Aircastle Announces First Quarter 2009 Results

STAMFORD, Conn., May 7 /PRNewswire-FirstCall/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported first quarter net income of $18.5 million, or $0.23 per diluted common share and adjusted net income of $21.1 million, or $0.27, per diluted common share.

Aircastle CEO Ron Wainshal commented, "During the first quarter, our portfolio continued to deliver strong cash flow performance despite the expected impacts from revenue downtime and transition costs related to customer defaults during the fourth quarter. We posted $0.93 per share of adjusted net income plus depreciation and amortization and ended the quarter with over $102 million of unrestricted operating cash. The overall demand environment remains challenging, but we see some positive industry signals and believe we are well positioned to successfully manage through this period."

First quarter total revenues were $132.1 million, a decrease of $2.8 million from the first quarter 2008. Lease rental revenue was $126.0 million, down $5.0 million year over year due principally to $7.7 million of revenue downtime in connection with aircraft in transition and freighter conversion and $1.6 million of floating rate lease adjustments, partially offset by the impact of 2008 aircraft acquisitions net of dispositions of $3.4 million and lease rate changes of $0.9 million. End of lease maintenance revenue for the quarter was higher by $6.6 million versus the first quarter 2008 and amortization of net lease discounts and lease incentives was lower by $3.8 million versus the first quarter 2008.

EBITDA was $116.5 million, down $3.4 million from the first quarter of 2008 due primarily to higher transition costs of $5.1 million, and lower lease rental revenue of $5.0 million, offset by higher maintenance revenue of $6.6 million.

Adjusted net income plus depreciation and amortization was $73.8 million, a decrease of $6.7 million compared to the first quarter of 2008. The year over year change was driven by lower lease rental revenue of $5.0 million and higher transitions costs of $5.1 million largely due to the transition of aircraft repossessed during the fourth quarter of 2008 as well as lower capitalized interest of $3.3 million, offset by higher maintenance revenue of $6.6 million.

Adjusted net income was $21.1 million, down $13.8 million compared to the first quarter of 2008. The year over year change reflects lower total revenues of $2.8 million, higher depreciation expense of $3.3 million, lower capitalized interest of $3.3 million, and higher transition costs of $5.1 million, offset by lower interest on our financings, net of interest income of $0.7 million and lower selling, general and administrative expenses of $0.4 million.

Aviation Assets

    As of March 31, 2009, Aircastle owned 130 aircraft having a net book value
of $3.8 billion.



                                                        Owned Aircraft
                                                            as of
                                                           March 31,
                                                            2009(A)
    113 Passenger Aircraft                                    70%
    17 Freighter Aircraft                                     30%
    Number of Lessees                                          58
    Number of Countries                                        32
    Weighted Average Remaining Lease Term (years)             5.1
    Percentage of Aircraft Leased Outside U.S.                90%
    Percentage of "Latest Generation" Aircraft                87%
    Weighted Average Fleet Utilization during Q1 2009         96%

    (A) Percentages calculated based on net book value

We secured lease commitments for all seven Boeing 737-700 aircraft returned following the Sterling Airlines bankruptcy in late 2008. Three of these aircraft are currently in revenue service and we anticipate the rest to be in operation by the end of May 2009.

Conference Call

In connection with this earnings release, management will host an earnings conference call on Thursday, May 7, 2009 at 2:00 P.M. Eastern time. All interested parties are welcome to participate on the live call. The conference call can be accessed by dialing (866) 510-4578 (from within the U.S.) or (706) 634-9537 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the "Aircastle First Quarter Earnings Call."

A webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for three months following the call.

For those who are not available to listen to the live call, a replay will be available until 11:59 P.M. Eastern time on Thursday, May 14, 2009 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference passcode "96342931."

About Aircastle Limited

Aircastle Limited is a global company that acquires, leases and sells high-utility commercial jet aircraft to airlines throughout the world. As of March 31, 2009 Aircastle's aircraft portfolio consisted of 130 aircraft comprising a variety of passenger and freighter aircraft types that were leased to 58 lessees located in 32 countries.

Safe Harbor

Certain items in this press release and other information we provide from time to time, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to our ability to acquire, sell and lease aircraft, raise capital, pay dividends, and increase revenues, earnings and EBITDA and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle Limited can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from Aircastle Limited's expectations include, but are not limited to, prolonged capital markets disruption and volatility, which may adversely affect our continued ability to obtain additional capital to finance our working capital needs, our pre-delivery payment obligations and other aircraft acquisition commitments, our ability to extend or replace our existing financings, and the demand for and value of aircraft; our exposure to increased bank and counterparty risk caused by credit and capital markets disruptions; general economic conditions and business conditions affecting demand for aircraft and lease rates; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay dividends; high or volatile fuel prices, lack of access to capital, reduced load factors and yields and other factors affecting the creditworthiness of our airline customers and their ability to continue to perform their obligations under our leases; termination payments on our interest rate hedges; and other risks detailed from time to time in Aircastle Limited's filings with the SEC, including "Risk Factors" as previously disclosed in Aircastle's 2008 Annual Report on Form 10-K, and in our other filings with the SEC, press releases and other communications. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Aircastle Limited expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

(1) Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers

                     Aircastle Limited and Subsidiaries
                        Consolidated Balance Sheets
                  (Dollars in thousands, except share data)

                                        December 31,      March 31,
                                               2008           2009
                                               ----           ----
                                                        (unaudited)
      ASSETS
      Cash and cash equivalents             $80,947       $102,399
      Accounts receivable                     3,161          3,332
      Debt investments                       14,349         12,626
      Restricted cash and cash
       equivalents                          182,623        177,537
      Flight equipment held for
       lease, net of accumulated
       depreciation of $371,591
       and $422,820                       3,837,543      3,798,709
      Aircraft purchase deposits and
       progress payments                     68,923         75,476
      Leasehold improvements,
       furnishings and equipment,
       net of accumulated
       depreciation of $1,999 and
       $2,119                                 1,174          1,137
      Other assets                           62,852         80,634
                                             ------         ------
        Total assets                     $4,251,572     $4,251,850
                                         ==========     ==========

      LIABILITIES AND SHAREHOLDERS' EQUITY
      LIABILITIES
      Borrowings from
       securitizations and term debt
       financings                        $2,476,296     $2,446,165
      Accounts payable, accrued
       expenses and other
       liabilities                           60,789         63,574
      Dividends payable                       7,862          7,923
      Lease rentals received in
       advance                               28,463         26,789
      Security deposits                      65,307         71,531
      Maintenance payments                  224,288        232,975
      Fair value of derivative
       liabilities                          276,401        261,977
                                            -------        -------
        Total liabilities                 3,139,406      3,110,934
                                          ---------      ---------

      Commitments and Contingencies

      SHAREHOLDERS' EQUITY
      Preference shares, $.01 par
       value, 50,000,000 shares
       authorized, no shares issued
       and outstanding                            -              -
      Common shares, $.01 par value,
       250,000,000 shares
       authorized, 78,620,320 shares
       issued and outstanding at
       December 31, 2008; and
       79,234,863 shares issued and
       outstanding at March 31, 2009            786            792
      Additional paid-in capital          1,474,455      1,474,804
      Retained earnings (deficit)              (473)        10,075
      Accumulated other
       comprehensive loss                  (362,602)      (344,755)
                                          ---------      ---------
        Total shareholders' equity        1,112,166      1,140,916
                                          ---------      ---------
        Total liabilities and
         shareholders' equity            $4,251,572     $4,251,850
                                      =============  =============



                     Aircastle Limited and Subsidiaries
                      Consolidated Statements of Income
               (Dollars in thousands, except per share amounts)

                                                   Three Months Ended
                                                        March 31,
                                                     ---------------
                                                     2008       2009
                                                     ----       ----
    Revenues:
    Lease rental revenue                         $130,981   $125,994
    Amortization of net lease discounts
     and lease incentives                           2,646     (1,117)
    Maintenance revenue                                 -      6,603
                                                        -      -----
        Total lease rentals                       133,627    131,480
    Interest income                                 1,291        633
    Other revenue                                      38         25
                                                       --         --
        Total revenues                            134,956    132,138
                                                  -------    -------

    Expenses:
    Depreciation                                   48,215     51,561
    Interest, net                                  41,011     43,411
    Selling, general and administrative
     (including non-cash share based
     payment expense of $1,598,
     and $1,658, respectively)                     11,489     11,095
    Other expenses                                    645      5,776
                                                      ---      -----
        Total expenses                            101,360    111,843
                                                  -------    -------

    Other income (expense):                          (245)        92
                                                    -----         --
        Total other income (expense)                 (245)        92
                                                    -----         --

    Income from continuing operations
     before income taxes                           33,351     20,387
    Income tax provision                            1,714      1,916
                                                    -----      -----
    Net income                                    $31,637    $18,471
                                                  =======    =======


    Earnings per common share - Basic               $0.40      $0.23
                                                    =====      =====

    Earnings per common share - Diluted             $0.40      $0.23
                                                    =====      =====

    Dividends declared per share                    $0.25      $0.10
                                                    =====      =====



                      Aircastle Limited and Subsidiaries
                    Consolidated Statements of Cash Flows
                           (Dollars in thousands)

