Aircastle Limited
Aug 10, 2010
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Aircastle Announces Second Quarter 2010 Results

Second Quarter Highlights

STAMFORD, Conn., Aug 10, 2010 /PRNewswire via COMTEX/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported second quarter net income of $18.1 million or $0.23 per diluted common share, and adjusted net income of $20.5 million or $0.26 per diluted common share.

Commenting on the results, Ron Wainshal, Aircastle's CEO, stated: "We continued delivering consistently solid portfolio performance during the second quarter, as we benefitted from effective asset management and improving industry conditions. We also capitalized on our strong operating track record and balance sheet by securing $1.1 billion in new financing commitments from a variety of debt sources, positioning us well to take advantage of a growing set of attractive new investment opportunities."

Lease rental revenue for the second quarter 2010 was $128.1 million, down 1.0% year over year and includes a decrease of $4.0 million due to aircraft transitions and lease extensions, of which $1.1 million relates to aircraft that were on the ground subject to a forward sale agreement. These decreases were partially offset by the impact of aircraft acquisitions net of dispositions of $3.1 million.

Second quarter total revenues were $130.2 million, a decrease of $6.7 million from the second quarter 2009, and reflect lower lease rental revenue of $1.3 million, lower end of lease maintenance revenue of $2.8 million due to fewer scheduled lease transitions in 2010 and higher non-cash lease incentive amortization of $2.1 million.

EBITDA was $119.2 million, down $6.4 million from the second quarter of 2009, due to lower lease rental revenue and maintenance revenue of $4.1 million, higher mark to market expense on our undesignated hedges of $1.2 million and a loss on the sale of aircraft of $1.3 million. These decreases in EBITDA were partially offset by lower maintenance and other costs of $1.1 million as a result of higher costs incurred in the second quarter of 2009 for repossessed aircraft.

Adjusted net income plus depreciation and amortization for the quarter was $79.8 million, down $1.5 million year over year, due primarily to lower lease rental revenue and maintenance revenue of $4.1 million, offset by lower maintenance and other expenses of $1.1 million and lower adjusted interest, net of $1.8 million.

Adjusted net income for the quarter was $20.5 million, down $6.4 million year over year, and reflects lower total revenues of $6.7 million, higher depreciation expense of $2.7 million, partially offset by lower maintenance and other costs of $1.1 million and lower adjusted interest, net of $1.8 million.

As disclosed previously, Aircastle owned three Boeing 757-200 aircraft subject to a forward sale agreement. During the second quarter we completed the sale of the first aircraft and recorded a loss on the sale of $1.3 million reflecting additional maintenance costs incurred to meet delivery conditions under the sale agreement. We anticipate completing the sale of the second aircraft during the third quarter of 2010. The final aircraft is currently on lease and is scheduled to return from the current lessee and deliver under the sale agreement in late 2011.

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

Aviation Assets

As of June 30, 2010, Aircastle owned 129 aircraft having a net book value of $3.7 billion.

                                                                 Owned
                                                               Aircraft
                                                                 as of
                                                               June 30,
                                                                2010(A)
                                                                -------
    108 Passenger Aircraft                                            71%
    21 Freighter Aircraft                                             29%
    Number of Lessees                                                 63
    Number of Countries                                               36
    Weighted Average Remaining Lease Term (years)(B)                 4.6
    Percentage of Aircraft Leased Outside U.S.                        91%
    Percentage of "Latest Generation" Aircraft                        88%
    Weighted Average Fleet Utilization during the Three Months
     ended June 30, 2010(C)                                           98%
    Weighted Average Fleet Utilization during the Six Months
     ended June 30, 2010(C)                                           98%


    (A)  Percentages calculated using net book value.
    (B)  Weighted average remaining lease term (years) by net value.
    (C)  Aircraft on-lease days as a percent of total days in period
    weighted by net book value, excluding aircraft in freighter
    conversion.


In June we purchased a Boeing 737-800 aircraft and placed it on lease. We also have a commitment to acquire three Airbus A330-200 aircraft from Sri Lankan Airlines, the flag carrier of Sri Lanka, in a sale-leaseback transaction (the "A330 SLB Aircraft"). The first aircraft closed in July 2010. The remaining two aircraft are expected to close in the third quarter of 2010. In addition we entered into a commitment to purchase one Boeing 737-800 aircraft which is subject to lease and is expected to close in the third quarter of 2010.

