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UNITED STATES

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

For the fiscal year ended December 31, 2003

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

For the transition period from _______________ to

INTERNATIONAL LEASE FINANCE CORPORATION

Registrant’s telephone number, including area code: (310) 788-1999

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x  NO o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). YES o  NO x

      As of June 30, 2003 and March 9, 2004, there were 42,198,119 shares of Common Stock, no par value, outstanding, all of which were held by affiliates.

      Registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this form with the reduced disclosure format.

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INTERNATIONAL LEASE FINANCE CORPORATION

2003 FORM 10-K ANNUAL REPORT

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PART I

General

      International Lease Finance Corporation (the “Company”) is primarily engaged in the acquisition of new commercial jet aircraft and the leasing of those aircraft to airlines throughout the world. In addition to its leasing activity, the Company regularly sells aircraft from its leased aircraft fleet to third party lessors and airlines. In some cases the Company provides fleet management services to companies with aircraft portfolios for a management fee. The Company also remarkets and sells aircraft owned by others for a fee. The Company, in terms of the number and value of transactions concluded, is a major owner-lessor of commercial jet aircraft.

      As of December 31, 2003, the Company’s lease portfolio consisted of 611 owned jet aircraft, and nine aircraft classified as finance leases. Additionally, the Company provided fleet management services for 69 jet aircraft. See “Item 2. Properties — Flight Equipment.” At December 31, 2003, the Company had committed to purchase 463 new and used aircraft deliverable through 2010 at an estimated aggregate purchase price of $26.2 billion, of which the Company currently anticipates taking delivery of 102 in 2004 with an estimated aggregate purchase price of $5.0 billion. It also had options to purchase an additional 11 new aircraft deliverable through 2008 at an estimated aggregate purchase price of $704.8 million. See “Item 2. Properties — Commitments.”

      The Company maintains the mix of flight equipment to meet its customers’ needs and to minimize the time that its aircraft are not leased to customers by purchasing those models of new and used aircraft which it believes will have the greatest airline demand and operational longevity.

      The Company typically finances the purchase of aircraft with borrowed funds and internally generated cash flow. The Company accesses the capital markets for such funds at times and on terms and conditions it considers appropriate. The Company may, but does not usually, engage in financing transactions for specific aircraft. The Company relies significantly on short-and medium-term financing, and thereby attempts to more closely match the lease terms of the financed aircraft. To date, the Company has been able to purchase aircraft on terms which have permitted it to lease its aircraft portfolio at a profit and has been able to obtain the necessary funding from the capital markets.

      The Company’s aircraft are usually leased on terms under which the Company does not fully recover the acquisition cost of such aircraft. Therefore, at the termination of a lease, the Company bears the risk of selling or re-leasing the aircraft on terms which will cover its remaining cost.

      The airline industry is cyclical, economically sensitive and highly competitive. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company’s continued success is partly dependent on management’s ability in the future to develop customer relationships for leasing, sales, remarketing and management services with those airlines and other customers best able to maintain their economic viability and survive in the competitive environment in which they operate.

      The Company is incorporated in the State of California and its principal executive offices are located at 10250 Constellation Blvd., Suite 3400, Los Angeles, California 90067. The Company’s telephone number, telecopier number and website address are (310) 788-1999, (310) 788-1990, and www.ilfc.com, respectively. The Company makes available its SEC EDGAR filings, free of charge, on its website or by written request to the Company.

      The Company is an indirect wholly owned subsidiary of American International Group, Inc. (“AIG”). AIG is a holding company which through its subsidiaries is engaged in a broad range of insurance and insurance-related activities in the United States and abroad. AIG’s primary activities include both general and life insurance operations. Other significant activities include financial services and retirement savings and asset management. The common stock of AIG is listed on, among others, the New York Stock Exchange.

