between five and 15 years of age for which the carrying value 
exceeds the appraised value are tested for impairment by comparing the 
undiscounted cash flows with the carrying value. If such cash flows do not 
exceed the carrying value by at least 10%, the aircraft are more susceptible to 
impairment risk. The aggregate carrying value of the Asset Group for one 
aircraft for which the cash flows did not substantially exceed our 10% 
threshold was $22.8 million, which represented approximately 0.07% of our total 
flight equipment held for operating leases and lease-related assets and 
liabilities as of December 31, 2016. The aircraft that was below the 10% 
threshold did however pass the impairment test as of December 31, 2016 and as 
such no impairment was recognized.

Guarantees

We have potential obligations under guarantee contracts that we have entered 
into with third parties. We initially recognize guarantees at fair value. 
Subsequently, if it becomes probable that we will be required to perform under 
a guarantee, we accrue a liability based on an estimate of the loss we will 
incur to perform under the guarantee. The estimate of the loss is generally 
measured as the amount by which the contractual guaranteed value exceeds the 
fair market value or future lease cash flows of the underlying aircraft.

Inventory

Inventory consists primarily of engine and airframe parts and rotable and 
consumable parts we sell through our subsidiary, AeroTurbine, which we are 
downsizing, and is included in other assets in our Consolidated Balance Sheets. 
We value our inventory at the lower of cost or market value. Cost is primarily 
determined using the specific identification method for individual part 
purchases and on an allocated basis for engines and aircraft purchased for 
disassembly and for bulk purchases. Costs are allocated using the relationship 
of the cost of the engine, aircraft or bulk inventory purchase to estimated 
retail sales value at the time of purchase. At the time of sale, this ratio is 
applied to the sales price of each individual part to determine its cost. We 
periodically evaluate this ratio and, if necessary, update sales estimates and 
make adjustments to this ratio. Generally, inventory that is held for more than 
four years is considered excess inventory, and its carrying value is reduced to 
zero.

Revenues and other income

We lease flight equipment principally under operating leases and recognize 
rental income on a straight-line basis over the life of the lease. At lease 
inception, we review all necessary criteria to determine proper lease 
classification. We account for lease agreements that include uneven rental 
payments on a straight line-basis. The difference between rental revenue 
recognized and cash received is included in our Consolidated Balance Sheets in 
other assets or, in the event it is a liability, in accounts payable, accrued 
expenses and other liabilities. In certain cases, leases provide for rentals 
contingent on usage. The usage may be calculated based on hourly usage or on 
the number of cycles operated, depending on the lease contract. Revenue 
contingent on usage is recognized at the time the lessee reports the usage to 
us. We cease revenue recognition on a lease contract when the collectability of 
such rentals is no longer reasonably assured. For past-due rentals that exceed 
related security deposits held, which have been recognized as revenue, we 
establish provisions on the basis of management's assessment of collectability. 
Such provisions are recorded in leasing expenses in our Consolidated Income 
Statements.

Revenue from net investment in finance and sales-type leases is recognized 
using the interest method to produce a constant yield over the life of the 
lease and is included in lease revenue in our Consolidated Income Statements. 
Expected unguaranteed residual values of leased flight equipment are based on 
our assessment of the values of the leased flight equipment at expiration of 
the lease terms.

Under our aircraft leases, the lessee is responsible for maintenance, repairs 
and other operating expenses related to our flight equipment during the term of 
the lease. Under the provisions of many of our leases, the lessee is required 
to make payments of supplemental maintenance rents which are calculated with 
reference to the utilization of the airframe, engines and other major 
life-limited components during the lease. We record as lease revenue all 
supplemental maintenance rent receipts not expected to be reimbursed to 
lessees. We estimate the total amount of maintenance reimbursements for the 
entire lease and only record revenue after we have received sufficient 
maintenance rents under a particular lease to cover the total amount of 
estimated maintenance reimbursements during the remaining lease term.

In most lease contracts not requiring the payment of supplemental maintenance 
rents, and to the extent that the aircraft is redelivered in a different 
condition than at acceptance, we generally receive EOL cash compensation for 
the difference at redelivery. We recognize receipts of EOL cash compensation as 
lease revenue when received to the extent those receipts exceed the EOL 
contract maintenance rights intangible asset, and we recognize leasing expenses 
when the EOL contract maintenance rights intangible asset exceeds the EOL cash 
receipts.


When flight equipment is sold, the portion of the accrued maintenance liability 
that is not specifically assigned to the buyer is released from our 
Consolidated Balance Sheets, net of any maintenance rights intangible asset 
balance, and recognized as part of the sale of the flight equipment as gain or 
loss in net gain on sale of assets in our Consolidated Income Statements.

Consolidation

We consolidate all companies in which we have a direct and indirect legal or 
effective control and all VIEs for which we are deemed the PB and have control 
under ASC 810. All intercompany balances and transactions with consolidated 
subsidiaries have been eliminated. The results of consolidated entities are 
included from the effective date of control or, in the case of VIEs, from the 
date that we are or become the PB. The results of subsidiaries sold or 
otherwise deconsolidated are excluded from the date that we cease to control 
the subsidiary or, in the case of VIEs, when we cease to be the PB.

Deferred income tax assets and liabilities

We report deferred income taxes resulting from the temporary differences 
between the book values and the tax values of assets and liabilities using the 
liability method. The differences are calculated at nominal value using the 
enacted tax rate applicable at the time the temporary difference is expected to 
reverse. Deferred income tax assets attributable to unutilized losses carried 
forward or other timing differences are reduced by a valuation allowance if it 
is more likely than not that such losses will not be utilized to offset future 
taxable income.

Future application of accounting standards

Revenue from contracts with customers

In May 2014, the FASB issued an accounting standard that provides a single 
comprehensive model for entities to use in accounting for revenue arising from 
contracts with customers and supersedes most current revenue recognition 
guidance, including industry-specific guidance. This guidance does not apply to 
lease contracts with customers. The standard will require an entity to 
recognize revenue when it transfers promised goods or services to customers in 
an amount that reflects the consideration to which the entity expects to be 
entitled in exchange for those goods or services. This update creates a 
five-step model that requires entities to exercise judgment when considering 
the terms of the contract including (i) identifying the contract with the 
customer; (ii) identifying the separate performance obligations in the 
contract; (iii) determining the transaction price; (iv) allocating the 
transaction price to the separate performance obligations; and (v) recognizing 
revenue when each performance obligation is satisfied.

This standard was originally scheduled to be effective for fiscal years 
beginning after December 15, 2016 and subsequent interim periods. In August 
2015, the FASB issued an update to the standard which deferred the effective 
date to January 1, 2018. The standard may be applied either retrospectively to 
each prior reporting period presented or retrospectively with the cumulative 
effect of applying this standard recognized at the date of adoption. Early 
adoption is permitted but not before the originally scheduled effective date. 
We plan to adopt the standard on its required effective date of January 1, 
2018. We are evaluating the effect the adoption of the standard will have on 
our Consolidated Financial Statements. This new standard does not impact the 
accounting of our lease revenue but may impact the accounting of our revenue 
other than lease revenue. While we are still performing our analysis, we do not 
expect the impact of this standard to be material to our Consolidated Financial 
Statements.

Inventory

In July 2015, the FASB issued an accounting standard that simplifies the 
subsequent measurement of all inventory except for inventory measured using the 
last-in, first-out or the retail inventory method. Inventory within the scope 
of this standard will be measured at the lower of cost and net realizable value 
instead of the lower of cost or market as required under existing guidance. Net 
realizable value is the estimated sale price in the ordinary course of 
business, less reasonably predictable costs of completion, disposal, and 
transportation. This standard also requires that substantial and unusual losses 
that result from the subsequent measurement of inventory be disclosed in the 
financial statements. The new standard will be effective for fiscal years 
beginning after December 15, 2016, including interim periods within those 
fiscal years. This standard should be applied prospectively with earlier 
application permitted as of the beginning of an interim or annual reporting 
period. We plan to adopt the standard on its required effective date of January 
1, 2017. We do not expect the impact of this standard to be material to our 
Consolidated Balance Sheets and Consolidated Income Statements.

Lease accounting

In February 2016, the FASB issued an accounting standard that requires lessees 
to recognize lease-related assets and liabilities on the balance sheet, other 
than leases that meet the definition of a short-term lease. In certain 
circumstances, the lessee is required to remeasure the lease payments. 
Qualitative and quantitative disclosures, including significant judgments made 
by management, will be required to provide insight into the extent of revenue 
and expense recognized and expected to be recognized from existing contracts. 
Under the new standard, lessor accounting remains similar to the current model. 
The new standard will be effective for fiscal years beginning after December 
15, 2018, including interim periods within those fiscal years. Early adoption 
is permitted. The new standard must be adopted using the modified retrospective 
transition approach. We plan to adopt the standard on its required effective 
date of January 1, 2019. We do not expect the impact of this standard to be 
material to our Consolidated Balance Sheets and Consolidated Income Statements. 
Adoption of the new standard will change the way airlines report operating 
leases in their financial statements, which could affect their behavior. 
However, we do not believe that the adoption will significantly impact 
airlines' decision to lease aircraft.

Stock compensation

In March 2016, the FASB issued an accounting standard that requires entities to 
record all tax effects related to share-based awards in the income statement 
when the awards vest or are settled. The accounting standard also requires 
excess tax benefits to be recorded when they arise, subject to normal valuation 
allowance considerations. Excess tax benefits are to be reported as operating 
activities on the statement of cash flows. The standard is effective for fiscal 
years beginning after December 15, 2016, including interim periods within those 
fiscal years. Early adoption will be permitted in any interim or annual period, 
with any adjustments reflected as of the beginning of the fiscal year of 
adoption. We plan to adopt the standard on its required effective date of 
January 1, 2017. We do not expect the impact of this standard to be material to 
our Consolidated Financial Statements.


Allowance for credit losses

In June 2016, the FASB issued an accounting standard that requires entities to 
estimate lifetime expected credit losses for most financial assets measured at 
amortized cost and certain other instruments, including trade and other 
receivables, net investments in leases and off-balance sheet credit exposures. 
The standard also requires additional disclosure, including how the entity 
develops its allowance for credit losses for financial assets measured at 
amortized cost and disaggregated information on the credit quality of net 
investments in leases measured at amortized cost by year of the asset's 
origination for up to five annual periods. The standard is effective for fiscal 
years beginning after December 15, 2019, including interim periods within those 
fiscal years. Early adoption will be permitted in any interim or annual period 
beginning after December 15, 2018. The new standard must be adopted using the 
modified retrospective transition approach. We plan to adopt the standard on 
its required effective date of January 1, 2020. We are evaluating the effect 
the adoption of the standard will have on our Consolidated Balance Sheets and 
Consolidated Income Statements.

Statement of cash flows

In August 2016, the FASB issued an accounting standard that is intended to 
reduce diversity in practice in how certain transactions are classified in the 
statement of cash flows. The standard includes clarifications that (i) cash 
payments for debt prepayment or extinguishments costs must be classified as 
cash outflows for financing activities; (ii) cash proceeds from the settlement 
of insurance claims should be classified based on the nature of the loss; (iii) 
an entity is required to make an accounting policy election to classify 
distributions received from equity method investees under either the 
cumulative-earnings approach or the nature of distribution approach; and (iv) 
in the absence of specific guidance, an entity should classify each separately 
identifiable cash source and use on the basis of the underlying cash flows. The 
standard is effective for fiscal years beginning after December 15, 2017, 
including interim periods within those fiscal years. Early adoption will be 
permitted in any interim or annual period. The new standard must be adopted 
using the retrospective transition method. We plan to adopt the standard on its 
required effective date of January 1, 2018. We do not expect the impact of this 
standard to be material to our Consolidated Statements of Cash Flows.

Presentation of restricted cash in the statement of cash flows

In November 2016, the FASB issued an accounting standard that clarifies how 
entities should present restricted cash and restricted cash equivalents in the 
statement of cash flows. The standard requires entities to show the changes in 
the total of cash, cash equivalents, restricted cash and restricted cash 
equivalents in the statement of cash flows. The standard also requires a 
reconciliation of the totals in the statement of cash flows to the related 
captions in the balance sheet. The standard is effective for fiscal years 
beginning after December 15, 2017, including interim periods within those 
fiscal years. Early adoption is permitted in any interim or annual period, but 
any adjustments must be reflected as of the beginning of the fiscal year. The 
new standard must be adopted retrospectively. We plan to adopt the standard on 
its required effective date of January 1, 2018. We are evaluating the effect 
the adoption of the standard will have on our Consolidated Statements of Cash 
Flows.

Basic lease rents. Basic lease rents decreased by $240.5 million, or 5%, to 
$4,395.3 million during the year ended December 31, 2016 from $4,635.8 million 
during the year ended December 31, 2015. The decrease in basic lease rents 
recognized during the year ended December 31, 2016 as compared to the year 
ended December 31, 2015 was attributable to: • the sale of 189 aircraft between 
January 1, 2015 and December 31, 2016 with an aggregate net book value of $3.3 
billion on their sale dates, resulting in a decrease in basic lease rents of 
$313.9 million; and

• a decrease in basic lease rents of $221.7 million primarily due to re-leases 
and extensions at lower rates, which include the extension of leases prior to 
their contracted redelivery dates. The accounting for these extensions requires 
the remaining rental payments to be recorded on a straight-line basis over the 
remaining term of the original lease plus the extension period. This results in 
a decrease in basic lease rents during the remaining term of the original lease 
that will be offset by an increase in basic lease rents during the extension 
period. In addition, the contracted lease rates of extensions or re-leases of 
an aircraft tend to be lower than their previous lease rates as the aircraft 
are older, and older aircraft have lower lease rates than newer aircraft,

partially offset by • the acquisition of 81 aircraft between January 1, 2015 
and December 31, 2016, with an aggregate net book value of $7.2 billion on 
their acquisition dates, resulting in an increase in basic lease rents of 
$295.1 million.

Maintenance rents and other receipts. Maintenance rents and other receipts 
increased by $116.5 million, or 33%, to $472.3 million during the year ended 
December 31, 2016 from $355.8 million during the year ended December 31, 2015. 
The increase was primarily attributable to: • an increase of $52.0 million in 
maintenance revenue and other receipts from lease terminations and amendments 
during the year ended December 31, 2016 as compared to the year ended December 
31, 2015; and

• an increase of $64.5 million in regular maintenance rents during the year 
ended December 31, 2016 as compared to the year ended December 31, 2015.

Net gain on sale of assets. Net gain on sale of assets decreased by $44.8 
million, or 24%, to $138.5 million during the year ended December 31, 2016 from 
$183.3 million during the year ended December 31, 2015. During the year ended 
December 31, 2016, we sold 124 aircraft and reclassified 19 aircraft to net 
investment in finance and sales-type leases, whereas during the year ended 
December 31, 2015, we sold 59 aircraft and reclassified 11 aircraft to net 
investment in finance and sales-type leases. Net gain on sale of assets is 
impacted by the timing and composition of asset sales.

Other income. Other income increased by $33.3 million, or 30%, to $146.0 
million during the year ended December 31, 2016 from $112.7 million during the 
year ended December 31, 2015. The increase was primarily due to higher 
non-recurring income of $63.2 million from lease terminations, $38.0 million 
from net insurance proceeds, and $27.7 million from a gain related to the 
prepayment of a note receivable earlier than expected, partially offset by 
lower gross profit on engine, airframe, parts and supplies sales as a result of 
the AeroTurbine downsizing. During the year ended December 31, 2015, we also 
recognized a gain of $22.6 million from the settlement of asset value 
guarantees.

Depreciation and amortization. Depreciation and amortization decreased by $51.7 
million, or 3%, to $1,791.3 million during the year ended December 31, 2016 
from $1,843.0 million during the year ended December 31, 2015. The decrease was 
primarily due to a reduction in the size of our aircraft portfolio due to 
aircraft sales.


Asset impairment. We recognized aggregate impairment charges of $81.6 million 
during the year ended December 31, 2016 as compared to $16.3 million recognized 
during the year ended December 31, 2015. The impairment charges recorded during 
the year ended December 31, 2016 related to lease terminations and amendments 
of lease agreements for 25 aircraft. These impairments were more than offset by 
lease revenue of $95.9 million that we recognized when we retained maintenance 
related balances or received EOL compensation upon lease termination or 
amendment. In addition, we recognized impairment charges for ten aircraft that 
were part of sale transactions and were classified as flight equipment held for 
sale. The impairment charges recorded during the year ended December 31, 2015 
related to eight aircraft that were sold or parted-out and 12 engines. The 
impairment charges recorded during the year ended December 31, 2015 included 
impairments of $6.6 million recorded for four older aircraft, for which we 
retained maintenance related balances or received EOL compensation and 
recognized $20.5 million of lease revenue upon redelivery.

Interest expense. Our interest expense decreased by $8.0 million, or 1%, to 
$1,091.9 million during the year ended December 31, 2016 from $1,099.9 million 
during the year ended December 31, 2015. The decrease in interest expense was 
primarily attributable to: • a decrease in our average outstanding debt balance 
by $0.7 billion to $29.1 billion during the year ended December 31, 2016 from 
$29.8 billion during the year ended December 31, 2015, primarily due to regular 
debt repayments, resulting in a $23.1 million decrease in our interest expense; 
and

• a $16.5 million decrease in non-cash mark-to-market losses on derivatives to 
$1.6 million recognized during the year ended December 31, 2016 from $18.1 
million recognized during the year ended December 31, 2015,

partially offset by • an increase in our average cost of debt to 3.7% for the 
year ended December 31, 2016 as compared to 3.6% for the year ended December 
31, 2015. Our average cost of debt excludes the effect of mark-to-market 
movements on our interest rate caps and swaps, and in 2015, includes a one-time 
charge of $16.9 million related to prior periods to correct capitalized 
interest. The increase in our average cost of debt was primarily due to the 
issuance of new longer-term bonds to replace shorter-term ILFC notes, which had 
lower reported interest expense as a result of the application of the 
acquisition method of accounting to the debt assumed as part of the ILFC 
Transaction. The increase in our average cost of debt resulted in a $31.6 
million increase in our interest expense.

Leasing expenses. Our leasing expenses increased by $60.1 million, or 12%, to 
$582.5 million during the year ended December 31, 2016 from $522.4 million 
during the year ended December 31, 2015. The increase was primarily due to 
$33.2 million higher maintenance rights expense and $38.3 million higher 
regular aircraft transition costs, lessor maintenance contributions and other 
leasing expenses, partially offset by $11.4 million lower expenses relating to 
airline defaults and restructurings recognized during the year ended December 
31, 2016 as compared to the year ended December 31, 2015.

Transaction, integration and restructuring related expenses. Our transaction, 
integration and restructuring related expenses decreased by $5.5 million, or 
9%, to $53.4 million during the year ended December 31, 2016 from $58.9 million 
during the year ended December 31, 2015. During the year ended December 31, 
2016, our transaction, integration and restructuring related expenses were 
related to the AeroTurbine downsizing, including intangible assets impairment, 
expenses related to the sale of AeroTurbine's Goodyear operations, leased 
engines impairment and severance costs. During the year ended December 31, 
2015, our transaction, integration and restructuring related expenses consisted 
of $9.6 million of severance and other compensation expenses and rent 
termination costs due to the ILFC Transaction and $49.3 million of 
restructuring expenses related to the downsizing of AeroTurbine. Please refer 
to Note 26—AeroTurbine restructuring to our Consolidated Financial Statements 
included in this annual report for further details on the AeroTurbine 
restructuring.

Selling, general and administrative expenses. Our selling, general and 
administrative expenses decreased by $30.4 million, or 8%, to $351.0 million 
during the year ended December 31, 2016 from $381.4 million during the year 
ended December 31, 2015. The decrease was due to lower overhead expenses as a 
result of the AeroTurbine downsizing as well as other expense reductions.

Income before income taxes and income of investments accounted for under the 
equity method. For the reasons explained above, our income before income taxes 
and income of investments accounted for under the equity method decreased by 
$165.3 million, or 12%, to $1,200.4 million during the year ended December 31, 
2016 from $1,365.7 million during the year ended December 31, 2015.

Provision for income taxes. Our provision for income taxes decreased by $16.3 
million, or 9%, to $173.5 million during the year ended December 31, 2016 from 
$189.8 million during the year ended December 31, 2015. Our effective tax rate 
was 14.5% for the year ended December 31, 2016 as compared to 13.9% for the 
year ended December 31, 2015. The increase in our effective tax rate for the 
year ended December 31, 2016 was primarily due to changes in our valuation 
allowance in the United States of America during the years ended December 31, 
2015 and 2016. Our effective tax rate in any period is impacted by the source 
and the amount of earnings among our different tax jurisdictions. Please refer 
to Note 17—Income taxes to our Consolidated Financial Statements included in 
this annual report for a detailed description of our income taxes.

Equity in net earnings of investments accounted for under the equity method. 
Our equity in net earnings of investments accounted for under the equity method 
was $12.6 million during the year ended December 31, 2016 as compared to $1.3 
million during the year ended December 31, 2015. During the year ended December 
31, 2015, our equity in net earnings of investments accounting for under the 
equity method was impacted by a loss of approximately $4 million from one of 
our investments.

Net income. For the reasons explained above, our net income decreased by $137.7 
million, or 12%, to $1,039.5 million during the year ended December 31, 2016 
from $1,177.2 million during the year ended December 31, 2015.

Net loss attributable to non-controlling interest. Net loss attributable to 
non-controlling interest was $7.1 million during the year ended December 31, 
2016 as compared to $1.5 million during the year ended December 31, 2015.

Net income attributable to AerCap Holdings N.V. For the reasons explained 
above, our net income attributable to AerCap Holdings N.V. decreased by $132.1 
million, or 11%, to $1,046.6 million during the year ended December 31, 2016 
from $1,178.7 million during the year ended December 31, 2015.

Basic lease rents. Basic lease rents increased by $1,353.0 million, or 41%, to 
$4,635.8 million during the year ended December 31, 2015 from $3,282.8 million 
during the year ended December 31, 2014. The increase in basic lease rents 
recognized during the year ended December 31, 2015 as compared to the year 
ended December 31, 2014 was attributable to: • the acquisition of 1,004 
aircraft between January 1, 2014 and December 31, 2015, including aircraft 
acquired as part of the ILFC Transaction, with an aggregate net book value of 
$29.9 billion on their acquisition dates, resulting in an increase in basic 
lease rents of $1,450.8 million,

partially offset by • the sale of 132 aircraft with an aggregate net book value 
of $2.2 billion on their sale dates, resulting in a decrease in basic lease 
rents of $79.0 million during such period; and

• a decrease in basic lease rents of $18.8 million recognized during the year 
ended December 31, 2015 as compared to the year ended December 31, 2014 due to 
re-leases and extensions at lower rates, which include the extension of leases 
prior to their contracted redelivery dates. The accounting for these extensions 
requires the remaining rental payments to be recorded on a straight-line basis 
over the remaining term of the original lease plus the extension period. This 
results in a decrease in basic lease rents during the remaining term of the 
original lease that will be offset by an increase in basic lease rents during 
the extension period. In addition, the contracted lease rates of extensions or 
re-leases of an aircraft tend to be lower than their previous lease rates as 
the aircraft are older, and older aircraft have lower lease rates than newer 
aircraft.

Maintenance rents and other receipts. Maintenance rents and other receipts 
increased by $189.0 million, or 113%, to $355.8 million during the year ended 
December 31, 2015 from $166.8 million during the year ended December 31, 2014. 
The increase was primarily attributable to: • an increase of $166.5 million in 
regular maintenance rents relating primarily to the ILFC Transaction during the 
year ended December 31, 2015 as compared to the year ended December 31, 2014; 
and

• an increase of $22.5 million in maintenance revenue and other receipts from 
airline defaults and restructurings during the year ended December 31, 2015 as 
compared to the year ended December 31, 2014.

Net gain on sale of assets. Net gain on sale of assets increased by $145.8 
million, or 389%, to $183.3 million during the year ended December 31, 2015 
from $37.5 million during the year ended December 31, 2014. The increase was 
primarily due to the higher volume of aircraft sold, as further detailed below, 
as well as improvements in aviation markets and aircraft values subsequent to 
the ILFC Transaction, and was driven primarily by the following factors: a 
decrease in oil prices between May 14, 2014 and December 31, 2015, an 
improvement in the air cargo market that commenced during the second half of 
2014, an increase in the supply of equity and debt capital and new market 
entrants with lower return requirements, driven by the sustained low interest 
rate environment, increased air travel passenger traffic, and the general 
improvement of the global economy.

During the year ended December 31, 2015 we sold 59 aircraft, reclassified 11 
aircraft to net investment in finance and sales type leases and parted-out nine 
aircraft, whereas during the year ended December 31, 2014, we sold the GFL 
portfolio of 37 aircraft and an additional 21 aircraft. When we part-out 
aircraft under a consignment contract, the gain is deferred and recognized as 
other income when the parts are sold.

Other income. Other income increased by $8.2 million, or 8%, to $112.7 million 
during the year ended December 31, 2015 from $104.5 million during the year 
ended December 31, 2014. The increase was primarily due to income of $22.6 
million from the settlement of asset value guarantees and net insurance 
proceeds of $16.2 million. During the year ended December 31, 2015, we also 
recognized an expense of $38.7 million related to a lower of cost or market 
adjustment of AeroTurbine's parts inventory as a result of the AeroTurbine 
downsizing, partially offset by the full year impact of income from 
AeroTurbine, which was acquired as part of the ILFC Transaction. During the 
year ended December 31, 2014 we recognized a gain of $19.9 million from the 
sale of our 42% equity interest in AerData.

Depreciation and amortization. Depreciation and amortization increased by 
$560.8 million, or 44%, to $1,843.0 million during the year ended December 31, 
2015 from $1,282.2 million during the year ended December 31, 2014. The 
increase was primarily due to the ILFC Transaction and purchases of new 
aircraft, and was partially offset by aircraft sales.

Asset impairment. We recognized aggregate impairment charges of $16.3 million 
during the year ended December 31, 2015 related to eight aircraft that were 
sold or parted-out and 12 engines, as compared to $21.8 million recognized 
during the year ended December 31, 2014 related to eight aircraft that were 
returned early from our lessees and three previously leased engines. The 
impairment charges recorded during the year ended December 31, 2015 included 
impairments of $6.6 million recorded for four older aircraft, for which we 
retained maintenance related balances or received EOL compensation and 
recognized $20.5 million of lease revenue upon redelivery.

Interest expense. Our interest expense increased by $319.6 million, or 41%, to 
$1,099.9 million during the year ended December 31, 2015 from $780.3 million 
during the year ended December 31, 2014. The increase in interest expense was 
primarily attributable to: • an increase in our average outstanding debt 
balance by $8.3 billion to $29.8 billion during the year ended December 31, 
2015 from $21.5 billion during the year ended December 31, 2014, primarily due 
to the repayment of older ILFC debt which was fair-valued at lower rates 
because of the shorter remaining tenor of the debt at the time of acquisition, 
and partially offset by regular debt repayments, resulting in a $295.9 million 
increase in our interest expense,

• a slight increase in our average cost of debt to 3.63% for the year ended 
December 31, 2015 as compared to 3.56% for the year ended December 31, 2014. 
Our average cost of debt excludes the effect of mark-to-market movements on our 
interest rate caps and swaps and charges from the early repayment of secured 
loans. In 2015, our average cost of debt includes a one-time charge of $16.9 
million related to prior periods to correct capitalized interest. The increase 
in our average cost of debt was primarily due to the ILFC Transaction and 
resulted in a $22.3 million increase in our interest expense; and

• a $1.4 million increase in non-cash mark-to-market losses on derivatives to 
$18.1 million recognized during the year ended December 31, 2015 from $16.7 
million recognized during the year ended December 31, 2014.

Leasing expenses. Our leasing expenses increased by $380.8 million, or 269%, to 
$522.4 million during the year ended December 31, 2015 from $141.6 million 
during the year ended December 31, 2014. The increase was primarily due to 
$293.9 million higher maintenance rights expense, $53.2 million higher regular 
aircraft transition costs, lessor maintenance contributions and other leasing 
expenses, and $33.7 million higher expenses relating to airline defaults and 
restructurings recognized during the year ended December 31, 2015 as compared 
to the year ended December 31, 2014.

Transaction, integration and restructuring related expenses. Our transaction, 
integration and restructuring related expenses decreased by $89.9 million, or 
60%, to $58.9 million during the year ended December 31, 2015 from $148.8 
million during the year ended December 31, 2014. During the year ended December 
31, 2015, our transaction, integration and restructuring related expenses 
consisted of $9.6 million of severance and other compensation expenses and rent 
termination costs due to the ILFC Transaction and $49.3 million of 
restructuring expenses related to the downsizing of AeroTurbine (see Note 
26—AeroTurbine restructuring), as compared to the year ended December 31, 2014, 
which consisted of $148.8 million of banking fees, professional fees and 
severance and other compensation expenses due to the ILFC Transaction.

Selling, general and administrative expenses. Our selling, general and 
administrative expenses increased by $81.4 million, or 27%, to $381.4 million 
during the year ended December 31, 2015 from $300.0 million during the year 
ended December 31, 2014. The increase was primarily due to higher personnel 
expenses as a result of the ILFC Transaction and higher share-based 
compensation expense.

Income before income taxes and income of investments accounted for under the 
equity method. For the reasons explained above, our income before income taxes 
and income of investments accounted for under the equity method increased by 
$448.8 million, or 49%, to $1,365.7 million during the year ended December 31, 
2015 from $916.9 million during the year ended December 31, 2014.

Provision for income taxes. Our provision for income taxes increased by $52.4 
million, or 38%, to $189.8 million during the year ended December 31, 2015 from 
$137.4 million during the year ended December 31, 2014. Our effective tax rate 
was 13.9% for the year ended December 31, 2015 and was 15.0% for the year ended 
December 31, 2014. The decrease in our effective tax rate for the year ended 
December 31, 2015 was driven primarily by the transfer of aircraft and 
substantial business operations from the United States to Ireland. Our 
effective tax rate in any period is impacted by the source and the amount of 
earnings among our different tax jurisdictions. Please refer to Note 17—Income 
taxes to our Consolidated Financial Statements included in this annual report 
for a detailed description of our income taxes.

Equity in net earnings of investments accounted for under the equity method. 
Our equity in net earnings of investments accounted for under the equity method 
was $1.3 million during the year ended December 31, 2015 as compared to $29.0 
million during the year ended December 31, 2014. The decrease was driven 
primarily by a non-recurring gain of approximately $20 million from one of our 
investments during the year ended December 31, 2014, and a loss of 
approximately $4 million from one of our investments during the year ended 
December 31, 2015.

Net income. For the reasons explained above, our net income increased by $368.7 
million, or 46%, to $1,177.2 million during the year ended December 31, 2015 
from $808.5 million during the year ended December 31, 2014.

Net loss attributable to non-controlling interest. Net loss attributable to 
non-controlling interest was $1.5 million during the year ended December 31, 
2015 as compared to $1.9 million during the year ended December 31, 2014.

Net income attributable to AerCap Holdings N.V. For the reasons explained 
above, our net income attributable to AerCap Holdings N.V. increased by $368.3 
million, or 45%, to $1,178.7 million during the year ended December 31, 2015 
from $810.4 million during the year ended December 31, 2014.

Liquidity and capital resources

Cash flows provided by operating activities. During the year ended December 31, 
2016, our cash provided by operating activities of $3,381.2 million was the 
result of net income of $1,039.5 million, non-cash and other adjustments to net 
income of $2,076.6 million and an increase in the net change in operating 
assets and liabilities of $265.1 million. During the year ended December 31, 
2015, our cash provided by operating activities of $3,360.0 million was the 
result of net income of $1,177.2 million, non-cash and other adjustments to net 
income of $2,012.4 million and an increase in the net change in operating 
assets and liabilities of $170.4 million.

Cash flows used in investing activities. During the year ended December 31, 
2016, our cash used in investing activities of $1,331.1 million primarily 
consisted of cash used for the purchase of aircraft and other fixed assets of 
$3,861.8 million, partially offset by cash provided by asset sale proceeds of 
$2,366.2 million, a decrease in our restricted cash of $90.3 million and 
collections of finance and sales-type leases of $74.2 million. During the year 
ended December 31, 2015, our cash used in investing activities of $1,715.9 
million primarily consisted of cash used for the purchase of aircraft of 
$3,637.0 million, partially offset by cash provided by asset sale proceeds of 
$1,568.2 million, a decrease in restricted cash of $297.9 million and 
collections of finance and sales-type leases of $55.0 million.