                                                     Three Months Ended
                                                          March 31,
                                                    --------------------
                                                    2008            2009
                                                    ----            ----
    Cash flows from Operating activities:
    Net income                                   $31,637         $18,471
     Adjustments to reconcile net income
      to net cash provided by operating
      activities:
       Depreciation                               48,162          51,561
       Amortization of deferred financing
        costs                                      2,584           2,533
       Amortization of net lease discounts
        and lease incentives                      (2,646)          1,117
       Deferred income taxes                       1,061           1,599
       Accretion of purchase discounts on
        debt investments                            (149)           (158)
       Non-cash share based payment expense        1,598           1,658
       Cash flow hedges reclassified into
        earnings                                    (139)          4,949
       Ineffective portion of cash flow
        hedges                                     1,998            (129)
       Security deposits and maintenance
        payments included in earnings               (566)         (3,451)
       Loss on sale of investments                   245               -
       Other                                           -            (518)
       Changes in certain assets and liabilities:
         Accounts receivable                        (942)           (171)
         Restricted cash and cash equivalents    (17,972)          5,086
         Other assets                                574          (1,548)
         Accounts payable, accrued expenses
          and other liabilities                   (2,148)         (9,951)
         Payable to affiliates                      (185)              -
         Lease rentals received in advance        (4,347)         (1,674)
                                                 -------         -------
           Net cash provided by operating
            activities                            58,765          69,374
                                                  ------          ------

    Cash flows from investing
     activities:
     Acquisition and improvement of
      flight equipment                          (117,027)        (17,268)
     Aircraft purchase deposits and
      progress payments, net of returned
      deposits                                    (5,312)         (7,906)
     Proceeds from sale of debt
      investments                                 65,335               -
     Principal repayments on debt
      investments                                 11,224             807
     Collateral call payments on
      derivatives and repurchase
      agreements                                (198,882)              -
     Collateral call receipts on
      derivatives and repurchase
      agreements                                 158,244               -
     Leasehold improvements, furnishings
      and equipment                                 (190)            (82)
                                                   -----            ----
           Net cash used in investing
            activities                           (86,608)        (24,449)
                                                --------        --------

    Cash flows from financing
     activities:
     Repurchase of shares from directors
      and employees                                 (898)           (247)
     Securitization and term debt
      financing repayments                       (15,692)        (30,131)
     Deferred financing costs                     (2,571)              -
     Credit facility borrowings                  325,608               -
     Credit facility repayments                 (142,202)              -
     Principal repayments on repurchase
      agreements                                 (65,461)              -
     Security deposits and maintenance
      payments received                           26,977          22,534
     Security deposits and maintenance
      payments returned                           (6,452)         (7,767)
     Payments for terminated cash flow
      hedges                                     (32,657)              -
     Dividends paid                              (55,004)         (7,862)
                                                --------         -------
           Net cash provided by (used in)
            financing activities                  31,648         (23,473)
                                                  ------        --------

    Net increase in cash and cash
     equivalents                                   3,805          21,452
    Cash and cash equivalents at
     beginning of period                          13,546          80,947
                                                  ------          ------
    Cash and cash equivalents at end of
     period                                      $17,351        $102,399
                                          ==============  ==============



                Aircastle Limited and Subsidiaries
                Supplemental Financial Information
          (Amount in thousands, except per share amounts)
                           (Unaudited)

                                              Three Months Ended
                                                   March 31,
                                                --------------
                                                2008      2009
                                                ----      ----

    Revenues                                $134,956  $132,138

    EBITDA                                  $119,931  $116,476

    Adjusted net income                      $34,901   $21,125

    Adjusted net income allocable to
     common shares                           $34,495   $20,783
      Per common share - Basic                 $0.44     $0.27
      Per common share - Diluted               $0.44     $0.27

    Adjusted net income plus
     depreciation and amortization           $80,470   $73,803

    Adjusted net income plus
     depreciation and amortization
     allocable to common shares              $79,535   $72,609
      Per common share - Basic                 $1.02     $0.93
      Per common share - Diluted               $1.02     $0.93

    Basic common shares outstanding           77,720    77,941
    Diluted common shares outstanding         77,720    77,941

    Refer to the selected information accompanying this press release for a
    reconciliation of GAAP to Non-GAAP information.



                   Aircastle Limited and Subsidiaries
               Reconciliation of GAAP to Non-GAAP Measures
                          EBITDA Reconciliation
                         (Dollars in thousands)
                              (Unaudited)

                                                    Three Months Ended
                                                          March 31,
                                                       --------------
                                                       2008      2009
                                                       ----      ----
    Net income                                      $31,637   $18,471
    Depreciation                                     48,215    51,561
    Amortization  of net lease
      discounts and lease incentives                 (2,646)    1,117
    Interest, net                                    41,011    43,411
    Income tax provision                              1,714     1,916
                                                      -----     -----
    EBITDA                                         $119,931  $116,476
                                                   ========  ========

    We define EBITDA as income from continuing operations before income taxes,
    interest expense, and depreciation and amortization. We use EBITDA to
    assess our consolidated financial and operating performance, and we
    believe this non-GAAP measure is helpful in identifying trends in our
    performance. Using EBITDA assists us in comparing our operating
    performance on a consistent basis by removing the impact of our capital
    structure (primarily interest charges on our outstanding debt) and asset
    base (primarily depreciation and amortization) from our operating results.