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Aircraft Leasing

      The Company leases most of its aircraft under operating leases. The Company does not fully recover its cost of the aircraft over the term of the initial lease and retains the benefit as well as assumes the risk of the residual value of the aircraft. In accordance with generally accepted accounting principles, rentals are reported ratably as revenue over the lease term as they are earned. The aircraft under operating leases are included as “Flight equipment” on the Company’s Consolidated Balance Sheets and depreciation is charged to income over the estimated useful lives of the aircraft. The Company on occasion enters into finance and sales-type leases where the full cost of the aircraft is substantially recovered over the term of the lease. With respect to these leases, the Company records the lease payments received as a reduction in the net investment in the finance lease and amortizes the interest income using a constant interest rate. The aircraft under finance and sales-type leases are recorded on the Company’s Consolidated Balance Sheets in “Net investment in finance leases”. At December 31, 2003, the Company accounted for 611 aircraft as operating leases and nine aircraft as finance leases.

      The initial term of the Company’s current leases range in length from one year to 15 years. See “Item 2. Properties — Flight Equipment” for information regarding scheduled lease terminations. The Company attempts to maintain a mix of short- and medium-term leases to balance the benefits and risks associated with different lease terms and changing market conditions. Varying lease terms mitigate the effects of changes in prevailing market conditions at the time aircraft become eligible for re-lease or are sold and the uncertainty associated with the estimated residual value of the aircraft at the end of the lease term.

      All leases are on a “net” basis with the lessee responsible for all operating expenses, which customarily include fuel, crews, airport and navigation charges, taxes, licenses, registration and insurance. In addition, normal maintenance and repairs, airframe and engine overhauls, and compliance with return conditions of flight equipment on lease are provided by and paid for by the lessee. The Company may, in connection with the lease of an aircraft, agree to contribute to the cost of certain major overhauls depending on the condition of the aircraft at delivery. Under the provisions of many leases, for certain airframe and engine overhauls, the lessee is reimbursed by the Company for costs incurred up to but not exceeding related hourly rentals paid to the Company by the lessee. Such rentals are included in the caption “Rental of flight equipment” in the Company’s Consolidated Statements of Income. The Company provides a charge to operations for such reimbursements based on the estimated reimbursements during the life of the lease, which amount is included in “Provision for overhauls” in the Company’s Consolidated Statements of Income.

      The lessee is responsible for compliance with all applicable laws and regulations with respect to the aircraft. The Company requires its lessees to comply with the standards of either the United States Federal Aviation Administration (the “FAA”) or its foreign equivalent. The Company makes periodic inspections of the condition of its leased aircraft. Generally, the Company requires a deposit which is security for the condition of the aircraft upon return to the Company, the rental payments by the lessee and the performance of other obligations by the lessee under the lease. In addition, the leases contain extensive provisions regarding the remedies and rights of the Company in the event of a default by the lessee and specific provisions regarding the condition of the aircraft upon return of the aircraft to the Company. The lessee is required to continue to make lease payments under all circumstances, including periods during which the aircraft is not in operation due to maintenance or grounding.

      Many foreign countries have currency and exchange laws regulating the international transfer of currencies. The Company attempts to minimize its currency and exchange risks by negotiating most of its aircraft leases and all of its sales transactions in U.S. Dollars, and all guarantees obtained to support various lease agreements are denominated for payment in the same currency as the lease. The Company requires, as a condition to any foreign transaction, that the lessee or purchaser in a foreign country obtain the necessary approvals of the appropriate government agency, finance ministry or central bank for the remittance of all funds contractually owed to the Company in U.S. Dollars. Some of the Company’s leases are negotiated in Euros to meet the needs of a growing number of airlines. As the Euro to U.S. Dollar exchange rate fluctuates, airlines’ interest in entering into Euro denominated lease agreements will change. Once an airline and the Company agree to the rental payment currency, the applicable form of currency remains for the term of the

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      The Company obtains and reviews relevant business materials from all prospective lessees and purchasers before entering into a lease or extending credit. Under certain circumstances, the Company may require the lessee to obtain guarantees or other financial support from an acceptable financial institution or other third parties.

      During the life of the lease, situations have arisen whereby the Company has restructured leases with both foreign and domestic lessees. Such restructurings have involved the voluntary termination of leases prior to lease expiration, the replacement of leased aircraft with smaller, less expensive leased aircraft, the arrangement of subleases from the primary lessee to another airline and the rescheduling of lease payments and extention of the lease terms. In many situations where the Company repossesses an aircraft, it exports the aircraft from the lessee’s jurisdiction. In the majority of these situations, the Company has obtained the lessee’s cooperation and the return and export of the aircraft was immediate. In some situations, however, the lessees have not fully cooperated in returning aircraft, in which case the Company has had to take legal action in the appropriate jurisdictions which has delayed the ultimate return and export of the aircraft. In addition, in connection with the repossession of an aircraft, the Company may be required to pay outstanding mechanic’s, airport and other operating liens on the repossessed aircraft, which could include charges relating to other aircraft not owned by the Company but operated by the lessee.