Cash flows used in financing activities. During the year ended December 31, 
2016, our cash used in financing activities of $2,417.2 million primarily 
consisted of cash used for the repurchase of shares and payments of tax 
withholdings on share-based compensation of $1,021.1 million and cash used for 
the payment of dividends to our non-controlling interest holders of $10.5 
million. In addition, cash was used for debt repayments and debt issuance 
costs, net of new financing proceeds of $1,606.3 million, partially offset by 
cash provided by net receipts of maintenance and security deposits of $220.7 
million. During the year ended December 31, 2015, our cash used in financing 
activities of $728.3 million primarily consisted of cash used for the 
repurchase of shares and payments of tax withholdings on share-based 
compensation of $793.9 million. In addition, cash was used for debt repayments 
and debt issuance costs, net of new financing proceeds of $179.3 million, 
partially offset by cash provided by net receipts of maintenance and security 
deposits of $244.9 million.

Aircraft leasing is a capital-intensive business and we have significant 
capital requirements, including making pre-delivery payments and paying the 
balance of the purchase price for aircraft on delivery. As of December 31, 
2016, we had 420 new aircraft on order, including 204 Airbus A320neo Family 
aircraft, 109 Boeing 737MAX aircraft, 50 Embraer E-Jets E2 aircraft, 38 Boeing 
787 aircraft and 19 Airbus A350 aircraft. As a result, we will need to raise 
additional funds to satisfy these requirements, which we expect to do through a 
combination of accessing committed debt facilities and securing additional 
financing, if needed, from capital market transactions or other sources of 
capital. If other sources of capital are not available to us, we may need to 
raise additional funds through selling aircraft or other aircraft investments, 
including participations in our joint ventures.

Our existing sources of liquidity of $12.8 billion as of December 31, 2016, 
were sufficient to operate our business and cover at least 1.2x of our debt 
maturities and contracted capital requirements for the next 12 months. Our 
sources of liquidity include undrawn lines of credit, unrestricted cash, 
estimated operating cash flows, cash flows from contracted asset sales and 
other sources of funding.

In order to satisfy our contractual purchase obligations, we expect to incur 
capital expenditures of approximately $5 billion per annum, on average, over 
the next three years based on our current order book. Sources of new debt 
finance for these capital expenditures would be through access to capital 
markets, including the unsecured and secured bond markets, the commercial bank 
market, export credit and the asset-backed securities market.

In the longer term, we expect to fund the growth of our business, including 
acquiring aircraft, through internally generated cash flows, the incurrence of 
new bank debt, the refinancing of existing bank debt and other capital raising 
initiatives.

Our cash balance as of December 31, 2016 was $2.4 billion, including 
unrestricted cash of $2.0 billion. As of December 31, 2016, we had 
approximately $7.3 billion of undrawn lines of credit available under our 
credit and term loan facilities. Our total available liquidity, including 
undrawn lines of credit, unrestricted cash, cash flows from contracted asset 
sales and other sources of funding, was $9.5 billion as of December 31, 2016. 
As of December 31, 2016, the principal amount of our outstanding indebtedness, 
which excludes fair value adjustments of $0.5 billion and debt issuance costs 
and debt discounts of $0.2 billion, totaled $27.4 billion and primarily 
consisted of senior unsecured, subordinated and senior secured notes, export 
credit facilities, commercial bank debt, revolving credit debt, securitization 
debt and capital lease structures.

Our debt, including fair value adjustments of $0.5 billion and net of debt 
issuance costs and debt discounts of $0.2 billion, was $27.7 billion as of 
December 31, 2016, and our average cost of debt, excluding the effect of 
mark-to-market movements on our interest rate caps and swaps, was 3.7% during 
the year ended December 31, 2016. Our adjusted debt to equity ratio was 2.7 to 
1 as of December 31, 2016. Please refer to "Item 5. Operating and Financial 
Review and Prospects—Non-GAAP measures" for reconciliations of adjusted debt 
and adjusted equity to the most closely related U.S. GAAP measures as of 
December 31, 2016 and 2015.

Please refer to Note 16—Debt to our Consolidated Financial Statements included 
in this annual report for a detailed description of our outstanding 
indebtedness.

AerCap Holdings N.V. is incorporated in the Netherlands and headquartered in 
Ireland, and is not directly engaged in business within, nor has a permanent 
establishment in, the United States. Only our U.S. subsidiaries are subject to 
U.S. net income tax or would potentially have to withhold U.S. taxes upon a 
distribution of our earnings.

While we were tax resident in the Netherlands, we did not accrue or pay taxes 
as a result of repatriation of earnings from any of our foreign subsidiaries to 
the Netherlands. Effective February 1, 2016, we became tax resident in Ireland 
and we would typically expect that the repatriation of earnings from our 
foreign subsidiaries should not give rise to material additional Irish taxation 
due to the availability of foreign tax credits. As of December 31, 2016, $249.6 
million out of $2,035.4 million of cash and short-term investments were held by 
our foreign subsidiaries outside of Ireland. Additionally, legal restrictions 
in relation to dividend payments from our subsidiaries to us are described in 
"Item 10. Additional Information—Taxation—Withholding tax" and "Item 3. Key 
Information—Risk Factors—Risks related to our organization and structure—If our 
subsidiaries do not make distributions to us we will not be able to pay 
dividends".

Contractual obligations

Our contractual obligations consist of principal and interest payments on debt 
(excluding fair value adjustments, debt issuance costs and debt discounts), 
executed purchase agreements to purchase aircraft and rent payments pursuant to 
our office and facility leases. We intend to fund our contractual obligations 
through unrestricted cash, lines-of-credit and other borrowings, operating cash 
flows and cash flows from asset sales. We believe that our sources of liquidity 
will be sufficient to meet our contractual obligations.

Off-balance sheet arrangements

We have interests in variable interest entities, some of which are not 
consolidated into our Consolidated Financial Statements. Please refer to Note 
28—Variable interest entities to our Consolidated Financial Statements included 
in this annual report for a detailed description of these interests and our 
other off-balance sheet arrangements.

Non-GAAP measures

The following are definitions of non-GAAP measures used in this report on Form 
20-F and a reconciliation of such measures to the most closely related U.S. 
GAAP measures.

Adjusted net income

Following the SEC's issuance of updated guidance on the use of non-GAAP 
financial measures, as of December 31, 2016, we are no longer reporting 
adjusted net income or adjusted earnings per share.

Net interest margin or net spread

This measure is the difference between basic lease rents and interest expense, 
excluding the impact of the mark-to-market of interest rate caps and swaps. We 
believe this measure may further assist investors in their understanding of the 
changes and trends related to the earnings of our leasing activities. This 
measure reflects the impact from changes in the number of aircraft leased, 
lease rates and utilization rates, as well as the impact from changes in the 
amount of debt and interest rates.

Adjusted debt to equity ratio

This measure is the ratio obtained by dividing adjusted debt by adjusted 
equity. Adjusted debt represents consolidated total debt less cash and cash 
equivalents, and less a 50% equity credit with respect to certain long-term 
subordinated debt. Adjusted equity represents total equity, plus the 50% equity 
credit with respect to the long-term subordinated debt. Adjusted debt and 
adjusted equity are adjusted by the 50% equity credit to reflect the equity 
nature of those financing arrangements and to provide information that is 
consistent with definitions under certain of our debt covenants.

The term for each director ends at the Annual General Meeting ("AGM") typically 
held in April or May of each year.

Directors

Pieter Korteweg. Mr. Korteweg has been a Director of AerCap since September 27, 
2006. He serves as Vice Chairman of Cerberus Global Investment Advisors, LLC, 
and Director of Cerberus entities in the Netherlands. In addition, he serves as 
Member of the Supervisory Board of Bawag PSK Bank (Vienna) and Non-Executive 
Member of the Board of Haya Real Estate S.L.U. (Madrid). He currently also 
serves as senior advisor to Anthos B.V. Mr. Korteweg previously served, amongst 
others, as Chairman of the Board of Capital Home Loans Ltd., Member of the 
Supervisory Board of Mercedes Benz Nederland B.V., Non-Executive Member of the 
Board of Aozora Bank Ltd. (Tokyo), Chairman of the Supervisory Board of 
Pensions and Insurance Supervisory Authority of the Netherlands, Chairman of 
the Supervisory Board of the Dutch Central Bureau of Statistics and Vice 
Chairman of the Supervisory Board of De Nederlandsche Bank. From 1987 to 2001, 
Mr. Korteweg was President and Chief Executive Officer of Robeco Group in 
Rotterdam. From 1981 to 1986, he was Treasurer General at the Dutch Ministry of 
Finance. Mr. Korteweg was a professor of economics from 1971 to 1998 at Erasmus 
University Rotterdam in the Netherlands. He holds a PhD in Economics from 
Erasmus University Rotterdam.

Aengus Kelly. Mr. Kelly was appointed Executive Director and Chief Executive 
Officer of AerCap on May 18, 2011. Previously he served as Chief Executive 
Officer of AerCap's U.S. operations since January 2008 and was AerCap's Group 
Treasurer from 2005 through December 31, 2007. He started his career in the 
aviation leasing and financing business with Guinness Peat Aviation in 1998 and 
has continued working with its successors AerFi in Ireland and debis AirFinance 
and AerCap in Amsterdam. Prior to joining GPA in 1998, he spent three years 
with KPMG in Dublin. Mr. Kelly is a Chartered Accountant and holds a Bachelor's 
degree in Commerce and a Master's degree in Accounting from University College 
Dublin.

Salem Al Noaimi. Mr. Al Noaimi has been a Director of AerCap since May 18, 
2011. Mr. Al Noaimi is also Waha Capital's Chief Executive Officer and Managing 
Director, responsible for leading the company's overall strategy across its 
business lines. Mr. Al Noaimi has served as Waha's CEO over the past eight 
years, with previous roles including Deputy CEO of Waha, and CEO of Waha 
Leasing. Earlier in his career, Mr. Al Noaimi held various positions at Dubai 
Islamic Bank, the UAE Central Bank, the Abu Dhabi Fund for Development and 
Kraft Foods. He chairs and sits on the Board of a number of companies, 
including Abu Dhabi Ship Building, Dunia Finance, Anglo Arabian Healthcare, Al 
Dhafra Insurance Company and Bahrain's ADDAX Bank. Mr. Al Noaimi is a UAE 
national with a degree in Finance and International Business from Northeastern 
University in Boston.

Homaid Al Shimmari. Mr. Al Shimmari has been a Director of AerCap since May 18, 
2011. Mr. Al Shimmari is also the Chief Executive Officer of Mubadala Aerospace 
& Engineering Services and member of the Investment Committee at Mubadala. He 
holds prominent roles with key aerospace, communications technology, defense 
and energy companies and organizations, including Chairman of Emirates Defence 
Industries Company ("EDIC"), Maximus Air Cargo, Abu Dhabi Autonomous Systems 
Investment ("ADASI") and Abu Dhabi Ship Building, and currently holds board 
positions with Mubadala Petroleum, Masdar, Global Foundries, Abu Dhabi 
Aviation, Royal Jet, du-Emirates Integrated Telecommunications Company PJSC and 
SR Technics Holdco 1 GmbH. Mr. Al Shimmari is also a Board Member of the UAE 
University Board of Trustees and Chairman of the Advisory Board of Etihad 
Airways Engineering LLC. Before joining Mubadala, Mr. Al Shimmari was a 
Lieutenant Colonel in the UAE Armed Forces serving in the areas of military 
aviation, maintenance, procurement and logistics. Mr. Al Shimmari holds a 
Bachelor of Science in Aeronautical Engineering from Embry Riddle Aeronautical 
University in Daytona Beach, Florida, and holds a black belt in six sigma from 
General Electric, a highly disciplined leadership program.

James (Jim) Chapman. Mr. Chapman has been a Director of AerCap since July 26, 
2006. Mr. Chapman serves as a Non-Executive Advisory Director of SkyWorks 
Capital, LLC, an aviation and aerospace management consulting services company 
based in Greenwich, Connecticut, which he joined in December 2004. Prior to 
SkyWorks, Mr. Chapman joined Regiment Capital Advisors, an investment advisor 
based in Boston specializing in high yield investments, which he joined in 
January 2003. Prior to Regiment, Mr. Chapman was a capital markets and 
strategic planning consultant and worked with private and public companies as 
well as hedge funds (including Regiment) across a range of industries. Mr. 
Chapman was affiliated with The Renco Group, Inc. from December 1996 to 
December 2001. Prior to Renco, Mr. Chapman worked in the financial services 
industry at Fieldstone Private Capital Group from 1990 through 1996 and Bankers 
Trust Company from 1985 through 1990. Presently, Mr. Chapman serves as a member 
of the Board of Directors of Arch Coal, Inc., Tembec Inc. and Tower 
International, Inc. Mr. Chapman received an MBA with distinction from Dartmouth 
College and was elected as an Edward Tuck Scholar. He received his BA, with 
distinction, magna cum laude, from Dartmouth College and was elected to Phi 
Beta Kappa, in addition to being a Rufus Choate Scholar.

Paul Dacier. Mr. Dacier has been a Director of AerCap since May 27, 2010. He is 
also currently a Non-Executive Director of GTI Technology Holdings Inc. (a 
technology holding company). Until 2016, Mr. Dacier was Executive Vice 
President and General Counsel of EMC Corporation (an information infrastructure 
technology and solutions company), where he worked in various positions since 
1990. He was a Non-Executive Director of Genesis from November 2007 until the 
date of the amalgamation with AerCap International Bermuda Limited. Prior to 
joining EMC, Mr. Dacier was an attorney with Apollo Computer Inc. (a computer 
work station company) from 1984 to 1990. Mr. Dacier received a BA in history 
and a JD in 1983 from Marquette University. He is admitted to practice law in 
the Commonwealth of Massachusetts and the state of Wisconsin.

Richard (Michael) Gradon. Mr. Gradon has been a Director of AerCap since May 
27, 2010. He is also currently a Non-Executive Director of Exclusive Hotels, 
and is on the Board of Directors of The All England Lawn Tennis Ground PLC, The 
All England Lawn Tennis Club and The Wimbledon Championships. He was a 
Non-Executive Director of Genesis from November 2007 until the date of the 
amalgamation with AerCap International Bermuda Limited. He practiced law at 
Slaughter & May before joining the UK FTSE 100 company The Peninsular & 
Oriental Steam Navigation Company ("P&O") where he was a main Board Director 
from 1998 until its takeover in 2006. His roles at P&O included the group 
commercial & legal director function and he served as Chairman of P&O's 
property division. In addition, Mr. Gradon served as Chairman of La Manga Club, 
Spain, and Chief Executive Officer of the London Gateway projects. Mr. Gradon 
holds an MA degree in law from Cambridge University.

Marius Jonkhart. Mr. Jonkhart has been a Director of AerCap since July 26, 
2006. He is also currently a member of the Supervisory Boards of Ecorys 
Holding, Orco Bank International and Tata Steel Nederland. He was previously 
the Chief Executive Officer of De Nationale Investeringsbank (NIBC) and the 
Chief Executive Officer of NOB Holding. He also served as the Director of 
monetary affairs of the Dutch Ministry of Finance. In addition, he has been a 
professor of finance at Erasmus University Rotterdam. He has served as a member 
of a number of Supervisory Boards, including the Supervisory Boards of BAWAG 
PSK Bank, Staatsbosbeheer, Connexxion Holding, European Investment Bank, Bank 
Nederlandse Gemeenten, Postbank, NPM Capital, Kema, AM Holding and De 
Nederlandsche Bank. He has also served as a Non-Executive Director of Aozora 
Bank, Chairman of the Investment Board of ABP Pension Fund and several other 
funds. Mr. Jonkhart holds a Master's degree in Business Administration, a 
Master's degree in Business Economics and a PhD in Economics from Erasmus 
University Rotterdam.

Walter McLallen. Mr. McLallen has been a Director of AerCap since May 11, 2016. 
He is also currently the principal of Meritage Capital Advisors, advising 
corporations in structuring debt and private equity transactions and providing 
strategic consulting, since 2004. Presently, Mr. McLallen serves as a member of 
the board of directors of Differential Brands Group Inc., as well as a number 
of private companies. He was also an advisor to and director of the Remington 
Outdoor Company and its predecessors from 2006 through June 2015 and served as 
chairman or vice chairman of the board of directors for the last five years of 
such period. Mr. McLallen was a managing director of CIBC World Markets from 
1995 to 2004, during which he was Head of Debt Capital Markets from 1997 to 
2004, as well as Head of High Yield Distribution from 2001 to 2004. Mr. 
McLallen held Associate and Vice President positions at The Argosy Group from 
1990 through 1995 and was an analyst in the mergers and acquisitions department 
at Drexel Burnham Lambert from 1988 to 1990. Mr. McLallen received his BA in 
Economics and Finance from the University of Illinois at Urbana-Champaign in 
1988.

Robert (Bob)Warden. Mr. Warden has been a Director of AerCap since July 26, 
2006. He is also currently a Partner at Pamplona Capital Management, a private 
equity investment firm, which he joined in August 2012. Mr. Warden serves as a 
director for several private companies affiliated with Pamplona. Prior to 
joining Pamplona, Mr. Warden was Managing Director at Cerberus Capital 
Management, L.P. from February 2003 to August 2012, a Vice President at J.H. 
Whitney from May 2000 to February 2003, a Principal at Cornerstone Equity 
Investors LLC from July 1998 to May 2000 and an Associate at Donaldson, Lufkin 
& Jenrette from July 1995 to July 1998. Mr. Warden received his A.B. from Brown 
University.

Officers

Wouter (Erwin) den Dikken. Mr. den Dikken was appointed Chief Operating Officer 
of AerCap in 2010 in addition to his role as Chief Legal Officer to which role 
he was appointed in 2005. Mr. den Dikken also previously served as the Chief 
Executive Officer of AerCap's Irish operations. He joined AerCap's legal 
department in 1998. Prior to joining AerCap, Mr. den Dikken worked for an 
international packaging company in Germany as Senior Legal Counsel where he 
focused on mergers and acquisitions. Mr. den Dikken holds a law degree from 
Utrecht University.

Keith Helming. Mr. Helming assumed the position of Chief Financial Officer of 
AerCap in 2006. Prior to joining AerCap, he was a long standing executive at GE 
Capital Corporation, including serving for five years as Chief Financial 
Officer at aircraft lessor GECAS. He was with General Electric Company for over 
25 years, beginning with their Financial Management Program in 1981. In 
addition to the GECAS role, Mr. Helming served as the Chief Financial Officer 
of GE Corporate Financial Services, GE Fleet Services and GE Consumer Finance 
in the United Kingdom, and also held a variety of other financial positions 
throughout his career at GECC. Mr. Helming holds a Bachelor of Science degree 
in Finance from Indiana University. On December 19, 2016, we announced that 
Peter Juhas will become our Chief Financial Officer in 2017. Mr. Helming will 
remain with AerCap through May 2017.

Philip Scruggs. Mr. Scruggs assumed the position of President and Chief 
Commercial Officer of AerCap upon the consummation of the ILFC Transaction, 
previously serving in the role of Executive Vice President and Chief Marketing 
Officer at ILFC where he has had a 20 year career. As Chief Marketing Officer 
of ILFC, Mr. Scruggs oversaw ILFC's worldwide leasing business, including the 
marketing, pricing, credit, commercial execution, and contracts functions 
within the company, together with ILFC's fleet management services to third 
party investors. Prior to joining ILFC, Mr. Scruggs was an attorney at the Los 
Angeles based law firm Paul, Hastings, Janofsky and Walker, where he 
specialized in leasing and asset based finance. Mr. Scruggs received his B.A. 
from the University of California, Berkeley, and his J.D. from The George 
Washington University. Mr. Scruggs is an instrument rated private pilot.

Peter Anderson. Mr. Anderson assumed the position of Senior Vice President 
Marketing and Head of Asia Pacific upon the consummation of the ILFC 
Transaction, previously serving in the role of Vice President Marketing and 
Deputy Head of APAC at ILFC. Mr. Anderson was responsible for managing ILFC's 
relationships with key airline customers in South East Asia, Japan and Korea. 
Prior to ILFC, Mr. Anderson was Asia Pacific Director of Sales and Marketing 
for Hong Kong Aviation Capital (HKAC), transitioning the Allco Finance Group 
Ltd. aviation assets into the HKAC business and managing those assets across 
Asia. Prior to HKAC, Mr. Anderson spent eight years at Allco Finance Group Ltd. 
in both Sydney and London, specializing in aircraft leasing, structured finance 
(for aviation assets) and mortgage and equipment lease securitization. Mr. 
Anderson earned his Master of Applied Finance and Investment from the 
Securities Institute of Australia, and his B.A. from the University of 
Technology Sydney.

Peter Juhas. Mr. Juhas was appointed Deputy Chief Financial Officer of AerCap 
in September 2015. Prior to joining AerCap, Mr. Juhas was the Global Head of 
Strategic Planning at AIG, where he led the development of the company's 
strategic and capital plans as well as mergers, acquisitions and other 
transactions, including the sale of ILFC to AerCap. Prior to joining AIG in 
2011, Mr. Juhas was a Managing Director in the Investment Banking Division of 
Morgan Stanley from 2000 to 2011. While at Morgan Stanley, he led the IPO of 
AerCap in 2006 and was the lead advisor to the Federal Reserve Bank and the 
U.S. Treasury on the AIG restructuring and the placement of the U.S. 
government-sponsored enterprises Fannie Mae and Freddie Mac into 
conservatorship in 2008. Prior to joining Morgan Stanley, Mr. Juhas was an 
attorney in the Mergers and Acquisitions group at Sullivan & Cromwell LLP, the 
New York law firm. Mr. Juhas received his A.B. from Harvard College and his 
J.D. from Harvard Law School. On December 19, 2016, we announced that Mr. Juhas 
will become our Chief Financial Officer in 2017. Mr. Helming will remain with 
AerCap through May 2017.

Tom Kelly. Mr. Kelly was appointed Chief Executive Officer of AerCap Ireland in 
2010. Mr. Kelly previously served as Chief Financial Officer of AerCap's Irish 
operations and has a substantial aircraft leasing and financial services 
background. Previously, Mr. Kelly spent ten years with GECAS where his last 
roles were as Chief Financial Officer and director of GECAS Limited, GECAS's 
Irish operation. Mr. Kelly also served as global controller for GECAS in his 
role as Senior Vice President & Controller. Prior to joining GECAS in 1997, Mr. 
Kelly spent over eight years with KPMG in their London office, acting as a 
Senior Manager in their financial services practice. Mr. Kelly is a Chartered 
Accountant and holds a Bachelor of Commerce degree from University College 
Dublin.

Edward (Ted) O'Byrne. Mr. O'Byrne was appointed Chief Investment Officer of 
AerCap in January 2011. Previously he held the position of Head of Portfolio 
Management overseeing aircraft trading, OEM relationships and portfolio 
management activities. Mr. O'Byrne joined AerCap in July 2007 as Vice President 
of Portfolio Management and Trading. Prior to joining AerCap, he worked as 
Airline Marketing Manager at Airbus North America and later as Director, Sales 
Contracts for Airbus Leasing Markets in Toulouse, France. Mr. O'Byrne received 
his MBA from the University of Chicago Booth School of Business and his B.A. 
from EuroMed in France.

Martin Olson. Mr. Olson assumed the position of Head of OEM Relations upon the 
consummation of the ILFC Transaction, previously serving in the role of Senior 
Vice President at ILFC. Mr. Olson headed ILFC's Aircraft Sales and Acquisitions 
Department, responsible for purchasing new aircraft and engines. Mr. Olson 
joined ILFC in 1995 after ten years with McDonnell Douglas Aircraft 
Corporation. Mr. Olson is a graduate of California State University, Fullerton. 
He also received a Master's Degree in Business Administration from the 
University of Southern California.

Paul Rofe. Mr. Rofe was appointed Group Treasurer of AerCap in January 2008, 
previously serving in the role of Vice President Corporate Group Treasury, 
since joining the company in September of 2006. He began his career in the 
aviation leasing and financing business with a Kleinwort Benson subsidiary in 
1995, and then moved to BAE Systems for seven years, where he held the 
positions of Director Asset Management and General Manager—Portfolio 
Management. Mr. Rofe qualified as an accountant in 1986 in the United Kingdom.

Sean Sullivan. Mr. Sullivan assumed the position of Head of Americas upon the 
consummation of the ILFC Transaction, previously serving in the role of Senior 
Vice President and Head of ILFC Americas. In this role, Mr. Sullivan was 
involved in ILFC's purchase and leaseback business, including strategic 
direction of the business, pricing and analysis tools, critical support, and 
customer evaluation and processes. Mr. Sullivan has more than 20 years of 
experience in negotiating and managing complicated transactions. Prior to ILFC, 
Mr. Sullivan was Director of Allco Aviation, where he oversaw strategic 
direction and creation of the business plan, focused on growth through purchase 
and leaseback transactions. Previously, Mr. Sullivan also held the position of 
Vice President at the Bank of America in the Leasing and Capital group, focused 
on aviation finance.

Joe Venuto. Mr. Venuto was appointed Chief Technical Officer of AerCap in 
February 2012. He previously served in the role of Senior Vice President 
Operations for the Americas at AerCap for four years. From 2004 to 2008, he was 
the Senior Vice President Operations at AeroTurbine responsible for all 
technical related issues. Prior to joining AeroTurbine, Mr. Venuto held the 
role of Senior Director Maintenance at several airlines including Trump 
Shuttle, Laker Airways and Amerijet International. He has over 30 years' 
experience in the aviation industry and he commenced his aviation career as an 
Airplane & Powerplant technician for Eastern Airlines. Mr. Venuto is a graduate 
of the College of Aeronautics and a licensed FAA Airframe and Powerplant 
Technician.

Kenneth Wigmore. Mr. Wigmore assumed the position of Head of Europe, Middle 
East and Africa ("EMEA") upon the consummation of the ILFC Transaction. 
Previously he held the positions in AerCap of Chief Marketing Officer and Head 
of Marketing for the Americas, overseeing customer relationships in North and 
South America for AerCap since January 2008. Mr. Wigmore joined AerCap in April 
2003 as Vice President, Airline Marketing. Prior to joining AerCap, he worked 
as an Airline Analyst and later as Sales Director, China over a nine year 
period with the aircraft manufacturer Fairchild Dornier. Mr. Wigmore holds a 
Bachelor of Science degree from Mount Saint Mary's University in Maryland.

Compensation

Compensation of non-executive directors

We currently pay each non-executive director an annual fee of €95,000 (€200,000 
for the Chairman of our Board of Directors and €115,000 for the Vice Chairman) 
and pay each of these directors an additional €4,000 per meeting attended in 
person or €1,000 per meeting attended by phone. In addition, we pay the chair 
of the Audit Committee an annual fee of €25,000 and each Audit Committee member 
will receive an annual fee of €15,000 and a fee of €4,000 per committee meeting 
attended in person or €1,000 per committee meeting attended by phone. We 
further pay the non-executive chair of each of the Nomination and Compensation 
Committee, the Group Treasury and Accounting Committee and the Group Portfolio 
and Investment Committee an annual fee of €15,000 and each such committee 
member will receive an annual fee of €10,000 and a fee of €4,000 per committee 
meeting attended in person or €1,000 per committee meeting attended by phone. 
In addition, our non-executive directors receive an annual equity award as 
provided for in AerCap's remuneration policy for members of the Board of 
Directors and in accordance with the terms of the Equity Incentive Plan 2014. 
The size of the annual equity award to our non-executive directors increased, 
effective as of December 31, 2015, following a market compensation analysis 
conducted by an independent benefits advisory firm and in accordance with the 
terms of the Equity Incentive Plan 2014. As of December 31, 2016, our 
non-executive directors hold options to acquire a total of 22,941 AerCap 
ordinary shares, 27,810 shares of restricted stock and 28,981 restricted stock 
units, which equity awards have been granted under the AerCap equity incentive 
plans, as further described below. All members of the Board of Directors are 
reimbursed for reasonable costs and expenses incurred in attending meetings of 
our Board of Directors.

Executive compensation

The aircraft leasing business is highly competitive. As the world's largest 
independent company in this industry, we seek to attract and retain the most 
talented and successful executives to manage our business and to motivate them 
with appropriate incentives to execute on our strategy and deliver attractive 
returns for our shareholders. We have designed our compensation plans to meet 
these objectives. Compensation goal How goal is accomplished Attract and retain 
leading executive talent •

Design compensation elements to enable us to compete effectively for executive 
talent

•

Selectively retain executives acquired through business transactions 
considering industry and functional knowledge, leadership abilities and fit 
with Company culture

•

Perform market analysis to stay informed of compensation trends and practices

Align executive pay with shareholder interest •

Concentrate executive pay heavily in equity compensation

•

Require robust equity ownership and retention

•

Motivate senior executives with meaningful incentives to generate long-term 
returns

Pay for performance •

Pay annual bonuses based on performance against one-year budgeted target set by 
the Nomination and Compensation Committee

•

Tie long-term incentive program awards to the achievement of multi-year 
earnings per share targets approved by the Nomination and Compensation 
Committee

•

Reward high-performers with above-target pay when predetermined goals are 
exceeded

•

Evaluate and adjust, if considered appropriate, for the impact of unanticipated 
favorable or unfavorable transactions/events on compensation payouts

Manage risk •

Prohibit hedging of Company securities and pledging of AerCap equity prior to 
vesting

•

Emphasize long-term performance by designing equity award opportunities to 
minimize short-term focus and influence on compensation payouts

•

Incentive compensation is subject to clawback provisions for the executive 
director in place for Netherlands-based companies

During the year ended December 31, 2016, we paid an aggregate of approximately 
$8.3 million in cash (base salary and bonuses) and benefits as compensation to 
our Group Executive Committee members (Aengus Kelly, Wouter (Erwin) den Dikken, 
Keith Helming and Philip Scruggs), including $0.5 million as part of their 
retirement and pension plans. Due to changes in the Dutch pension system as of 
January 1, 2015, amounts paid by the Company to fund retirement annuities for 
annual salary amounts in excess of €101,519 were paid directly to our Dutch tax 
resident officers (and other Dutch tax resident employees) as a separate 
component of salary instead of paid to a third party and applied towards a 
supplemental premium.

The compensation packages of our Group Executive Committee members and certain 
other officers, consisting of base salary, annual bonus and, for some officers, 
annual grants of AerCap equity instruments ("Annual Equity Awards"), along with 
other benefits, are determined by the Nomination and Compensation Committee 
upon recommendation of the Chief Executive Officer (other than with respect to 
his own compensation package) on an annual basis. The annual compensation 
package of our Chief Executive Officer, consisting of base salary, bonus and 
Annual Equity Awards, along with other benefits, is determined by the Board of 
Directors, upon recommendation of the Nomination and Compensation Committee. In 
addition, the Nomination and Compensation Committee (or, in the case of our 
Chief Executive Officer, the Board of Directors, upon recommendation of the 
Nomination and Compensation Committee) may grant AerCap equity incentive awards 
to our officers on a non-recurring basis ("Other Equity Awards") under our 
equity incentive plans, as further outlined below.

The amount of the annual bonus and, if applicable, the number of Annual Equity 
Awards granted to our Group Executive Committee members and other participating 
officers are dependent on the target bonus level and, if applicable, the target 
Annual Equity Awards level, established before the performance period begins by 
the Nomination and Compensation Committee (or, in the case of our Chief 
Executive Officer, the Board of Directors, upon recommendation of the 
Nomination and Compensation Committee), in combination with our actual 
performance relative to our internal budget for the past financial year, as 
approved by the Board of Directors each year, and the personal performance of 
the individual Group Executive Committee member or other officer involved. The 
annual bonuses are paid in arrears. Actual bonuses will not exceed target bonus 
levels as long as our budget for the relevant year has not been met, subject to 
exceptions and approval by the Nomination and Compensation Committee (or, in 
the case of our Chief Executive Officer, the Board of Directors upon 
recommendation of the Nomination and Compensation Committee) which, if 
applicable, will be disclosed in this annual report. As a matter of policy, 
actual bonuses will be determined below target level in years that our budget 
is not met, unless specific circumstances require otherwise. The Annual Equity 
Awards are granted in arrears. The Annual Equity Awards are time-based with a 
three-year vesting period, subject to certain exceptions.

