Code of Ethics for the Chief Executive and Senior Financial Officers, which applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer and Controller, is available in print, free of charge, to any shareholder upon request to Investor Relations, Aircastle Limited, c/o Aircastle Advisor LLC, 300 First Stamford Place, 5th Floor, Stamford, Connecticut 06902.
The information on the Company's website is not part of, or incorporated by reference, into this report, or any other report we file with, or furnish to, the SEC.

OVERVIEW
We acquire, lease, and sell high-utility commercial jet aircraft. High-utility aircraft are generally modern and operationally efficient jets with many operators and have long useful lives. As of September 30, 2012, our portfolio consisted of 157 aircraft leased to 68 lessees located in 36 countries. Our aircraft fleet is managed by an experienced team based in the United States, Ireland and Singapore. Typically, our aircraft are subject to net leases whereby the lessee is generally responsible for maintaining the aircraft and paying operational, maintenance and insurance costs, although in a majority of cases, we are obligated to pay a portion of specified maintenance or modification costs. From time to time, we also make investments in other aviation assets, including debt investments secured by commercial jet aircraft. Our revenues and income (loss) from continuing operations for the three and nine months ended September 30, 2012 were $172.9 million and $(45.8) million, $510.0 million and $3.1 million, respectively.
The commercial jet aircraft market has grown 41% over the past 10 years. Increasing global economic activity together with a proliferation of air travel in emerging economies has driven the long-term growth in the commercial jet aircraft market. At the same time, the share of the world's commercial jet aircraft owned by leasing companies has expanded to 40% as compared to 25% ten years ago. However, aircraft trading volumes during 2012 have been low and the availability of equity and debt capital remains somewhat limited for the type of aircraft investments we are currently pursuing.
In spite of these near-term challenges, we plan to grow our business and profits over the long-term by continuing to employ the following elements of our fundamental business strategy:

•        Investing in additional commercial jet aircraft and other aviation
         assets when attractively priced opportunities and cost effective
         financing are available. We believe the large and growing aircraft
         market, together with ongoing fleet replacements, will provide
         significant acquisition opportunities. We regularly evaluate potential
         aircraft acquisitions and expect to continue our investment program
         through additional passenger and cargo aircraft purchases when
         attractively priced opportunities and cost effective financing are
         available.


•        Maintaining efficient access to financing from multiple sources. We have
         financed our aircraft acquisitions using various long-term debt
         structures obtained through several different markets to obtain cost
         effective financing. In this regard, we believe having corporate credit
         ratings from Standard & Poor's and Moody's enables us to access a
         broader pool of capital than many of our peers. Indeed, we believe the
         contraction in traditional aviation bank debt lending capacity upon
         which many of our peers and airline customers depend will enhance our
         competitiveness and ability to source attractive investment
         opportunities. This, in turn, will allow us to grow our business and
         profits.


•        Leveraging our efficient operating platform and strong operating track
         record. We believe our team's capabilities in the global aircraft
         leasing market place us in a favorable position to explore new
         income-generating activities and we intend to continue to focus our
         efforts in areas where we believe we have competitive advantages and on
         transactions that offer attractive risk/return profiles after taking
         into consideration available financing options.


•        Reinvesting a portion of the cash flows generated by our business in
         additional aviation assets and/or our own debt and equity securities.
         Aircraft have finite useful lives, but typically provide reliable cash
         flows. Our strategy is to reinvest a portion of our cash flows from
         operations and asset sales in our business to grow our asset base and
         earnings bases.


•        Selling assets when attractive opportunities arise and for portfolio
         management purposes. We pursue asset sales as opportunities over the
         course of the business cycle with the aim of realizing profits and
         reinvesting proceeds where more accretive investments are available. We
         also use asset sales for portfolio management purposes such as reducing
         lessee specific concentrations and lowering residual value exposures to
         certain aircraft types.