Flight Equipment Marketing

      The Company may dispose of its leased aircraft at or before the expiration of their leases. The buyers include the aircraft’s lessee, another aircraft operator or a third party lessor. From time to time, the Company engages in transactions to buy aircraft for resale. In other cases, the Company assists its customers in acquiring or disposing of aircraft through consulting services and procurement of financing from third parties. In 2003 and early 2004, the Company sold aircraft into securitization trusts which are primarily funded and owned by other subsidiaries of the Company’s parent and are consolidated by the Company’s parent, AIG. The transactions were structured as securitizations. See “Management’s Discussion and Analysis and Results of Operations — Related Parties” for more information on these transactions. Any gain or loss on disposition of leased aircraft is included in the caption “Flight equipment marketing” in the Company’s Consolidated Statements of Income.

      From time to time, the Company is engaged as an agent for airlines and various financial institutions in the disposition of their surplus aircraft on a fee basis. The Company generally acts as an agent under an exclusive remarketing contract whereby it agrees to sell aircraft on a commercially reasonable basis within a fixed time period. These activities generally augment the Company’s primary activities and also serve to promote relationships with prospective sellers and buyers of aircraft. The Company may, from time to time, participate with banks, other financial institutions and airlines to assist in financing aircraft purchased by others and by providing asset guarantees, put options, or loan guarantees collateralized by aircraft.

      The Company plans to continue its remarketing services on a selective basis involving specific situations where these activities will not conflict nor compete with, but rather will complement its leasing and selling activities.

Fleet Management Services

      The Company provides fleet management services to third party operating lessors who are unable or unwilling to perform this service as part of their own operation. The Company typically provides the same services that it performs for its own fleet. Specifically, the Company provides leasing, re-leasing and sales services on behalf of the lessor for which the Company receives a fee. In connection with the sales of aircraft to trusts discussed above, the Company was retained to provide fleet management services for the aircraft sold for which it receives fees from the trust. The fees for fleet management services are included in “Other income” in the Company’s Consolidated Statements of Income.

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Financing/Source of Funds

      The Company purchases new aircraft directly from manufacturers and used aircraft from airlines and other owners. The Company finances the purchase price of flight equipment from internally generated funds, secured and unsecured commercial bank financings and the issuance of commercial paper, public and private debt and preferred stock. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Customers

      At December 31, 2003, the Company leased aircraft to customers in the following regions:

Customers by Region

      No single customer accounted for more than 10% of total revenues.

      Revenues include rentals of flight equipment to foreign airlines of $2,625,315,000 (2003), $2,317,619,000 (2002), and $2,173,778,000 (2001) comprising 89.3%, 86.5% and 87.9%, respectively, of total rentals of flight equipment. See Note J of Notes to Consolidated Financial Statements.

      The following table sets forth the dollar amount and percentage of total rental revenues attributable to the indicated geographic areas based on each airline’s principal place of business for the years indicated:

      The following table sets forth revenue attributable to individual countries representing at least 10% of total revenue based on each airline’s principal place of business for the years indicated:

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Competition

      The leasing, remarketing and sale of jet aircraft is highly competitive. The Company faces competition from aircraft manufacturers, banks, 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, extension options, termination options, purchase options, aircraft condition and the availability of the types of aircraft to meet the needs of the customer. The Company believes it is a strong competitor in all of these areas. However, overcapacity in the current market place has increased competition from other entities leasing aircraft which has caused downward pressure on lease rates and lease revenue and, possibly, aircraft values. As the overcapacity is absorbed in the market place, the Company expects lease rates to rebound.

Government Regulation

      The U.S. Department of State (“DOS”) and the U.S. Department of Transportation (“DOT”) including the FAA, an agency of the DOT, exercise regulatory authority over air transportation in the United States.