Financing Update

In July 2010, Aircastle Limited closed a private placement offering of 9.75% senior unsecured notes due in 2018, in an aggregate principal amount of $300 million. The notes were issued at 98.645% of par and were offered only to qualified institutional buyers and buyers outside the United States in accordance with Rule 144A and Regulation S, respectively, under the Securities Act of 1933. We used a portion of the net proceeds of the private placement to repay $25 million drawn under a credit facility used in connection with the purchase of the first A330 SLB Aircraft and plan to use the remaining net proceeds to repay all of its outstanding indebtedness under our Term Financing No. 2 and for general corporate purposes, including the purchase of aviation assets.

We secured a commitment from Citigroup Global Markets Inc. for a $50 million senior unsecured revolving credit facility which will have a three-year term and, subject to the completion of satisfactory documentation, is anticipated to be closed during the course of the third quarter.

In June, we entered into a $108 million loan facility to finance a portion of the pre delivery payments on six new Airbus A330 aircraft under the airbus A330 acquisition agreement (Airbus A330 Agreement).

In addition, in July 2010, we secured new financing commitments for our Airbus A330 Agreement which will benefit from an ECA guarantee provided by Compagnie Francaise d'Assurance pour le Commerce Exterieur, or COFACE, as follows:

 

 

Conference Call

In connection with this earnings release, management will host an earnings conference call on August 10, 2010 at 10:00 A.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 Second Quarter Earnings Call."

A simultaneous 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. In addition to this earnings release an accompanying power point presentation has been posted to the Investor Relations section of Aircastle's website.

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 Tuesday, August 17, 2010 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference passcode "89643753."

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 June 30, 2010 Aircastle's aircraft portfolio consisted of 129 aircraft and had 63 lessees located in 36 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, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted Net Income and Adjusted Net Income plus Depreciation and Amortization 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; volatility in the value of our aircraft or in appraisals thereof, which may, among other things, result in increased principal payments under our term financings and reduce our cash flow available for investment or dividends; 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/or reduced yields, operational disruptions caused by volcanic activity 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 2009 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.

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


                                                  December
                                                     31,       June 30,
                                                       2009          2010
                                                       ----          ----
                                                             (Unaudited)
    ASSETS
    Cash and cash equivalents                      $142,666      $149,696
    Accounts receivable                               2,941         3,041
    Restricted cash and cash equivalents            207,834       213,105
    Restricted liquidity facility collateral         81,000        79,000
    Flight equipment held for lease, net of
     accumulated depreciation of $586,537 and
     $688,492                                     3,812,970     3,742,080
    Aircraft purchase deposits and progress
     payments                                       141,144       210,297
    Leasehold improvements, furnishings and
     equipment, net of accumulated depreciation
     of $2,455 and $2,654                               802           619
    Other assets                                     65,155        66,504
                                                     ------        ------
      Total assets                               $4,454,512    $4,464,342
                                                 ==========    ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    LIABILITIES
    Borrowings from securitizations and term
     debt financings (including borrowings of
     ACS Ireland VIEs of $331,856 and $322,453,
     respectively)                               $2,464,560    $2,433,308
    Accounts payable, accrued expenses and
     other liabilities                               60,392        58,542
    Dividends payable                                 7,955         7,947
    Lease rentals received in advance                34,381        31,288
    Liquidity facility                               81,000        79,000
    Security deposits                                82,533        74,670
    Maintenance payments                            253,175       279,235
    Fair value of derivative liabilities            179,279       211,698
                                                    -------       -------
      Total liabilities                           3,163,275     3,175,688
                                                  ---------     ---------

    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, 79,550,421 shares
     issued and outstanding at December 31,
     2009; and 79,472,390 shares issued and
     outstanding at June 30, 2010                       796           795
    Additional paid-in capital                    1,479,995     1,482,044
    Retained earnings                                70,294        91,414
    Accumulated other comprehensive loss           (259,848)     (285,599)
                                                   --------      --------
      Total shareholders' equity                  1,291,237     1,288,654
                                                  ---------     ---------
      Total liabilities and shareholders' equity $4,454,512    $4,464,342
                                                 ==========    ==========



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


                               Three Months Ended           Six Months Ended
                                    June 30,                    June 30,
                                    --------                    --------
                                2009          2010        2009          2010
                                ----          ----        ----          ----
    Revenues:
     Lease rental
      revenue               $129,406      $128,133    $255,400      $258,255
     Amortization of net
      lease discounts
      and lease
      incentives              (2,810)       (4,909)     (3,927)       (9,754)
     Maintenance revenue       9,637         6,836      16,240        12,090
                               -----         -----      ------        ------
        Total lease rentals  136,233       130,060     267,713       260,591
     Interest income             594            --       1,227            --
     Other revenue                86           124         111           154
                                 ---           ---         ---           ---
       Total revenues        136,913       130,184     269,051       260,745
                             -------       -------     -------       -------

    Expenses:
     Depreciation             51,688        54,424     103,249       108,569
     Interest, net            41,482        40,166      84,893        81,125
     Selling, general
      and administrative
      (including non-
      cash share based
      payment expense of
      $1,729 and $1,929
      for the three
      months ended, and
      $3,387 and $3,711
      for the six months
      ended June 30,
      2009 and 2010,
      respectively)           11,122      11,036    22,217      22,709
     Maintenance and
      other costs              4,502         3,437      10,278         5,637
                               -----         -----      ------         -----
      Total expenses         108,794       109,063     220,637       218,040
                             -------       -------     -------       -------

    Other income
     (expense):
       Loss on sale of
        aircraft                  --        (1,291)         --        (1,291)
       Other income
        (expense)              1,501          (176)      1,593          (546)
                               -----          ----       -----          ----
       Total other income
        (expense)              1,501        (1,467)      1,593        (1,837)
                               -----        ------       -----        ------

    Income from
     continuing
     operations before
     income taxes             29,620        19,654      50,007        40,868
    Income tax
     provision                 2,049         1,515       3,965         3,850
                               -----         -----       -----         -----
    Net income               $27,571       $18,139     $46,042       $37,018
                             =======       =======     =======       =======


    Earnings per common
     share -Basic              $0.35         $0.23       $0.58         $0.46
                               =====         =====       =====         =====

    Earnings per common
     share -Diluted            $0.35         $0.23       $0.58         $0.46
                               =====         =====       =====         =====

    Dividends declared
     per share                 $0.10         $0.10       $0.20         $0.20
                               =====         =====       =====         =====



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


                                                         Six Months Ended
                                                             June 30,
                                                             --------
                                                           2009       2010
                                                            ---       ----
    Cash flows from operating activities:
    Net income                                          $46,042    $37,018
      Adjustments to reconcile net income to net
       cash provided by operating activities:
       Depreciation                                     103,249    108,569
       Amortization of deferred financing costs           5,731      5,760
       Amortization of net lease discounts and lease
        incentives                                        3,927      9,754
       Deferred income taxes                              3,348      2,537
       Accretion of purchase discounts on debt
        investments                                        (288)         -
       Non-cash share based payment expense               3,387      3,711
       Cash flow hedges reclassified into earnings        7,796      4,074
       Ineffective portion of cash flow hedges             (573)     1,769
       Loss on sale of flight equipment                       -      1,291
       Security deposits and maintenance payments
        included in earnings                            (10,506)    (9,978)
       Other                                             (1,164)       546
       Changes in certain assets and liabilities:
         Accounts receivable                             (2,281)      (662)
         Restricted cash and cash equivalents           (16,754)    12,436
         Other assets                                    (4,077)       655
         Accounts payable, accrued expenses and other
          liabilities                                   (10,118)    (5,445)
         Lease rentals received in advance               (1,228)    (1,343)
                                                         ------     ------
          Net cash provided by operating activities     126,491    170,692
                                                        -------    -------

    Cash flows from investing activities:
      Acquisition and improvement of flight
       equipment and lease incentives                 (105,746)    (55,353)
      Proceeds from sale of flight equipment, net
       of gain                                                -     17,707
      Restricted cash and cash equivalents related
       to sale of flight equipment                            -    (17,707)
      Aircraft purchase deposits and progress
       payments, net of returned deposits               (39,715)   (74,666)
      Principal repayments on debt investments              808          -
      Leasehold improvements, furnishings and
       equipment                                            (82)       (16)
                                                            ---        ---
          Net cash used in investing activities       (144,735)  (130,035)
                                                       --------   --------

    Cash flows from financing activities:
      Repurchase of shares from directors and
       employees                                           (247)    (1,663)
      Proceeds from debt financings                      70,916     57,089
      Debt repayments                                   (65,847)   (88,341)
      Deferred financing costs                           (3,098)    (2,023)
      Restricted secured liquidity facility
       collateral                                       (81,186)     2,000
      Secured liquidity facility collateral              81,186     (2,000)
      Security deposits received                         37,475      3,917
      Security deposits returned                         (6,267)    (8,760)
      Maintenance payments received                      33,220     57,762
      Maintenance payments returned                     (14,527)   (35,702)
      Payments for terminated cash flow hedges           (2,758)         -
      Dividends paid                                    (15,785)   (15,906)
                                                        -------    -------
          Net cash provided by (used in) financing
           activities                                    33,082    (33,627)
                                                         ------    -------

    Net increase (decrease) in cash and cash
     equivalents                                         14,838      7,030
    Cash and cash equivalents at beginning of
     period                                              80,947    142,666
                                                         ------    -------
    Cash and cash equivalents at end of period          $95,785   $149,696
                                                        =======   ========



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


                                   Three Months Ended        Six Months Ended
                                        June 30,                 June 30,
                                        --------                 --------
                                    2009          2010     2009          2010
                                    ----          ----     ----          ----

    Revenues                    $136,913      $130,184 $269,051      $260,745

    EBITDA                      $125,600      $119,153 $242,076      $240,316

    Adjusted net income          $26,884       $20,514  $48,009       $41,077

    Adjusted net income
     allocable to common shares  $26,413       $20,217  $47,229       $40,467
      Per common share - Basic     $0.34         $0.26    $0.61         $0.52
      Per common share -Diluted    $0.34         $0.26    $0.61         $0.52

    Adjusted net income plus
     depreciation and
     amortization                $81,382       $79,847 $155,185      $159,400

    Adjusted net income plus
     depreciation and
     amortization allocable to
     common shares               $79,957       $78,690 $152,665      $157,033
      Per common share - Basic     $1.03         $1.00    $1.96         $2.00
      Per common share -Diluted    $1.03         $1.00    $1.96         $2.00

    Basic common shares
     outstanding                  77,977        78,465   77,959        78,437
    Diluted common shares
     outstanding                  77,977        78,465   77,959        78,437


    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        Six Months
                                    Ended              Ended
                                  June 30,           June 30,
                                  --------           --------
                                  2009       2010     2009       2010
                                  ----       ----     ----       ----

    Net income                 $27,571    $18,139  $46,042    $37,018
    Depreciation                51,688     54,424  103,249    108,569
    Amortization of net lease
     discounts and lease
     incentives                  2,810      4,909    3,927      9,754
    Interest, net               41,482     40,166   84,893     81,125
    Income tax provision         2,049      1,515    3,965      3,850
                                 -----      -----    -----      -----
    EBITDA                    $125,600   $119,153 $242,076   $240,316
                              ========   ======== ========   ========



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     Six Months Ended
                                       June 30,              June 30,
                                       --------              --------
                                     2009       2010     2009       2010
                                     ----       ----     ----       ----

    Net income                    $27,571    $18,139  $46,042    $37,018
       Ineffective portion and
        termination of cash flow
        hedges(1)                     385        908    3,131      2,222
       Mark to market of interest
        rate derivative
        contracts(2)               (1,072)       176   (1,164)       546
      Loss on sale of flight
       equipment(2)                     -      1,291        -      1,291
                                      ---      -----      ---      -----
    Adjusted net income            26,884     20,514   48,009     41,077
       Depreciation                51,688     54,424  103,249    108,569
       Amortization of net lease
        discounts and lease
        incentives                  2,810      4,909    3,927      9,754
                                    -----      -----    -----      -----
    Adjusted net income plus
     depreciation and
     amortization                 $81,382    $79,847 $155,185   $159,400
                                  =======    ======= ========   ========


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

Management believes that Adjusted Net Income ("ANI") and Adjusted Net Income plus Depreciation and Amortization ("ANIDA"), when viewed in conjunction with the Company's results under GAAP and the above reconciliation, provide useful information about operating and period-over-period performance, and provide additional information that is useful for evaluating the underlying operating performance of our business without regard to periodic reporting elements related to interest rate derivative accounting as well as gains/(losses) related to flight equipment and debt investments. Additionally, management believes that ANIDA provides investors with an additional metric to enhance their understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made, debt is serviced and dividends are paid. However, ANI and ANIDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss) or cash flow from operating activities as indicators of operating performance or liquidity.