The Other Equity Awards granted to our officers in 2014, 2015 and 2016, subject 
to certain exceptions, have vesting periods ranging between three years and 
five years and are subject to vesting criteria based on our average 
performance, relative to our internal budget, over a number of years in order 
to promote and encourage good performance over a prolonged period of time. All 
equity awards contain change of control provisions causing immediate vesting of 
all equity awards, to the extent not yet forfeited, in the case of a change of 
control in accordance with the respective equity award agreements.

Severance payments are part of the employment agreements with our Group 
Executive Committee members. The amount of the pre-agreed severance is based 
upon calculations in accordance with their respective age and years of service.


The Company is subject to the Netherlands' Clawback of Bonuses Act that went 
into effect as of January 1, 2014. Pursuant to this legislation, bonuses paid 
to the executive director (and other directors, as defined under the articles 
of association, provided they are in charge of day to day management) may be 
clawed back if awarded on the basis of incorrect information. In addition, any 
bonus that has been awarded to the executive director (and other directors, as 
defined under the articles of association, provided they are in charge of day 
to day management) may be reduced if, under the circumstances, payment of the 
bonus would be unacceptable. As of December 31, 2016, we did not have any 
directors other than the executive director who were in charge of day to day 
management.

AerCap equity incentive plans

Under our equity incentive plans, we have granted restricted stock units, 
restricted stock and stock options, to directors, officers and employees in 
order to enable us to attract, retain and motivate such people and to align 
their interests with ours, including but not limited to retention and 
motivation in relation to the implementation of the ILFC Transaction.

We require our Group Executive Committee members to own Company ordinary shares 
having a value equal to at least ten times their annual base salary, in order 
to further align their interests with the long-term interests of our 
shareholders. This threshold amount includes ordinary shares owned outright, 
vested stock-based equity awards, time-based restricted stock and time-based 
restricted stock units, whether or not vested, and any stock-based equity that 
the executive has elected to defer. New Group Executive Committee members have 
a five year grace period to meet this threshold. In addition, each Group 
Executive Committee member is required to hold 50% of the net shares (after 
satisfaction of any exercise price or tax withholding obligations) delivered to 
him or her pursuant to Company equity awards since January 1, 2007, for so long 
as such member remains employed by the Company (or, if earlier, until such 
member reaches 65 years of age). Sales of Company ordinary shares are conducted 
with a view to avoiding undue impact on the Company ordinary share price and in 
compliance with laws and regulations. Each executive must consult with the 
Chairman before executing any sale of the Company's ordinary shares.

Our policies prohibit our directors, officers and employees from trading in 
Company securities on the basis of material non-public information, or engaging 
in hedging and other "short" transactions involving Company securities. In 
addition, our directors, officers and employees are prohibited from pledging 
equity incentive awards prior to vesting.

As a foreign private issuer, as defined by the rules promulgated under the 
Exchange Act, we are not required to have a majority independent Board of 
Directors under applicable NYSE rules. In 2016, our Board of Directors 
continued to meet the Dutch Corporate Governance Code independence 
requirements. For a non-executive director to be considered "independent" under 
the Dutch Corporate Governance Code, he or she (and his or her spouse and 
immediate relatives) may not, among other things, (i) in the five years prior 
to his or her appointment, have been an employee or executive director of us or 
any public company affiliated with us; (ii) in the year prior to his or her 
appointment, have had an important business relationship with us or any public 
company affiliated with us; (iii) receive any financial compensation from us 
other than for the performance of his or her duties as a director or other than 
in the ordinary course of business; (iv) hold 10% or more of our ordinary 
shares (including ordinary shares subject to any shareholder's agreement); (v) 
be a member of the management or Supervisory Board of a company owning 10% or 
more of our ordinary shares; or (vi) in the year prior to his or her 
appointment, have temporarily managed our day-to-day affairs while the 
executive director was unable to discharge his or her duties.

The directors are appointed by the general meeting of the shareholders. Our 
directors may be appointed by the vote of a majority of votes cast at a general 
meeting of shareholders provided that our Board of Directors has proposed the 
appointment. Without a Board of Directors proposal, directors may also be 
appointed by the vote of a majority of the votes cast at a general meeting of 
shareholders if the majority represents at least one-third of our issued 
capital.

Shareholders may remove or suspend a director by the vote of a majority of the 
votes cast at a general meeting of shareholders, provided that our Board of 
Directors has proposed the removal. Our shareholders may also remove or suspend 
a director, without there being a proposal by the Board of Directors, by the 
vote of a majority of the votes cast at a general meeting of shareholders if 
the majority represents at least one-third of our issued capital.

Under our articles of association, the rules for the Board of Directors and the 
board committees, and Dutch corporate law, the members of the Board of 
Directors are collectively responsible for the management, general and 
financial affairs, policy, and strategy of our company.

The executive director is our Chief Executive Officer, who is primarily 
responsible for managing our day-to-day affairs as well as other 
responsibilities that have been delegated to the executive director in 
accordance with our articles of association and our internal rules for the 
Board of Directors. The non-executive directors supervise the Chief Executive 
Officer and our general affairs and provide general advice to our Chief 
Executive Officer. In performing their duties, the non-executive directors are 
guided by the interests of the Company and shall, within the boundaries set by 
relevant Dutch law, take into account the relevant interests of our 
shareholders and other stakeholders in AerCap. The internal affairs of the 
Board of Directors are governed by our rules for the Board of Directors.

The Chairman of the Board is obligated to ensure, among other things, that (i) 
each director receives all information about matters that he or she may deem 
useful or necessary in connection with the proper performance of his or her 
duties; (ii) each director has sufficient time for consultation and decision 
making; and (iii) the Board of Directors and the board committees are properly 
constituted and functioning.

Each director has the right to cast one vote and may be represented at a 
meeting of the Board of Directors by a fellow director. The Board of Directors 
may pass resolutions only if a quorum of four directors, including our Chief 
Executive Officer and the Chairman, or, in his absence, the Vice Chairman, are 
present at the meeting. Resolutions must be passed by a majority of the votes 
cast. If there is a tie, the matter will be decided by the Chairman of our 
Board of Directors, or in his absence, the Vice Chairman. Subject to Dutch law, 
resolutions of the Board of Directors may be passed in writing by a majority of 
the directors in office. Pursuant to Dutch laws and the Board Rules, a director 
may not participate in discussions or the decision making process on a 
transaction or subject in relation to which he or she has a conflict of 
interest with us. Resolutions to enter into such transactions must be approved 
by our Board of Directors, excluding such interested director or directors.

In 2016, the Board of Directors met on 11 occasions. Throughout the year, the 
Chairman of the Board and individual non-executive directors were in close 
contact with our Chief Executive Officer and the other Group Executive 
Committee members. During its meetings and contacts with the Chief Executive 
Officer and the other Group Executive Committee members, the Board discussed 
such topics as AerCap's annual reports and annual accounts for the financial 
year 2015, topics for the AGM 2016, secured and unsecured financing 
transactions and AerCap's liquidity position, AerCap's hedging policies, 
optimization of AerCap's portfolio of aircraft, global and regional 
macroeconomic, monetary and political developments and impact on the industry, 
AerCap key customer developments, emerging markets risks and opportunities, 
aircraft valuations, AerCap's backlog of new technology orders with aircraft 
and engine manufacturers, AerCap shareholder value, AerCap key shareholder 
developments, capital allocation strategies and share repurchases, AerCap's 
corporate and tax structure, completion of the relocation of the Company's 
principal place of business to Dublin, the AeroTurbine downsizing, reports from 
the various Board committees, the budget for 2017, remuneration and 
compensation, directors and officers succession planning, regulatory 
compliance, corporate social responsibility, governance and risk management and 
control, including but not limited to compliance with the Sarbanes-Oxley Act of 
2002, as amended (the "Sarbanes-Oxley Act").

Committees of the Board of Directors

As described above, the Chief Executive Officer is primarily responsible for 
managing our day-to-day affairs as well as other duties that have been 
delegated to the executive director in accordance with our articles of 
association and our internal rules for the Board of Directors. The Board of 
Directors has established a Group Executive Committee, a Group Portfolio and 
Investment Committee, a Group Treasury and Accounting Committee, an Audit 
Committee and a Nomination and Compensation Committee.

Group Executive Committee

Our Group Executive Committee assists the Chief Executive Officer with regard 
to the operational management of the company, subject to the Chief Executive 
Officer's ultimate responsibility. It is chaired by our Chief Executive Officer 
and is comprised of officers appointed by the Nomination and Compensation 
Committee. The current members of our Group Executive Committee are Aengus 
Kelly (Chief Executive Officer), Wouter (Erwin) den Dikken (Chief Operating 
Officer), Keith Helming (Chief Financial Officer) and Philip Scruggs (President 
& Chief Commercial Officer). The members of the Group Executive Committee 
assist the Chief Executive Officer in performing his duties and as such have 
managerial and policy making functions within the company in their respective 
areas of responsibility.

Group Portfolio and Investment Committee

Our Group Portfolio and Investment Committee is entrusted with the authority to 
consent to transactions relating to the acquisition and disposal of aircraft, 
engines and financial assets that are in excess of $250 million but less than 
$600 million, among others. It is chaired by our Chief Financial Officer and is 
comprised of non-executive directors and officers appointed by the Nomination 
and Compensation Committee. The current members of our Group Portfolio and 
Investment Committee are Keith Helming, Aengus Kelly, Salem Al Noaimi, James 
(Jim) Chapman, Edward (Ted) O'Byrne and Robert (Bob) Warden.

Group Treasury and Accounting Committee

Our Group Treasury and Accounting Committee is entrusted with the authority to 
consent to debt funding in excess of $250 million but less than $600 million 
per transaction, among others. It is chaired by our Chief Financial Officer and 
is comprised of non-executive directors and officers appointed by the 
Nomination and Compensation Committee. The current members of our Group 
Treasury and Accounting Committee are Keith Helming, Aengus Kelly, Salem Al 
Noaimi, Marius Jonkhart, Tom Kelly, Paul Rofe and Robert (Bob) Warden.

Audit Committee

Our Audit Committee assists the Board of Directors in fulfilling its 
responsibilities relating to the integrity of our financial statements, our 
risk management and internal control arrangements, our compliance with legal 
and regulatory requirements, the performance, qualifications and independence 
of external auditors, and the performance of the internal audit function, among 
others. The Audit Committee is comprised of non-executive directors who are 
"independent" as defined by Rule 10A-3 under the Exchange Act. At least one of 
them shall have the necessary financial qualifications. The current members of 
our Audit Committee are James (Jim) Chapman (Chairman), Marius Jonkhart, 
Richard (Michael) Gradon and Walter McLallen.

In 2016, the Audit Committee met on eight occasions. Throughout the year, the 
members of the Audit Committee were in close contact with our Chief Executive 
Officer, our Chief Financial Officer, internal auditors as well as the external 
auditors. Principal items discussed and reviewed during these Audit Committee 
meetings and with our Chief Executive Officer and our Chief Financial Officer 
included the annual and quarterly financial statements and disclosures, 
external auditor's reports, external auditor's independence and rotation, 
activities and results in respect of our continued compliance with the 
Sarbanes-Oxley Act, the external auditor's audit plan for 2016, approval of 
other services rendered by the external auditor, internal audit reports, the 
internal auditor's audit plan for 2017, the Company's compliance, risk 
management policies and integrity and fraud, the expenses incurred by the 
Company's most senior officers in carrying out their duties, the Company's tax 
planning policies, the functioning of the Audit Committee, the audit committee 
charter and the audit committee cycle. The Audit Committee had several separate 
sessions with the external auditor without management being present.


Nomination and Compensation Committee

Our Nomination and Compensation Committee selects and recruits candidates for 
the positions of Chief Executive Officer, non-executive director and Chairman 
of the Board of Directors and recommends their remuneration, bonuses and other 
terms of employment or engagement to the Board of Directors. In addition, our 
Nomination and Compensation Committee approves the remuneration, bonuses and 
other terms of employment of the Group Executive Committee and certain other 
officers and appoints members of the Group Executive Committee, the Group 
Portfolio and Investment Committee, the Group Treasury and Accounting Committee 
and recommends candidates for the Audit Committee and plans the succession 
within the Board of Directors and committees. It is chaired by the Chairman of 
our Board of Directors and is further comprised of up to three non-executive 
directors appointed by the Board of Directors. The current members of our 
Nomination and Compensation Committee are Pieter Korteweg (Chairman), Salem Al 
Noaimi, Paul Dacier and Robert (Bob) Warden.

In 2016, the Nomination and Compensation Committee met on two occasions. At 
these meetings it discussed and approved succession planning and compensation 
related occurrences and developments within the framework of the Board and 
Committee Rules and our remuneration policy. In line with the Dutch Corporate 
Governance Code, the Company has provided the 2016 remuneration report in "Item 
6. Directors, Senior Management and Employees—Compensation". In addition, 
various resolutions were adopted outside of these meetings.

None of our Nomination and Compensation Committee members or our officers has a 
relationship that would constitute an interlocking relationship with officers 
or directors of another entity or insider participation in compensation 
decisions.

None of our employees are covered by a collective bargaining agreement, and we 
believe that we maintain excellent employee relations.

In addition to the above, as of December 31, 2016, 2015 and 2014, we had 160, 
411 and 390 employees, respectively, primarily located in Miami, Florida and 
Goodyear, Arizona relating to AeroTurbine, a subsidiary we are downsizing.

Major Shareholders and Related Party Transactions

Major shareholders

Beneficial holders of 5% or more of our ordinary outstanding shares as of 
December 31, 2016, based on available public filings include: Wellington 
Management Co. LLP at 8.7% (15,312,014 shares), Greenlight Capital, Inc. at 
7.2% (12,621,325 shares), Fidelity Management & Research Co. at 5.1% (9,014,924 
shares) and Donald Smith & Company, Inc. at 5.1% (8,985,613 shares).

In addition, in the second half of 2014, Waha Capital PJSC entered into sale 
and funded collar transactions with respect to the entire amount of the 
ordinary shares they held. We understand Waha has the right to acquire, through 
a call right, up to the same number of shares that are the subject of the 
funded collar transactions (26,846,611 shares, which is 15.2% of our ordinary 
outstanding shares).

Furthermore, Waha Capital PJSC acquired 124,846 shares on December 14, 2015 and 
a further 3,875,154 shares on January 19, 2016. They subsequently sold these 
shares (4,000,000 shares) on November 22, 2016.

We do not register the jurisdiction of all record holders as this information 
is not always available. Specifically, the number of record holders in the 
United States is not known to the company and cannot be ascertained from public 
filings. All of our ordinary shares have the same voting rights.


Additional Information

Memorandum and articles of association

Set forth below is a summary description of our ordinary shares and related 
material provisions of our articles of association and of Book 2 of the Dutch 
Civil Code ("Boek 2 van het Burgerlijk Wetboek"), which governs the rights of 
holders of our ordinary shares. Please refer to "Item 6—Directors, Senior 
Management and Employees" for a discussion of Netherlands laws and our internal 
rules concerning directors' power to vote on proposals in which they are 
materially interested.

Ordinary share capital

Pursuant to our articles of association, our ordinary shares may only be held 
in registered form. All of our ordinary shares are registered in a register 
kept by us or on our behalf by our transfer agent. Transfer of registered 
shares requires a written deed of transfer and the acknowledgment by AerCap, 
subject to provisions stemming from private international law. Our ordinary 
shares are, in general, freely transferable.

Regulatory obligations regarding certain share transactions

AerCap Cash Manager Limited and AerCap Cash Manager II Limited, which are 
members of the AerCap group, are subject to regulation by the Central Bank of 
Ireland. As a result, the acquisition or disposal directly or indirectly of 
interests in AerCap shares or similar interests may be subject to regulatory 
requirements involving the Central Bank of Ireland as set forth below. The 
following disclosure is for informational purposes only and AerCap cannot 
provide Irish legal advice to actual or potential investors. Actual or 
potential investors in AerCap must obtain their own legal advice in relation to 
their position.

Under the European Communities (Markets in Financial Instruments) Regulations 
2007 (as amended) (the "MiFID Regulations"), a person or a group of persons 
acting in concert proposing to acquire a direct or indirect holding of ordinary 
shares or other similar interests in AerCap must give the Central Bank of 
Ireland prior written notice of such proposed acquisition if the acquisition 
would directly or indirectly (i) represent 10% or more of the capital or voting 
rights in AerCap; (ii) result in the proportion of capital or voting rights in 
AerCap held by such person or persons reaching or exceeding 10%, 20%, 33% or 
50% of the capital or voting rights in AerCap; or (iii) in the opinion of the 
Central Bank of Ireland, make it possible for that person or those persons to 
control or exercise a significant influence over the management of either or 
both of our entities subject to the regulation by the Central Bank of Ireland. 
Any such proposed acquisition shall not proceed until (a) the Central Bank of 
Ireland has informed such proposed acquirer or acquirers that it approves such 
acquisition or (b) the period prescribed in section 181 of the MiFID 
Regulations has elapsed without the Central Bank of Ireland having given notice 
in writing that it opposes such acquisition. It is important in this regard to 
note that the validity as a matter of Irish law of affected transactions, if 
completed without prior notification to, or assessment by, the Central Bank of 
Ireland, will not be recognized in Ireland. Corresponding provisions apply to 
the disposition of ordinary shares in AerCap, except that, in such case, no 
approval is required, but prior notice of the disposition must be given to the 
Central Bank of Ireland. The relevant regulated entities of the AerCap group 
are required under Irish law to notify the Central Bank of Ireland of relevant 
acquisitions or disposals of which they become aware.

Issuance of ordinary shares

The General Meeting of Shareholders can resolve upon the issuance of ordinary 
shares or the granting of rights to subscribe for ordinary shares, but only 
upon a proposal by the Board of Directors specifying the price and further 
terms and conditions. The General Meeting of Shareholders may designate our 
Board of Directors as the authorized corporate body for this purpose. Such 
designation may be for any period of up to five years and must specify the 
maximum number of ordinary shares that may be issued.

At the Annual General Meeting held in 2016, our shareholders resolved to 
authorize the Board of Directors, for a period of 18 months, to issue ordinary 
shares or grant rights to subscribe for ordinary shares (i) up to ten percent 
of the Company's issued share capital; and (ii) up to an additional ten percent 
of the Company's issued share capital, provided that the shares that may be 
issued and rights that may be granted pursuant to this second authorization may 
only be used for mergers and/or the acquisition of a business or a company.

These resolutions together authorize the Board of Directors to issue ordinary 
shares, and grant rights to subscribe for such shares, up to a maximum of 20% 
of the Company's issued share capital, subject to the conditions described in 
these resolutions.

Preemptive rights

Unless limited or excluded by the General Meeting of Shareholders or Board of 
Directors as described below, holders of ordinary shares have a pro rata 
preemptive right to subscribe for ordinary shares that we issue, except for 
ordinary shares issued for non-cash consideration (contribution in kind) or 
ordinary shares issued to our employees.

The General Meeting of Shareholders may limit or exclude preemptive rights and 
also designate our Board of Directors as the authorized corporate body for this 
purpose. At the Annual General Meeting held in 2016, our shareholders resolved 
to authorize the Board of Directors to limit or exclude preemptive rights in 
respect of any issuance of shares or granting of rights to subscribe for shares 
pursuant to the authorizations described above in the paragraph Issuance of 
ordinary shares, which authorization is valid for a period of 18 months.

Repurchase of our ordinary shares

We may acquire our ordinary shares, subject to certain provisions of the laws 
of the Netherlands and of our articles of association, if the following 
conditions are met: • the General Meeting of Shareholders has authorized our 
Board of Directors to acquire the ordinary shares, which authorization may be 
valid for no more than 18 months;

• our equity, after deduction of the price of acquisition, is not less than the 
sum of the paid-in and called-up portion of the share capital and the reserves 
that the laws of the Netherlands or our articles of association require us to 
maintain; and

• we would not hold after such purchase, or hold as pledgee, ordinary shares 
with an aggregate par value exceeding such part of our issued share capital as 
set by law from time to time.

At the Annual General Meeting held in 2016, our shareholders resolved to 
authorize the Board of Directors for a period of 18 months (i) to repurchase 
ordinary shares up to ten percent of the Company's issued share capital; and 
(ii) to repurchase ordinary shares up to an additional ten percent of the 
Company's issued share capital, subject to the condition that the number of 
ordinary shares which the Company may at any time hold in its own capital will 
not exceed ten percent of the Company's issued share capital, and certain other 
conditions described in these resolutions.


Capital reduction and cancellation

The General Meeting of Shareholders may reduce our issued share capital either 
by cancelling ordinary shares held in treasury or by amending our articles of 
association to reduce the par value of the ordinary shares. A resolution to 
reduce our capital requires the approval of at least an absolute majority of 
the votes cast and, if less than one half of the share capital is represented 
at a meeting at which a vote is taken, the approval of at least two-thirds of 
the votes cast.

At the Annual General Meeting held in 2016, our shareholders resolved to cancel 
the Company's ordinary shares that may be acquired under the repurchase 
authorizations described above or otherwise, subject to determination by our 
Board of Directors of the exact number of ordinary shares to be cancelled. 
During 2016, we cancelled 15,563,862 ordinary shares that we had repurchased.

General Meetings of Shareholders

Our articles of association determine how our annual General Meeting of 
Shareholders ("AGM") and any extraordinary General Meeting of Shareholders are 
convoked. At least one annual General Meeting of Shareholders must be held 
every year. Shareholders can exercise their voting rights by submitting their 
proxy forms or equivalent means prior to a set date in accordance with the 
procedures indicated in the notice and agenda of the applicable general meeting 
of shareholders. Shareholders may exercise their meeting rights in person after 
notifying us prior to a set date and providing us with appropriate evidence of 
ownership of the shares and authority to vote prior to a set date in accordance 
with the procedures indicated in the notice and agenda of the applicable 
general meeting of shareholders.

The rights of shareholders may only be changed by amending our articles of 
association. A resolution to amend our articles of association is valid if the 
Board of Directors makes a proposal amending the articles of association and 
such proposal is adopted by a simple majority of votes cast.

The following resolutions require a two thirds majority vote if less than half 
of the issued share capital is present or represented at the general meeting of 
shareholders: • capital reduction;

• exclusion or restriction of preemptive rights, or designation of the Board of 
Directors as the authorized corporate body for this purpose; and

• legal merger or legal demerger within the meaning of Title 7 of Book 2 of the 
Dutch Civil Code.

If a proposal to amend the articles of association will be considered at the 
meeting, we will make available a copy of that proposal, in which the proposed 
amendments will be stated verbatim.

An agreement of AerCap to enter into a (i) statutory merger whereby AerCap is 
the acquiring entity; or (ii) a legal demerger, with certain limited 
exceptions, must be approved by the shareholders.

The Annual General Meeting of shareholders was held on May 11, 2016. The Annual 
General Meeting of shareholders adopted the 2015 annual accounts and voted for 
all other items which required a vote.

Voting rights

Each ordinary share represents the right to cast one vote at a general meeting 
of shareholders. All resolutions must be passed with an absolute majority of 
the votes validly cast except as set forth above. We are not allowed to 
exercise voting rights for ordinary shares we hold directly or indirectly.

Any major change in the identity or character of AerCap or its business must be 
approved by our shareholders, including: • the sale or transfer of 
substantially all our business or assets;

• the commencement or termination of certain major joint ventures and our 
participation as a general partner with full liability in a limited partnership 
("commanditaire vennootschap") or general partnership ("vennootschap onder 
firma"); and

• the acquisition or disposal by us of a participating interest in a company's 
share capital, the value of which amounts to at least one third of the value of 
our assets.

Liquidation rights

If we are dissolved or wound up, the assets remaining after payment of our 
liabilities will be first applied to pay back the amounts paid up on the 
ordinary shares. Any remaining assets will be distributed among our 
shareholders, in proportion to the par value of their shareholdings. All 
distributions referred to in this paragraph shall be made in accordance with 
the relevant provisions of the laws of the Netherlands.

Dutch statutory squeeze-out proceedings

If a person or a company or two or more group companies within the meaning of 
Article 2:24b of the Dutch Civil Code acting in concert holds in total 95% of a 
Dutch public limited liability company's issued share capital by par value for 
their own account, the laws of the Netherlands permit that person or company or 
those group companies acting in concert to acquire the remaining ordinary 
shares in the company by initiating statutory squeeze out proceedings against 
the holders of the remaining shares. The price to be paid for such shares will 
be determined by the Enterprise Chamber of the Amsterdam Court of Appeal.

Choice of law and exclusive jurisdiction

Our articles of association provide that the legal relationship among or 
between us, any of our current or former directors, and any of our current or 
former holders of our shares and derivatives thereof, including but not limited 
to (i) actions under statute; (ii) actions under the articles of association, 
including actions for breach thereof; and (iii) actions in tort, shall be 
governed in each case exclusively by the laws of the Netherlands, unless such 
legal relationship does not pertain to or arise out of the capacities above. 
Any dispute, suit, claim, pre-trial action or other legal proceeding, including 
summary or injunctive proceedings, by and between those persons pertaining to 
or arising out of their capacities listed above shall be exclusively submitted 
to the courts of the Netherlands.

Adoption of annual accounts and discharge of management liability

Each year, our Board of Directors must prepare annual accounts within four 
months after the end of our financial year. The annual accounts must be made 
available for inspection by shareholders at our offices within the same period. 
The annual accounts must be accompanied by an auditor's certificate, an annual 
report and certain other mandatory information. The shareholders shall appoint 
an accountant, as referred to in Article 393 of Book 2 of the Dutch Civil Code, 
to audit the annual accounts. The annual accounts are adopted by our 
shareholders.

The adoption of the annual accounts by our shareholders does not release the 
members of our Board of Directors from liability for acts reflected in those 
documents. Any such release from liability requires a separate shareholders' 
resolution.

Disclosure of insider transactions

Members of our Board of Directors and our reporting officers report their 
transactions in AerCap equity interests to the SEC on a voluntary basis.

Registrar and transfer agent

A register of holders of the ordinary shares will be maintained by Broadridge 
in the United States who also serves as our transfer agent. The telephone 
number of Broadridge is 1-800-733-1121.

Risk management and control framework

Our management is responsible for designing, implementing and operating an 
adequate functioning internal risk management and control framework. The 
purpose of this framework is to identify and manage the strategic, operational, 
financial and compliance risks to which we are exposed, to promote 
effectiveness and efficiency of our operations, to promote reliable financial 
reporting and to promote compliance with laws and regulations. Supervision is 
exercised by our Audit Committee, as described in "Item 6. Directors, Senior 
Management and Employees—Board Practices—Committees of the Board of 
Directors—Audit Committee". Our internal risk management and control framework 
is based on the COSO framework developed by the Committee of Sponsoring 
Organizations of the Treadway Commission (2013). The COSO framework aims to 
provide reasonable assurance regarding effectiveness and efficiency of an 
entity's operations, reliability of financial reporting, prevention of fraud 
and compliance with laws and regulations.

Our internal risk management and control framework has the following key 
components:

Planning and control cycle

The planning and control cycle consists of an annual budget and business plan 
prepared by management and approved by our Board of Directors, quarterly 
forecasts, operational reviews and financial reporting.

Risk management and internal controls

We have developed policies and procedures for all areas of our operations, both 
financial and non-financial, that constitutes a broad system of internal 
control. This system of internal control has been developed through a 
risk-based approach and enhanced with a view to achieving and maintaining full 
compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. Our 
system of internal control is embedded in our standard business practices and 
is validated through audits performed by our internal auditors and through 
management testing of Sarbanes-Oxley Act controls, which is performed with the 
assistance of external advisors. In addition, senior management personnel and 
finance managers of our main operating subsidiaries annually sign a detailed 
letter of representation with regard to financial reporting, internal controls 
and ethical principles. Employees working in our finance or accounting 
functions are subject to a separate Finance Code of Ethics.

Code of Conduct and Whistleblower Policy

Our Code of Conduct is applicable to all our employees, including the Chief 
Executive Officer, Chief Financial Officer and controllers. It is designed to 
promote honest and ethical conduct and timely and accurate disclosure in our 
periodic financial results. Our Whistleblower Policy provides for the 
reporting, if so wished on an anonymous basis, of alleged violations of the 
Code of Conduct, alleged irregularities of a financial nature by our employees, 
directors or other stakeholders, alleged violations of our compliance 
procedures and other alleged irregularities without any fear of reprisal 
against the individual that reports the violation or irregularity.

Compliance procedures

AerCap has various procedures and programs in place designed to ensure 
compliance with relevant laws and regulations, including anti-insider trading 
procedures, anti-bribery procedures, anti-fraud procedures, economic sanctions 
and export control compliance procedures, anti-money laundering procedures and 
anti-trust procedures. AerCap's compliance officer is responsible for the 
design and effective operation of the compliance procedures and programs. The 
procedures are subject to regular audits by, or on behalf of, the internal 
audit function.

Internal auditors

We have an internal audit function in place to provide assurance to the Audit 
Committee, on behalf of the Board of Directors, and to AerCap's executive 
officers, with respect to AerCap's key processes. The internal audit function 
independently and objectively carries out audit assignments in accordance with 
the annual internal audit plan, as approved by the Audit Committee. The head of 
the internal audit function reports, in line with professional standards of the 
Institute of Internal Auditors, to the Audit Committee (functional reporting 
line) and to our Chief Executive Officer (administrative reporting line). The 
work of the internal audit department is fully endorsed by the Audit Committee 
and AerCap's executive officers and is considered a valuable part of AerCap's 
system of control and risk management.

Disclosure controls and procedures

The Disclosure Committee assists our Chief Executive Officer and Chief 
Financial Officer in overseeing our financial and non-financial disclosure 
activities and to ensure compliance with applicable disclosure requirements 
arising under U.S. and Dutch law and regulatory requirements. The Disclosure 
Committee obtains information for its recommendations from the operational and 
financial reviews, letters of representation which include a risk and internal 
controls self-assessment, input from the documentation and assessment of our 
internal controls over financial reporting and input from risk management 
activities during the year along with various business reports. The Disclosure 
Committee comprises various members of senior management.

External auditors

Our external auditor is responsible for auditing the financial statements. 
Following the recommendation by the Audit Committee and upon proposal by the 
Board of Directors, the General Meeting of Shareholders appoints each year the 
auditor to audit the financial statements of the current financial year. The 
external auditor reports to our Board of Directors and the Audit Committee of 
our Board of Directors. The external auditor is present at the meetings of the 
Audit Committee when our quarterly and annual results are discussed.

At the request of the Board of Directors and the Audit Committee, the Chief 
Financial Officer and the Internal Audit department review, in advance, each 
service to be provided by the auditor to identify any possible breaches of the 
auditor's independence. The Audit Committee pre-approves every engagement of 
our external auditor. In accordance with applicable regulations, the partner of 
the external audit firm in charge of the audit activities is subject to 
rotation requirements. The current signing partner will rotate off after 2017.

Material contracts

We have entered into several credit facilities and other financing arrangements 
to fund our acquisition of our aircraft. See Note 16—Debt to our Consolidated 
Financial Statements included in this annual report for more information 
regarding our credit facilities and financing arrangements.


Exchange controls

There are no limits under the laws of the Netherlands or in our articles of 
association on non-residents of the Netherlands holding or voting our ordinary 
shares. Currently, there are no exchange controls under the laws of the 
Netherlands on the conduct of our operations or affecting the remittance of 
dividends.

Taxation

Effective as of February 1, 2016, we moved our headquarters and principal 
executive officers from Amsterdam, the Netherlands to Dublin, Ireland. From 
that date forward, AerCap Holdings N.V. has been managed and controlled from 
Ireland. As a result of the application of the tax treaty between the 
Netherlands and Ireland, we are no longer considered a resident of the 
Netherlands for tax purposes but instead a resident of Ireland for tax 
purposes.

Irish tax considerations

The following is a general summary of certain Irish tax consequences applicable 
to both Irish tax resident and non-Irish residents as a result of the holding 
and disposal of ordinary shares where and while we are considered a resident of 
Ireland for the purposes of Irish tax from February 1, 2016 onward. This 
summary is based on existing Irish law and our understanding of the practices 
of the Irish Revenue Commissioners as of the date of this annual report. 
Legislative, administrative or judicial changes may modify the tax consequences 
described below. The discussion below is included for general information 
purposes only.