      The DOS and DOT, in general, have jurisdiction over the economic regulation of air transportation, including the negotiation with foreign governments of the rights of U.S. carriers to fly to other countries and the rights of foreign carriers to fly to and within the United States. The Company is not directly subject to the regulatory jurisdiction of the DOS and DOT or their counterpart organizations in foreign countries related to the operation of aircraft for public transportation of passengers and property.

      The Company’s relationship with the FAA consists of the registration with the FAA of those aircraft which are leased by the Company to U.S. carriers and to a number of foreign carriers where, by agreement, the aircraft are to be registered in the United States. When an aircraft is not on lease, the Company may obtain from the FAA, or its designated representatives, a U.S. Certificate of Airworthiness or a ferry flight permit for the particular aircraft.

      The Company’s involvement with the civil aviation authorities of foreign jurisdictions consists largely of requests to register and deregister the Company’s aircraft on those countries’ registries.

      The U.S. Department of Commerce (“DOC”) exercises regulatory authority over exports. The Company is subject to the regulatory authority of the DOS and DOC as it relates to the export of aircraft for lease and sale to foreign entities and the export of parts to be installed on the Company’s aircraft. These Departments have, in some cases, required the Company to obtain export licenses for parts exported to foreign countries.

      The Patriot Act of 2001 gave the Secretary of State and the Secretary of Treasury the authority to (a) designate individuals and organizations as terrorists and terrorist supporters and to freeze their U.S. assets and (b) prohibit financial transactions with U.S. persons, including U.S. individuals, entities and charitable organizations. The Company must comply with the provisions of this Act and closely monitor its activities with foreign entities.

      A bureau of the U.S. Department of the Treasury, the U.S. Customs Service, enforces regulations related to the import of the Company’s aircraft into the United States for maintenance or lease and the importation of parts for installation on the Company’s aircraft. The Company monitors its imports for compliance with U.S. Customs regulations.

Employees

      The Company is in a capital intensive rather than a labor intensive business. As of December 31, 2003, the Company had 129 full-time employees, which it considered adequate for its business operations. The Company will expand its management and administrative personnel, as necessary, to meet future growth. None of the Company’s employees is covered by a collective bargaining agreement and the Company believes that it has maintained excellent employee relations. The Company provides certain employee benefits

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Insurance

      The Company requires its lessees to carry those types of insurance which are customary in the air transportation industry, including comprehensive liability insurance and aircraft hull insurance. In general, the Company is an additional insured on liability policies carried by the lessees. The Company obtains certificates of insurance from the lessees’ insurance brokers. All certificates of insurance contain a breach of warranty endorsement so that the interests of the Company are not prejudiced by any act or omission of the operator-lessee.

      Insurance premiums are paid by the lessee, with coverage acknowledged by the broker or carrier. The territorial coverage is, in each case, suitable for the lessee’s area of operations. The certificates of insurance contain, among other provisions, a “no co-insurance” clause and a provision prohibiting cancellation or material change without at least 30 days advance written notice to the insurance broker, who is obligated to give prompt notice to the Company. Hull/war insurance policies customarily provide 7 days advance written notice for cancellation and may be subject to lesser notice under certain market conditions. Furthermore, the insurance is primary and not contributory and all insurance carriers are required to waive rights of subrogation against the Company.

      The stipulated loss value schedule under aircraft hull insurance policies is on an agreed value basis acceptable to the Company, which usually exceeds the book value of the aircraft. In cases where the Company believes that the agreed value stated in the lease is not sufficient, the Company purchases additional Total Loss Only coverage for the deficiency. Aircraft hull policies contain standard clauses covering aircraft engines. All deductibles are required to be paid by the lessee. Furthermore, the aircraft hull policies contain full war risk endorsements, including, but not limited to, confiscation (where available), seizure, hijacking and similar forms of retention or terrorist acts. Lease agreements generally require liability limits to be in U.S. Dollars, which are shown on the certificate of insurance.

      The comprehensive liability insurance listed on certificates of insurance include provisions for bodily injury, property damage, passenger liability, cargo liability and such other provisions reasonably necessary in commercial passenger and cargo airline operations. Such certificates of insurance list combined comprehensive single liability limits of not less than $250 million. As a result of the terrorist attacks on September 11, 2001, the insurance market unilaterally imposed a sublimit on each operator’s policy for third party war risk liability in the amount of $50 million. The Company requires each lessee to purchase higher limits of third party war risk liability or obtain an indemnity from their government. Additionally, all aircraft in the Company’s fleet are covered by contingent liability insurance and contingent hull insurance.

