FLY Leasing Reports First Quarter 2011 Financial Results

DUBLIN, May 4, 2011 /PRNewswire/ — FLY Leasing Limited (NYSE: FLY) (“FLY”), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the first quarter of 2011.

First Quarter 2011 Highlights

Adjusted net income of $3.7 million, EPS of $0.14, excluding share-based compensation
Net income of $2.8 million, EPS of $0.10
Available Cash Flow of $28.3 million, $1.07 per share
Acquired one new Boeing 737-800 aircraft under a sale and leaseback
Invested in a joint venture that owns four Boeing 767 aircraft
Repurchased more than one million FLY shares
Declared 14th consecutive quarterly dividend on April 15th

“In the first quarter, our operating lease revenue was $47.6 million, and net income was $2.8 million or $0.10 per share,” said Colm Barrington, CEO of FLY. “At quarter end, all 60 of our aircraft were contracted for lease to 34 lessees in 23 countries. In the quarter, we acquired a brand new Boeing 737-800 under a sale and leaseback transaction with an airline and purchased a 57% equity interest in a new joint venture that owns four Boeing 767 aircraft on lease to two airlines in North America. Our net equity investment in the joint venture is $5.9 million.”

“During the quarter we also repurchased an additional 1.1 million FLY shares at an average price of $11.94 per share,” added Barrington. “FLY has now repurchased a total of 8.0 million of its shares at an average price of $7.89 per share, representing 24% of its IPO shares. FLY’s 14th consecutive quarterly dividend, representing 19% of Available Cash Flow in the quarter, will be paid on May 20th to shareholders of record on April 29th.” Barrington concluded, “With all our aircraft currently leased and generating rentals, along with $139.8 million of unrestricted cash, we remain well-positioned to grow our portfolio of aircraft.”

Financial Results

FLY’s net income and basic and diluted earnings per share for the first quarter of 2011 were $2.8 million and $0.10 per share compared to $16.7 million and $0.55 per share for the same period of the preceding year. The decrease in net income is primarily due to a decline in revenue.

Total revenues for the first quarter of 2011 were $49.7 million compared to $67.7 million in the same period in the previous year. The decrease in total revenues was primarily attributable to a $12.5 million pre-tax gain on the sale of an option to purchase notes payable in 2010 and a $6.6 million decrease in operating lease revenue in the first quarter of 2011, partially offset by $1.2 million of equity earnings from unconsolidated joint ventures. The decrease in operating lease revenue from $54.2 million in 2010 to $47.6 million in 2011 was primarily attributable to $3.6 million of end of lease revenues on aircraft whose leases expired in 2010 and $2.9 million in operating lease revenue from the four aircraft that were sold during 2010, partially offset by $1.6 million in revenue from two new Boeing 737-800 aircraft purchased in late 2010 and early 2011. Total expenses in the first quarter of 2011 were $46.2 million compared to $47.1 million in the first quarter of 2010.

Available Cash Flow

Available Cash Flow (“ACF”), which FLY defines as net income plus depreciation, lease incentive amortization, amortization of debt issue costs, non-cash equity based compensation, the deferred tax provision and other one-time, non-cash items, was $28.3 million for the first quarter of 2011 compared to $45.0 million for the same period in the previous year. The decrease is primarily due to the decline in net income caused by the 2010 gain associated with the sale of the debt purchase option. ACF per share was $1.07 for the first quarter of 2011 compared to $1.49 in the same period of 2010.

ACF should be used, as a supplement to, and not as a substitute for financial measures determined in accordance with Accounting Principles Generally Accepted in the United States.

Quarterly Dividend

On April 15, 2011, FLY declared a dividend of $0.20 per share in respect of the first quarter of 2011. This dividend will be paid on May 20, 2011 to shareholders of record on April 29, 2011. This dividend represents 19% of the first quarter 2011 ACF.

Share Repurchases

During the first quarter of 2011, FLY repurchased 1,058,573 shares at an average cost of $11.94 per share. At March 31, 2011, there are 25.6 million shares outstanding.

On May 3, 2011, the Board of Directors approved a new $30 million share repurchase program expiring in May 2012. Under this program, FLY may make share repurchases from time to time in the open market or in privately negotiated transactions. The timing of repurchases under the program will depend upon a variety of factors, including market conditions, and the program may be suspended or discontinued at any time.

Financial Position

At March 31, 2011, FLY’s total assets were $2.0 billion, including flight equipment with a net book value of $1.6 billion. Restricted and unrestricted cash at March 31, 2011 totaled $306.5 million, of which $139.8 million was unrestricted. These amounts compare to total cash of $329.0 million and unrestricted cash of $164.1 million at December 31, 2010.

Aircraft Portfolio

At March 31, 2011, FLY’s aircraft were on lease to 34 lessees in 23 countries. The table below shows the aircraft in FLY’s portfolio on March 31, 2011 and December 31, 2010. The table does not include the four B767 aircraft owned by the joint venture in which FLY has a 57% interest.

At March 31, 2011, the average age of FLY’s portfolio was 8.1 years weighted by the net book value of each aircraft. The average remaining lease term was 4.5 years, also weighted by net book value. At March 31, 2011, the leases were generating annualized revenues of $210 million. For the first quarter of 2011, FLY’s lease utilization factor was 95%.