Please note that this summary does not constitute tax advice and is intended 
only as a general guide. Furthermore, this information applies only to our 
shares that are held as capital assets and does not apply to all categories of 
shareholders, such as dealers in securities, trustees, insurance companies, 
collective investment schemes or shareholders who have, or who are deemed to 
have, acquired their shares by virtue of an office or employment.

This summary is not exhaustive and shareholders should consult their own tax 
advisers as to the tax consequences of acquiring, holding and disposing our 
ordinary shares in their particular circumstances.

Dividend withholding tax

Irish dividend withholding tax ("DWT"), (currently at a rate of 20%) will arise 
in respect of dividends or other distributions (including deemed distributions) 
we pay unless an exemption applies. A deemed distribution for these purposes 
would include, among other things, a payment made on the redemption, repayment 
or purchase of its own shares by a company except for such payments made by a 
quoted company in certain circumstances. Where DWT does arise in respect of 
dividends, the Company is responsible for deducting DWT at source and 
forwarding the relevant payment to the Irish Revenue Commissioners.

An exemption from DWT is available on dividend payments made to certain 
non-Irish tax resident shareholders ("Exempt Non-Resident Shareholders"). 
Exempt Non-Resident Shareholders must be resident in a Relevant Territory (i.e. 
a country with which Ireland has a double tax treaty), which includes the 
United States and member states of the European Union (other than Ireland). 
Exempt Non-Resident Shareholders include: • individual shareholders (not being 
a company) who are not tax resident in Ireland and who are resident for the 
purposes of tax in a Relevant Territory; • corporate shareholders resident for 
the purposes of tax in a Relevant Territory and which are not controlled 
(directly or indirectly) by Irish tax residents;

• corporate shareholders that are not resident in Ireland for the purposes of 
tax, which are under the direct or indirect control of persons who are resident 
for the purposes of tax in a Relevant Territory and are not under the ultimate 
control of persons not resident in a Relevant Territory; or

• corporate shareholders, that are not resident for tax purposes in Ireland, 
the principal class of shares of which (or of its 75% parent or where wholly 
owned by two or more companies, each such company) is substantially and 
regularly traded on a stock exchange in Ireland, a recognized stock exchange in 
a Relevant Territory or on such other stock exchange approved by the Irish 
Minister for Finance (which includes the New York Stock Exchange),

and provided that, in all cases noted above (but subject to the exception in 
the paragraph below regarding "U.S. resident shareholders"), the Exempt 
Non-Resident Shareholder has provided a relevant DWT declaration, as prescribed 
by the Irish Revenue Commissioners, to his or her broker before the record date 
for the dividend, and the relevant information is further transmitted to the 
Company (in the case of shares held through the Depository Trust Company 
("DTC")) or to our transfer agent (in the case of shares held outside of the 
DTC).

U.S. resident shareholders

A simplified DWT exemption procedure exists for U.S. resident shareholders who 
hold their shares in the Company through the DTC. The simplified procedures 
provide that such shareholders are not required to complete the Irish Revenue 
Commissioners' DWT declaration form but can still avail of the exemption from 
DWT provided the address of the beneficial owner of the shares in the records 
of the broker is in the United States. We strongly recommend that such 
shareholders ensure that their information has been properly recorded by their 
brokers. In order for this simplified procedure to apply, the dividends must be 
paid via a "qualifying intermediary" as discussed further below.

Dividends paid in respect of shares in an Irish resident company that are owned 
by residents of the United States and held outside of the DTC will not be 
subject to DWT provided that the shareholder has completed the relevant DWT 
declaration form and this declaration form remains valid. Such shareholders 
must provide the relevant DWT declaration form to our transfer agent at least 
seven business days before the record date for the first dividend payment to 
which they are entitled.

If a U.S. resident shareholder receives a dividend subject to DWT, that 
shareholder should generally be able to make an application for a refund of DWT 
from the Irish Revenue Commissioners, subject to certain time limits.

Distributions to a qualifying intermediary

A distribution made by the Company to a "qualifying intermediary" (for example 
a bank or stockbroking firm) approved by the Irish Revenue Commissioners is 
exempt from DWT if the ultimate beneficial owner is an Exempt Non-Resident 
Shareholder. In such instances, the qualifying intermediary is required to 
identify the person who is beneficially entitled to the distribution and to 
ensure that the prescribed declarations are in place in advance of the dividend 
payment, or in the case of U.S. residents which hold our shares through the 
DTC, that the address of the beneficial owner of the shares is in the United 
States. The Company must apply DWT to a distribution unless it has been 
notified by the qualifying intermediary that the distribution to be received by 
the qualifying intermediary is for the benefit of an Exempt Non-Resident 
Shareholder.

Prior to paying any dividend, the Company intends to put in place an agreement 
with an entity which is recognized by the Irish Revenue Commissioners as a 
"qualifying intermediary", such that any dividends paid by the Company will be 
paid via a qualifying intermediary.

Other non-resident persons

Shareholders that do not fall within one of the categories mentioned above may 
fall within other exemptions from DWT. If a shareholder is exempt from DWT but 
receives a dividend subject to DWT, that shareholder may be able to claim a 
refund of DWT from the Irish Revenue Commissioners subject to certain time 
limits.

Irish resident shareholders

Irish tax resident or ordinarily resident individual shareholders will 
generally be subject to DWT in respect of dividends or distributions received 
from an Irish resident company (with some limited exemptions). Irish tax 
resident individual shareholders will be allowed a tax credit for the amount of 
DWT suffered on the dividend against their Irish income tax charge on the 
dividend income. Irish tax resident corporate shareholders will generally be 
entitled to claim an exemption from DWT.

Irish tax resident or ordinarily resident shareholders that are entitled to 
receive dividends without DWT must complete the relevant DWT declaration form, 
as prescribed by the Irish Revenue Commissioners, and provide the declaration 
form to their brokers before the record date for the first dividend to which 
they are entitled (in the case of shares held through the DTC), or to our 
transfer agent at least seven business days before such record date (in the 
case of shares held outside of the DTC).

Irish tax resident or ordinarily resident individual shareholders who are not 
entitled to an exemption from DWT and who are subject to Irish tax should 
consult their own tax adviser.

Irish income tax on dividends

Non-Irish resident shareholders

A shareholder who is not resident or ordinarily resident for tax purposes in 
Ireland and who is entitled to an exemption from DWT, generally has no 
liability to Irish income tax on a dividend from an Irish resident company 
unless that shareholder holds the shares through a branch or agency which 
carries on a trade in Ireland.

A shareholder who is not resident or ordinarily resident for tax purposes in 
Ireland and who is not entitled to an exemption from DWT, generally has no 
additional liability to Irish income tax unless that shareholder holds the 
shares through a branch or agency which carries on a trade in Ireland. The 
shareholder's liability to Irish tax on the dividend is effectively limited to 
the amount of DWT already deducted by the Company.

Irish resident shareholders

Irish tax resident or ordinarily resident individual shareholders may be 
subject to Irish income tax and income charges such as pay related social 
insurance ("PRSI") and the Universal Social Charge ("USC") on the gross amount 
of any dividends received from the Company, with a credit allowed for any DWT 
suffered on the dividend. Such shareholders should consult their own tax 
adviser. Irish tax resident corporate shareholders should generally not be 
subject to Irish corporation tax on dividends from the Company.


Irish stamp duty

Irish stamp duty will generally not be payable on transactions for cash in the 
Company's shares, unless the transfer of the shares is related to either 
immoveable property situated in Ireland or any interest in such property or to 
shares or marketable securities of an Irish incorporated company. In such cases 
a 1% stamp duty charge will arise for the acquirer based on the transfer 
consideration for the shares.

Irish tax on chargeable gains

Non-residents of Ireland

A disposal of our shares by a shareholder who is not resident or ordinarily 
resident for tax purposes in Ireland should not give rise to Irish tax on any 
chargeable gain realized on such disposal unless such shares are used, held or 
acquired for the purposes of a trade carried on by such shareholder through a 
branch or agency in Ireland.

Irish resident individuals/companies

A disposal of our shares by an Irish tax resident or ordinarily resident 
shareholder may, depending on the circumstances (including the availability of 
exemptions and reliefs), give rise to a chargeable gain or allowable loss for 
that shareholder. Any such gain or loss must be calculated in euro. The rate of 
capital gains tax in Ireland is currently 33%. Depending on the individual 
circumstances, unutilized capital losses from other sources may be available to 
reduce gains realized on the disposal of our shares.

A holder of our shares who is an Irish tax resident individual and becomes 
temporarily non-resident in Ireland may, under Irish anti-avoidance 
legislation, be liable to Irish tax on any chargeable gain realized on a 
disposal during the period in which such individual is non-resident.

Irish capital acquisitions tax

On a gift or inheritance of our shares, Irish capital acquisitions tax ("CAT"), 
will arise where either the disponer and/or the recipient is tax resident or 
ordinary resident in Ireland. Special rules with regard to residence apply 
where an individual is not domiciled in Ireland. Where both the disponer and 
the recipient are not Irish tax resident or ordinary resident, Irish CAT may 
still arise on a gift or inheritance of shares in the Company, if they are 
deemed to be situated in Ireland at the time. The current rate of Irish CAT for 
gifts and inheritances is 33% and there are various thresholds which apply 
before CAT becomes applicable.

The Estate Tax convention between Ireland and the United States generally 
provides for Irish CAT paid on inheritances in Ireland to be credited, in whole 
or in part, against tax payable in the United States, in the case where an 
inheritance of shares is subject to both Irish CAT and U.S. Federal Estate Tax. 
The Estate Tax Convention does not apply to Irish CAT paid on gifts.

U.S. tax considerations

Subject to the limitations and qualifications stated herein, this discussion 
sets forth the material U.S. federal income tax consequences of the purchase, 
ownership and disposition of the ordinary shares. The discussion of the 
holders' tax consequences addresses only those persons that hold those ordinary 
shares as capital assets for U.S. federal income tax purposes and does not 
address the tax consequences to any special class of holder, including without 
limitation, holders of (directly, indirectly or constructively) 10% or more of 
the total combined voting power, if any, of our ordinary shares, dealers in 
securities or currencies, banks, tax-exempt organizations, life insurance 
companies, financial institutions, broker dealers, regulated investment 
companies, real estate investment trusts, traders in securities that elect the 
mark-to-market method of accounting for their securities holdings, persons that 
hold securities that are a hedge or that are hedged against currency or 
interest rate risks or that are part of a straddle, conversion or "integrated" 
transaction, certain U.S. expatriates, partnerships or other entities 
classified as partnerships for U.S. federal income tax purposes and U.S. 
Holders whose functional currency for U.S. federal income tax purposes is not 
the U.S. dollar. This discussion does not address the effect of the U.S. 
federal alternative minimum tax or any state, local or foreign tax laws on a 
holder of ordinary shares. The discussion is based on the Internal Revenue Code 
of 1986, as amended, its legislative history, existing and proposed regulations 
thereunder, published rulings and court decisions, all as currently in effect 
and all subject to change at any time, possibly with retroactive effect.

For purposes of this discussion, a "U.S. Holder" means a beneficial owner of 
ordinary shares that is for U.S. federal income tax purposes an individual 
citizen or resident of the U.S.; a U.S. corporation, or other entity taxable as 
a corporation, created or organized in or under the laws of the United States 
or any political subdivision thereof; a trust if the trust (i) is subject to 
the primary supervision of a U.S. court and one or more U.S. persons are able 
to control all substantial decisions of the trust; or (ii) has elected to be 
treated as a U.S. person; or an estate the income of which is subject to U.S. 
federal income tax regardless of its source. A "non-U.S. Holder" is a 
beneficial owner of our ordinary shares that is neither a U.S. Holder nor a 
partnership for U.S. federal income tax purposes.

If an entity or arrangement that is treated as a partnership for U.S. federal 
income tax purposes holds the shares, the U.S. federal income tax treatment of 
a partner will generally depend on the status of the partner and activities of 
the partnership. Partnerships holding shares and partners therein should 
consult their own tax advisors as to the particular U.S. federal income tax 
consequences of acquiring, owning and disposing of the shares.

Cash dividends and other distributions

A U.S. Holder of ordinary shares generally will be required to treat 
distributions received with respect to such ordinary shares (including any 
amounts withheld) as dividend income to the extent of AerCap's current or 
accumulated earnings and profits (computed using U.S. federal income tax 
principles), with the excess treated as a non-taxable return of capital to the 
extent of the holder's adjusted tax basis in the ordinary shares and, 
thereafter, as capital gain, subject to the PFIC rules discussed below. 
Dividends paid to a U.S. Holder that is a corporation are not eligible for the 
dividends received deduction available to corporations. Current tax law 
provides for a maximum 20% U.S. tax rate on the dividend income of an 
individual U.S. Holder with respect to dividends paid by a domestic corporation 
or "qualified foreign corporation" if certain holding period requirements are 
met. A qualified foreign corporation generally includes a foreign corporation 
(other than a PFIC) if (i) its ordinary shares are readily tradable on an 
established securities market in the United States; or (ii) it is eligible for 
benefits under a comprehensive U.S. income tax treaty. The ordinary shares are 
expected to be readily traded on the NYSE. As a result, assuming we are not 
treated as a PFIC, we should be treated as a qualified foreign corporation with 
respect to dividends paid on our ordinary shares and, therefore, dividends paid 
to an individual U.S. Holder with respect to ordinary shares for which the 
requisite holding period is satisfied should be taxed at a maximum federal tax 
rate of 20%.

Distributions to U.S. Holders of additional ordinary shares or preemptive 
rights with respect to ordinary shares that are made as part of a pro rata 
distribution to all of our shareholders generally will not be subject to U.S. 
federal income tax, but in other circumstances may constitute a taxable 
dividend.

Distributions paid in a currency other than U.S. dollars will be included in a 
U.S. Holder's gross income in a U.S. dollar amount based on the spot exchange 
rate in effect on the date of actual or constructive receipt whether or not the 
payment is converted into U.S. dollars at that time. The U.S. Holder will have 
a tax basis in such currency equal to such U.S. dollar amount, and any gain or 
loss recognized upon a subsequent sale or conversion of the foreign currency 
for a different U.S. dollar amount will be U.S. source ordinary income or loss. 
If the dividend is converted into U.S. dollars on the date of receipt, a U.S. 
Holder generally should not be required to recognize foreign currency gain or 
loss in respect of the dividend income.

Subject to applicable limitations that may vary depending upon the 
circumstances, foreign taxes withheld from dividends on ordinary shares, to the 
extent the taxes do not exceed those taxes that would have been withheld had 
the holder been eligible for and actually claimed the benefits of any reduction 
in such taxes under applicable law or tax treaty, will be creditable against 
the U.S. Holder's federal income tax liability. The limitation on foreign taxes 
eligible for credit is calculated separately with respect to specific classes 
of income. The rules governing foreign tax credits are complex and, therefore, 
prospective purchasers of ordinary shares should consult their own tax advisors 
regarding the availability of foreign tax credits in their particular 
circumstances. Instead of claiming a credit, a U.S. Holder may, at his 
election, deduct such otherwise creditable foreign taxes in computing his 
taxable income, subject to generally applicable limitations under U.S. law.

A non-U.S. Holder generally will not be subject to U.S. federal income or 
withholding tax on dividends paid with respect to ordinary shares unless such 
income is effectively connected with the conduct by the non-U.S. Holder of a 
trade or business within the United States.

Sale or disposition of ordinary shares

A U.S. Holder generally will recognize gain or loss on the taxable sale or 
exchange of the ordinary shares in an amount equal to the difference between 
the U.S. dollar amount realized on such sale or exchange (determined in the 
case of shares sold or exchanged for currencies other than U.S. dollars by 
reference to the spot exchange rate in effect on the date of the sale or 
exchange or, if the ordinary shares sold or exchanged are traded on an 
established securities market and the U.S. Holder is a cash basis taxpayer or 
an electing accrual basis taxpayer, the spot exchange rate in effect on the 
settlement date) and the U.S. Holder's adjusted tax basis in the ordinary 
shares determined in U.S. dollars. The initial tax basis of the ordinary shares 
to a U.S. Holder will be the U.S. Holder's U.S. dollar purchase price for the 
shares (determined by reference to the spot exchange rate in effect on the date 
of the purchase, or if the shares purchased are traded on an established 
securities market and the U.S. Holder is a cash basis taxpayer or an electing 
accrual basis taxpayer, the spot exchange rate in effect on the settlement 
date). Assuming that AerCap is not a PFIC and has not been treated as a PFIC 
during your holding period for our ordinary shares, such gain or loss will be 
capital gain or loss and will be long-term gain or loss if the ordinary shares 
have been held for more than one year. Under current law, the maximum long-term 
capital gain rate for an individual U.S. Holder is 20%. The deductibility of 
capital losses is subject to limitations. Capital gain or loss, if any, 
recognized by a U.S. Holder generally will be treated as U.S. source income or 
loss for U.S. foreign tax credit purposes.

A non-U.S. Holder of ordinary shares will not be subject to United States 
income or withholding tax on gain from the sale or other disposition of 
ordinary shares unless (i) such gain is effectively connected with the conduct 
of a trade or business within the United States; or (ii) the non-U.S. Holder is 
an individual who is present in the United States for at least 183 days during 
the taxable year of the disposition and certain other conditions are met.

Potential application of PFIC provisions

We do not believe we will be classified as a PFIC for 2016. We cannot yet make 
a determination as to whether we will be classified as a PFIC for 2017 or 
subsequent years. In general, a non-U.S. corporation will be classified as a 
PFIC for U.S. federal income tax purposes in any taxable year in which, after 
applying certain look-through rules, either (i) at least 75% of its gross 
income is "passive income"; or (ii) at least 50% of the average value of its 
gross assets is attributable to assets that produce "passive income" or are 
held for the production of "passive income". Passive income for this purpose 
generally includes dividends, interest, royalties, rents and gains from 
commodities, foreign currency and securities transactions. Certain exceptions 
are provided, however, for rental income derived in the active conduct of a 
business.

The determination as to whether a foreign corporation is a PFIC is a complex 
determination that is based on all of the relevant facts and circumstances and 
that depends on the classification of various assets and income under 
applicable rules. It is unclear how some of these rules apply to us. Further, 
this determination must be tested annually at the end of the taxable year and, 
while we intend to conduct our affairs in a manner that will reduce the 
likelihood of our becoming a PFIC, our circumstances may change or our business 
plan may result in our engaging in activities that could cause us to become a 
PFIC. Accordingly, there can be no assurance that we will not be classified as 
a PFIC for the current taxable year or any future taxable year.

If we are or become a PFIC in a taxable year in which we pay a dividend or the 
prior taxable year, the dividend rate discussed above with respect to dividends 
paid to non-corporate holders would not apply. If we are a PFIC, subject to the 
discussion of the mark-to-market election and the qualified electing fund 
election below, a U.S. Holder of ordinary shares will be subject to additional 
tax and an interest charge on "excess distributions" received with respect to 
the ordinary shares or gains realized on the disposition of such ordinary 
shares. Such a U.S. Holder will have an excess distribution if distributions 
during any tax year exceed 125% of the average amount received during the three 
preceding tax years (or, if shorter, the U.S. Holder's holding period). A U.S. 
Holder may realize gain on an ordinary share not only through a sale or other 
disposition, but also by pledging the ordinary share as security for a loan or 
entering into certain constructive disposition transactions. To compute the tax 
on an excess distribution or any gain, (i) the excess distribution or gain is 
allocated ratably over the U.S. Holder's holding period; (ii) the amount 
allocated to the current tax year and amounts allocated to any year before the 
first year in which we are a PFIC is taxed as ordinary income in the current 
tax year; and (iii) the amount allocated to each previous tax year (other than 
any year before the first year in which we are a PFIC) is taxed at the highest 
applicable marginal rate in effect for that year and an interest charge is 
imposed to recover the deemed benefit from the deferred payment of the tax. 
These rules effectively prevent a U.S. Holder from treating the gain realized 
on the disposition of an ordinary share as capital gain.

If we are a PFIC and our ordinary shares are "regularly traded" on a "qualified 
exchange," a U.S. Holder may make a mark-to-market election, which may mitigate 
the adverse tax consequences resulting from AerCap's PFIC status. The ordinary 
shares will be treated as "regularly traded" in any calendar year during which 
more than a de minimis quantity of ordinary shares are traded on a qualified 
exchange on at least 15 days during each calendar quarter. The NYSE, on which 
the ordinary shares are expected to be regularly traded, is a qualified 
exchange for U.S. federal income tax purposes.

If a U.S. Holder makes the mark-to-market election, for each year in which we 
are a PFIC the holder generally will include as ordinary income the excess, if 
any, of the fair market value of the ordinary shares at the end of the taxable 
year over their adjusted basis, and will be permitted an ordinary loss in 
respect of the excess, if any, of the adjusted basis of the ordinary shares 
over their fair market value at the end of the taxable year (but only to the 
extent of the net amount of previously included income as a result of the 
mark-to-market election). If a U.S. Holder makes the election, his basis in the 
ordinary shares will be adjusted to reflect any such income or loss amounts. 
Any gain recognized on the sale or other disposition of ordinary shares, for 
which the mark-to-market election has been made, will generally be treated as 
ordinary income.

Alternatively, if we become a PFIC in any year, a U.S. Holder of ordinary 
shares may wish to avoid the adverse tax consequences resulting from our PFIC 
status by making a qualified electing fund ("QEF") election with respect to our 
ordinary shares in such year. If a U.S. Holder makes a QEF election, the holder 
will be required to include in gross income each year (i) as ordinary income, 
its pro rata share of our earnings and profits in excess of net capital gains; 
and (ii) as long-term capital gains, its pro rata share of our net capital 
gains, in each case, whether or not cash distributions are actually made. The 
amounts recognized by a U.S. Holder making a QEF election generally are treated 
as income from sources outside the U.S. If, however, U.S. Holders hold at least 
half of the ordinary shares, a percentage of our income equal to the proportion 
of our income that we receive from U.S. sources will be U.S. source income for 
the U.S. Holders of ordinary shares. Because a U.S. Holder of shares in a PFIC 
that makes a QEF election is taxed currently on its pro rata share of our 
income, the amounts recognized will not be subject to tax when they are 
distributed to the U.S. Holder. An electing U.S. Holder's basis in the ordinary 
shares will be increased by any amounts included in income currently as 
described above and decreased by any amounts not subjected to tax at the time 
of distribution. If we are or become a PFIC, a U.S. Holder would make a QEF 
election in respect of its ordinary shares by attaching a properly completed 
IRS Form 8621 in respect of such shares to the holder's timely filed U.S. 
federal income tax return. For any taxable year that we determine that we are a 
PFIC, we will (i) provide notice of our status as a PFIC as soon as practicable 
following such taxable year; and (ii) comply with all reporting requirements 
necessary for U.S. Holders to make QEF elections, including providing to 
shareholders upon request the information necessary for such an election.

Although a U.S. Holder normally is not permitted to make a retroactive QEF 
election, a retroactive election (a "retroactive QEF election") may be made for 
a taxable year of the U.S. Holder (the "retroactive election year") if the U.S. 
Holder (i) reasonably believed that, as of the date the QEF election was due, 
the foreign corporation was not a PFIC for its taxable year that ended during 
the retroactive election year; and (ii) to the extent provided for in 
applicable Treasury Regulations, filed a protective statement with respect to 
the foreign corporation, applicable to the retroactive election year, in which 
the U.S. Holder described the basis for its reasonable belief and extended the 
period of limitation on the assessment of taxes for all taxable years of the 
shareholder to which the protective statement applies. If required to be filed 
to preserve the U.S. Holder's ability to make a retroactive QEF election, the 
protective statement must be filed by the due date of the investor's return 
(including extensions) for the first taxable year to which the statement is to 
apply. U.S. Holders should consult their own tax advisors regarding the 
advisability of filing a protective statement.

As discussed above, if we are a PFIC, a U.S. Holder of ordinary shares that 
makes a QEF election (including a proper retroactive QEF election) will be 
required to include in income currently its pro rata share of our earnings and 
profits whether or not we actually distribute earnings. The use of earnings to 
fund reserves or pay down debt or to fund other investments could result in a 
U.S. Holder of ordinary shares recognizing income in excess of amounts it 
actually receives. In addition, our income from an investment for U.S. federal 
income tax purposes may exceed the amount we actually receive. If we are a PFIC 
and a U.S. Holder makes a valid QEF election in respect of its ordinary shares, 
such holder may be able to elect to defer payment, subject to an interest 
charge for the deferral period, of the tax on income recognized on account of 
the QEF election. Prospective purchasers of ordinary shares should consult 
their own tax advisors about the advisability of making a QEF election, 
protective QEF election and deferred payment election.

Miscellaneous itemized deductions of an individual U.S. person can only be 
deducted to the extent that all of such person's miscellaneous itemized 
deductions exceed 2% of its adjusted gross income. In addition, an individual's 
miscellaneous itemized deductions are not deductible for purposes of computing 
the alternative minimum tax. Certain expenses of AerCap might be a 
miscellaneous itemized deduction if incurred by an individual. A U.S. person 
that owns an interest in a "pass-through entity" is treated as recognizing 
income in an amount corresponding to its share of any item of expense that 
would be a miscellaneous itemized deduction and as separately deducting that 
item subject to the limitations described above. If it is determined that we 
are a PFIC, the IRS could take the position that we are a "pass-through entity" 
with respect to a U.S. Holder of ordinary shares that makes a QEF election.

Special rules apply to determine the foreign tax credit with respect to 
withholding taxes imposed on distributions on shares in a PFIC. If a U.S. 
Holder owns ordinary shares during any year in which we are a PFIC, such holder 
must file Internal Revenue Service Form 8621.

We urge prospective purchasers of ordinary shares to consult their own tax 
advisors concerning the tax considerations relevant to an investment in a PFIC, 
including the availability and consequences of making the mark-to-market 
election and QEF election discussed above.

Additional tax on net investment income

Certain U.S. Holders that are individuals, trusts or estates may be subject to 
a 3.8% tax, in addition to otherwise applicable U.S. federal income tax, on the 
lesser of (i) the U.S. Holder's "net investment income" (or undistributed "net 
investment income," in the case of a trust or estate) for the relevant taxable 
year; and (ii) the excess of the U.S. Holder's modified adjusted gross income 
(or adjusted gross income, in the case of a trust or estate) for the relevant 
taxable year above a certain threshold (which in the case of an individual 
ranges from $125,000 to $250,000, depending on the individual's circumstances). 
A U.S. Holder's "net investment income" generally includes, among other things, 
dividend income on and capital gain from the disposition of shares, subject to 
certain exceptions. Holders should consult their own tax advisors regarding the 
applicability of this tax to the ordinary shares.

Information reporting and backup withholding

Information reporting to the U.S. Internal Revenue Service generally will be 
required with respect to payments on the ordinary shares and proceeds of the 
sale of the ordinary shares paid to holders that are U.S. taxpayers, other than 
certain corporations and other exempt recipients. A 28% "backup" withholding 
tax may apply to those payments if such a holder fails to provide a taxpayer 
identification number to the paying agent and to certify that no loss of 
exemption from backup withholding has occurred. Holders that are not subject to 
U.S. taxation may be required to comply with applicable certification 
procedures to establish that they are not U.S. taxpayers in order to avoid the 
application of such information reporting requirements and backup withholding. 
The amounts withheld under the backup withholding rules are not an additional 
tax and may be refunded, or credited against the holder's U.S. federal income 
tax liability, if any, provided the required information is furnished to the 
U.S. Internal Revenue Service.

The above discussion is a general summary. It does not cover all tax matters 
that may be of importance to particular investors. All prospective investors 
are strongly urged to consult their own tax advisors about the tax consequences 
of an investment in our ordinary shares.


Dividends

Dividends may in principle only be paid out of profit as shown in the adopted 
annual accounts. We will only have power to make distributions to shareholders 
and other persons entitled to distributable profits to the extent our equity 
exceeds the sum of the paid and called up portion of the ordinary share capital 
and the reserves that must be maintained in accordance with provisions of the 
laws of the Netherlands or our articles of association. The profits must first 
be used to set up and maintain reserves required by law and must then be set 
off against certain financial losses. We may not make any distribution of 
profits on ordinary shares that we hold and have not done so in the past. Our 
Board of Directors determines whether and how much of the remaining profit it 
will reserve, and, if the Board of Directors determines that not all of the 
remaining profit is reserved, the manner and date of a dividend distribution, 
and notifies shareholders.

All calculations to determine the amounts available for dividends will be based 
on our annual Dutch GAAP statutory accounts, which may be different from our 
Consolidated Financial Statements under U.S. GAAP, such as those included in 
this annual report. Our statutory accounts have to date been prepared, and will 
continue to be prepared, under Dutch GAAP and are deposited with the Commercial 
Register in Amsterdam, the Netherlands. Our net income for the year ended 
December 31, 2015 and our shareholders' equity as of December 31, 2015 as set 
forth in our annual statutory accounts were $1,078.5 million and $8,118.6 
million, respectively. We are dependent on dividends or other advances from our 
operating subsidiaries to fund any dividends we may pay on our ordinary shares.


Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposure is interest rate risk associated with short- 
and long-term borrowings bearing variable interest rates and lease payments 
under leases tied to floating interest rates. To manage this interest rate 
exposure, from time to time, we enter into interest rate swap and cap 
agreements. We are also exposed to foreign currency risk, which can adversely 
affect our operating profits. To manage this risk, from time to time, we enter 
into forward exchange contracts.

The following discussion should be read in conjunction with Note 13—Derivative 
assets and liabilities and Note16—Debt to our Consolidated Financial Statements 
included in this annual report, which provide further information on our debt 
and derivative financial instruments.

Interest rate risk

Interest rate risk is the exposure to changes in the level of interest rates 
and the spread between different interest rates. Interest rate risk is highly 
sensitive to many factors, including government monetary policies, global 
economic factors and other factors beyond our control.

We enter into leases with rents that are based on fixed and variable interest 
rates, and we fund our operations primarily with a mixture of fixed and 
floating rate debt. Interest rate exposure arises when there is a mismatch 
between terms of the associated debt and interest earning assets, primarily 
between floating rate debt and fixed rate leases. We manage this exposure 
primarily through the use of interest rate caps, interest rate swaps and 
interest rate floors using a cash flow-based risk management model. This model 
takes the expected cash flows generated by our assets and liabilities and then 
calculates by how much the value of these cash flows will change for a given 
movement in interest rates.

The principal amount of our outstanding floating rate debt was approximately 
$8.1 billion, or approximately 30% of the total principal amount of our 
outstanding indebtedness as of December 31, 2016. If interest rates were to 
increase by 1%, we would expect an average increase in interest expense on our 
floating rate indebtedness of approximately $30 million to $35 million per 
year, including the offsetting benefits of interest rate derivatives currently 
in effect, leases that are based on variable interest rates and interest 
earning cash balances. A decrease in interest rates would result in a decrease 
in our interest expense, which would be partially offset by a decrease in the 
interest revenue and lease revenue. This sensitivity analysis is limited by 
several factors, and should not be viewed as a forecast.

The variable benchmark interest rates associated with these instruments ranged 
from one- to three-month U.S. dollar LIBOR.

Our Board of Directors is responsible for reviewing our overall interest rate 
management policies. Our counterparty risk is monitored on an ongoing basis, 
but is mitigated by the fact that the majority of our interest rate derivative 
counterparties are required to collateralize in the event of their downgrade by 
the rating agencies below a certain level.


Foreign currency risk and foreign operations

Our functional currency is U.S. dollars. Foreign exchange risk arises from our 
and our lessees' operations in multiple jurisdictions. All of our aircraft 
purchase agreements are negotiated in U.S. dollars, we currently receive 
substantially all of our revenue in U.S. dollars and we pay our expenses 
primarily in U.S. dollars. We currently have a limited number of leases 
denominated in foreign currencies, maintain part of our cash in foreign 
currencies, pay taxes in foreign currencies, and incur some of our expenses in 
foreign currencies, primarily the Euro. A decrease in the U.S. dollar in 
relation to foreign currencies increases our lease revenue received from 
foreign currency denominated leases and our expenses paid in foreign 
currencies. An increase in the U.S. dollar in relation to foreign currencies 
decreases our lease revenue received from foreign currency denominated leases 
and our expenses paid in foreign currencies. Because we currently receive most 
of our revenues in U.S. dollars and pay most of our expenses in U.S. dollars, a 
change in foreign exchange rates would not have a material impact on our 
results of operations or cash flows. We do not have any restrictions or 
repatriation issues associated with our foreign cash accounts.