      The Company also maintains other insurance covering the specific needs of its business operations. Insurance policies are generally placed or reinsured through AIG subsidiaries, with costs allocated back to the Company. The Company believes that its insurance is adequate both as to coverage and amount.

Forward-Looking Statements

      This annual report on Form 10-K contains or incorporates statements that constitute forward-looking statements. Those statements appear in a number of places in this Form 10-K and include statements regarding, among other matters, the state of the airline industry, the Company’s access to the capital markets, the Company’s ability to restructure leases and repossess aircraft, the structure of the Company’s leases, regulatory matters pertaining to compliance with governmental regulations and other factors affecting the Company’s financial condition or results of operations. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and “should” and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company or industry results to vary materially from the Company’s future results, performance or achievements, or those of the industry, expressed or implied in such

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Item 2. Properties

Flight Equipment

      The Company’s management frequently reviews opportunities to acquire suitable commercial jet aircraft based not only on market demand and customer airline requirements, but also on the Company’s fleet portfolio mix criteria and leasing strategies. Before committing to purchase specific aircraft, the Company takes into consideration factors such as estimates of future values, potential for remarketing, trends in supply and demand for the particular type, make and model of aircraft and engines, and anticipated obsolescence. As a result, certain types and vintages of aircraft do not necessarily fit the profile for inclusion in the Company’s portfolio of aircraft owned and used in its leasing operations.

      At December 31, 2003, all of the Company’s fleet was Stage III compliant, meaning that the aircraft hold or are capable of holding a noise certificate issued under Chapter 3 of Volume 1, Part II of Annex 16 of the Chicago Convention or have been shown to comply with the Stage III noise levels set out in Section 36.5 of Appendix C of Part 36 of the Federal Aviation Regulations of the United States. At December 31, 2003, the average age of the Company’s aircraft was 5.22 years.

      The following table shows the scheduled lease terminations (for the minimum noncancelable period) by aircraft type for the Company’s operating lease portfolio at December 31, 2003:

      This schedule excludes five aircraft which were not subject to lease at December 31, 2003, all of which were subsequently leased. As of March 5, 2004, leases covering 16 of the 27 aircraft with lease expiration dates in 2004 had been extended or leased to other customers.

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Commitments

      At December 31, 2003, the Company had committed to purchase the following new aircraft at an estimated aggregate purchase price (including adjustment for anticipated inflation) of approximately $25.7 billion for delivery as shown:

(a)	The Company has the right to designate the size of the aircraft within the specific model type at specific dates prior to contractual delivery.
(b)	Under the terms of the contract with Airbus, the Company intends to exercise its right to redesignate these aircraft to other aircraft types.

      At December 31, 2003, the Company had committed to purchase the following 25 used aircraft at an estimated aggregate purchase price of approximately $500.0 million:

      At December 31, 2003, the Company had options to purchase the following new aircraft at an estimated aggregate purchase price (including adjustment for anticipated inflation) of approximately $704.8 million for delivery as shown:

(a)	The Company has the right to designate the size of the aircraft within the specific model type at specific dates prior to contractual delivery.

      Management anticipates that a significant portion of such aggregate purchase price will be funded by incurring additional debt. The exact amount of the indebtedness to be incurred will depend upon the actual purchase price of the aircraft, which can vary due to a number of factors, including inflation, and the

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      The new aircraft listed above are being purchased pursuant to master agreements with each of The Boeing Company (“Boeing”) and AVSA, S.A.R.L., the sales subsidiary of Airbus Industrie (“Airbus”). These agreements establish the pricing formulas (which include certain price adjustments based upon inflation and other factors) and various other terms with respect to the purchase of aircraft. Under certain circumstances, the Company has the right to alter the mix of aircraft type ultimately acquired. As of December 31, 2003, the Company had made non-refundable deposits (exclusive of capitalized interest) with respect to the aircraft which the Company has committed to purchase of approximately $600.0 million and $520.0 million with Boeing and Airbus, respectively.

      As of March 5, 2004, the Company had entered into contracts for the lease of new aircraft deliverable through 2010 as follows: