What Willis Lease Finance Corp. told the SEC could break it.

Willis Lease has some lessee concentration: one customer accounted for approximately 13% of total lease rent revenue in 2025 and 15% of total receivables (two customers were 11% each in 2024); although the company believes the loss of any one customer would not have a significant long-term effect because its engines are easily transferable among lessees in many countries, non-payment by, or loss of, a top lessee could still create near-term collection problems and revenue volatility.

“One customer accounted for approximately 13% of total lease rent revenue during the year ended December 31, 2025.”

Willis Lease is exposed to foreign-lessee currency risk: 69% of its total lease rent revenue in both 2025 and 2024 came from non-U.S.-domiciled lessees, and although substantially all leases require payment in U.S. dollars, a devaluation of those lessees' local currencies against the dollar could make it harder for them to pay, raising default/collection risk; the company also monitors expropriation risk and the political/legal climate of lessees' countries to gauge its ability to repossess engines.

“During the years ended December 31, 2025 and 2024, 69% and 69% of our total lease rent revenues came from non-U.S. domiciled lessees, respectively. Substantially all of our leases require payment in U.S. dollars. If these lessees' currency devalues against the U.S. dollar, the lessees could potentially encounter difficulty in making their lease payments.”

Willis Lease is a capital-intensive, highly leveraged lessor: at December 31, 2025 it had $2,700.3 million of debt obligations (interest rates from ~3.1% to 8.0%), substantially all of its assets are pledged to secure that debt, and it funds engine purchases by borrowing up to ~85% of an engine's price and via asset-backed note offerings (e.g., WEST VIII's $596M and WEST IX); covenant compliance, refinancing risk and rising rates therefore weigh heavily on its financial flexibility and ability to fund portfolio growth.

“At December 31, 2025, debt obligations totaled $2,700.3 million, net of unamortized debt issuance costs and note discounts, payable with interest rates varying between approximately 3.1% and 8.0%. Substantially all of our assets are pledged to secure our obligations to creditors.”

Willis Lease's lessees are heavily regulated (FAA in the U.S. and EASA and equivalent agencies abroad regulate aircraft/engine airworthiness, maintenance and operation, which indirectly affects demand and engine values), and the engines/parts it purchases, leases and sells must meet certification requirements; it also faces OFAC sanctions and export-control risk that its globally transferable engines could, without its knowledge, end up with OFAC-designated persons or in sanctioned countries, where compliance failures could bring penalties and reputational harm.

“It is possible that, without our knowledge, engines or other equipment that we export end up in the possession of individuals or entities that have been designated by OFAC or are located in a country subject to sanctions.”