DEFA14A: Air Lease Corp. Updates Merger Proxy Amid Shareholder Lawsuits

Air Lease Corporation has filed supplemental disclosures to its definitive proxy statement for its proposed merger, addressing shareholder lawsuits alleging misleading information and seeking injunctions.

Summary

• Air Lease Corporation (AL) entered into an Agreement and Plan of Merger on September 1, 2025, to be acquired by Sumisho Air Lease Corporation Designated Activity Company (Parent), a new holding company established by Sumitomo Corporation, SMBC Aviation Capital Limited, Apollo Capital Management, L.P., and Brookfield Asset Management Ltd. (Equity Investors).
• This Current Report on Form 8-K supplements the Definitive Proxy Statement filed on November 4, 2025, and mailed on November 7, 2025, in connection with the special meeting of Class A common stockholders scheduled for December 18, 2025.
• The supplemental disclosures address three shareholder lawsuits and multiple demand letters alleging materially misleading and/or incomplete disclosures in the Definitive Proxy Statement.
• Allegations include issues with the company's financial projections, analyses conducted by J.P. Morgan, discussions about post-transaction employment, and prior representations by the company's legal advisor of Brookfield.
• The company denies the allegations and believes its disclosures comply with all applicable laws but is voluntarily providing supplemental disclosures to moot potential claims, avoid nuisance, expense, and business delays.
• Key amendments include updates to J.P. Morgan's Selected Transactions Analysis and Dividend Discount Analysis, and the Certain Projected Financial Information section, which details the Air Lease Projections (August 29, 2025).
• The merger consideration offered to Class A common stockholders is $65.00 per share.

Sentiment

Score: 5

Explanation: Neutral. While the company faces legal challenges and potential merger delays, it is proactively addressing the issues by providing supplemental disclosures. The underlying financial projections for the standalone entity show positive growth, but the merger's completion remains uncertain due to the lawsuits.

Positives

• The company is proactively providing additional disclosures to shareholders, even while denying the legal merit of the allegations, which may help facilitate the merger process and enhance transparency.
• The Air Lease Projections (August 29, 2025) indicate projected revenue growth from $3,034 million in 2025E to $3,491 million in 2028E.
• Adjusted Return on Average Common Equity (ROACE) is projected to expand from 7.7% in 2025E to 9.4% by 2032E, reaching the midpoint of the company's assumed cost of equity capital range.
• Projections assume an improvement in the interest rate environment and a continuation of robust gain on sale margins, with $1.5 billion in annual aircraft sales at 13% assumed gains.

Negatives

• Multiple shareholder lawsuits have been filed in Delaware and New York, alleging breach of fiduciary duties, negligent misrepresentation, and incomplete disclosures related to the merger.
• The lawsuits seek preliminary injunctions to prevent the stockholder vote or enjoin the merger until supplemental disclosures are made, indicating potential delays and increased legal costs.
• Allegations question the integrity of financial projections and the fairness analyses conducted by J.P. Morgan, potentially undermining shareholder confidence.
• Concerns have been raised about potential conflicts of interest, specifically regarding the company's legal advisor (Skadden) concurrently representing some of the Equity Investors on unrelated matters.

Risks

• One or more closing conditions to the merger, including regulatory approvals, may not be satisfied or waived, or a governmental entity may prohibit, delay, or refuse approval for the merger's consummation.
• The required approval of the Merger Agreement by the holders of the company's Class A common stock may not be obtained.
• The business may suffer as a result of uncertainty surrounding the merger, and there may be challenges with employee retention due to the pending merger.
• The Merger Agreement contains restrictions on the company's ability to incur additional debt, which may negatively impact its liquidity and ability to maintain its investment-grade ratings.
• The merger may involve unexpected costs, liabilities, or delays.
• Legal proceedings have been and may continue to be initiated related to the merger.
• Changes in economic conditions, political conditions, and changes in laws or regulations may occur.
• An event, change, or other circumstance may occur that could give rise to the termination of the Merger Agreement, including circumstances requiring a party to pay the other party a termination fee.
• New risks and uncertainties may emerge from time to time, and it is not possible to predict or assess the impact of every factor that may cause actual results to differ from forward-looking statements.
• The Air Lease Projections do not contemplate any major disruptions in the aviation sector.

Future Outlook

The company's projections assume an improvement in the interest rate environment based on market expectations as of August 2025, and that current market conditions will persist without major disruptions in the aviation sector. Projections reflect contracted rental rates for the existing fleet and placed orderbook, with lease rates on extensions and unplaced orders in line with recent placement levels, indicating marked market improvement since the COVID-19 pandemic. The company anticipates robust gain on sale margins, with $1.5 billion in annual aircraft sales at 13% assumed gains. It expects to maintain its current depreciation policies, debt capital structure, and a 2.50x adjusted net debt/equity target. Operating expenses are projected for moderate growth after one-time items, and the company plans to continue investing in its asset base by purchasing incremental aircraft, leading to a gradual expansion of Return on Average Common Equity (ROACE) to 9.4% by 2032.

Management Comments

• The disclosures in the Definitive Proxy Statement comply fully with all applicable laws.
• Denies the allegations in the Complaints described above and believes they are without merit.
• In order to moot the allegations and any potential claims regarding disclosures, avoid nuisance and possible expense and business delays, and provide additional information to its Class A common stockholders, the Company has determined voluntarily to supplement certain disclosures.
• Specifically denies all allegations in the Complaints and the various demand letters that any additional disclosure was or is required or material.