Inflation

Inflation generally affects our costs, including selling, general and 
administrative expenses and other expenses. We do not believe that our 
financial results have been, or will be in the near future, materially and 
adversely affected by inflation.


General

The Company

We are an independent aircraft leasing company with total assets of $41.6 
billion, primarily consisting of 1,022 owned aircraft as of December 31, 2016. 
Our ordinary shares are listed on the New York Stock Exchange (AER). Pursuant 
to our recent migration from the Netherlands to Ireland, we moved our 
headquarters and executive officers from Amsterdam to Dublin, effective as of 
February 1, 2016. We continue to have offices in Amsterdam, Los Angeles, 
Shannon, Fort Lauderdale, Miami, Singapore, Shanghai and Abu Dhabi. We also 
have representative offices at the world's largest aircraft manufacturers, 
Boeing in Seattle and Airbus in Toulouse.

The Consolidated Financial Statements presented herein include the accounts of 
AerCap Holdings N.V. and its subsidiaries. AerCap Holdings N.V. is a public 
limited liability company ("naamloze vennootschap" or "N.V.") incorporated in 
the Netherlands on July 10, 2006.

ILFC Transaction

On May 14, 2014, we successfully completed the ILFC Transaction, as further 
described in Note 4—ILFC Transaction.

AIG offering and the Share Repurchase from AIG

On June 9, 2015, AIG sold 71,184,686 of its AerCap ordinary shares in a 
secondary public offering and AerCap completed the Share Repurchase from AIG of 
15,698,588 ordinary shares. On August 24, 2015, AIG sold 10,677,702 of its 
AerCap ordinary shares in a secondary public offering. Following this sale, AIG 
no longer owns any of our outstanding ordinary shares and has no designees on 
our Board of Directors.

GFL Transaction

On April 22, 2014, we completed the sale of 100% of the class A common shares 
in Genesis Funding Limited to GFL Holdings, LLC, an affiliate of Wood Creek 
Capital Management, LLC. GFL had 37 aircraft in its portfolio with a net book 
value of $727 million.

Basis of presentation

General

Our Consolidated Financial Statements are presented in accordance with U.S. 
GAAP.

We consolidate all companies in which we have direct and indirect legal or 
effective control and all VIEs for which we are deemed the PB and have control 
under ASC 810. All intercompany balances and transactions with consolidated 
subsidiaries have been eliminated. The results of consolidated entities are 
included from the effective date of control or, in the case of VIEs, from the 
date that we are or become the PB. The results of subsidiaries sold or 
otherwise deconsolidated are excluded from the date that we cease to control 
the subsidiary or, in the case of VIEs, when we cease to be the PB.

Other investments in which we have the ability to exercise significant 
influence and joint ventures are accounted for under the equity method of 
accounting.

Our Consolidated Financial Statements are stated in U.S. dollars, which is our 
functional currency.

Use of estimates

The preparation of Consolidated Financial Statements in conformity with U.S. 
GAAP requires management to make estimates and assumptions that affect the 
reported amounts of assets and liabilities and disclosure of contingent assets 
and liabilities at the date of the financial statements and the reported 
amounts of revenues and expenses during the reporting period. The use of 
estimates is or could be a significant factor affecting the reported carrying 
values of flight equipment, intangibles, investments, trade and notes 
receivables, deferred income tax assets and accruals and reserves. We consider 
information available from professional appraisers, where possible, to support 
our estimates, particularly with respect to flight equipment. Actual results 
may differ from our estimates under different conditions, sometimes materially.

During the years ended December 31, 2016, 2015 and 2014, we changed our 
estimates of useful lives and residual values of certain aircraft. The changes 
in estimates are a result of the current market conditions or other factors 
that have affected the useful lives and residual values for such aircraft. The 
effect for the years ended December 31, 2016, 2015 and 2014 was to reduce net 
income by $14.4 million, $35.8 million and $4.4 million, respectively, basic 
earnings per share by $0.08, $0.18 and $0.02, respectively, and diluted 
earnings per share by $0.08, $0.17 and $0.02, respectively.

Summary of significant accounting policies

Cash and cash equivalents

Cash and cash equivalents include cash and highly liquid investments with 
original maturities of three months or less.

Restricted cash

Restricted cash includes cash held by banks that is subject to withdrawal 
restrictions. Such amounts are typically restricted under secured debt 
agreements and can be used only to maintain the aircraft securing the debt and 
to provide debt service payments of principal and interest.

Trade receivables

Trade receivables represent unpaid, current lessee obligations under existing 
lease contracts or receivables related to inventory sales. An allowance for 
credit losses on trade receivables is established when the risk of non-recovery 
is probable. The risk of non-recovery is primarily based on the extent to which 
amounts outstanding exceed the value of security held, together with an 
assessment of the financial strength and condition of a debtor and the economic 
conditions persisting in the debtor's operating environment. The allowance for 
credit losses is classified as leasing expenses in our Consolidated Income 
Statements.

Flight equipment held for operating leases, net

Flight equipment held for operating leases is stated at cost less accumulated 
depreciation and impairment. Flight equipment is depreciated to its estimated 
residual value on a straight-line basis over the useful life of the aircraft, 
which is generally 25 years from the date of manufacture, or a different period 
depending on the disposition strategy. The costs of improvements to flight 
equipment are normally expensed unless the improvement increases the long-term 
value or extends the useful life of the flight equipment. The capitalized 
improvement cost is depreciated over the estimated remaining useful life of the 
aircraft. The residual value of our flight equipment is generally 15% of 
estimated industry standard price, except where more relevant information 
indicates a different residual value is more appropriate.

We periodically review the estimated useful lives and residual values of our 
flight equipment based on our knowledge of the industry, external factors, such 
as current market conditions, and changes in our disposition strategies, to 
determine if they are appropriate, and record adjustments to depreciation rates 
prospectively on an aircraft by aircraft basis, as necessary.

On a quarterly basis, we perform recoverability assessments of our long-lived 
assets when events or changes in circumstances indicate that the carrying value 
of such assets may not be recoverable. Annually, we perform impairment 
assessments for all of our aircraft held for operating leases that are five 
years of age or older. The review of recoverability includes an assessment of 
the estimated future cash flows associated with the use of an asset and its 
eventual disposal. The assets are grouped at the lowest level for which 
identifiable cash flows are largely independent of other groups of assets, 
which includes the individual aircraft and the lease-related assets and 
liabilities of that aircraft (the "Asset Group"). If the sum of the expected 
undiscounted future cash flows is less than the aggregate net book value of the 
Asset Group, an impairment loss is recognized. The loss is measured as the 
excess of the carrying amount of the impaired aircraft over its fair value.

Fair value reflects the present value of cash expected to be generated from the 
aircraft in the future, including its expected residual value, discounted at a 
rate commensurate with the associated risk. Future cash flows are assumed to 
occur under the current market conditions and assume adequate time for a sale 
between a willing buyer and a willing seller. Expected future lease rates are 
based on all relevant information available, including current contracted rates 
for similar aircraft, appraisal data and industry trends.

Capitalization of interest

We capitalize interest on prepayments of forward order flight equipment and add 
such amount to prepayments on flight equipment. The amount of interest 
capitalized is the actual interest costs incurred on the debt specific to the 
prepayments, if any, or the amount of interest costs which could have been 
avoided in the absence of such prepayments.

Net investment in finance and sales-type leases

If a lease meets specific criteria under U.S. GAAP, we recognize the lease in 
net investment in finance and sales-type leases in our Consolidated Balance 
Sheets and de-recognize the aircraft from flight equipment held for operating 
leases. For finance and sales-type leases, we recognize the difference between 
the aircraft carrying value and the amount recognized in net investment in 
finance and sales-type leases in net gain on sale of assets in our Consolidated 
Income Statements. The amounts recognized for finance and sales-type leases 
consist of lease receivables and the estimated unguaranteed residual value of 
the flight equipment on the lease termination date, less the unearned income. 
Expected unguaranteed residual values are based on our assessment of the values 
of the flight equipment at expiration of the lease. The unearned income is 
recognized as lease revenue in our Consolidated Income Statements over the 
lease term, in a manner that produces a constant rate of return on the lease.

Definite-lived intangible assets

We recognize intangible assets acquired in a business combination at fair value 
on the date of acquisition. The rate of amortization of definite-lived 
intangible assets is calculated based on the period over which we expect to 
derive economic benefits from such assets.

Maintenance rights intangible and lease premium, net

Maintenance rights intangible assets are recognized when we acquire aircraft 
subject to existing leases, primarily as a result of the ILFC Transaction. 
These intangible assets represent the contractual right to receive the aircraft 
in a specified maintenance condition at the end of the lease (EOL contracts) or 
our right to receive an aircraft in better maintenance condition due to our 
obligation to contribute towards the cost of the maintenance events performed 
by the lessee either through reimbursement of maintenance deposit rents held 
(MR contracts), or through a lessor contribution to the lessee.

For EOL contracts, to the extent the lease end cash compensation paid to us is 
less than the maintenance rights intangible asset, we recognize the difference 
between these two amounts as maintenance rights expense upon lease termination. 
Maintenance rights expense is included in leasing expenses in our Consolidated 
Income Statements. To the extent the lease end cash compensation paid to us is 
more than the maintenance rights intangible asset, we recognize the difference 
between these two amounts as lease revenue in our Consolidated Income 
Statements upon lease termination. For MR contracts, we recognize maintenance 
rights expense at the time the lessee submits a reimbursement claim and 
provides the required documentation related to the cost of a qualifying 
maintenance event that relates to pre-acquisition usage.

Lease premium assets represent the value of an acquired lease where the 
contractual rental payments are above the market rate. We amortize the lease 
premium assets on a straight-line basis over the term of the lease as a 
reduction of lease revenue in our Consolidated Income Statements.

Other definite-lived intangible assets

Other definite-lived intangible assets primarily consist of customer 
relationships recorded at fair value on the Closing Date as a result of the 
ILFC Transaction. These intangible assets are amortized over the period which 
we expect to derive economic benefits from such assets. The amortization 
expense is recorded in depreciation and amortization in our Consolidated Income 
Statements. We evaluate all definite-lived intangible assets for impairment 
when events or changes in circumstances indicate that the carrying value of the 
asset may not be recoverable.

Other assets

Other assets consist of inventory, notes receivables, investments, derivative 
financial instruments, lease incentives, other tangible fixed assets, and 
straight-line rents, prepaid expenses and other receivables.

Inventory

Inventory consists primarily of engine and airframe parts and rotable and 
consumable parts we sell through our subsidiary, AeroTurbine. We value our 
inventory at the lower of cost or market value. Cost is primarily determined 
using the specific identification method for individual part purchases and on 
an allocated basis for engines and aircraft purchased for disassembly and for 
bulk purchases. Costs are allocated using the relationship of the cost of the 
engine, aircraft, or bulk inventory purchase to the estimated retail sales 
value at the time of purchase. At the time of sale, this ratio is applied to 
the sales price of each individual part to determine its cost. We periodically 
evaluate this ratio and, if necessary, update sales estimates and make 
adjustments to this ratio. Generally, inventory that is held for more than four 
years is considered excess inventory and its carrying value is reduced to zero.

Notes receivables

Notes receivables represent amounts advanced in the normal course of our 
operations and also arise from the restructuring and deferral of trade 
receivables from lessees experiencing financial difficulties. An allowance for 
credit losses on notes receivables is established when the risk of non-recovery 
is probable. The assessment of the risk of non-recovery where lessees are 
experiencing financial difficulties is primarily based on the extent to which 
amounts outstanding exceed the value of security held, together with an 
assessment of the financial strength and condition of the debtor and the 
economic conditions persisting in the debtor's operating environment. The note 
receivable as a result of the ALS Transaction was recorded at fair value and 
was subsequently measured at amortized cost using the retrospective effective 
interest method.

Investments

Investments over which we have significant influence but not a controlling 
interest, joint ventures or VIEs for which we are not the PB are reported using 
the equity method of accounting. Under the equity method of accounting, we 
include our share of earnings and losses of such investments in equity in net 
earnings (losses) of investments accounted for under the equity method.

Derivative financial instruments

We use derivative financial instruments to manage our exposure to interest rate 
risks. We recognize derivatives in our Consolidated Balance Sheets at fair 
value.

When cash flow hedge accounting treatment is applied, the changes in fair 
values related to the effective portion of the derivatives are recorded in 
AOCI, and the ineffective portion is recognized immediately in interest 
expense. Amounts reflected in AOCI related to the effective portion are 
reclassified into interest expense in the same period or periods during which 
the hedged transaction affects interest expense.

We discontinue hedge accounting prospectively when (i) we determine that the 
derivative is no longer effective in offsetting changes in the fair value or 
cash flows of the hedged item; (ii) the derivative expires or is sold, 
terminated, or exercised; or (iii) management determines that designating the 
derivative as a hedging instrument is no longer appropriate. In all situations 
in which hedge accounting is discontinued and the derivative remains 
outstanding, we recognize the changes in the fair value in current-period 
earnings. The remaining balance in AOCI at the time we discontinue hedge 
accounting is not recognized in our Consolidated Income Statements unless it is 
probable that the forecasted transaction will not occur. Such amounts are 
recognized in interest expense when the hedged transaction affects interest 
expense.

When cash flow hedge accounting treatment is not applied, the changes in fair 
values related to interest rate related derivatives between periods are 
recognized in interest expense in our Consolidated Income Statements.

Net cash received or paid under derivative contracts in any reporting period is 
classified as operating cash flows in our Consolidated Statements of Cash 
Flows.

Lease incentives

We capitalize amounts paid or value provided to lessees as lease incentives. We 
amortize lease incentives on a straight-line basis over the term of the related 
lease as a reduction in lease revenue in our Consolidated Income Statements.

Other tangible fixed assets

Other tangible fixed assets consist primarily of computer equipment, leasehold 
improvements and office furniture, and are valued at acquisition cost and 
depreciated at various rates over the asset's estimated useful life on a 
straight-line basis. Depreciation expense on other tangible fixed assets is 
recorded in depreciation and amortization in our Consolidated Income 
Statements.

Fair value measurements

Fair value is defined as the amount that would be received to sell an asset or 
paid to transfer a liability in an orderly transaction between market 
participants at the measurement date. We measure the fair value of our 
derivatives on a recurring basis and measure the fair value of flight equipment 
and definite-lived intangible assets on a non-recurring basis. See Note 31—Fair 
value measurements.

Income taxes

We recognize an uncertain tax benefit only to the extent that it is more likely 
than not that the tax position will be sustained on examination by the taxing 
authorities, based on the technical merits of the position.

Deferred income tax assets and liabilities

We report deferred income taxes resulting from the temporary differences 
between the book values and the tax values of assets and liabilities using the 
liability method. The differences are calculated at nominal value using the 
enacted tax rate applicable at the time the temporary difference is expected to 
reverse. Deferred income tax assets attributable to unutilized losses carried 
forward or other timing differences are reduced by a valuation allowance if it 
is more likely than not that such losses will not be utilized to offset future 
taxable income.

Guarantees

We have potential obligations under guarantee contracts that we have entered 
into with third parties. See Note 30—Commitment and contingencies. We initially 
recognize guarantees at fair value. Subsequently, if it becomes probable that 
we will be required to perform under a guarantee, we accrue a liability based 
on an estimate of the loss we will incur to perform under the guarantee. The 
estimate of the loss is generally measured as the amount by which the 
contractual guaranteed value exceeds the fair market value or future lease cash 
flows of the underlying aircraft.

Accrued maintenance liability

Under our aircraft leases, the lessee is responsible for maintenance and 
repairs and other operating expenses related to the flight equipment during the 
term of the lease. In certain instances, such as when an aircraft is not 
subject to a lease, we may incur maintenance and repair expenses for our 
aircraft. Maintenance and repair expenses are recorded in leasing expenses in 
our Consolidated Income Statements, to the extent such expenses are incurred by 
us.

We may be obligated to make additional payments to the lessee for maintenance 
related expenses, primarily related to usage of major life-limited components 
existing at the inception of the lease ("lessor maintenance contributions"). 
For all lease contracts, we expense planned major maintenance activities, such 
as lessor maintenance contributions, when incurred. The expense is recorded in 
leasing expenses in our Consolidated Income Statements. In the case we have 
established an accrual as an assumed liability for such payment in connection 
with the purchase of an aircraft with a lease attached, such payments are 
charged against the existing accrual.

For all lease contracts acquired as part of the ILFC Transaction, we determined 
the fair value of our maintenance liability, including lessor maintenance 
contributions, using the present value of the expected cash outflows. The 
discounted amounts are accreted in subsequent periods to their respective 
nominal values up until the expected maintenance event dates using the 
effective interest method. The accretion amounts are recorded as increases to 
interest expense in our Consolidated Income Statements.

Debt and deferred debt issuance costs

Long-term debt is carried at the principal amount borrowed, including 
unamortized discounts and premiums, fair value adjustments and debt issuance 
costs, where applicable. The fair value adjustments reflect the application of 
the acquisition method of accounting to the debt assumed as part of the ILFC 
Transaction. We amortize the amount of discounts or premiums and fair value 
adjustments over the period the debt is outstanding using the effective 
interest method. The costs we incur for issuing debt are capitalized and 
amortized as an increase to interest expense over the life of the debt using 
the effective interest method. The coupon liability as a result of the ALS 
Transaction was recorded at fair value and was subsequently measured at 
amortized cost using the retrospective effective interest method.

Lessee security deposits

For all lessee deposits assumed as part of the ILFC Transaction, we discounted 
the lessee security deposit amounts to their respective present values. We 
accrete the discounted security deposit amounts to their respective nominal 
values over the period we expect to refund the security deposits to each 
lessee, using the effective interest method, recognizing an increase in 
interest expense.

Revenue recognition

We lease flight equipment principally under operating leases and recognize 
rental income on a straight-line basis over the life of the lease. At lease 
inception, we review all necessary criteria to determine proper lease 
classification. We account for lease agreements that include uneven rental 
payments on a straight-line basis. The difference between rental revenue 
recognized and cash received is included in our Consolidated Balance Sheets in 
other assets, or in the event it is a liability, in accounts payable, accrued 
expenses and other liabilities. In certain cases, leases provide for rentals 
contingent on usage. The usage may be calculated based on hourly usage or on 
the number of cycles operated, depending on the lease contract. Revenue 
contingent on usage is recognized at the time the lessee reports the usage to 
us.

Lease agreements for which base rent is based on floating interest rates are 
included in minimum lease payments based on the floating interest rate that 
existed at the inception of the lease; and any increases or decreases in lease 
payments that result from subsequent changes in the floating interest rate are 
considered contingent rentals and are recorded as increases or decreases in 
lease revenue in the period of the interest rate change.

Our lease contracts normally include default covenants, which generally 
obligate the lessee to pay us damages to put us in the position we would have 
been in had the lessee performed under the lease in full. There are no 
additional payments required which would increase the minimum lease payments. 
We cease revenue recognition on a lease contract when the collectability of 
such rentals is no longer reasonably assured. For past-due rentals that exceed 
related security deposits held, which have been recognized as revenue, we 
establish provisions on the basis of management's assessment of collectability. 
Such provisions are recorded in leasing expenses in our Consolidated Income 
Statements.

Revenue from net investment in finance and sales-type leases is included in 
lease revenue in our Consolidated Income Statements and is recognized using the 
interest method to produce a constant yield over the life of the lease.

Most of our lease contracts require payment in advance. Rental payments 
received but unearned under these lease agreements are recorded as deferred 
revenue in our Consolidated Balance Sheets.

Under our aircraft leases, the lessee is responsible for maintenance, repairs 
and other operating expenses related to our flight equipment during the term of 
the lease. Under the provisions of many of our leases, the lessee is required 
to make payments of supplemental maintenance rents which are calculated with 
reference to the utilization of the airframe, engines and other major 
life-limited components during the lease. We record as lease revenue all 
supplemental maintenance rent receipts not expected to be reimbursed to 
lessees. We estimate the total amount of maintenance reimbursements for the 
entire lease and only record revenue after we have received sufficient 
maintenance rents under a particular lease to cover the total amount of 
estimated maintenance reimbursements during the remaining lease term.

In most lease contracts not requiring the payment of supplemental maintenance 
rents, and to the extent that the aircraft is redelivered in a different 
condition than at acceptance, we generally receive EOL cash compensation for 
the difference at redelivery. We recognize receipts of EOL cash compensation as 
lease revenue when received to the extent those receipts exceed the EOL 
contract maintenance rights intangible asset, and we recognize leasing expenses 
when the EOL contract maintenance rights intangible asset exceeds the EOL cash 
receipts.

Accrued maintenance liability existing at the end of a lease is released and 
recognized as lease revenue at lease termination to the extent that the 
maintenance liability exceeds the MR contract maintenance rights intangible 
asset. If the maintenance liability does not exceed the MR contract maintenance 
rights intangible asset, we recognize the difference as a leasing expense. When 
flight equipment is sold, the portion of the accrued maintenance liability 
which is not specifically assigned to the buyer is released from our 
Consolidated Balance Sheets, net of any maintenance rights intangible asset 
balance, and recognized as part of the sale of the flight equipment as gain or 
loss in net gain on sale of assets in our Consolidated Income Statements.

Net gain or loss on sale of assets originates primarily from the sale of 
aircraft and engines. The sale is recognized when the relevant asset is 
delivered, the risk of loss has transferred to the buyer, and we no longer have 
significant ownership risk in the asset sold.

Other income consists of interest income, management fees, lease termination 
penalties, inventory part sales and net gain on sale of equity investments 
accounted for under the equity method, insurance proceeds, and other 
miscellaneous activities. Income from secured loans, notes receivables and 
other interest bearing instruments is recognized using the effective yield 
method as interest accrues under the associated contracts. Lease management 
fees are recognized as income as they accrue over the life of the contract. 
Income from the receipt of lease termination penalties is recorded at the time 
cash is received or when the lease is terminated, if revenue recognition 
criteria are met.

Pension

We operate a defined benefit pension plan for our Dutch employees and some of 
our Irish employees. We recognize net periodic pension costs associated with 
these plans in selling, general and administrative expenses and recognize the 
unfunded status of the plan, if any, in accounts payable, accrued expenses and 
other liabilities. The change in fair value of the funded pension liability 
that is not related to the net periodic pension cost is recorded in AOCI. The 
projection of benefit obligation and fair value of plan assets require the use 
of assumptions and estimates, including discount rates. Actual results could 
differ from those estimates. Furthermore, we operate defined contribution plans 
for the employees who do not fall under the defined benefit pension plans. We 
recognize an expense for contributions to the defined contribution plans in 
selling, general and administrative expenses in the period the contributions 
are made.

Share-based compensation

Certain employees receive AerCap share-based awards, consisting of restricted 
stock units and restricted stock. Share-based compensation expense is 
determined by reference to the fair value of the restricted stock units or 
restricted stock on the grant date and is recognized on a straight-line basis 
over the requisite service period. Share-based compensation expense is 
classified in selling, general and administrative expenses in our Consolidated 
Income Statements.

Foreign currency

Foreign currency transactions are translated into U.S. dollars at the exchange 
rate prevailing at the time of the transaction. Receivables or payables 
denominated in foreign currencies are remeasured into U.S. dollars at the 
exchange rate at the balance sheet date. All resulting exchange gains and 
losses are recorded in selling, general and administrative expenses in our 
Consolidated Income Statements.

Variable interest entities

We consolidate VIEs in which we have determined that we are the PB. We use 
judgment when determining (i) whether an entity is a VIE; (ii) who are the 
variable interest holders; (iii) the elements and degree of control that each 
variable interest holder has; and (iv) ultimately which party is the PB. When 
determining which party is the PB, we perform an analysis which considers (i) 
the design of the VIE; (ii) the capital structure of the VIE; (iii) the 
contractual relationships between the variable interest holders; (iv) the 
nature of the entities' operations; and (v) the purposes and interests of all 
parties involved, including related parties. While we consider these factors, 
our conclusion about whether to consolidate ultimately depends on the breadth 
of our decision-making ability and our ability to influence activities that 
significantly affect the economic performance of the VIE. We continually 
re-evaluate whether we are the PB for VIEs in which we hold a variable 
interest.

Earnings per share

Basic earnings per share is computed by dividing income available to ordinary 
shareholders by the weighted average number of ordinary shares outstanding 
during the period. For the purposes of calculating diluted earnings per share, 
the denominator includes both the weighted average number of ordinary shares 
outstanding during the period and the weighted average number of potentially 
dilutive ordinary shares, such as restricted stock units, restricted stock and 
stock options.

Reportable segments

We manage our business and analyze and report our results of operations on the 
basis of one business segment: leasing, financing, sales and management of 
commercial aircraft and engines.

Recent accounting standards adopted during the year ended December 31, 2016:

Amendments to the consolidation analysis

In February 2015, the FASB issued an accounting standard that affects reporting 
entities that are required to evaluate whether they should consolidate certain 
legal entities. Specifically, the amendments modify the evaluation of whether 
limited partnerships and similar legal entities are VIEs or voting interest 
entities; eliminate the presumption that a general partner should consolidate a 
limited partnership; affect the consolidation analysis of reporting entities 
that are involved with VIEs, particularly those that have fee arrangements and 
related party relationships; and provide a scope exemption from consolidation 
guidance for reporting entities with interests in legal entities that are 
required to comply with or operate in accordance with requirements that are 
similar to those in Rule 2a-7 of the Investment Company Act of 1940 for 
registered money market funds.

We adopted the standard on its required effective date of January 1, 2016 and 
it did not have any effect on our Consolidated Financial Statements.

Presentation of debt issuance costs

In April 2015, the FASB issued an accounting standard that requires debt 
issuance costs related to a recognized debt liability to be presented on the 
balance sheet as a direct deduction from the debt liability. In August 2015, 
the FASB issued an accounting standard to clarify that entities are permitted 
to defer and present debt issuance costs related to line-of-credit arrangements 
as an asset, and subsequently amortize the deferred debt issuance costs ratably 
over the term of the line-of-credit arrangement, regardless of whether there 
are any outstanding borrowings on the line-of-credit arrangement. Upon 
adoption, the standards should be applied retrospectively to all prior periods 
presented in the financial statements.

We adopted the standards on their required effective date of January 1, 2016. 
As a result, we have retrospectively reclassified $165.0 million of debt 
issuance costs from other assets to a direct reduction of the debt liability in 
our Consolidated Balance Sheet as of December 31, 2015. We continue to present 
debt issuance costs related to our line-of-credit arrangements within other 
assets. The adoption of this standard did not have any effect on our 
Consolidated Income Statements or Consolidated Statements of Cash Flows.

Future application of accounting standards:

Revenue from contracts with customers

In May 2014, the FASB issued an accounting standard that provides a single 
comprehensive model for entities to use in accounting for revenue arising from 
contracts with customers and supersedes most current revenue recognition 
guidance, including industry-specific guidance. This guidance does not apply to 
lease contracts with customers. The standard will require an entity to 
recognize revenue when it transfers promised goods or services to customers in 
an amount that reflects the consideration to which the entity expects to be 
entitled in exchange for those goods or services. This update creates a 
five-step model that requires entities to exercise judgment when considering 
the terms of the contract including (i) identifying the contract with the 
customer; (ii) identifying the separate performance obligations in the 
contract; (iii) determining the transaction price; (iv) allocating the 
transaction price to the separate performance obligations; and (v) recognizing 
revenue when each performance obligation is satisfied.

This standard was originally scheduled to be effective for fiscal years 
beginning after December 15, 2016 and subsequent interim periods. In August 
2015, the FASB issued an update to the standard which deferred the effective 
date to January 1, 2018. The standard may be applied either retrospectively to 
each prior reporting period presented or retrospectively with the cumulative 
effect of applying this standard recognized at the date of adoption. Early 
adoption is permitted but not before the originally scheduled effective date. 
We plan to adopt the standard on its required effective date of January 1, 
2018. We are evaluating the effect the adoption of the standard will have on 
our Consolidated Financial Statements. This new standard does not impact the 
accounting of our lease revenue but may impact the accounting of our revenue 
other than lease revenue. While we are still performing our analysis, we do not 
expect the impact of this standard to be material to our Consolidated Financial 
Statements.

Inventory

In July 2015, the FASB issued an accounting standard that simplifies the 
subsequent measurement of all inventory except for inventory measured using the 
last-in, first-out or the retail inventory method. Inventory within the scope 
of this standard will be measured at the lower of cost and net realizable value 
instead of the lower of cost or market as required under existing guidance. Net 
realizable value is the estimated sale price in the ordinary course of 
business, less reasonably predictable costs of completion, disposal, and 
transportation. This standard also requires that substantial and unusual losses 
that result from the subsequent measurement of inventory be disclosed in the 
financial statements. The new standard will be effective for fiscal years 
beginning after December 15, 2016, including interim periods within those 
fiscal years. This standard should be applied prospectively with earlier 
application permitted as of the beginning of an interim or annual reporting 
period. We plan to adopt the standard on its required effective date of January 
1, 2017. We do not expect the impact of this standard to be material to our 
Consolidated Balance Sheets and Consolidated Income Statements.

Lease accounting

In February 2016, the FASB issued an accounting standard that requires lessees 
to recognize lease-related assets and liabilities on the balance sheet, other 
than leases that meet the definition of a short-term lease. In certain 
circumstances, the lessee is required to remeasure the lease payments. 
Qualitative and quantitative disclosures, including significant judgments made 
by management, will be required to provide insight into the extent of revenue 
and expense recognized and expected to be recognized from existing contracts. 
Under the new standard, lessor accounting remains similar to the current model. 
The new standard will be effective for fiscal years beginning after December 
15, 2018, including interim periods within those fiscal years. Early adoption 
is permitted. The new standard must be adopted using the modified retrospective 
transition approach. We plan to adopt the standard on its required effective 
date of January 1, 2019. We do not expect the impact of this standard to be 
material to our Consolidated Balance Sheets and Consolidated Income Statements.

Stock compensation

In March 2016, the FASB issued an accounting standard that requires entities to 
record all tax effects related to share-based awards in the income statement 
when the awards vest or are settled. The accounting standard also requires 
excess tax benefits to be recorded when they arise, subject to normal valuation 
allowance considerations. Excess tax benefits are to be reported as operating 
activities on the statement of cash flows. The standard is effective for fiscal 
years beginning after December 15, 2016, including interim periods within those 
fiscal years. Early adoption will be permitted in any interim or annual period, 
with any adjustments reflected as of the beginning of the fiscal year of 
adoption. We plan to adopt the standard on its required effective date of 
January 1, 2017. We do not expect the impact of this standard to be material to 
our Consolidated Financial Statements.

Allowance for credit losses

In June 2016, the FASB issued an accounting standard that requires entities to 
estimate lifetime expected credit losses for most financial assets measured at 
amortized cost and certain other instruments, including trade and other 
receivables, net investments in leases and off-balance sheet credit exposures. 
The standard also requires additional disclosure, including how the entity 
develops its allowance for credit losses for financial assets measured at 
amortized cost and disaggregated information on the credit quality of net 
investments in leases measured at amortized cost by year of the asset's 
origination for up to five annual periods. The standard is effective for fiscal 
years beginning after December 15, 2019, including interim periods within those 
fiscal years. Early adoption will be permitted in any interim or annual period 
beginning after December 15, 2018. The new standard must be adopted using the 
modified retrospective transition approach. We plan to adopt the standard on 
its required effective date of January 1, 2020. We are evaluating the effect 
the adoption of the standard will have on our Consolidated Balance Sheets and 
Consolidated Income Statements.

Statement of cash flows

In August 2016, the FASB issued an accounting standard that is intended to 
reduce diversity in practice in how certain transactions are classified in the 
statement of cash flows. The standard includes clarifications that (i) cash 
payments for debt prepayment or extinguishments costs must be classified as 
cash outflows for financing activities; (ii) cash proceeds from the settlement 
of insurance claims should be classified based on the nature of the loss; (iii) 
an entity is required to make an accounting policy election to classify 
distributions received from equity method investees under either the 
cumulative-earnings approach or the nature of distribution approach; and (iv) 
in the absence of specific guidance, an entity should classify each separately 
identifiable cash source and use on the basis of the underlying cash flows. The 
standard is effective for fiscal years beginning after December 15, 2017, 
including interim periods within those fiscal years. Early adoption will be 
permitted in any interim or annual period. The new standard must be adopted 
using the retrospective transition method. We plan to adopt the standard on its 
required effective date of January 1, 2018. We do not expect the impact of this 
standard to be material to our Consolidated Statements of Cash Flows.