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


                         Three
                         Months                 Six Months
                         Ended                     Ended
                       June 30,                   June 30,
                           2010                         2010
                       ---------                    ---------
                       Shares       Percent(2)       Shares       Percent(2)
    Weighted average
     shares
    ----------------
    Common shares
     outstanding -
     Basic              78,465          98.55 %       78,437          98.52 %
    Unvested
     restricted
     common shares
     outstanding         1,153           1.45 %        1,182           1.48 %
                         -----           -----         -----           -----
    Total weighted
     average shares
     outstanding        79,619         100.00 %       79,619         100.00 %
                        ======         =======        ======         =======

    Common shares
     outstanding -
     Basic              78,465         100.00 %       78,437         100.00 %
    Effect of
     dilutive
     shares(1)               -               -             -               -
                           ---             ---           ---             ---
    Common shares
     outstanding -
     Diluted            78,465         100.00 %       78,437         100.00 %
                        ======         =======        ======         =======

    Net income
     allocation
    -----------
    Net income         $18,139         100.00 %      $37,018         100.00 %
    Distributed and
     undistributed
     earnings
     allocated to
     unvested
     restricted
     shares               (263)       (1.45)%       (550)       (1.48)%
                          ----          ------          ----          ------
    Earnings
     available to
     common shares     $17,876          98.55 %      $36,468          98.52 %
                       =======          ======       =======          ======

    Adjusted net
     income
     allocation
    ------------
    Adjusted net
     income            $20,514         100.00 %      $41,077         100.00 %
    Amounts
     allocated to
     unvested
     restricted
     shares               (297)       (1.45)%       (610)       (1.48)%
                          ----          ------          ----          ------
    Amounts
     allocated to
     common shares     $20,217          98.55 %      $40,467          98.52 %
                       =======          ======       =======          ======

    Adjusted net
     income plus
     depreciation
     and
     amortization
     allocation
    -------------
    Adjusted net
     income plus
     depreciation
     and
     amortization      $79,847       100.00 %   $159,400       100.00 %
    Amounts
     allocated to
     unvested
     restricted
     shares             (1,157)       (1.45)%     (2,367)       (1.48)%
                        ------          ------        ------          ------
    Amounts
     allocated to
     common shares     $78,690          98.55 %     $157,033          98.52 %
                       =======          ======      ========          ======



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

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


                                Three
                                Months             Six Months
                                Ended                Ended
                               June 30,            June 30,
                                   2009                   2009
                               ---------              ---------
                        Shares       Percent(2)       Shares       Percent(2)
    Weighted average
     shares
    ----------------
    Common shares
     outstanding -
     Basic               77,977          98.25 %       77,959          98.38 %
    Unvested
     restricted
     common shares
     outstanding          1,390           1.75 %        1,287           1.62 %
                          -----           -----         -----           -----
    Total weighted
     average shares
     outstanding         79,367         100.00 %       79,246         100.00 %
                         ======         =======        ======         =======

    Common shares
     outstanding -
     Basic               77,977         100.00 %       77,759         100.00 %
    Effect of
     dilutive
     shares(1)                -               -             -               -
                            ---             ---           ---             ---
    Common shares
     outstanding -
     Diluted             77,977         100.00 %       77,759         100.00 %
                         ======         =======        ======         =======

    Net income
     allocation
    -----------
    Net income          $27,571         100.00 %      $46,042         100.00 %
    Distributed and
     undistributed
     earnings
     allocated to
     unvested
     restricted
     shares                (483)       (1.75)%       (748)       (1.62)%
                           ----          ------          ----          ------
    Earnings
     available to
     common shares      $27,088          98.25 %      $45,294          98.38 %
                        =======          ======       =======          ======

    Adjusted net
     income
     allocation
    ------------
    Adjusted net
     income             $26,884         100.00 %      $48,009         100.00 %
    Amounts allocated
     to unvested
     restricted
     shares                (471)         (1.75)%         (780)         (1.62)%
                           ----          ------          ----          ------
    Amounts allocated
     to common shares   $26,413          98.25 %      $47,229          98.38 %
                        =======          ======       =======          ======

    Adjusted net
     income plus
     depreciation and
     amortization
     allocation
    -----------------
    Adjusted net
     income plus
     depreciation and
     amortization       $81,382         100.00 %     $155,185         100.00 %
    Amounts allocated
     to unvested
     restricted
     shares              (1,425)         (1.75)%       (2,520)         (1.62)%
                         ------          ------        ------          ------
    Amounts allocated
     to common shares   $79,957          98.25 %     $152,665          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