                  Aircastle Limited and Subsidiaries
              Reconciliation of GAAP to Non-GAAP Measures
         Adjusted Net Income plus Depreciation Reconciliation
                      (Dollars in thousands)
                            (Unaudited)

                                              Three Months Ended
                                                   March 31,
                                                --------------
                                                2008      2009
                                                ----      ----

    Net income                               $31,637   $18,471
    Ineffective portion and
     termination of cash flow hedges(1)        3,019     2,746
    Mark to market adjustment on
     undesignated derivatives(2)                   -       (92)
    Loss on sale of debt
     investments(2)                              245         -
    Adjusted net income                       34,901    21,125

    Depreciation                              48,215    51,561
    Amortization of net lease discounts
     and lease incentives                     (2,646)    1,117
    Adjusted net income plus depreciation
     and amortization                        $80,470   $73,803

    (1) Included in Interest, net
    (2) in Other income (expense)

    We adjust net income for ineffective portion and termination of cash flow
    hedges, write-off of deferred financing fees, mark to market and
    termination of interest rate swaps, loss on sale of debt investments and
    gain on sale of flight equipment. We use adjusted net income to assess our
    consolidated financial and operating performance, and we believe this
    non-GAAP measure is helpful in identifying long-term trends in our
    performance net of non-recurring items.

    We use adjusted net income plus depreciation and amortization to assess
    our consolidated financial and operating performance, and we believe this
    non-GAAP measure is helpful in identifying trends in our performance on an
    operating cash flow basis after taking into account interest expense on
    our outstanding indebtedness.


                     Aircastle Limited and Subsidiaries
                 Reconciliation of GAAP to Non-GAAP Measures
            Reconciliation of Net Income Allocable to Common Shares
                              (in thousands)
                                (Unaudited)

                             Three Months Ended       Three Months Ended
                               March 31, 2008           March 31, 2009
                            ---------------------    ---------------------
                            Shares   Percentage(2)   Shares   Percentage(2)
    Weighted average
     shares
    -------
    Common shares
     outstanding - Basic    77,720          98.84%   77,941          98.38%
    Unvested restricted
     common shares
     outstanding               914           1.16%    1,282           1.62%
                               ---           ----     -----           ----
    Total weighted
     average shares
     outstanding            78,634         100.00%   79,223         100.00%
                            ======         ======    ======         ======

    Common shares
     outstanding - Basic    77,720         100.00%   77,941         100.00%
    Effect of
     dilutive shares(1)          -              -         -              -
                            ------         ------    ------         ------
    Common shares
     outstanding -
     Diluted                77,720         100.00%   77,941         100.00%
                            ======         ======    ======         ======

    Net income allocation
    ---------------------
    Net income             $31,637         100.00%  $18,471         100.00%
    Distributed and
     undistributed
     earnings allocated
     to unvested
     restricted shares        (368)         (1.16)%    (299)        (1.62)%
                               ---           ----       ---          ----
    Earnings available to
     common shares         $31,269          98.84%  $18,172          98.38%
                            ======          =====    ======          =====

    Adjusted net income
     allocation
    -----------
    Adjusted net income    $34,901         100.00%  $21,125         100.00%
    Amounts allocated to
     unvested restricted
     shares                   (406)         (1.16)%    (342)        (1.62)%
                               ---           ----       ---          ----
    Amounts allocated to
     common shares         $34,495          98.84%  $20,783          98.38%
                            ======          =====    ======          =====

    Adjusted net income
     plus depreciation
     and amortization
     allocation
    -----------
    Adjusted net income
     plus depreciation
     and amortization      $80,470         100.00%  $73,803         100.00%
    Amounts allocated to
     unvested restricted
     shares                   (935)         (1.16)%  (1,194)        (1.62)%
                               ---           ----     -----           ----
    Amounts allocated to
     common shares         $79,535          98.84%  $72,609          98.38%
                            ======          =====    ======          =====

    (1) The Company had no dilutive common share equivalents for the periods
        presented.
    (2) Percentages rounded to two decimal places.

SOURCE Aircastle Limited
CONTACT: Julia Hallisey, Investor Relations of Aircastle Limited,
+1-203-504-1063/
/Web Site: http://www.aircastle.com / (AYR)