Industry Context

The filing highlights a 'marked improvement in market conditions since the COVID-19 pandemic' for aircraft lease rates, which underpins the company's financial projections. The proposed merger itself, involving major players like Sumitomo, SMBC Aviation Capital, Apollo, and Brookfield, indicates ongoing consolidation and strategic investments within the global aircraft leasing sector. J.P. Morgan's analysis of selected transactions further contextualizes the merger within a competitive M&A landscape for aircraft leasing businesses.

Comparison to Industry Standards

• J.P. Morgan's Selected Transactions Analysis reviewed 17 comparable sales transactions involving target companies in the aircraft leasing business.
• Examples include Avolon's acquisition of Castlelake (portfolio) in Sep-24 with a P/BV of 0.98x, AviLease's acquisition of Standard Chartered's aircraft leasing business in Aug-23 with a P/BV of 1.36x, and AerCap's acquisition of GECAS in Mar-21 with a P/BV of 0.80x.
• The P/BV reference range derived from these transactions was 0.66x to 1.67x.
• Applying this range to the company's Book Value Per Share (BVPS) of $65.96 (as of June 30, 2025) resulted in an implied equity value of $43.55 to $110.15 per share, which encompasses the merger consideration of $65.00 per share.

Management Changes

Corporate Governance

Legal Proceedings

• A lawsuit filed on November 12, 2025, in the Court of Chancery in the State of Delaware (Bingham v. Air Lease Corp., C.A. No. 2025-1308-BWD) by a purported Class A common stockholder against the company and its Board of Directors. Claims allege breach of fiduciary duties related to materially misleading and/or incomplete disclosures in the Definitive Proxy Statement, seeking a preliminary injunction to prevent the stockholder vote.
• Two separate lawsuits filed on November 24, 2025, in the Supreme Court of the State of New York (Williams v. Air Lease Corp., No. 659969/2025 and Thomas v. Air Lease Corp., No. 659966/2025) by purported Class A common stockholders against the company and its Board of Directors. Claims allege negligent misrepresentation and concealment and general negligence concerning the Definitive Proxy Statement, seeking to enjoin the merger until supplemental disclosures are made.
• Multiple demand letters received from counsel representing purported Class A common stockholders since October 15, 2025, alleging violations of federal or state law due to materially misleading and/or incomplete disclosures and requesting supplemental disclosures.

Related Party Transactions

• Skadden, the company's legal advisor for the merger, has historically and currently represented Sumitomo Corporation, Sumitomo Mitsui Financial Group (excluding SMBC AC), Apollo Global Management, Inc. affiliates, and Brookfield Corporation affiliates on matters unrelated to Air Lease and the merger.
• Certain of these representations were undertaken concurrently with Skadden's representation of the company in connection with the merger.
• Fees billed by Skadden for these other representations of Brookfield Entities, Sumitomo Entities, SMFG Entities, and Apollo Entities were less than 1% of Skadden's total revenues for 2024 and for the period from January 1, 2025, to October 31, 2025.
• Fees billed by Skadden for its representation of the company and its subsidiaries represented less than 0.05% of Skadden's total revenues for 2024 and 0% for the period from January 1, 2025, to October 31, 2025, with expected merger-related fees to be less than 0.5% of total revenues.
• Demand letters from stockholders alleged concerns about personal or business relationships between the company's directors/executives and those of the Equity Investors, and prior representations by the company's legal advisor of Brookfield.

Stakeholder Impact

• Shareholders: Directly impacted by the merger proposal, the supplemental disclosures, and the ongoing legal challenges which could affect the merger's terms or timeline. Their vote on December 18, 2025, is crucial.
• Employees: The forward-looking statements section mentions potential challenges with employee retention as a result of the pending merger, indicating uncertainty for the workforce.
• Creditors: Restrictions on the company's ability to incur additional debt, as per the Merger Agreement, could impact its liquidity and ability to maintain investment-grade ratings, which is relevant for debt holders.
• Equity Investors (Sumitomo, SMBC AC, Apollo, Brookfield): Their acquisition of Air Lease is subject to shareholder approval and resolution of legal challenges, impacting their strategic investment.

Next Steps

• Class A common stockholders will hold a Special Meeting on December 18, 2025, to consider and vote on the proposal to adopt and approve the Merger Agreement.
• The company expects to bill Skadden for fees in connection with the merger.

Key Dates

Recommendation

The proposed merger offers a fixed price of $65.00 per share, which is within J.P. Morgan's valuation ranges. However, the ongoing shareholder lawsuits and requests for injunctions introduce significant uncertainty regarding the merger's completion and timeline. While the company is proactively addressing disclosure concerns, the legal challenges could lead to delays or even termination. Investors should hold their position pending the outcome of the shareholder vote and legal proceedings, as the current situation presents both a potential acquisition premium and legal risks.

Keywords

Air Lease Corporation, AL, Merger, Proxy Statement, SEC Filing, Shareholder Lawsuit, Financial Projections, Aircraft Leasing, Corporate Governance, J.P. Morgan, Sumitomo Corporation, SMBC Aviation Capital, Apollo Capital Management, Brookfield Asset Management