Presentation of restricted cash in the statement of cash flows

In November 2016, the FASB issued an accounting standard that clarifies how 
entities should present restricted cash and restricted cash equivalents in the 
statement of cash flows. The standard requires entities to show the changes in 
the total of cash, cash equivalents, restricted cash and restricted cash 
equivalents in the statement of cash flows. The standard also requires a 
reconciliation of the totals in the statement of cash flows to the related 
captions in the balance sheet. The standard is effective for fiscal years 
beginning after December 15, 2017, including interim periods within those 
fiscal years. Early adoption is permitted in any interim or annual period, but 
any adjustments must be reflected as of the beginning of the fiscal year. The 
new standard must be adopted retrospectively. We plan to adopt the standard on 
its required effective date of January 1, 2018. We are evaluating the effect 
the adoption of the standard will have on our


Consolidated Statements of Cash Flows.


ILFC Transaction

On May 14, 2014, AerCap issued 97,560,976 new ordinary shares and paid $2.4 
billion in cash to AIG to successfully complete the ILFC Transaction. Prior to 
the consummation of the ILFC Transaction, ILFC paid a special distribution to 
AIG in the amount of $600.0 million.

The total consideration paid to AIG, excluding the special distribution of 
$600.0 million paid by ILFC to AIG on May 13, 2014, had a value of 
approximately $7.0 billion based on AerCap's closing price per share of $46.59 
on May 14, 2014. On the Closing Date, immediately after completing the ILFC 
Transaction, all of ILFC's assets were transferred substantially as an entirety 
to AerCap Trust, a legal entity formed on February 5, 2014, and AerCap Trust 
assumed substantially all of the liabilities of ILFC. AICDC, a wholly-owned 
subsidiary of AerCap Ireland, and ILFC, an indirect subsidiary of AerCap Trust, 
are the sole beneficiaries of AerCap Trust.

On June 9, 2015, AIG sold 71,184,686 of its AerCap ordinary shares in a 
secondary public offering and AerCap completed the Share Repurchase from AIG of 
15,698,588 ordinary shares.

On August 24, 2015, AIG sold 10,677,702 of its AerCap ordinary shares in a 
secondary public offering. Following this sale, AIG no longer owns any of our 
outstanding ordinary shares and has no designees on our Board of Directors.


The most significant pro forma adjustments were to reflect the impact, net of 
tax, of: (i) the amortization of the intangible lease premium component as an 
adjustment to revenue; (ii) the expensing of the maintenance rights intangible, 
which occurs when the lease ends for EOL contracts or when the lessee provides 
us with the required documentation related to the cost of a qualifying 
maintenance event that relates to pre-acquisition usage for MR contracts. The 
related pro forma adjustment was based on the estimated annual charge in the 
first full year after the acquisition; (iii) the depreciation and amortization 
expenses related to the fair value adjustments to aircraft and other 
intangibles; (iv) the interest expense on the existing debt taking into account 
the fair value adjustment to the debt as of the Closing Date; (v) the interest 
expense related to the acquisition financing, as if the financing occurred as 
of January 1, 2013; (vi) other interest expense adjustments relating to the 
maintenance and security deposit liabilities as well as the prepayments on 
flight equipment; and (vii) non-recurring transaction and integration related 
expenses, as if they had been incurred as of January 1, 2013 instead of 2014.

Flight equipment held for sale

Generally, an aircraft is classified as held for sale when the sale is probable 
and is expected to be sold within one year. Aircraft are reclassified from 
flight equipment held for operating leases to flight equipment held for sale at 
the lower of the aircraft carrying value or fair value, less costs to sell. 
Depreciation is no longer recognized for aircraft classified as held for sale.

As of December 31, 2016, six aircraft and four engines met the held for sale 
criteria and were classified as flight equipment held for sale in our 
Consolidated Balance Sheet. As of December 31, 2015, we had five aircraft 
classified as flight equipment held for sale in our Consolidated Balance Sheet, 
and the sale of those aircraft closed during the first quarter of 2016.


AerDragon and ACSAL are VIEs for which we are not the PB but do have 
significant influence. Therefore, they are accounted for under the equity 
method.

Our share of undistributed earnings of investments in which our ownership 
interest is less than 50% was $38.4 million and $34.4 million as of December 
31, 2016 and 2015, respectively. Our equity investments in our unconsolidated 
joint ventures, AerDragon, AerLift and ACSAL, are accounted for under the 
equity method.

13. Derivative assets and liabilities

We have entered into interest rate derivatives to hedge the current and future 
interest rate payments on our variable rate debt. These derivative financial 
instruments can include interest rate swaps, caps, floors, options and forward 
contracts.

As of December 31, 2016, we had interest rate caps and swaps outstanding, with 
underlying variable benchmark interest rates ranging from one to three-month 
U.S. dollar LIBOR.

None of our derivatives that were outstanding as of December 31, 2016 were 
subject to master netting agreements, which would allow the netting of 
derivative assets and liabilities in the case of default under any one 
contract.

Some of our agreements with derivative counterparties require a two-way cash 
collateralization of derivative fair values. As of December 31, 2016 and 2015, 
we had cash collateral of $8.6 million and $4.5 million, respectively, from 
various counterparties and the obligation to return such collateral was 
recorded in accounts payable, accrued expenses and other liabilities. We had 
not advanced any cash collateral to counterparties as of December 31, 2016 or 
2015.

The counterparties to our interest rate derivatives are major international 
financial institutions. We continually monitor our positions and the credit 
ratings of the counterparties involved and limit the amount of credit exposure 
to any one party. We could be exposed to potential losses due to the credit 
risk of non-performance by these counterparties. We have not experienced any 
material losses to date.

Debt

As of December 31, 2016, the principal amount of our outstanding indebtedness 
totaled $27.4 billion, which excluded fair value adjustments of $0.5 billion 
and debt issuance costs and debt discounts of $0.2 billion. As of December 31, 
2016, our undrawn lines of credit were approximately $7.3 billion, subject to 
certain conditions, including compliance with certain financial covenants.

As of December 31, 2016, all debt was guaranteed by us with the exception of 
the ALS II debt, the AerFunding revolving credit facility and the Glide Funding 
term loan facility. As of December 31, 2016, a further $209.5 million included 
in other secured debt was limited recourse in nature.

During the years ended December 31, 2016, 2015 and 2014, we recorded 
amortization expense for debt issuance costs and debt discounts of $55.8 
million, $45.6 million and $86.2 million, respectively. The unamortized debt 
issuance costs and debt discounts as of December 31, 2016 are expected to be 
amortized through 2045.

ILFC Legacy Notes

As of December 31, 2016, we had an aggregate outstanding principal amount of 
senior unsecured notes of $7.7 billion issued by ILFC prior to the ILFC 
Transaction (the "ILFC Legacy Notes"). The ILFC Legacy Notes have maturities 
ranging through 2022. The fixed rate notes bear interest at rates ranging from 
3.875% to 8.875%. The notes are not subject to redemption prior to their stated 
maturity and there are no sinking fund requirements.

The indentures governing the ILFC Legacy Notes contain customary covenants 
that, among other things, restrict our, and our restricted subsidiaries', 
ability to (i) incur liens on assets; (ii) declare or pay dividends or acquire 
or retire shares of our capital stock during certain events of default; (iii) 
designate restricted subsidiaries as unrestricted subsidiaries or designate 
unrestricted subsidiaries; (iv) make investments in or transfer assets to 
unrestricted subsidiaries; and (v) consolidate, merge, sell, or otherwise 
dispose of all or substantially all of our assets. The indentures also provide 
for customary events of default, including, but not limited to, the failure to 
pay scheduled principal and interest payments on the notes, the failure to 
comply with covenants and agreements specified in the indentures, the 
acceleration of certain other indebtedness resulting from non-payment of that 
indebtedness and certain events of insolvency. If any event of default occurs, 
any amount then outstanding under the indentures may immediately become due and 
payable.

Upon consummation of the ILFC Transaction, AerCap Trust became the successor 
issuer under the ILFC Legacy Notes indentures. ILFC also agreed to continue to 
be co-obligor. In addition, AerCap Holdings N.V. and certain of its 
subsidiaries became guarantors of the ILFC Legacy Notes.

AerCap Aviation Notes

In May 2012, AerCap Aviation Solutions B.V. issued $300.0 million of 6.375% 
senior unsecured notes due 2017 (the "AerCap Aviation Notes"). The proceeds 
from the offering were used for general corporate purposes. The AerCap Aviation 
Notes are guaranteed by AerCap Holdings N.V. and AerCap Ireland.

The AerCap Aviation Notes contain customary covenants that, among other things, 
limit our, and our restricted subsidiaries', ability to incur additional 
indebtedness, enter into certain mergers or consolidations, incur certain liens 
and engage in certain transactions with our affiliates. In addition, the 
indenture governing the AerCap Aviation Notes restricts our, and our restricted 
subsidiaries', ability to pay dividends or make certain restricted payments, 
subject to certain exceptions, unless certain conditions are met.

AerCap Trust & AICDC Notes

In May 2014, AerCap Trust and AICDC co-issued $2.6 billion aggregate principal 
amount of senior unsecured notes, consisting of $400.0 million of 2.75% notes 
due 2017, $1.1 billion of 3.75% notes due 2019, and $1.1 billion of 4.50% notes 
due 2021 (collectively, the "Acquisition Notes"). The proceeds from the 
offering were used to finance in part the consideration payable in connection 
with the ILFC Transaction.

In September 2014, AerCap Trust and AICDC co-issued $800.0 million aggregate 
principal amount of 5.00% senior notes due 2021 (the "September 2014 Notes"). 
The proceeds from the offering were used for general corporate purposes.

In June 2015, AerCap Trust and AICDC co-issued $1.0 billion aggregate principal 
amount of senior unsecured notes, consisting of $500.0 million of 4.25% notes 
due 2020 and $500.0 million of 4.625% notes due 2022 (collectively, the "June 
2015 Notes"). The proceeds from the offering were used for general corporate 
purposes.

In October 2015, AerCap Trust and AICDC co-issued $1.0 billion aggregate 
principal amount of 4.625% senior unsecured notes due 2020 (the "October 2015 
Notes"). The proceeds from the offering were used for general corporate 
purposes.

In May 2016, AerCap Trust and AICDC co-issued $1.0 billion aggregate principal 
amount of 3.95% senior unsecured notes due 2022 (the "May 2016 Notes"). The 
proceeds from the offering were used for general corporate purposes.

In January 2017, AerCap Trust and AICDC co-issued $600.0 million aggregate 
principal amount of 3.50% senior unsecured notes due 2022 (the "January 2017 
Notes", and together with the Acquisition Notes, the September 2014 Notes, the 
June 2015 Notes, the October 2015 Notes and the May 2016 Notes, the "AGAT/AICDC 
Notes"). The proceeds from the offering were used for general corporate 
purposes.

The AGAT/AICDC Notes are registered with the SEC. The AGAT/AICDC Notes are 
jointly and severally and fully and unconditionally guaranteed by AerCap 
Holdings N.V. and certain of its subsidiaries. Except as described below, the 
AGAT/AICDC Notes are not subject to redemption prior to their stated maturity 
and there are no sinking fund requirements. We may redeem each series of the 
AGAT/AICDC Notes in whole or in part, at any time, at a price equal to 100% of 
the aggregate principal amount plus the applicable "make-whole" premium plus 
accrued and unpaid interest, if any, to the redemption date. The "make-whole" 
premium is the excess of:

(i) the sum of the present value at such redemption date of all remaining 
scheduled payments of principal and interest on such note through the stated 
maturity date of the notes (excluding accrued but unpaid interest to the 
redemption date), discounted to the date of redemption using a discount rate 
equal to the treasury rate plus 50 basis points; over

(ii) the principal amount of the notes to be redeemed.

The indentures governing the AGAT/AICDC Notes contain customary covenants that, 
among other things, restrict our, and our restricted subsidiaries', ability to 
(i) incur liens on assets; (ii) designate restricted subsidiaries as 
unrestricted subsidiaries or designate unrestricted subsidiaries; (iii) 
consolidate, merge, sell, or otherwise dispose of all or substantially all of 
our assets; and, in certain cases, (iv) declare or pay dividends or acquire or 
retire shares of our capital stock during certain events of default; and (v) 
make investments in or transfer assets to unrestricted subsidiaries. The 
indentures also provide for customary events of default, including, but not 
limited to, the failure to pay scheduled principal and interest payments on the 
AGAT/AICDC Notes, the failure to comply with covenants and agreements specified 
in the indentures, the acceleration of certain other indebtedness resulting 
from non-payment of that indebtedness and certain events of insolvency. If any 
event of default occurs, any amount then outstanding under the indentures may 
immediately become due and payable.

Asia revolving credit facility

In December 2015, AerCap Holdings N.V. entered into a $575.0 million unsecured 
revolving and term loan agreement (the "Asia Revolver"). In June 2016, the 
facility was increased to $585.0 million. In October 2016, the facility was 
further increased to $600.0 million. The Asia Revolver is a five-year facility, 
split between a three-year revolving period followed by a two-year term loan. 
The interest rate for borrowings under the Asia Revolver is LIBOR plus a margin 
of 1.95% during the revolving period, with the margin increasing to 2.25% 
during the first year of the term loan and increasing to 2.50% during the 
second year of the term loan.

The outstanding principal amount of any loans under the Asia Revolver at the 
end of the three-year revolving period will be amortized over the remaining 
two-year term out period of the facility. One-third of the balance is to be 
repaid in December 2019 and the remaining two-thirds must be repaid in December 
2020.

All borrowings under the Asia Revolver are subject to the satisfaction of 
customary conditions precedent. We have the right to terminate or cancel, in 
whole or in part, the unused portion of the commitment amount.

The Asia Revolver contains covenants customary for unsecured financings, 
including financial covenants that require us to maintain compliance with a 
maximum ratio of consolidated indebtedness to shareholders' equity, a minimum 
fixed charges coverage ratio and a maximum ratio of unencumbered assets to 
certain financial indebtedness.

Citi revolving credit facility

In March 2014, AICDC entered into a $2.75 billion four-year senior unsecured 
revolving credit facility (the "Citi Revolver"), which became effective upon 
completion of the ILFC Transaction. The facility has an accordion feature 
permitting increases to a maximum size of $4.0 billion. The facility matures in 
2018. The obligations under the Citi Revolver are guaranteed by AerCap Holdings 
N.V. and certain of its subsidiaries.

In September 2014, we increased the size of the facility to $2.925 billion, and 
in October 2014, we further increased the size of the facility to $2.955 
billion.

In March 2015, we further increased the size of the facility to $3.0 billion. 
All borrowings under the facility are subject to the satisfaction of customary 
conditions precedent. We have the right to terminate or cancel, in whole or in 
part, the unused portion of the commitment amount.

In February 2017, the facility was upsized to $3.745 billion and the maturity 
of the facility was extended to February 2021. The interest rates for 
borrowings under the Citi Revolver were reduced from a base rate or LIBOR plus 
a margin of 2.0% for drawn facilities to a margin of 1.50% and undrawn facility 
commitment fees of 0.375% to 0.25%.

The Citi Revolver contains covenants customary for unsecured financings, 
including financial covenants that require us to maintain compliance with a 
maximum ratio of consolidated indebtedness to shareholders' equity, a minimum 
interest coverage ratio and a maximum ratio of unencumbered assets to certain 
financial indebtedness. The facility also contains covenants that, among other 
things, restrict, subject to certain exceptions, the ability of AerCap to sell 
assets, make certain restricted payments and incur certain liens.

AIG revolving credit facility

In December 2013, AICDC entered into a $1.0 billion five-year senior unsecured 
revolving credit facility (the "AIG Revolver"), with AIG as lender and 
administrative agent, which became effective upon completion of the ILFC 
Transaction. The interest rate for borrowings under the facility is, at our 
option, either (i) LIBOR plus 3.75%; or (ii) 2.75% plus the greatest of (x) the 
U.S. federal funds rate plus 0.50%; (y) the rate of interest publicly announced 
from time to time by Citibank, N.A. as its "base rate"; and (z) one-month LIBOR 
plus 1.00%. The facility matures in May 2019. The obligations under the AIG 
Revolver are guaranteed by AerCap Holdings N.V. and certain of its 
subsidiaries.

In June 2015, the amount available under the AIG revolving credit facility was 
reduced from $1.0 billion to $500.0 million upon the issuance of the Junior 
Subordinated Notes.

All borrowings under the facility are subject to the satisfaction of customary 
conditions precedent. We have the right to terminate or cancel, in whole or in 
part, the unused portion of the commitment amount.

The AIG Revolver contains covenants customary for unsecured financings, 
including financial covenants that require us to maintain compliance with a 
maximum ratio of consolidated indebtedness to shareholders' equity, a minimum 
interest coverage ratio and a maximum ratio of unencumbered assets to certain 
financial indebtedness. The facility also contains covenants that, among other 
things, restrict, subject to certain exceptions, the ability of AerCap to sell 
assets, make certain restricted payments and incur certain liens.

The export credit facilities contain affirmative covenants customary for 
secured financings, in addition to customary events of default and restrictive 
covenants. The facilities also contain net worth financial covenants. As of 
December 31, 2016, AerCap was in compliance with its covenants under the export 
credit facilities.

The obligations under export credit facilities are guaranteed by AerCap 
Holdings N.V. and certain of its subsidiaries, as well as various export credit 
agencies.

Senior Secured Notes

In August 2010, ILFC issued $3.9 billion of senior secured notes (the "Senior 
Secured Notes"), with $1.35 billion that matured in September 2014 and bore 
interest of 6.5%, $1.275 billion that matured in September 2016 and bore 
interest of 6.75%, and $1.275 billion maturing in September 2018 and bearing 
interest of 7.125%. Upon consummation of the ILFC Transaction, AerCap Trust 
became the successor issuer under the indenture governing the Senior Secured 
Notes. ILFC also agreed to continue to be a co-obligor. We can redeem the 
Senior Secured Notes at any time prior to their maturity, subject to a penalty 
of the greater of 1.00% of the outstanding principal amount and a "make-whole" 
premium based on the relevant U.S. Treasury Rate plus 50 basis points. There is 
no sinking fund for the Senior Secured Notes.

The obligations of the subsidiary borrower are guaranteed by AerCap Holdings 
N.V. and certain of its subsidiaries.

The Senior Secured Notes are secured by a designated pool of aircraft and cash 
collateral when required. In addition, two of our subsidiaries, which either 
own or hold leases attached to the aircraft included in the pool securing the 
Senior Secured Notes, have guaranteed the notes.

The indenture and the aircraft mortgage and security agreement governing the 
Senior Secured Notes contain customary covenants that, among other things, 
restrict our, and our restricted subsidiaries', ability to (i) create liens; 
(ii) sell, transfer or otherwise dispose of the assets serving as collateral 
for the Senior Secured Notes; (iii) declare or pay dividends or acquire or 
retire shares of our capital stock during certain events of default; (iv) 
designate restricted subsidiaries as unrestricted subsidiaries or designate 
unrestricted subsidiaries; and (v) make investments in or transfer assets to 
unrestricted subsidiaries.

The indenture restricts our, and the subsidiary guarantors', ability to 
consolidate, merge, sell or otherwise dispose of all, or substantially all, of 
our assets. The indenture also provides for customary events of default, 
including, but not limited to, the failure to pay scheduled principal and 
interest payments on the Senior Secured Notes, the failure to comply with 
covenants and agreements specified in the indenture, the acceleration of 
certain other indebtedness resulting from non-payment of that indebtedness, and 
certain events of insolvency. If any event of default occurs, any amount then 
outstanding under the Senior Secured Notes may immediately become due and 
payable.

Institutional secured term loans & secured portfolio loans

Hyperion facility

In March 2014, one of ILFC's indirect wholly-owned subsidiaries entered into a 
secured term loan agreement in the amount of $1.5 billion. In January 2017, 
AerCap extended the maturity of the Hyperion facility from March 2021 to 
October 2023 and reduced the margin above LIBOR from 2.75% to 2.25%. We can 
voluntarily prepay the loan at any time, subject to certain conditions.

The obligations of the subsidiary borrower are guaranteed by AerCap Holdings 
N.V. and certain of its subsidiaries.

The loan is secured by the equity interests in the borrower and certain SPE 
subsidiaries of the borrower. The SPEs hold title to 85 aircraft with an 
appraised value of approximately $2.46 billion as of December 31, 2016, 
representing a loan-to-value ratio of approximately 61%. The loan requires a 
loan-to-value ratio of no more than 70%. If the maximum loan-to-value ratio is 
exceeded, we will be required to prepay portions of the outstanding loans, 
deposit an amount in the cash collateral account or transfer additional 
aircraft to SPEs, subject to certain concentration criteria, so that the ratio 
is equal to or less than 70%.

The loan contains customary covenants and events of default, including 
covenants that limit the ability of the subsidiary borrower and its 
subsidiaries to incur additional indebtedness and create liens, and covenants 
that limit the ability of the guarantors, the subsidiary borrower and its 
subsidiaries to consolidate, merge or dispose of all or substantially all of 
their assets and enter into transactions with affiliates.

Vancouver facility

In February 2012, one of ILFC's indirect wholly-owned subsidiaries entered into 
a secured term loan agreement in the amount of $900.0 million. In April 2013, 
ILFC amended the agreement and simultaneously prepaid $150.0 million of the 
outstanding principal amount. In December 2016, we entered into an amendment to 
extend the maturity date from April 2020 to October 2022 and reduce the margin 
above LIBOR from 2.75% to 2.25%. The remaining outstanding principal amount of 
$750.0 million bears interest at an annual rate of LIBOR plus 2.25%, with a 
LIBOR floor of 0.75%, or, if applicable, a base rate plus a margin of 1.25%. We 
can voluntarily prepay the loan at any time, subject to certain conditions.

The obligations of the subsidiary borrower are guaranteed by AerCap Holdings 
N.V. and certain of its subsidiaries.

The loan is secured by the equity interests in certain SPEs of the subsidiary 
borrower. As of December 31, 2016, the SPEs collectively own a portfolio of 51 
aircraft with an appraised value of approximately $1.34 billion, equaling a 
loan-to-value ratio of approximately 56%. The loan requires a loan-to-value 
ratio of no more than 63%. If the maximum loan-to-value ratio is exceeded, we 
will be required to prepay a portion of the outstanding loan, deposit an amount 
in the cash collateral account or transfer additional aircraft to SPEs, subject 
to certain concentration criteria, so that the ratio is equal to or less than 
63%.

The loan contains customary covenants and events of default, including 
covenants that limit the ability of the subsidiary borrower and its 
subsidiaries to incur additional indebtedness and create liens, and covenants 
that limit the ability of the guarantors, the subsidiary borrower and its 
subsidiaries to consolidate, merge or dispose of all or substantially all of 
their assets and enter into transactions with affiliates.

Temescal facility

In March 2011, one of ILFC's indirect wholly-owned subsidiaries entered into a 
secured term loan agreement with lender commitments in the amount of 
approximately $1.3 billion, which was subsequently increased to approximately 
$1.5 billion. As of December 31, 2016, approximately $880.4 million was 
outstanding. In February 2017, AerCap extended the maturity of the Temescal 
facility from March 2021 to March 2023 and reduced the margin above LIBOR from 
2.00% to 1.95%. We can voluntarily prepay the loan at any time, subject to 
certain conditions.

The obligations of the subsidiary borrower are guaranteed by AerCap Holdings 
N.V. and certain of its subsidiaries.

The loan is secured by a portfolio of 52 aircraft and the equity interests in 
certain SPEs that own the pledged aircraft. As of the latest loan-to-value 
ratio determination date, the appraised value of the pledged aircraft was $1.67 
billion, resulting in a loan-to-value ratio of approximately 56%. The 
subsidiary borrower is required to maintain compliance with a maximum 
loan-to-value ratio, which was 58.5% as of the latest loan-to-value ratio 
determination date. The maximum loan-to value ratio declines over time, as set 
forth in the term loan agreement. If the maximum loan-to-value ratio is 
exceeded, we will be required to prepay portions of the outstanding loans, 
deposit an amount in the cash collateral account or transfer additional 
aircraft to the SPEs, subject to certain concentration criteria, so that the 
ratio is equal to or less than the maximum loan-to-value ratio. As of December 
31, 2016, we were in compliance with this ratio.

The loan facility contains customary covenants and events of default, including 
covenants that limit the ability of the subsidiary borrower and its 
subsidiaries to incur additional indebtedness and create liens, and covenants 
that limit the ability of the guarantors, the subsidiary borrower and its 
subsidiaries to consolidate, merge or dispose of all or substantially all of 
their assets and enter into transactions with affiliates.

Glide Funding term loan facility

Glide Funding Limited ("Glide Funding") is a SPE that is a wholly-owned 
subsidiary of AerCap Ireland. Glide Funding is a consolidated subsidiary formed 
for the purpose of acquiring and financing aircraft assets. In December 2015, 
Glide Funding entered into a non-recourse term loan credit facility in the 
aggregate amount of up to $500.0 million with a term of five years, which would 
be used to finance the acquisition of up to nine specified aircraft under the 
facility.

As of December 31, 2016, Glide Funding had $469.1 million of loans outstanding, 
relating to nine aircraft. Borrowings under the Glide Funding term loan 
facility bear interest at a rate equal to one-month LIBOR plus 1.60%. Principal 
may be prepaid without penalty upon notice, subject to certain conditions. 
Mandatory partial prepayments of borrowings under the facility are required in 
certain circumstances, including upon removal of an aircraft from the facility, 
unless an acceptable substitute aircraft is added to the facility. The loan 
obligations are secured by, among other things, security interests in the 
equity ownership and beneficial interest in all of the subsidiaries of Glide 
Funding that own or lease its financed aircraft, and their interests in the 
leases of the financed aircraft.

The facility contains customary covenants and events of default, including 
covenants that limit the ability of Glide Funding and its subsidiaries to incur 
additional indebtedness and create liens, to consolidate, merge or dispose of 
all or substantially all of their assets and to enter into transactions with 
affiliates.

Celtago facility

Celtago Funding Limited ("Celtago") is a wholly-owned subsidiary of AerCap 
Ireland. Celtago was formed for the purpose of acquiring and financing aircraft 
assets. In December 2015, Celtago entered into a secured term loan agreement 
with lender commitments in the amount of $817.0 million, which is being used to 
finance 13 aircraft, with a maturity date of December 2024.

Borrowings under the term loan facility bear interest at three-month LIBOR plus 
a margin of 1.50%, or, if applicable, a base rate plus a margin of 1.50%. The 
loans can be voluntarily prepaid at any time, subject to certain conditions. 
Celtago's obligations under the term loan facility are guaranteed by AerCap 
Holdings N.V. and certain of its subsidiaries. As of December 31, 2016, Celtago 
had $775.2 million of loans outstanding relating to 13 aircraft.

The term loan facility contains customary covenants and events of default, 
including covenants that limit the ability of Celtago and its subsidiaries to 
incur additional indebtedness and create liens, and covenants that limit the 
ability of the guarantors and Celtago and its subsidiaries to consolidate, 
merge or dispose of all or substantially all of their assets or enter into 
transactions with affiliates.

BlowfishFunding Facility

Blowfish Funding B.V. ("Blowfish") is a wholly-owned subsidiary of AerCap B.V. 
Blowfish was formed for the purpose of financing aircraft assets. In April 
2016, Blowfish entered into a new secured term loan agreement with lender 
commitments in the amount of $650 million, which will be used to finance nine 
aircraft. The loan has a maturity date of December 2022.

Borrowings under the term loan facility bear interest at three-month LIBOR plus 
a margin of 1.65%, or, if applicable, a base rate plus a margin of 1.65%. The 
loans can be voluntarily prepaid at any time, subject to certain conditions. 
Blowfish's obligations under the term loan facility are guaranteed by AerCap 
Holdings N.V. and certain of its subsidiaries. As of December 31, 2016, 
Blowfish had $588.9 million of loans outstanding relating to eight aircraft.

The term loan facility contains customary covenants and events of default, 
including covenants that limit the ability of Blowfish and its subsidiaries to 
incur additional indebtedness and create liens, and covenants that limit the 
ability of the guarantors and Blowfish and its subsidiaries to consolidate, 
merge or dispose of all or substantially all of their assets or enter into 
transactions with affiliates.

Celtago II Facility

Celtago II Funding Limited ("Celtago II") is a wholly-owned subsidiary of 
AerCap Ireland. Celtago II was formed for the purpose of acquiring and 
financing aircraft assets. In July 2016, Celtago II entered into a new secured 
term loan agreement with lender commitments in the amount of $684.0 million, 
which will be used to finance 13 aircraft. The loan has a maturity date of 
November 2022.

Borrowings under the term loan facility bear interest at three-month LIBOR plus 
a margin of 1.75%, or, if applicable, a base rate plus a margin of 1.75%. The 
loans can be voluntarily prepaid at any time, subject to certain conditions. 
Celtago II's obligations under the term loan facility are guaranteed by AerCap 
Holdings N.V. and certain of its subsidiaries. As of December 31, 2016, Celtago 
II had $65.0 million of loans outstanding relating to two aircraft.

The term loan facility contains customary covenants and events of default, 
including covenants that limit the ability of Celtago II and its subsidiaries 
to incur additional indebtedness and create liens, and covenants that limit the 
ability of the guarantors and Celtago II and its subsidiaries to consolidate, 
merge or dispose of all or substantially all of their assets or enter into 
transactions with affiliates.

Iridium Facility

Iridium Funding Limited ("Iridium") is a wholly-owned subsidiary of AerCap 
Ireland. Iridium was formed for the purpose of acquiring and financing aircraft 
assets. In November 2016, Iridium entered a new secured term loan agreement 
with lender commitments in the amount of $595.0 million, which will be used to 
finance eight aircraft. The loan has a maturity date of May 2024.

Borrowings under the term loan facility bear interest at three-month LIBOR plus 
a margin of 1.75%, or, if applicable, a base rate plus a margin of 1.75%. The 
loans can be voluntarily prepaid at any time, subject to certain conditions. 
Iridium's obligations under the term loan facility are guaranteed by AerCap 
Holdings N.V. and certain of its subsidiaries. As of December 31, 2016, there 
were no loans outstanding.

The term loan facility contains customary covenants and events of default, 
including covenants that limit the ability of Iridium and its subsidiaries to 
incur additional indebtedness and create liens, and covenants that limit the 
ability of the guarantors and Iridium and its subsidiaries to consolidate, 
merge or dispose of all or substantially all of their assets or enter into 
transactions with affiliates.

ALS II debt

In June 2008, we completed a securitization in which ALS II, a SPE formed for 
the purpose of the securitization, issued securitized class A-1 notes and class 
A-2 notes, representing interests in certain lease receivables, to holders who 
committed to advance funds in connection with the purchase of certain aircraft. 
As of December 31, 2016, the net book value of the 26 aircraft, which were 
pledged as collateral for the securitization debt, was $745.3 million. The ALS 
II senior Class A notes were repaid in full in January 2017.

AerFunding revolving credit facility

AerFunding 1 Limited ("AerFunding") is a SPE whose share capital is owned 95% 
by a charitable trust and 5% by AerCap Ireland. AerFunding is a consolidated 
subsidiary formed for the purpose of acquiring aircraft assets. In April 2006, 
AerFunding entered into a non-recourse senior secured revolving credit facility 
in the aggregate amount of up to $1.0 billion. The facility was subsequently 
amended in 2010, 2011, 2013 and 2014.

In December 2014, the facility was increased to $2.16 billion and was amended 
to allow for a three-year revolving period to December 2017, and a two-year 
term out period to December 2019. The maturity date of the AerFunding revolving 
credit facility is December 9, 2019.

The net book value of aircraft pledged to lenders under the credit facility was 
$767.1 million as of December 31, 2016.

Borrowings under the AerFunding revolving credit facility can be used to 
finance between 73.5% and 80.0% of the lower of the purchase price and the 
appraised value of the eligible aircraft. Eligible aircraft include Airbus A320 
Family aircraft, Boeing 737-700, 800 and 900ER aircraft, Boeing 777 aircraft, 
Boeing 787 aircraft and Airbus A330 aircraft. In addition, value enhancing 
expenditures and required liquidity reserves are also funded by the lenders. 
All borrowings under the AerFunding revolving credit facility are subject to 
the satisfaction of customary conditions and restrictions on the purchase of 
aircraft that would result in our portfolio becoming too highly concentrated, 
with regard to both aircraft type and geographical location. The borrowing 
period during which new advances may be made under the facility will expire in 
December 2017.

