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  "documentTitle": "FTAI Aviation, Ltd. (FTAI)",
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  "authorName": "Muddy Waters Research",
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  "presentationDate": "2025-01-15 00:00:00",
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  "notes": "The slide highlights an 'accounting trick' where assets are depreciated even when off-lease, which the author claims is unique to FTAI's business model compared to peers.",
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      "text": "Thus, we believe its peers do not exploit this accounting trick to materially boost EBITDA margins.",
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      "text": "We estimate FTAI's current carrying value per narrowbody engine in the leasing portfolio to be ~$3.2m (vs $10m+ for a like-new engine). FTAI's depreciation policy in Leasing reflects the shorter useful lives of the company's engines. Mere months of off-lease depreciation, which would have no impact on the actual useful life of engine, has the potential to meaningfully impact carrying value. FTAI's assets are depreciable even when off-lease, per a September 2023 FTAI SEC Comment Letter. FTAI's depreciation practice may not differ from that of other leasing companies; however, most leasing peers do not own/operate a large MRO that relies, in large part, on its related leasing segment for raw material. Thus, we believe its peers do not exploit this accounting trick to materially boost EBITDA margins. A peer who does depreciate engines based on usage is ATSG US.",
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      "text": "useful life: 2-6 years",
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      "kind": "quote",
      "text": "\"For both aircraft and engines, depreciation begins when the asset is initially placed into service, which generally coincides with the date when the asset is ready for its intended use. Depreciation continues whether leased or not, until the asset is permanently removed from service.\" — FTAI SEC Comment Letter",
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      "kind": "source-note",
      "text": "1 Link to SEC Comment Letter. 2 ATSG's 2023 10-K: “Assets are typically depreciated on a straight-line basis except for certain engines which are depreciated based on their usage levels during the period.” ATSG is an aircraft leasing and air cargo transportation service company. 3 Per most recent annual report. 4 AAR useful includes \"equipment, furniture, and fixtures, and capitalized software.\"",
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      "text": "Useful Lives of Engines FTAI vs Peers. FTAI: 2-6 years. Willis Lease Finance: 15 years. AAR Corp: 3-10 years. AerCap: 20 years.",
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      "text": "FTAI Benefits from Owning Used Engines with Short Useful Lives that are Depreciated Even When Off-Lease",
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