FLY Leasing Reports Third Quarter 2011 Financial Results

DUBLIN, Nov. 2, 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 third quarter of 2011.

Third Quarter 2011 Highlights

Adjusted net income of $4.1 million, EPS of $0.16, excluding share-based compensation
Net income of $3.4 million, EPS of $0.13
Available Cash Flow of $28.8 million, $1.12 per share
Acquired 49 additional aircraft in a transaction that closed on October 14th
Acquired one additional B737-800 aircraft on October 28th
Declared a quarterly dividend of $0.20 on October 17th

“On October 14, 2011, FLY completed the acquisition of a portfolio of 49 aircraft, increasing its fleet to a total of 109 aircraft,” said Colm Barrington, CEO of FLY. “This acquisition was completed without the need to raise any new equity capital by utilizing FLY’s available cash. As a result, the new portfolio will significantly grow our earnings per share.”

“Our fleet of modern and fuel-efficient commercial aircraft is leased under long-term binding contracts to many strong, well-run airlines around the world, including some of the industry’s best credits. This provides us with strong cash flow and earnings visibility.”

“In the third quarter we had a 100% utilization rate, with all of our aircraft on lease,” added Barrington. “As we start the fourth quarter, all of the 109 aircraft in our larger fleet are on lease. However, there was an impact on our third quarter results from one of our lessees that did not submit payment in the third quarter. We have since received partial payment from this lessee, which will be recognized in the fourth quarter.”

“FLY has now grown its fleet by more than 130% since it went public in late 2007,” said Barrington. “In addition, the company has repurchased approximately 24% of its shares and has also repurchased and holds 15% of its securitized debt, while paying a cash dividend for 16 consecutive quarters. Our strategy of focusing on opportunities for smart growth, combined with our commitment to enhancing shareholder value, will continue to deliver strong returns for shareholders,” added Barrington. “FLY will continue to leverage the global platform and full strength of BBAM – a global leader in the aircraft leasing industry – to continue to look for prudent opportunities to grow our fleet and to maximize trading opportunities that we uncover in order to maximize shareholder value.”

Third Quarter Financial Results

FLY’s net income and basic and diluted earnings per share for the third quarter of 2011 were $3.4 million and $0.13 per share compared to $12.2 million and $0.45 per share in the same period of 2010. The decrease in net income is primarily due gains realized on the sale of three aircraft in the 3rd quarter of 2010 and recognition of $2.9 million of end of lease revenue also in the 3rd quarter of 2010, neither of which is present in the current period.

Net income and diluted earnings per share for the nine months ended September 30, 2011 were $10.3 million and $0.39 per share compared to $42.0 million and $1.46 per share in the same period in 2010. The 2010 results benefited from a gain of $12.5 million from the sale of an option to purchase our notes payable, gains from the sale of three aircraft and $14.3 million of end of lease revenue. The 2011 results include just $3.0 million of end of lease revenue.

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 $28.8 million for the third quarter of 2011 compared to $40.4 million for the same period in the previous year. The decrease is primarily due to the absence of aircraft sales and the decline in end of lease income. ACF per share was $1.12 for the third quarter of 2011 compared to $1.48 in the same period of 2010.

For the nine months ended September 30, 2011, ACF was $87.9 million or $3.37 per share. This compares to $127.9 million or $4.43 per share for 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.

Dividends and Share Repurchases

On October 17, 2011 FLY declared a dividend of $0.20 per share in respect of the third quarter of 2011. This dividend will be paid on November 21, 2011 to shareholders of record on October 31, 2011.

During the third quarter of 2011, FLY repurchased 16,293 shares at an average cost of $10.91 per share or approximately $180,000. Under a $30 million share repurchase program that expires in May 2012, 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. $29.8 million remains available under this program. At September 30, 2011, there are 25.6 million shares outstanding.

Financial Position

At September 30, 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 September 30, 2011 totaled $392.4 million, of which $230.3 million was unrestricted. These amounts compare to total cash of $329.0 million and unrestricted cash of $164.1 million at December 31, 2010.

Acquisition of 49 Aircraft

On October 14, 2011, FLY completed the acquisition of 49 aircraft valued at approximately $1.4 billion. The purchase was funded with approximately $115 million of the Company’s unrestricted cash (net of cash acquired as part of the acquisition) and assumption of approximately $1.2 billion of secured, non-recourse debt. In connection with the acquisition, the Company expects to incur approximately $19 million of fees and expenses, $17 million of which will be charged to expense in the fourth quarter.

The 49 aircraft are on lease to 23 airlines in 15 countries and currently generate annual rents of approximately $163 million.

Aircraft Portfolio

At September 30, 2011 FLY’s aircraft were on lease to 34 lessees in 22 countries. All aircraft are on lease. Acquisition of the 49 aircraft will increase the number of lessees to 53 airlines and the country count to 29. The table below shows the aircraft in FLY’s portfolio on December 31, 2010 and September 30, 2011 and the portfolio after acquisition of the 49 aircraft. The table does not include the four B767 aircraft owned by the joint venture in which FLY has a 57% interest.

• Includes one new B737-800 under contract and delivered in February 2011.

• Includes one Boeing 737-800 held for sale at September 30, 2011 and excludes one Boeing 737-800 acquired on October 28, 2011.

At September 30, 2011, the average age of the combined portfolio was 8.3 years weighted by the net book value of each of FLY’s aircraft and estimated appraised values of the acquired aircraft. The average remaining lease term was 3.7 years, also weighted by net book and appraised values. At September 30, 2011 FLY’s leases were generating annualized revenues of $205 million. The combined annualized revenues are approximately $368 million, an increase of approximately 80%.

For the third quarter of 2011, FLY’s lease utilization factor was 100% and for the nine months ended September 30, 2011 the lease utilization factor was 98%.