Additionally, we are subject to (i) a 0.375% fee on any portion of the unused 
loan commitment if the average facility utilization is greater than 50% during 
a period; or (ii) a 0.50% fee on any unused portion of the unused loan 
commitment if the average facility utilization is less than 50% during a 
period.

Interest on the loans is due on a monthly basis. Principal on the loans 
amortizes on a monthly basis to the extent funds are available. All outstanding 
principal not paid during the term is due on the maturity date.

Advances under the AerFunding revolving credit facility may be prepaid without 
penalty upon notice, subject to certain conditions. Mandatory partial 
prepayments of borrowings under the AerFunding revolving credit facility are 
required: • Upon the sale of certain assets by the borrower, including any 
aircraft or aircraft engines financed or refinanced with proceeds from the 
AerFunding revolving credit facility;

• Upon the occurrence of an event of loss with respect to an aircraft or 
aircraft engine financed with proceeds from the AerFunding revolving credit 
facility from the proceeds of insurance claims; and

• Upon the securitization of any interests or leases with respect to aircraft 
or aircraft engines financed with proceeds from the AerFunding revolving credit 
facility.

AerFunding is required to maintain up to 5.0% of the borrowing value of the 
aircraft in reserve for the benefit of the lenders. Amounts held in reserve for 
the benefit of the lenders are available to the extent that there are 
insufficient funds to pay required expenses, hedge payments, or principal of or 
interest on the loans on any payment date. The amounts on reserve are funded by 
the lenders. Borrowings under the AerFunding revolving credit facility are 
secured by, among other things, security interests in and pledges or 
assignments of equity ownership and beneficial interests in all of the 
subsidiaries of AerFunding, as well as by AerFunding's interests in the leases 
of its assets.

AeroTurbine revolving credit agreement

In November 2014, AeroTurbine entered into an amended and restated credit 
facility providing for a maximum aggregate available amount of $550.0 million, 
subject to availability determined by a calculation utilizing AeroTurbine's 
aircraft assets and accounts receivable. In May 2016, the facility was reduced 
to a maximum aggregate available amount of $400.0 million. In August 2016, the 
facility was further reduced to a maximum aggregate available amount of $200.0 
million. Borrowings under the facility bore interest determined, with certain 
exceptions, based on LIBOR plus a margin of 2.50%. In February 2017, the 
facility was fully repaid and terminated.

AeroTurbine's obligations under the facility were guaranteed by AerCap Holdings 
N.V. and certain of its subsidiaries, including AeroTurbine's subsidiaries 
(subject to certain exclusions). AeroTurbine's obligations were secured by 
substantially all of the assets of AeroTurbine and its subsidiary guarantors.

The credit agreement contained customary events of default and covenants, 
including certain financial covenants. Additionally, the credit agreement 
imposed limitations on AeroTurbine's ability to pay dividends to us (other than 
dividends payable solely in the form of common shares).

Three engines are pledged as collateral in addition to the aircraft.

The majority of the financings are secured by, among other things, a pledge of 
the shares of the subsidiaries owning the related aircraft, a guarantee from 
AerCap Holdings N.V. and, in certain cases, a mortgage on the applicable 
aircraft. All of our financings contain affirmative covenants customary for 
secured financings.

ECAPS subordinated notes

In December 2005, ILFC issued two tranches of subordinated notes in an 
aggregate principal amount of $1.0 billion. The $400.0 million tranche had a 
call option date of December 21, 2015 and had a fixed interest rate of 6.25% 
until the 2015 call option date. We did not exercise the call option. After the 
call option date, the interest rate changed to a floating rate, reset 
quarterly, based on a margin of 1.80% plus the highest of three-month LIBOR, 
ten-year constant maturity treasury, and 30-year constant maturity treasury. We 
can call the $600.0 million tranche at any time. The interest rate on the 
$600.0 million tranche is a floating rate with a margin of 1.55% plus the 
highest of three-month LIBOR, ten-year constant maturity treasury, and 30-year 
constant maturity treasury. The interest rate resets quarterly.

In July 2013, ILFC amended the financial tests in both tranches of notes by 
changing the method of calculating the ratio of equity to total managed assets 
and the minimum fixed charge coverage ratio. Failure to comply with these 
financial tests will result in a "mandatory trigger event". If a mandatory 
trigger event occurs and we are unable to raise sufficient capital in a manner 
permitted by the terms of the subordinated debt to cover the next interest 
payment on the subordinated debt, a "mandatory deferral event" will occur, 
requiring us to defer all interest payments and prohibiting the payment of cash 
dividends on AerCap Trust's or ILFC's capital stock or its equivalent until 
both financial tests are met or we have raised sufficient capital to pay all 
accumulated and unpaid interest on the subordinated debt. Mandatory trigger 
events and mandatory deferral events are not events of default under the 
indenture governing the subordinated debt.

Upon consummation of the ILFC Transaction, the subordinated notes were assumed 
by AerCap Trust, and AerCap Holdings N.V. and certain of its subsidiaries 
became guarantors. ILFC remains a co-obligor under the indentures governing the 
subordinated notes.

Junior Subordinated Notes

In June 2015, AerCap Trust issued $500.0 million of junior subordinated notes 
due 2045. The Junior Subordinated Notes initially bear interest at a fixed 
interest rate of 6.50%, and beginning in June 2025, will bear interest at a 
floating rate of three-month LIBOR plus 4.30%. The notes were issued to AIG as 
payment for a portion of the Share Repurchase from AIG. The amount available 
under the AIG revolving credit facility was reduced from $1.0 billion to $500.0 
million upon the issuance of the Junior Subordinated Notes. As of December 31, 
2016, AIG did not hold any of the Junior Subordinated Notes.

We may defer any interest payments on the Junior Subordinated Notes for up to 
five consecutive years for one or more deferral periods. At the end of five 
years following the commencement of any deferral period, we must pay all 
accrued and unpaid deferred interest, including compounded interest. During a 
deferral period, interest will continue to accrue on the Junior Subordinated 
Notes and deferred interest will bear additional interest, compounded on each 
interest payment date. If we have paid all deferred interest (including 
compounded interest thereon) on the Junior Subordinated Notes, then we may 
again defer interest payments.

The Junior Subordinated Notes are guaranteed by AerCap Holdings N.V. and 
certain of its subsidiaries.

We may at our option redeem the Junior Subordinated Notes before their maturity 
(i) in whole or in part, at any time and from time to time, on or after June 
15, 2025 at 100% of their principal amount plus any accrued and unpaid interest 
thereon; (ii) in whole, but not in part, before June 15, 2025 at the make-whole 
redemption price, if an applicable rating agency makes certain changes to the 
equity credit criteria for securities such as the Junior Subordinated Notes; 
(iii) in whole, but not in part, at any time at 100% of their principal amount 
plus any accrued and unpaid interest thereon in the event that we become or 
would become obligated to pay any additional amounts as a result of a change in 
tax laws, regulations or official interpretations; or (iv) in whole, but not in 
part, at 101% of their principal amount plus any accrued and unpaid interest 
thereon within 60 days after the occurrence of a "change of control triggering 
event" consisting of a change of control and a decline in the rating of our 
senior unsecured debt securities by two applicable rating agencies. In the 
event that we do not redeem the Junior Subordinated Notes in connection with a 
change of control triggering event, the then-applicable annual interest rate 
borne by the Junior Subordinated Notes will increase by 5.00%.

The Junior Subordinated Notes are junior subordinated unsecured obligations, 
rank equally with all of AerCap Trust's future equally ranking junior 
subordinated indebtedness, if any, and are subordinate and junior in right of 
payment to all of AerCap Trust's existing and future senior indebtedness.

Subordinated debt in joint venture partners

In 2008 and 2010, AerCap Holdings N.V. and our joint venture partners each 
subscribed a total of approximately $64.3 million of subordinated loan notes. 
The subordinated debt held by AerCap Holdings N.V. is eliminated in 
consolidation of the joint ventures. Interest on the subordinated loan notes 
accrues at a rate of 15.00% per annum in the case of the AerCap Partners II 
joint venture. In the case of the AerCap Partners I and AerCap Partners 767 
joint ventures, interest originally accrued on the subordinated loan notes at a 
rate of 20.00% per annum, and following an amendment entered into in June 2013, 
the interest rate was reduced to 0% effective as of January 1, 2013. Where (i) 
the amount which, pursuant to the terms of the senior facility, is available to 
the joint ventures to make payments in respect of, amongst other things, the 
subordinated loan notes is insufficient to meet the interest payments; or (ii) 
the terms of the senior facility prohibit the payment in full of interest on 
the relevant payment date, then the joint venture partners must pay the maximum 
amount of interest that can properly be paid to the note holders on the 
relevant interest payment date and the unpaid interest carries interest at a 
rate of 19.50% per annum until paid.

The collateral granted in respect of the subordinated loan notes also secures 
the senior facility. The rights of the holders of subordinated loan notes in 
respect of this security are subordinated to the rights of the senior facility 
lenders, amongst others. The subordinated loan notes are fully subordinated in 
all respects including in priority of payment to, amongst other debts of the 
joint ventures, a senior debt facility. As is the case in respect of the senior 
facility, the obligation of the joint ventures to make payments in respect of 
the subordinated loan notes is limited in recourse to certain amounts actually 
received by the joint ventures.

Subject to certain conditions, including (while the senior facility security 
remains outstanding) the consent of the collateral trustee, the joint venture 
partners may at any time redeem all or any of the outstanding subordinated loan 
notes.


The net deferred income tax liabilities as of December 31, 2016 of $363.5 
million were recognized in our Consolidated Balance Sheet as deferred income 
tax assets of $215.5 million and as deferred income tax liabilities of $579.0 
million.

The net deferred income tax liabilities as of December 31, 2015 of $204.2 
million were recognized in our Consolidated Balance Sheet as deferred income 
tax assets of $161.2 million and as deferred income tax liabilities of $365.4 
million.

The valuation allowance as of December 31, 2016 of $127.4 million included $9.9 
million related to losses and credit forwards in Australia, $89.1 million 
related to having insufficient sources of projected taxable income to fully 
realize the deferred tax asset in the United States of America, particularly in 
respect of our U.S. subsidiary AeroTurbine, $26.8 million related to loss carry 
forwards in the Netherlands and $1.6 million related to loss carry forwards in 
Ireland.

The valuation allowance as of December 31, 2015 of $72.0 million included $23.0 
million related to losses and credit forwards in Australia, $35.1 million 
related to having insufficient sources of projected taxable income to fully 
realize the deferred tax asset in the United States of America, and $13.9 
million related to loss carry forwards in the Netherlands.

As of December 31, 2016 and 2015, we had $29.8 million and $15.5 million, 
respectively, of unrecognized tax benefits. Substantially all of the 
unrecognized tax benefits as of December 31, 2016, if recognized, would affect 
our effective tax rate. Although it is reasonably possible that a change in the 
balance of unrecognized tax benefits may occur within the next 12 months, based 
on the information currently available, we do not expect any change to be 
material to our consolidated financial condition.

Our primary tax jurisdictions are Ireland, the Netherlands and the United 
States of America. Our tax returns are open for examination in Ireland from 
2012 forward, in the Netherlands from 2011 forward, and in the United States of 
America from 2014 forward. In the United States of America, the 2013 audit of 
the federal income tax return for AerCap, Inc. and its subsidiaries was closed 
without adjustment in early 2016. The 2014 federal income tax return of some of 
our U.S. resident subsidiaries was subject to audit, and we do not expect any 
material changes in the outcome of this audit.

Our policy is to recognize accrued interest on the underpayment of income taxes 
as a component of interest expense and penalties associated with tax 
liabilities as a component of provision for income taxes.

Ireland

Since 2006, the enacted Irish corporate income tax rate has been 12.5%. Some of 
our Irish tax-resident operating subsidiaries have significant losses carry 
forward as of December 31, 2016 which give rise to deferred income tax assets. 
The availability of these losses does not expire with time. In addition, the 
vast majority of all of our Irish tax-resident subsidiaries are entitled to 
accelerated aircraft depreciation for tax purposes and shelter net taxable 
income with the surrender of losses on a current year basis within the Irish 
tax group. Based on projected taxable profits in our Irish subsidiaries, we 
expect to recover the majority of the value of our Irish tax assets and have 
not recognized a valuation allowance against such assets, with the exception of 
$1.6 million, as of December 31, 2016.

The Netherlands

The majority of our Dutch subsidiaries are part of two Dutch fiscal unities and 
are included in consolidated tax filings. Current tax expenses are limited with 
respect to the Dutch subsidiaries due to the existence of interest bearing 
intercompany liabilities. Deferred income tax is calculated using the Dutch 
corporate income tax rate (25.0%). Tax losses in the Netherlands can generally 
be carried back one year and carried forward nine years before expiry.

United States of America

Our U.S. subsidiaries are assessable to federal and state U.S. taxes. Since the 
ILFC Transaction, we no longer file one consolidated federal income tax return. 
We have two distinct groups of U.S. companies that file consolidated returns. 
The blended federal and state tax rate applicable to our combined U.S. group 
was 36.3% for the year ended December 31, 2016. Due to a restructuring of 
activities in the U.S. AeroTurbine group, which started in late 2015, we do not 
expect to generate sufficient sources of taxable income to realize our deferred 
income tax asset in the U.S. Additionally, certain tax attributes are subject 
to an annual limitation as a result of the change in ownership in 2015 as 
defined under Internal Revenue Code Section 382. We had $234.7 million U.S. 
federal net operating losses as of December 31, 2016, which expire between 2026 
and 2036.

Equity

In February 2015, our Board of Directors approved a share repurchase program 
authorizing total repurchases of up to $250 million of AerCap ordinary shares. 
In May 2015, the Board of Directors authorized an additional $500 million of 
share repurchases, increasing the total authorization under the program to $750 
million.

On June 9, 2015, we completed the Share Repurchase from AIG, at an approximate 
price per share of $47.77 for consideration equal to $750 million. See Note 
4—ILFC Transaction. In relation to the Share Repurchase from AIG, we incurred 
$11.2 million of expenses.

In October 2015, our Board of Directors cancelled 9,698,588 ordinary shares 
which were acquired through the Share Repurchase from AIG in accordance with 
the authorizations obtained from the Company's shareholders.

In February 2016, our Board of Directors approved a share repurchase program 
authorizing total repurchases of up to $400 million of AerCap ordinary shares 
through June 30, 2016. We completed this share repurchase program on June 1, 
2016.


Share-based compensation

Under our equity incentive plans we have granted restricted stock units, 
restricted stock and stock options to directors, officers and employees in 
order to enable us to attract, retain and motivate such people and to align 
their interests with ours, including but not limited to retention and 
motivation in relation to the implementation of the ILFC Transaction.

AerCap Holdings N.V. Equity Grants

In March 2012, we implemented an equity incentive plan (the "Equity Incentive 
Plan 2012") which provides for the grant of stock options, non-qualified stock 
options, restricted stock, restricted stock units, stock appreciation rights 
and other stock awards to participants of the plan selected by the Nomination 
and Compensation Committee of our Board of Directors. Effective May 14, 2014, 
the Equity Incentive Plan 2012 was expanded and the maximum number of shares 
available under the plan is equivalent to 8,064,081 Company shares. The Equity 
Incentive Plan 2012 is not open for equity awards to our directors.

On May 14, 2014, we implemented an equity incentive plan (the "Equity Incentive 
Plan 2014") which provides for the grant of equity awards to participants of 
the plan selected by the Nomination and Compensation Committee of our Board of 
Directors. The maximum number of shares available under the plan is equivalent 
to 4,500,000 Company shares. The Equity Incentive Plan 2014 is open for equity 
awards to our directors.

The Equity Incentive Plan 2014 replaced an equity incentive plan that was 
implemented in October 2006 (the "Equity Incentive Plan 2006", the Equity 
Incentive Plan 2014, Equity Incentive Plan 2012 and Equity Incentive Plan 2006 
collectively referred to herein as "AerCap Holdings N.V. Equity Plans"). Prior 
awards remain in effect pursuant to their terms and conditions. The terms and 
conditions of the Equity Incentive Plan 2006 and the Equity Incentive Plan 2014 
are substantially the same.

The terms and conditions, including the vesting conditions, of the equity 
awards granted under AerCap Holdings N.V. Equity Plans are determined by the 
Nomination and Compensation Committee and, for our directors, by the Board of 
Directors in line with the remuneration policy approved by the General Meeting 
of Shareholders. The vesting periods of the equity awards range between three 
years and five years, subject to certain exceptions. Certain awards are subject 
to long term performance vesting criteria, based on the average earnings per 
share over the specified periods, in order to promote and encourage superior 
performance over a prolonged period of time. Some of our officers receive 
annual equity awards as part of their compensation package. Annual equity 
awards are granted after the year end and the number of awards granted is 
dependent on the performance of AerCap and the respective individual officer 
during the previous financial year. The 2015 annual equity awards were granted 
to some of our officers in December 2015 in lieu of the first quarter of 2016 
in order to avoid double taxation in connection with the migration of the 
Company's headquarters to Ireland in early 2016. All outstanding awards of 
restricted stock units are convertible into common shares of the Company at a 
ratio of one-to-one. During the year ended December 31, 2016, the Company's 
obligations to issue shares at the exercise of vested options, on the vesting 
date of restricted stock units, or upon lapse of the restrictions in relation 
to restricted stock were satisfied by the transfer of treasury shares acquired 
through share repurchases. Shares subject to outstanding equity awards, that 
are not issued or delivered by reason of, amongst others, the cancellation or 
forfeiture of such awards or the withholding of such shares to settle tax 
obligations, shall again be available under the AerCap Holdings N.V. Equity 
Plans.

During the year ended December 31, 2016, 807,227 restricted stock units that 
had been issued previously were converted to restricted stock of which 541,037 
were issued with the remaining stock being withheld and applied to pay the 
taxes involved. The converted restricted stock remained subject to restrictions 
and conditions identical to the restricted stock units, including vesting and 
forfeiture conditions.

The amount of share-based compensation expense is determined by reference to 
the fair value of the restricted stock units or restricted stock on the grant 
date, based on the trading price of the Company's shares on the grant date and 
reflective of the probability of vesting. All outstanding options have been 
fully expensed.

We incurred share-based compensation expense of $102.8 million, $100.2 million 
and $68.2 million during the years ended December 31, 2016, 2015 and 2014, 
respectively.

Pension plans

We operate defined benefit plans and defined contribution pension plans for our 
employees. These plans do not have a material impact on our Consolidated 
Balance Sheets or Consolidated Income Statements.

Defined benefit plans

Dutch defined benefit plan

We provide an insured defined benefit pension plan covering our Dutch employees 
(the "Dutch Plan") based on years of service and career average pay. The Dutch 
Plan is funded through a guaranteed insurance contract, and we determine the 
funded status of this plan with the assistance of an actuary. During the years 
ended December 31, 2016, 2015 and 2014, we recognized actuarial gains (losses) 
of pension obligations, net of taxes, of $0.1 million, $(0.2) million and $1.6 
million, respectively, in AOCI. The actuarial gains or losses were calculated 
assuming a discount rate of 2.0%, 2.4% and 2.4% for the years ended December 
31, 2016, 2015 and 2014, respectively, and various assumptions regarding the 
plan's future funding and pay out. As of December 31, 2016 and 2015, we 
recorded a liability in accounts payable, accrued expenses and other 
liabilities of $2.2 million and $3.2 million, respectively, which covers the 
excess of our projected benefit obligations over plan assets.

Irish defined benefit plan

We provide a defined benefit pension plan covering some of our Irish employees 
(the "Irish Plan") based on years of service and final pensionable pay. The 
Irish Plan is funded through contributions by the Company and invested in 
trustee administered funds, which was closed to new participants as of June 30, 
2009, but will continue to accrue benefits for existing participants. We 
determine the funded status of this plan with the assistance of an actuary. 
During the years ended December 31, 2016, 2015 and 2014, we recognized 
actuarial gains (losses), net of tax, of $(1.6) million, $0.5 million and 
$(3.1) million, respectively, in AOCI. The actuarial gains or losses were 
calculated assuming a discount rate of 2.0%, 2.5% and 2.4% for the years ended 
December 31, 2016, 2015, and 2014, respectively, and various assumptions 
regarding the plan's future funding and pay out. As of December 31, 2016 and 
2015, we recorded a liability in accounts payable, accrued expenses and other 
liabilities of $9.1 million and $6.9 million, respectively, which covers the 
excess of our projected benefit obligations over plan assets.

Defined contribution plans

Dutch defined contribution plan

We provide a defined contribution pension plan for those Dutch employees that 
are not covered by the defined benefit plan. During the years ended December 
31, 2016, 2015 and 2014, we contributed $0.2 million, $0.4 million and $0.3 
million, respectively, to this plan. No amounts were outstanding in respect of 
pension contributions as of December 31, 2016.

Irish defined contribution plan

We provide a defined contribution pension plan for those Irish employees that 
are not covered by the defined benefit plan. During the years ended December 
31, 2016, 2015 and 2014, we contributed $1.8 million, $1.1 million and $0.3 
million, respectively, to this plan. No amounts were outstanding in respect of 
pension contributions as of December 31, 2016.

Asset impairment

Our long-lived assets include flight equipment and definite-lived intangible 
assets. We test long-lived assets for impairment whenever events or changes in 
circumstances indicate that the carrying amounts of the assets may not be 
recoverable.

During the year ended December 31, 2016, we recognized impairment charges of 
$81.6 million on 35 aircraft. The impairment charges primarily related to lease 
terminations and amendments of lease agreements for 25 aircraft. These 
impairments were more than offset by lease revenue of $95.9 million that we 
recognized when we retained maintenance related balances or received EOL 
compensation upon lease termination or amendment. In addition we recognized 
impairment charges for ten aircraft that were part of sale transactions and 
were classified as flight equipment held for sale.

During the year ended December 31, 2015, we recognized total impairment charges 
of $16.3 million primarily related to eight aircraft and 12 engines. Four of 
the impaired aircraft were redelivered from the respective lessees for which we 
retained maintenance related balances or received EOL compensation and 
recognized $20.5 million of lease revenue upon redelivery. The impairment on 
the remaining four aircraft and 12 engines was recognized as their net book 
values were no longer supportable based on our latest cash flow estimates for 
each of these assets.

During the years ended December 31, 2016 and 2015, we also recognized 
impairment charges for certain AeroTurbine intangible assets and leased 
engines. Please refer to Note 26—AeroTurbine restructuring for further details.

During the year ended December 31, 2014, we recognized impairment charges of 
$21.8 million primarily related to eight aircraft that were returned early from 
our lessees, and three previously leased engines that we sold for parts. The 
impairment was recognized as their net book values were no longer supportable 
based on our latest cash flow estimates for each of these assets.

26. AeroTurbine restructuring

At the end of 2015, we made the decision to restructure and downsize the 
AeroTurbine business. Since we made this decision, AeroTurbine has been 
actively reducing its debt and total assets by disposing of engines from its 
engine leasing portfolio as well as parts from its inventory. In February 2017, 
the AeroTurbine revolving credit facility was fully repaid and terminated.

In connection with the downsizing, during the year ended December 31, 2015, we 
performed recoverability assessments of AeroTurbine's long-lived assets. These 
recoverability assessments indicated that the book value of certain AeroTurbine 
intangible assets and leased engines were no longer supported by their future 
expected cash flows. The resulting impairment was measured as the excess of the 
carrying amount of each asset over its fair value. Fair value was estimated 
based on the present value of future cash flows expected to be generated from 
the asset, including its expected residual value, discounted at a rate 
commensurate with the associated risk. During the year ended December 31, 2015, 
we also recognized a lower of cost or market adjustment of $38.7 million 
related to AeroTurbine's parts inventory. Please refer to Note 23—Other income.

During 2016, AeroTurbine entered into a letter of intent to sell its storage 
and maintenance facility located in Goodyear, Arizona, which resulted in a 
write-down of assets and associated intangible assets. In January 2017, 
AeroTurbine completed the sale of its Goodyear operations. In March 2017, 
AeroTurbine executed an amendment to the existing lease agreement for its 
facility in Florida. Pursuant to the amendment, the square footage of the 
leased premises was reduced from approximately 264,000 square feet to 
approximately 64,000 square feet.

During 2016, we also completed a review of AeroTurbine's engine leasing 
portfolio and identified specific engines for longer-term use and support of 
AerCap's core aircraft leasing business, as well as the specific engines to be 
sold by AeroTurbine to third parties. As a result, we recognized impairments 
related primarily to older, out-of-production engines.

The sale of the Goodyear operations and the engine portfolio review, together, 
triggered our decision in the second half of 2016, to accelerate the final 
phase of the AeroTurbine downsizing. We performed a review of AeroTurbine's 
parts inventory, and recognized a lower of cost or market adjustment of $36.0 
million based on current available market information. Please refer to Note 
23—Other income. The lower of cost or market adjustment related primarily to 
older, out-of-production assets, and also reflected our decision to accelerate 
the downsizing of AeroTurbine generally, including ascribing a discount to 
reflect the expected cost of potential consignment transactions for the 
remaining inventory.

In addition to the charges described above, during the years ended December 31, 
2016 and 2015, AeroTurbine incurred other operating losses of $33.9 million and 
other operating income of $14.0 million, respectively, bringing AeroTurbine's 
total pre-tax loss to $123.3 million and $74.0 million, respectively.

Earnings per share

Basic earnings per share ("EPS") is calculated by dividing net income by the 
weighted average number of our ordinary shares outstanding, which excludes 
3,426,810, 3,030,724 and 232,140 unvested restricted stock as of December 31, 
2016, 2015 and 2014, respectively. For the calculation of diluted EPS, the 
weighted average of our ordinary shares outstanding for basic EPS is adjusted 
by the effect of dilutive securities, including awards under our equity 
compensation plans. The number of shares excluded from diluted shares 
outstanding was 152,314, 36,666 and nil for the years ended December 31, 2016, 
2015 and 2014, respectively, because the effect of including those shares in 
the calculation would have been anti-dilutive.


Variable interest entities

Our leasing and financing activities require us to use many forms of entities 
to achieve our business objectives and we have participated to varying degrees 
in the design and formation of these entities. Our involvement in VIEs varies 
and includes being a passive investor in the VIE with involvement from other 
parties, managing and structuring all the VIE's activities, or being the sole 
shareholder of the VIE.

During the year ended December 31, 2016, we have not provided any financial 
support to any of our VIEs that we were not contractually obligated to provide.

Consolidated VIEs

As of December 31, 2016 and 2015, substantially all assets and liabilities 
presented in our Consolidated Balance Sheets were held in consolidated VIEs. 
The assets of our consolidated VIEs that can only be used to settle obligations 
of these entities, and the liabilities of these VIEs for which creditors do not 
have recourse to our general credit are disclosed in our Consolidated Balance 
Sheets under Supplemental balance sheet information. Further details of debt 
held by our consolidated VIEs are disclosed in Note 16—Debt.

Wholly-owned ECA and Ex-Im financing vehicles

We have created certain wholly-owned subsidiaries for the purpose of purchasing 
aircraft and obtaining financing secured by such aircraft. The secured debt is 
guaranteed by the European ECAs and the Export-Import Bank of the United 
States. These entities meet the definition of a VIE because they do not have 
sufficient equity to operate without subordinated financial support from us in 
the form of intercompany notes. We have determined that we are the PB of these 
entities because we control and manage all aspects of these entities, including 
directing the activities that most significantly affect the entities' economic 
performance, we absorb the majority of the risks and rewards of these entities 
and we guarantee the activities of these entities.

Other secured financings

We have created a number of wholly-owned subsidiaries for the purpose of 
obtaining secured financings. These entities meet the definition of a VIE 
because they do not have sufficient equity to operate without subordinated 
financial support from us in the form of intercompany notes. We have determined 
that we are the PB of these entities because we control and manage all aspects 
of these entities, including directing the activities that most significantly 
affect the entities' economic performance, we absorb the majority of the risks 
and rewards of these entities and we guarantee the activities of these 
entities.

Wholly-owned leasing entities

We have created wholly-owned subsidiaries for the purpose of facilitating 
aircraft leases with airlines. These entities meet the definition of a VIE 
because they do not have sufficient equity to operate without subordinated 
financial support from us in the form of intercompany notes, which serve as 
equity. We have determined that we are the PB of these entities because we 
control and manage all aspects of these entities, including directing the 
activities that most significantly affect the entities' economic performance, 
we absorb the majority of the risks and rewards of these entities and we 
guarantee the activities of these entities.

Limited recourse financing structures

We have established entities to obtain secured financings for the purchase of 
aircraft in which we have variable interests. These entities meet the 
definition of a VIE because they do not have sufficient equity to operate 
without subordinated financial support from us in the form of intercompany 
notes. The loans of these entities are non-recourse to us except under limited 
circumstances. We have determined that we are the PB of these entities because 
we control and manage all aspects of these entities, including directing the 
activities that most significantly affect the entities' economic performance, 
and we absorb the majority of the risks and rewards of these entities.

AerCap Partners I

AerCap Partners I Holding Limited ("AerCap Partners I") is a 50%-50% joint 
venture owned by us and Deucalion Aviation Funds. We provide lease management, 
insurance management and aircraft asset management services to AerCap Partners 
I for a fee. We have determined that we are the PB of the entity because we 
direct the activities that most significantly affect the economic performance 
of the entity and we absorb a significant portion of the risks and rewards of 
the entity.

As of December 31, 2016, AerCap Partners I had a portfolio consisting of eight 
Boeing 737NG aircraft. During the year ended December 31, 2016, AerCap Partners 
I sold three Boeing 737NG aircraft, with leases attached, to a third party. As 
of December 31, 2016, AerCap Partners I had $81.5 million outstanding under a 
senior debt facility, which is guaranteed by us, and $63.8 million of 
subordinated debt outstanding, consisting of $31.9 million from us and $31.9 
million from our joint venture partner.

AerCap Partners II

AerCap Partners II Holding Limited ("AerCap Partners II") is a 50%-50% joint 
venture owned by us and Deucalion Aviation Funds. We provide lease management, 
insurance management and aircraft asset management services to AerCap Partners 
II for a fee. We have determined that we are the PB of the entity because we 
direct the activities that most significantly affect the economic performance 
of the entity and we absorb a significant portion of the risks and rewards of 
the entity.

As of December 31, 2016, AerCap Partners II had a portfolio consisting of three 
Airbus A320 aircraft. As of December 31, 2016, AerCap Partners II had $49.0 
million outstanding under an ECA senior debt facility, which is guaranteed by 
us, and $16.8 million of subordinated debt outstanding, consisting of $8.4 
million from us and $8.4 million from our joint venture partner.

AerCap Partners 767

AerCap Partners 767 Limited ("AerCap Partners 767") is a 50%-50% joint venture 
owned by us and Deucalion Aviation Funds. We provide lease management, 
insurance management and aircraft asset management services to AerCap Partners 
767 for a fee. We have determined that we are the PB of the entity because we 
direct the activities that most significantly affect the economic performance 
of the entity and we absorb a significant portion of the risks and rewards of 
the entity.

As of December 31, 2016, AerCap Partners 767 had a portfolio consisting of two 
Boeing 767-300ER aircraft. As of December 31, 2016, AerCap Partners 767 had 
$16.2 million outstanding under a senior debt facility, which is limited 
recourse to us and $31.0 million of subordinated debt outstanding, consisting 
of $15.5 million from us and $15.5 million from our joint venture partner.

ALS II

We hold a 5% equity investment and 100% of the subordinated fixed rate 
deferrable interest asset-backed notes ("ALS II Class E-1 Notes") in ALS II. We 
provide lease management, insurance management and aircraft asset management 
services to ALS II for a fee. We have determined that we are the PB of the 
entity because we have control and we absorb the majority of the risks and 
rewards of the entity.

As of December 31, 2016, ALS II had a portfolio consisting of 26 Airbus A320 
Family aircraft. During the year ended December 31, 2016, ALS II sold four 
Airbus A320 Family aircraft, with leases attached, to a third party. As of 
December 31, 2016, ALS II had $17.7 million of senior Class A notes outstanding 
and $350.0 million of ALS II Class E-1 Notes outstanding due to us. The ALS II 
senior Class A notes were repaid in full in January 2017.