For the first nine months of 2012, air traffic data demonstrated improvement in the passenger markets while the air cargo markets shrank. According to the International Air Transport Association, global passenger traffic increased by 5.7% while air cargo traffic, measured in freight ton kilometers, decreased 1.9% as compared to the same period in 2011. There are significant regional variations and airlines operating primarily in areas with slower economic growth, such as Europe, or with political instability, such as North Africa and the Middle East, may see more modest growth. While both passenger and air cargo growth rates are vulnerable to slowing economic growth and uncertain business conditions in the near term, over the long-term, we believe the market will be driven, to a large extent, by expansion of emerging market economies and rising levels of per capita air travel in those markets.
We intend to pay quarterly dividends to our shareholders based on the company's sustainable earnings levels; however, our ability to pay quarterly dividends will depend upon many factors, including those as previously disclosed in Aircastle's 2011 Annual Report on Form 10-K. On February 17, 2012, our board of directors declared a regular quarterly dividend of $0.15 per common share, or an aggregate of $10.9 million, for the three months ended March 31, 2012, which was paid on March 15, 2012 to holders of record on February 29, 2012. On May 2, 2012, our board of directors declared a regular quarterly dividend of $0.15 per common share, or an aggregate of $10.8 million, for the three months ended June 30, 2012, which was paid on June 15, 2012 to holders of record on May 31, 2012. On August 1, 2012, our board of directors declared a regular quarterly dividend of $0.15 per common share, or an aggregate of $10.5 million, for the three months ended September 30, 2012, which was paid on September 15, 2012 to holders of record on August 31, 2012. This dividend may not be indicative of the amount of any future dividends. On November 5, 2012, our board of directors declared a regular quarterly dividend of $0.165 per common share for the three months ended December 31, 2012, which will be paid on December 14, 2012 to holders of record on November 30, 2012.

Revenues
Our revenues are comprised primarily of operating lease rentals on flight equipment held for lease, revenue from retained maintenance payments related to lease expirations, lease termination payments, lease incentive amortization and interest recognized from finance leases.
Typically, our aircraft are subject to net operating leases whereby the lessee pays lease rentals and is generally responsible for maintaining the aircraft and paying operational, maintenance and insurance costs, although in a majority of cases we are obligated to pay a portion of specified maintenance or modification costs. Our aircraft lease agreements generally provide for the periodic payment of a fixed amount of rent over the life of the lease and the amount of the contracted rent will depend upon the type, age, specification and condition of the aircraft and market conditions at the time the lease is committed. The amount of rent we receive will depend on a number of factors, including the credit-worthiness of our lessees and the occurrence of delinquencies, restructurings and defaults. Our lease rental revenues are also affected by the extent to which aircraft are off-lease and our ability to remarket aircraft that are nearing the end of their leases in order to minimize their off-lease time. Our success in re-leasing aircraft is affected by market conditions relating to our aircraft and by general industry conditions and trends. An increase in the percentage of off-lease aircraft or a reduction in lease rates upon remarketing would negatively impact our revenues.
Under an operating lease, the lessee will be responsible for performing maintenance on the relevant aircraft and will typically be required to make payments to us for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft. These maintenance payments are based on hours or cycles of utilization or on calendar time, depending upon the component, and would be made either monthly in arrears or at the end of the lease term. For maintenance payments made monthly in arrears during a lease term, we will typically be required to reimburse all or a portion of these payments to the lessee upon their completion of the relevant heavy maintenance, overhaul or parts replacement. We record maintenance payments paid by the lessee during a lease as accrued maintenance liabilities in recognition of our obligation in the lease to refund such payments, and therefore we do not recognize maintenance revenue during the lease. Maintenance revenue recognition would occur at the end of a lease, when we are able to determine the amount, if any, by which reserve payments received exceed the amount we are required under the lease to reimburse to the lessee for heavy maintenance, overhaul or parts replacement. The amount of maintenance revenue we recognize in any reporting period is inherently volatile and is dependent upon a number of factors, including the timing of lease expiries, including scheduled and unscheduled expiries, the timing of maintenance events and the utilization of the aircraft by the lessee.
Many of our leases contain provisions which may require us to pay a portion of the lessee's costs for heavy maintenance, overhaul or replacement of certain high-value components. We account for these expected payments as lease incentives, which are amortized as a reduction of revenue over the life of the lease. We estimate the amount of our portion for such costs, typically for the first major maintenance event for the airframe, engines, landing gear and auxiliary power units,

expected to be paid to the lessee based on assumed utilization of the related aircraft by the lessee, the anticipated cost of the maintenance event and the estimated amounts the lessee is responsible to pay.
This estimated lease incentive is not recognized as a lease incentive liability at the inception of the lease. We recognize the lease incentive as a reduction of lease revenue on a straight-line basis over the life of the lease, with the offset being recorded as a lease incentive liability which is included in maintenance payments on the balance sheet. The payment to the lessee for the lease incentive liability is first recorded against the lease incentive liability and any excess above the lease incentive liability is recorded as a prepaid lease incentive asset which is included in other assets on the balance sheet and continues to amortize over the remaining life of the lease.

2012 Lease Expirations and Lease Placements At the beginning of 2012, we had 17 aircraft with scheduled lease expirations in 2012 and we leased, extended or sold, or committed to lease, extend or sell, 14 of these aircraft, and we have a letter of intent to lease one aircraft, leaving us with two such aircraft that we are marketing for lease or sale in 2012. We are also marketing two Boeing Model 747-400 converted freighter aircraft for lease or sale in 2012. One of these aircraft was returned to us in October 2012 by Southern Air Inc. ("Southern"), which filed for bankruptcy protection in the third quarter of 2012. Southern continues to operate a second Boeing Model 747-400 converted freighter, and we expect this aircraft will be returned to us in the fourth quarter of 2012.
The four aircraft we are currently marketing for lease or sale in 2012 represented 2.5% of our total net book value of flight equipment held for lease (includes net book value of flight equipment held for lease and net investment in finance leases) at September 30, 2012. In addition:

•            We have a commitment to lease one Boeing Model 747-400 converted
             freighter aircraft which we expect to return to us from another
             customer under a mutually agreed early termination arrangement in
             the fourth quarter of 2012.


•            We entered into lease extension agreements for two Boeing Model
             737-700 aircraft which were returned to us earlier in 2012 and
             placed on short-term leases.


•            We agreed to an early termination of the lease for one Airbus Model
             A330-200 aircraft and have a commitment to lease the aircraft to
             another customer.  We expect this transition to occur in the fourth
             quarter of 2012.  We collected an early termination fee of $6.9
             million under that agreement, $3.9 million of which we recorded as
             other revenue in the third quarter of 2012 and the remainder of
             which we expect to be recorded as other revenue in the fourth
             quarter of 2012.


•            We agreed to an early termination of the leases for two 1991-vintage
             Airbus Model A320-200 aircraft in the fourth quarter of 2012, and we
             expect to sell these aircraft for part-out. We recorded impairment
             charges of $11.3 million and maintenance revenue of $10.2 million in
             the third quarter of 2012 in connection with that agreement.

2013-2016 Lease Expirations and Lease Placements Taking into account lease and sale commitments, we currently have the following number of aircraft with lease expirations scheduled in the period 2013-2016 representing the percentage of our net book value of flight equipment held for lease at September 30, 2012 specified below:
• 2013: 18 aircraft, representing 6%;

• 2014: 33 aircraft, representing 15%;

• 2015: 18 aircraft, representing 7%; and

• 2016: 24 aircraft, representing 12%.

Operating Expenses
Operating expenses are comprised of depreciation of flight equipment held for lease, interest expense, selling, general and administrative expenses, aircraft impairment charges and maintenance and other costs. Because our operating lease terms generally require the lessee to pay for operating, maintenance and insurance costs, our portion of maintenance and other costs relating to aircraft reflected in our statement of income primarily relates to expenses for unscheduled lease terminations.