AerFunding

We hold a 5% equity investment and 100% of the subordinated fixed rate 
deferrable interest asset-backed notes ("AerFunding Class E-1 Notes") in 
AerFunding. We provide lease management, insurance management and aircraft 
asset management services to AerFunding for a fee. We have determined that we 
are the PB of the entity because we have control and we absorb the majority of 
the risks and rewards of the entity.

As of December 31, 2016, AerFunding had a portfolio consisting of five Airbus 
A320 Family aircraft, five Airbus A330 aircraft, seven Boeing 737NG aircraft 
and two Boeing 787 aircraft. As of December 31, 2016, AerFunding had $596.8 
million outstanding under a secured revolving credit facility and $192.7 
million of AerFunding Class E-1 Notes outstanding due to us.

AerLift Jet

AerLift Leasing Jet Ltd. ("AerLift Jet") is a 50%-50% joint venture owned by us 
and a U.S.-based aircraft leasing company. We provide lease management, 
insurance management and aircraft asset management services to AerLift Jet for 
a fee. We have determined that we are the PB of the entity because we direct 
the activities that most significantly affect the economic performance of the 
entity and we absorb a significant portion of the risks and rewards of the 
entity.

During the year ended December 31, 2016, AerLift Jet sold its four aircraft and 
repaid all amounts previously outstanding under its secured bank loans. AerLift 
Jet did not own any aircraft as of December 31, 2016.

Non-consolidated VIEs

The maximum exposure to loss represents the amount that would be absorbed by us 
in the event that all of our assets held in the VIEs, for which we are not the 
PB, had no value and outstanding debt guarantees were called upon in full.

AerDragon

AerDragon is a joint venture with 50% owned by China Aviation Supplies Holding 
Company and the other 50% owned equally by us, affiliates of Crédit Agricole 
Corporate and Investment Bank, and East Epoch Limited. This joint venture 
enhances our presence in the Chinese market and our ability to lease our 
aircraft and engines throughout the entire Asia/Pacific region. We provide 
certain aircraft and accounting related services to AerDragon, and guarantee 
debt secured by certain aircraft which AerDragon purchased directly from us for 
a fee. As of December 31, 2016 and 2015, we guaranteed debt of $3.4 million and 
$7.5 million, respectively, for AerDragon. With the exception of the debt for 
which we act as a guarantor, the obligations of AerDragon are non-recourse to 
us.

As of December 31, 2016, AerDragon had 29 narrowbody aircraft on lease to ten 
airlines. During the year ended December 31, 2016, AerDragon completed the sale 
of one widebody aircraft, with lease attached, to a third party.

We have determined that AerDragon is a VIE, in which we do not have control and 
therefore we are not the PB. We do have significant influence and, accordingly, 
we account for our investment in AerDragon under the equity method of 
accounting.

AerLift

AerLift is a joint venture in which we have a 39% interest. We provide asset 
and lease management, insurance management and cash management services to 
AerLift for a fee. As of December 31, 2016 and 2015, we guaranteed debt of 
$122.0 million and $168.9 million, respectively, for AerLift. Other than the 
debt for which we act as a guarantor, the debt obligations of AerLift are 
non-recourse to us.

As of December 31, 2016, AerLift owned four aircraft. During the year ended 
December 31, 2016, AerLift completed the sale of two aircraft to third parties. 
We have determined that AerLift is a VIE in which we do not have control and 
therefore we are not the PB. We do have significant influence and, accordingly, 
we account for our investment in AerLift under the equity method of accounting.

ACSAL

In June 2013, we completed a transaction under which we sold eight Boeing 
737-800 aircraft to ACSAL, an affiliate of Guggenheim, in exchange for cash, 
and we made a capital contribution to ACSAL in exchange for 19% of its equity. 
We provide aircraft asset and lease management services to ACSAL for a fee. As 
of December 31, 2016, ACSAL continued to own the eight aircraft.

We have determined that ACSAL is a VIE in which we do not have control and 
therefore we are not the PB. We do have significant influence and, accordingly, 
we account for our investment in ACSAL under the equity method of accounting.

AerCap Partners III

In 2010, we entered into a 50% joint venture, AerCap Partners III Holdings 
Limited ("AerCap Partners III"), which initially owned three Airbus A330 
aircraft. On June 1, 2011, we sold our 50% interest in the three Airbus A330 
aircraft but we continued to guarantee debt for AerCap Partners III for a fee. 
During the year ended December 31, 2016, AerCap Partners III was unwound and we 
no longer act as a guarantor for the debt of AerCap Partners III as of December 
31, 2016. As of December 31, 2015, we guaranteed $71.7 million of debt for 
AerCap Partners III. Other than the debt for which we acted as a guarantor, the 
obligations of AerCap Partners III were non-recourse to us. We determined that 
AerCap Partners III was a VIE in which we did not have control and therefore we 
were not the PB.

ALS

In 2012, we completed the ALS Transaction. In addition, we obtained financing 
(the "ALS Coupon Liability") in return for which we received a contingent asset 
(the "ALS Note Receivable") with the substance of a structured note. Repayments 
of the ALS Coupon Liability were equal to an annual 8% coupon of the 
transaction price, paid until the earlier of December 2016 or the month in 
which the senior securities issued by ALS (the "G-Notes"), were fully repaid.

As of December 31, 2015, the ALS Note Receivable was $85.7 million, and the 
amount outstanding under the ALS Coupon Liability was $28.0 million.

On December 7, 2016, the ALS Coupon Liability and the G-Notes were both repaid 
in full. On December 23, 2016, the ALS portfolio was refinanced (the "ALS 
Refinancing"), upon which we received $120.3 million based on 20% of the cash 
flows from the ALS Refinancing up to a cap equal to the total ALS Coupon 
Liability payments. At the time of the ALS Refinancing, the ALS Note Receivable 
had a carrying value of $92.6 million and as a result we recognized a net gain 
of $27.7 million in other income.

We have determined that ALS was a VIE in which we did not have control and 
therefore we were not the PB.

AerCo

We had an economic interest in AerCo Limited ("AerCo"). AerCo was an aircraft 
securitization vehicle in which we held the most junior class of subordinated 
notes and certain notes immediately senior to those junior notes. On August 4, 
2015, AerCo entered into a creditor's winding up. On October 15, 2015, AerCo 
disclosed that no further payments of interest or principal would be made in 
respect of the classes of notes held by us. Hence, we did not realize any value 
from the creditor's winding up of AerCo. On February 16, 2016, AerCo Limited 
was dissolved. We provided a variety of management services to AerCo for which 
we received fees. AerCo was a VIE for which we determined that we did not have 
control and were not the PB and, accordingly, we did not consolidate the 
financial results of AerCo in our Consolidated Financial Statements. 
Historically, the investment in AerCo had been written down to zero.

AerData

In 2014, we sold our 42.3% equity interest in AerData, an integrated software 
solution provider for the aircraft leasing industry. AerData continues to 
provide software services to us.

Other variable interest entities

We have variable interests in other entities in which we have determined we are 
not the PB because we do not have the power to direct the activities that most 
significantly affect the entity's economic performance. Our variable interest 
in these entities consists of servicing fees that we receive for providing 
aircraft management services.

Related party transactions

AIG

As a result of the ILFC Transaction, AIG held a significant ownership interest 
in AerCap. Following both secondary public offerings and the Share Repurchase 
from AIG, AIG no longer owns any of our outstanding ordinary shares. See Note 
4—ILFC Transaction. AIG and its subsidiaries were considered related parties 
between the Closing Date and August 24, 2015, when AIG sold its remaining 
AerCap ordinary shares and when AIG's remaining designee resigned from AerCap's 
Board of Directors.

Debt

We have a senior unsecured revolving credit facility with AIG as lender and 
administrative agent. We paid fees of $4.1 million and $14.9 million from 
January 1, 2015 through August 24, 2015 and for the year ended December 31, 
2014, respectively.


In June 2015, AerCap Trust issued the Junior Subordinated Notes due 2045 to 
AIG. See Note 16—Debt. We paid no fees or interest to AIG from January 1, 2015 
through August 24, 2015 for these notes. As of December 31, 2016, AIG did not 
hold any of the Junior Subordinated Notes.

Repurchase of shares

On June 9, 2015, we completed the Share Repurchase from AIG. See Note 
18—Equity.

Derivatives

We had interest rate swap agreements with AIG Markets, Inc., a wholly-owned 
subsidiary of AIG, that matured during the year ended December 31, 2015. The 
net effect in our Consolidated Income Statements from January 1, 2015 through 
August 24, 2015 and for the year ended December 31, 2014 from derivative 
contracts with AIG Markets, Inc., was nil, as the cash expense of $1.3 million 
and $4.3 million, respectively, was offset by a mark-to-market gain of $1.3 
million and $4.3 million, respectively. See also Note 13—Derivative assets and 
liabilities.

Management fees

We received management fees of $5.1 million and $4.9 million from January 1, 
2015 through August 24, 2015 and during the year ended December 31, 2014, 
respectively, from affiliates of AIG.

AerDragon

We provide certain aircraft and accounting related services to, and guarantee 
certain debt of, AerDragon, a joint venture accounted for under the equity 
method. We charged AerDragon a fee for these services of $0.6 million, $0.5 
million and $0.4 million during the years ended December 31, 2016, 2015 and 
2014, respectively. In addition, we received a dividend of $1.7 million and 
$0.3 million from AerDragon during the years ended December 31, 2016 and 2015, 
respectively.

ACSAL

We provide aircraft asset and lease management services to ACSAL, an investment 
accounted for under the equity method, for which we received a fee of $0.5 
million, $0.5 million and $0.5 million for the years ended December 31, 2016, 
2015 and 2014, respectively.

AerLift

We provide a variety of management services to, and guarantee certain debt of, 
AerLift, a joint venture accounted for under the equity method, for which we 
received a fee of $2.9 million, $2.8 million and $4.0 million during the years 
ended December 31, 2016, 2015 and 2014, respectively. In addition, we received 
dividends of $7.5 million and $2.3 million from AerLift during the years ended 
December 31, 2016 and 2015, respectively.

AerCo

AerCo was an aircraft securitization vehicle in which we held the most junior 
class of subordinated notes and certain notes immediately senior to those 
junior notes. On February 16, 2016, AerCo was dissolved. During the years ended 
December 31, 2015 and 2014, we provided a variety of management services to 
AerCo, for which we received fees of $1.4 million and $1.5 million, 
respectively.

Commitments and contingencies

Aircraft on order

As of December 31, 2016, we had commitments to purchase 420 new aircraft 
scheduled for delivery through 2022. The majority of these commitments are 
based upon purchase agreements with Boeing, Airbus and Embraer. These 
agreements establish the pricing formulas (including adjustments for certain 
contractual escalation provisions) and various other terms with respect to the 
purchase of aircraft. Under certain circumstances, we have the right to alter 
the mix of aircraft types ultimately acquired. As of December 31, 2016, we had 
made non-refundable deposits on these purchase commitments (exclusive of 
capitalized interest and fair value adjustments) of approximately $636.2 
million, $667.3 million and $7.5 million with Boeing, Airbus and Embraer, 
respectively.

Management anticipates that a portion of the aggregate purchase price for the 
acquisition of aircraft will be funded by incurring additional debt. The amount 
of the indebtedness to be incurred will depend on the final purchase price of 
the aircraft, which can vary due to a number of factors, including inflation.

Asset value guarantees

We have potential obligations under contracts that guarantee a portion of the 
residual value of aircraft owned by third parties. These guarantees expire at 
various dates through 2023 and generally obligate us to pay the shortfall 
between the fair market value and the guaranteed value of the aircraft and, in 
certain cases, provide us with an option to purchase the aircraft for the 
guaranteed value. As of December 31, 2016, eight guarantees were outstanding.

We regularly review the underlying values of the aircraft collateral to 
determine our exposure under these asset value guarantees. We did not record 
any asset value guarantee loss provisions during the years ended December 31, 
2016 or 2015.

As of December 31, 2016 and 2015, the carrying value of the asset value 
guarantee liability was $37.5 million and $37.5 million, respectively, and was 
included in accounts payable, accrued expenses and other liabilities in our 
Consolidated Balance Sheets. As of December 31, 2016, the maximum aggregate 
potential commitment that we were obligated to pay under these guarantees, 
including those exercised, and without any offset for the projected value of 
the aircraft or other contractual features that may limit our exposure, was 
approximately $168.4 million.

Other guarantees

We guarantee the future re-lease or extension rental rates and other costs of 
four sold aircraft up to agreed maximum amounts for each aircraft. These 
guarantees expire when qualifying re-lease or extension agreements are signed 
but generally no later than 2018. We are obligated to perform under these 
guarantees if the contracted net re-lease or extension rates do not equal or 
exceed the specified amounts in the guarantees.

We also guarantee the replacement lease rental cash flows of three sold 
aircraft, in the event of a default and lease termination by the current 
lessees, up to agreed maximum amounts for each aircraft. Two of these 
guarantees expire in 2020 and the third guarantee expires in 2018. We are 
obligated to perform under these guarantees in the event of a default and lease 
termination by the current lessees, and if the contracted net replacement lease 
rental rates do not equal or exceed the rental amounts in the current lease 
contracts.

As of December 31, 2016 and 2015, the carrying value of these guarantees was 
$14.3 million and $9.9 million, respectively, and was included in accounts 
payable, accrued expenses and other liabilities in our Consolidated Balance 
Sheets. As of December 31, 2016, the maximum undiscounted aggregate future 
guarantee payments that we could be obligated to make under these guarantees, 
without offset for the projected net future re-lease or extension rates, were 
approximately $34.2 million.

Legal proceedings

General

In the ordinary course of our business, we are a party to various legal 
actions, which we believe are incidental to the operations of our business. The 
Company regularly reviews the possible outcome of such legal actions, and 
accrues for such legal actions at the time a loss is probable and the amount of 
the loss can be estimated. In addition, the Company also reviews indemnities 
and insurance coverage, where applicable. Based on information currently 
available, we believe the potential outcome of those cases where we are able to 
estimate reasonably possible losses, and our estimate of the reasonably 
possible losses exceeding amounts already recognized, on an aggregated basis, 
is immaterial to our Consolidated Financial Statements.

VASP litigation

We leased 13 aircraft and three spare engines to Viação Aerea de São Paulo 
("VASP"), a Brazilian airline. In 1992, VASP defaulted on its lease obligations 
and we commenced litigation against VASP to repossess our equipment. In 1992, 
we obtained a preliminary injunction for the repossession and export of 13 
aircraft and three spare engines from VASP. We repossessed and exported the 
aircraft and engines in 1992. VASP appealed this decision. In 1996, the 
Appellate Court of the State of São Paulo ("TJSP") ruled in favor of VASP on 
its appeal. We were instructed to return the aircraft and engines to VASP for 
lease under the terms of the original lease agreements. The Appellate Court 
also granted VASP the right to seek damages in lieu of the return of the 
aircraft and engines. Since 1996 we have defended this case in the Brazilian 
courts through various motions and appeals. On March 1, 2006, the Superior 
Tribunal of Justice (the "STJ") dismissed our then-pending appeal and on April 
5, 2006, a special panel of the STJ confirmed this decision. On May 15, 2006 we 
filed an extraordinary appeal with the Federal Supreme Court. In September 2009 
the Federal Supreme Court requested an opinion on our appeal from the office of 
the Attorney General. This opinion was provided in October 2009. The Attorney 
General recommended that AerCap's extraordinary appeal be accepted for trial 
and that the case be subject to a new judgment before the STJ. The Federal 
Supreme Court is not bound by the opinion of the Attorney General. While we 
have been advised that it would be normal practice to take such an opinion into 
consideration, there are no assurances that the Federal Supreme Court will rule 
in accordance with the Attorney General opinion or, if it did, what the outcome 
of the judgment of the STJ would be.

On February 23, 2006, VASP commenced a procedure to calculate its alleged 
damages and since then we, VASP and the court have appointed experts to assist 
the court in calculating damages. Our appointed expert has concluded that no 
damages were incurred. The VASP-appointed expert has concluded that substantial 
damages were incurred, and has claimed that such damages should reflect 
monetary adjustments and default interest for the passage of time. The 
court-appointed expert has also concluded that no damages were incurred. The 
public prosecutor had filed an opinion that supports the view of the 
VASP-appointed expert. In response to that opinion, the court-appointed expert 
reaffirmed his conclusion. A subsequently-appointed public prosecutor has since 
filed a new opinion that is less supportive of the VASP-appointed expert's 
opinion. The procedure is ongoing. We believe, and we have been advised, that 
it is not probable that VASP will be able to recover damages from us even if 
VASP prevails on the issue of liability. The outcome of the legal process is, 
however, uncertain, and the court is conducting its own analysis and will reach 
its own conclusion. The amount of damages, if any, payable to VASP cannot 
reasonably be estimated at this time. We continue to actively pursue all 
courses of action that may reasonably be available to us and intend to defend 
our position vigorously.

In July 2006, we brought a claim for damages against VASP in the English 
courts, seeking damages incurred by AerCap as a result of VASP's default under 
seven leases that were governed by English law. VASP filed applications 
challenging the jurisdiction of the English court, and sought to adjourn the 
jurisdictional challenge pending the sale of some of its assets in Brazil. We 
opposed this application and by an order dated March 6, 2008, the English court 
dismissed VASP's applications.

In September 2008, the bankruptcy court in Brazil ordered the bankruptcy of 
VASP. VASP appealed this decision. In December 2008, we filed with the English 
court an application for default judgment, seeking damages plus accrued 
interest pursuant to seven lease agreements. On March 16, 2009, we obtained a 
default judgment in which we were awarded approximately $40.0 million in 
damages plus accrued interest. We subsequently applied to the STJ for an order 
ratifying the English judgment, so that it might be asserted in the VASP 
bankruptcy. The STJ granted AerCap's application and entered an order ratifying 
the English judgment. Although VASP appealed that order, it is fully effective 
pending a resolution of VASP's appeal of the order ratifying the English 
judgment.

On November 6, 2012, the STJ ruled in favor of VASP on its appeal from the 
order placing it in bankruptcy. Acting alone, the reporting justice of the 
appellate panel ordered the bankruptcy revoked and the matter converted to a 
judicial reorganization. Several creditors of VASP appealed that ruling to the 
full panel of the STJ. On December 17, 2012, the Special Court of the STJ 
reversed the ruling of the reporting justice and upheld the order placing VASP 
in bankruptcy. The decision was published on February 1, 2013. On February 25, 
2013, the lapse of time for appeal (res judicata) was certified.

In addition to our claim in the English courts, AerCap has also brought actions 
against VASP in the Irish courts to recover damages incurred as a result of 
VASP's default under nine leases governed by Irish law. The Irish courts 
granted an order for service of process, and although VASP opposed service in 
Brazil, the STJ ruled that service of process had been properly completed. 
After some additional delay due to procedural issues related to VASP's 
bankruptcy, the Irish action went forward. Upon VASP's failure to appear, the 
High Court entered default judgment in favor of AerCap, finding VASP liable for 
breach of its obligations under the leases. On October 24, 2014, the High Court 
entered judgment in favor of AerCap, awarding us damages in the amount of 
approximately $36.9 million. We are presently seeking to have the Irish 
judgment ratified by the STJ in Brazil, so that it might be asserted in the 
VASP bankruptcy.

Transbrasil litigation

In the early 1990s, two AerCap-related companies (the "AerCap Lessors") leased 
an aircraft and two engines to Transbrasil S/A Linhas Areas ("Transbrasil"), a 
now-defunct Brazilian airline. By 1998, Transbrasil had defaulted on various 
obligations under its leases with AerCap, along with other leases it had 
entered into with GECC and certain of its affiliates (collectively with GECC, 
the "GE Lessors"). GECAS was the servicer for all these leases at the time. 
Subsequently, Transbrasil issued promissory notes (the "Notes") to the AerCap 
lessors and GE Lessors (collectively the "Lessors") in connection with 
restructurings of the leases. Transbrasil defaulted on the Notes and GECC 
brought an enforcement action on behalf of the Lessors in 2001. Concurrently, 
GECC filed an action for the involuntary bankruptcy of Transbrasil.

Transbrasil brought a lawsuit against the Lessors in February 2001 (the 
"Transbrasil Lawsuit"), claiming that the Notes had in fact been paid at the 
time GECC brought the enforcement action. In 2007, the trial judge ruled in 
favor of Transbrasil. That decision was appealed. In April 2010, the appellate 
court published a judgment (the "2010 Judgment") rejecting the Lessors' appeal, 
ordering them to pay Transbrasil statutory penalties equal to double the face 
amount of the Notes (plus interest and monetary adjustments) as well as damages 
for any losses incurred as a result of the attempts to collect on the Notes. 
The 2010 Judgment provided that the amount of such losses would be calculated 
in separate proceedings in the trial court (the "Indemnity Claim"). In June 
2010, the AerCap Lessors and GE Lessors separately filed special appeals before 
the STJ in Brazil. These special appeals were subsequently admitted for 
hearing.

In July 2011, Transbrasil brought three actions for provisional enforcement of 
the 2010 Judgment (the "Provisional Enforcement Actions"): one to enforce the 
award of statutory penalties; a second to recover attorneys' fees related to 
that award, and a third to enforce the Indemnity Claim. Transbrasil submitted 
its alleged calculation of statutory penalties, which, according to 
Transbrasil, amounted to approximately $210 million in the aggregate against 
all defendants, including interest and monetary adjustments. AerCap and its 
co-defendants opposed provisional enforcement of the 2010 judgment, arguing, 
among other things, that Transbrasil's calculations were greatly exaggerated.

Transbrasil also initiated proceedings to determine the amount of its alleged 
Indemnity Claim. The court appointed an expert to determine the measure of 
damages and the defendants appointed an assistant expert. We believe we have 
strong arguments to convince the expert and the court that Transbrasil suffered 
no damage as a result of the defendants' attempts to collect on the Notes.

In February 2012, AerCap brought a civil complaint against GECAS and GECC in 
the State of New York (the "New York Action"), alleging, among other things, 
that GECAS and GECC had violated certain duties to AerCap in connection with 
their attempts to enforce the Notes and their defense of Transbrasil's lawsuit. 
In November 2012, AerCap, GECAS, and the GE Lessors entered into a settlement 
agreement resolving all of the claims raised in the New York Action. The terms 
of the settlement agreement are confidential.

In October 2013, the STJ granted the special appeals filed by GECAS and its 
related parties, effectively reversing the 2010 Judgment in most respects as to 
all of the Lessors.

In February 2014, Transbrasil appealed the STJ's ruling of October 2013 to 
another panel of the STJ. The appellate panel rejected Transbrasil's appeal in 
November 2016, preserving the October 2013 order. The parties have the right to 
seek further appellate review of the appellate panel's November 2016 order.

In light of the STJ's ruling of October 2013, the trial court has ordered the 
dismissal of two of Transbrasil's Provisional Enforcement Actions—those seeking 
statutory penalties and attorneys' fees. The TJSP has since affirmed the 
dismissals of those actions. Transbrasil's Provisional Enforcement Action with 
respect to the Indemnity Claim remains pending; however, the action has 
currently been stayed pending a final decision in the Transbrasil Lawsuit.

Yemen Airways-Yemenia litigation

ILFC is named in a lawsuit in connection with the 2009 crash of an Airbus 
A310-300 aircraft owned by ILFC and on lease to Yemen Airways-Yemenia, a Yemeni 
carrier ("Hassanati Action"). The Hassanati plaintiffs are families of deceased 
occupants of the flight and seek unspecified damages for wrongful death, costs, 
and fees. The Hassanati Action commenced in January 2011 and was pending in the 
United States District Court for the Central District of California. On 
February 18, 2014, the district court granted summary judgment in ILFC's favor 
and dismissed all of the Hassanati plaintiffs' remaining claims. The Hassanati 
plaintiffs appealed. On March 22, 2016, the appellate court rejected the 
appeal. On April 22, 2016, the Hassanati plaintiffs refiled their action at the 
trial court. The trial court granted ILFC's motion to dismiss the Hassanati 
plaintiffs' second complaint on November 22, 2016. The Hassanati plaintiffs 
have appealed this order. On August 29, 2014, a new group of plaintiffs filed a 
lawsuit against ILFC in the United States District Court for the Central 
District of California (the "Abdallah Action"). The Abdallah Action claims 
unspecified damages from ILFC on the same theory as does the Hassanati Action. 
We believe that ILFC has substantial defenses on the merits and is adequately 
covered by available liability insurance in respect of both the Hassanati 
Action and the Abdallah Action.

Fair value measurements

The Company determines fair value based on the price that would be received to 
sell an asset or paid to transfer a liability in an orderly transaction between 
market participants at the measurement date. It is our policy to maximize the 
use of observable inputs and minimize the use of unobservable inputs when 
developing fair value measurements, in accordance with the fair value hierarchy 
as described below. Where limited or no observable market data exists, fair 
value measurements for assets and liabilities are primarily based on 
management's own estimates and are calculated based upon the economic and 
competitive environment, the characteristics of the asset or liability and 
other such factors. Therefore, the results may not be realized in actual sale 
or immediate settlement of the asset or liability.

The degree of judgment used in measuring the fair value of a financial and 
non-financial asset or liability generally correlates with the level of pricing 
observability. We classify our fair value measurements based on the 
observability and significance of the inputs used in making the measurement, as 
provided below:

Level 1—Quoted prices available in active markets for identical assets or 
liabilities as of the reported date.

Level 2—Observable market data. Inputs include quoted prices for similar 
assets, liabilities (risk adjusted) and market-corroborated inputs, such as 
market comparables, interest rates, yield curves and other items that allow 
value to be determined.

Level 3—Unobservable inputs from our own assumptions about market risk 
developed based on the best information available, subject to cost benefit 
analysis. Inputs may include our own data.

Fair value measurements (Continued)

Fair value measurements are classified in their entirety based on the lowest 
level of input that is significant to their fair value measurement.

Assets and liabilities measured at fair value on a recurring basis

As of December 31, 2016 and 2015, our derivative portfolio consisted of 
interest rate swaps and caps. The fair value of derivatives is based on dealer 
quotes for identical instruments. We have also considered the credit rating and 
risk of the counterparty of the derivative contract based on quantitative and 
qualitative factors. As such, the valuation of these instruments was classified 
as Level 2.


Assets and liabilities measured at fair value on a non-recurring basis

We measure the fair value of certain definite-lived intangible assets and our 
flight equipment on a non-recurring basis, when U.S. GAAP requires the 
application of fair value, including when events or changes in circumstances 
indicate that the carrying amounts of the assets may not be recoverable.

Management develops the assumptions used in the fair value measurements. 
Therefore, the fair value measurements of flight equipment and definite-lived 
intangible assets are classified as Level 3 valuations.

Definite-lived intangible assets

We use the income approach to measure the fair value of definite-lived 
intangible assets, which is based on the present value of estimated future cash 
flows to be generated from the asset.

We impaired certain definite-lived intangible assets to fair value during the 
years ended December 31, 2016 and 2015 as the carrying value of these assets 
was not expected to be recoverable based on the revised cash flow estimates. 
Please refer to Note 26—AeroTurbine restructuring for further details.


Fair value measurements (Continued)

Flight equipment

Inputs to non-recurring fair value measurements categorized as level 3

We use the income approach to measure the fair value of flight equipment, which 
is based on the present value of estimated future cash flows. Key inputs to the 
estimated future cash flows for flight equipment include current contractual 
lease cash flows, projected future non-contractual lease or sale cash flows, 
extended to the end of the aircraft's estimated holding period in its highest 
and best use, and a contractual or estimated disposition value.

The current contractual lease cash flows are based on the in-force lease rates. 
The projected future non-contractual lease cash flows are estimated based on 
the aircraft type, age, and the airframe and engine configuration of the 
aircraft. The projected non-contractual lease cash flows are applied to 
follow-on lease terms, which are estimated based on the age of the aircraft at 
the time of re-lease and are assumed through the estimated holding period of 
the aircraft. The estimated holding period is the period over which future cash 
flows are assumed to be generated. Shorter holding periods can result when a 
potential sale or future part-out of an individual aircraft has been contracted 
for, or is likely. In instances of a potential sale or part-out, the holding 
period is based on the estimated sale or part-out date. The disposition value 
is generally estimated based on aircraft type. In situations where the aircraft 
will be disposed of, the disposition value assumed is based on an estimated 
part-out value or the contracted sale price.

The estimated future cash flows, as described above, are then discounted to 
present value. The discount rate used is based on the aircraft type and 
incorporates assumptions market participants would use regarding the market 
attractiveness of the aircraft type, the likely debt and equity financing 
components, and the required returns of those financing components.

During the year ended December 31, 2016, we recognized impairment charges of 
$81.6 million on 35 aircraft. The impairment charges primarily related to lease 
terminations and amendments of lease agreements for 25 aircraft. These 
impairments were more than offset by lease revenue of $95.9 million that we 
recognized when we retained maintenance related balances or received EOL 
compensation upon lease termination or amendment. In addition, we recognized 
impairment charges for ten aircraft that were part of sale transactions and 
were classified as flight equipment held for sale.

Fair value measurements (Continued)

Sensitivity to changes in unobservable inputs

When estimating the fair value measurement of flight equipment, we consider the 
effect of a change in a particular assumption independently of changes in any 
other assumptions. In practice, simultaneous changes in assumptions may not 
always have a linear effect on inputs.

The significant unobservable inputs utilized in the fair value measurement of 
flight equipment are the discount rate, the remaining estimated holding period 
and the non-contractual cash flows. The discount rate is affected by movements 
in the aircraft funding markets, including fluctuations in required rates of 
return in debt and equity, and loan to value ratios. The remaining estimated 
holding period and non-contractual cash flows represent management's estimate 
of the remaining service period of an aircraft and the estimated 
non-contractual cash flows over the remaining life of the aircraft. An increase 
in the discount rate would decrease the fair value measurement of the aircraft, 
while an increase in the remaining estimated holding period or the estimated 
non-contractual cash flows would increase the fair value measurement of the 
aircraft.

Fair value disclosures of financial instruments

The fair value of restricted cash and cash and cash equivalents approximates 
their carrying value because of their short-term nature (Level 1). The fair 
value of notes receivables approximates its carrying value (Level 2). The fair 
value of our long-term unsecured debt is estimated using quoted market prices 
for similar or identical instruments, depending on the frequency and volume of 
activity in the market. The fair value of our long-term secured debt is 
estimated using a discounted cash flow analysis based on current market 
interest rates and spreads for debt with similar characteristics (Level 2). 
Derivatives are recognized in our Consolidated Balance Sheets at their fair 
value. The fair value of derivatives is based on dealer quotes for identical 
instruments. We have also considered the credit rating and risk of the 
counterparties of the derivative contracts based on quantitative and 
qualitative factors (Level 2). The fair value of guarantees is determined by 
reference to the fair market value or future lease cash flows of the underlying 
aircraft and the guaranteed amount (Level 3).

AerCap Aviation Notes

In May 2012, AerCap Aviation Solutions B.V. ("AerCap Aviation Solutions"), a 
100%-owned finance subsidiary of AerCap Holdings N.V. (the "Parent Guarantor"), 
issued $300.0 million of 6.375% senior unsecured notes due 2017 (the "AerCap 
Aviation Notes"). The AerCap Aviation Notes are fully and unconditionally 
guaranteed by the Parent Guarantor.

In November 2012, we entered into a $285.0 million unsecured revolving credit 
facility which was guaranteed by AerCap Aviation Solutions and AerCap Ireland. 
The guarantee by AerCap Ireland under this facility triggered a springing 
guarantee under the AerCap Aviation Notes indenture, as a result of which 
AerCap Ireland also fully and unconditionally guarantees the AerCap Aviation 
Notes.

Subsequent events In January 2017, AICDC and AerCap Trust co-issued $600.0 
million aggregate principal amount of 3.50% senior unsecured notes due 2022, 
which are jointly and severally and fully and unconditionally guaranteed by the 
Parent Guarantor and the Subsidiary Guarantors. The proceeds from the offering 
were used for general corporate purposes.

In February 2017, our Board of Directors approved a new share repurchase 
program authorizing total repurchases of up to $350 million of AerCap ordinary 
shares through June 30, 2017. Repurchases under the program may be made through 
open market purchases or privately negotiated transactions in accordance with 
applicable U.S. federal securities laws. The timing of repurchases and the 
exact number of common shares to be purchased will be determined by the 
Company's management, in its discretion, and will depend upon market conditions 
and other factors. The program will be funded using the Company's cash on hand 
and cash generated from operations. The program may be suspended or 
discontinued at any time.