Income Tax Provision
We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 2035, be applicable to us or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by us in respect of real property owned or leased by us in Bermuda. Consequently, the provision for income taxes recorded relates to income earned by certain subsidiaries of the Company which are located in, or earn income in, jurisdictions that impose income taxes, primarily Ireland and the United States.
All of our aircraft-owning subsidiaries that are recognized as corporations for U.S. tax purposes are non-U.S. corporations. These non-U.S. subsidiaries generally earn income from sources outside the United States and typically are not subject to U.S. federal, state or local income taxes unless they operate within the U.S., in which case they may be subject to federal, state and local income taxes. We also have a U.S. based subsidiary which provides management services to our non-U.S. subsidiaries and is subject to U.S. federal, state and local income taxes. In addition, those subsidiaries that are resident in Ireland are subject to Irish tax.

Acquisitions and Disposals
Thus far in 2012, we invested $563.3 million in the following 18 aircraft acquisitions:
• Two Airbus A330 family aircraft.

• One Airbus Model A320-200.

• Eight Boeing Model 737-800s.

• One Boeing Model 747-400 converted freighter.

• Six Boeing Model 767-300ERs.

We also have commitments to acquire three aircraft during the balance of 2012. During the first nine months of 2012, we sold the following aircraft:
• Two Boeing Model 737 classics.

• One Boeing Model 757-200.

• One Boeing Model 767-300ER aircraft which was subject to an insurance settlement following an incident in late 2011.

In addition, we began the part-out sale of a Boeing Model 747-400 passenger configured aircraft, a process we expect to complete in the fourth quarter of 2012. As mentioned above, we also expect to sell two 1991-vintage Airbus Model A320-200 aircraft for part-out following an agreed early lease termination. During the first nine months of 2012, the aggregate sales price for the aircraft we sold during 2012 was $54.4 million, which resulted in a net gain on the sale of flight equipment of $3.1 million. We repaid debt associated with these aircraft in the amount of $32.6 million.

The following table sets forth certain information with respect to the aircraft owned by us as of September 30, 2012:
AIRCASTLE AIRCRAFT INFORMATION (dollars in millions)

                                                                               Owned
                                                                          Aircraft as  of
                                                                       September 30,  2012(1)
Flight Equipment                                                     $               4,654
Unencumbered Flight Equipment                                                        2,010
Number of Aircraft                                                                     157
Number of Unencumbered Aircraft                                                         70
Number of Lessees                                                                       68
Number of Countries                                                                     36
Weighted Average Age - Passenger (years)(2)                                           11.0
Weighted Average Age - Freighter (years)(2)                                           10.9
Weighted Average Age - Combined (years)(2)                                            11.0
Weighted Average Remaining Passenger Lease Term (years)(3)                             4.5
Weighted Average Remaining Cargo Lease Term (years)(3)                                 5.7
Weighted Average Remaining Combined Lease Term (years)(3)                              4.9
Weighted Average Fleet Utilization during the three months ended
September 30, 2012(4)                                                                   99 %
Weighted Average Fleet Utilization during the nine months ended
September 30, 2012(4)                                                                   99 %
Portfolio Yield for the three months ended September 30, 2012(5)                        14 %
Portfolio Yield for the nine months ended September 30, 2012(5)                         14 %

(1) Calculated using net book value of flight equipment held for lease and net investment in finance leases as of September 30, 2012.

(2) Weighted average age (years) by net book value.

(3) Weighted average remaining lease term (years) by net book value.

(4) Aircraft on-lease days as a percent of total days in period weighted by net book value, excluding aircraft in freighter conversion.

(5) Lease rental revenue for the period as a percent of the average net book value of flight equipment held for lease for the period; quarterly information is annualized.

Our owned aircraft portfolio as of September 30, 2012 is listed in Exhibit 99.1 to this report.

PORTFOLIO DIVERSIFICATION

                                 Owned Aircraft as  of
                                   September 30, 2012
                               Number of            % of Net
                                Aircraft           Book  Value
Aircraft Type
Passenger:
Narrowbody                     93                        37 %
Midbody                        36                        29 %
. . .