Aircastle Limited
May 14, 2007
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Aircastle Announces First Quarter 2007 Results

First Quarter 2007 Highlights





    Summary of Financial Results

 


    STAMFORD, Conn., May 14 /PRNewswire-FirstCall/ -- Aircastle Limited (the
"Company" or "Aircastle") (NYSE: AYR) reported first quarter net income of
$21.5 million (including non-cash charges of $23.7 million for depreciation
and share-based compensation expense), or $0.36 per diluted common share.
Income from continuing operations was $20.9 million, and income from
discontinued operations of $684,000 reflects one aircraft being designated as
held for sale during the quarter.


    First quarter revenue of $70.0 million increased 17.5% versus the fourth
quarter 2006, and 123% over first quarter 2006.  Income from continuing
operations grew 9.4% over fourth quarter 2006 and 181% year over year. The
increases in both revenues and income from continuing operations reflect the
continued growth in our portfolio of aviation assets compared to the prior
periods.


    Investments in Aviation Assets


    As of March 31, 2007 Aircastle owned aviation assets having an aggregate
purchase price of $2.24 billion, including 77 aircraft all of which are on
lease or subject to binding lease commitments, and one aircraft designated as
held for sale.  Aircastle also has outstanding commitments to acquire $1.43
billion in aviation assets as of March 31, 2007, which combined with its owned
portfolio aggregates to $3.67 billion including 115 aircraft leased to 47
lessees located in 27 countries, with one aircraft designated as held for
sale.


    On January 22, 2007 Aircastle entered into a definitive purchase agreement
with Guggenheim Aviation Investment Fund L.P. ("GAIF") to purchase 38 aircraft
for an aggregate purchase price of approximately $1.6 billion. The aircraft
are scheduled to be delivered through February 2009, with 28 of these aircraft
scheduled for delivery in 2007.


    During the first quarter of 2007 Aircastle acquired $469.3 million of
aviation assets including nine aircraft for $454.0 million and secured debt
investments of $15.3 million.   First quarter 2007 acquisitions included six
aircraft for $265.5 million as part of the GAIF transaction.


    Joe Adams, Deputy Chairman of Aircastle, commented, "We had an
exceptionally strong first quarter in terms of investment activity --
committing to $1.7 billion and closing $469.3 million of new investments.
Overall, we are very pleased with the pace of growth of the business, having
sourced over $1.4 billion in investments closed or expected to close in 2007.
This significant level of investment activity puts us in a great position to
continue to grow our dividend."


    Aircastle's CEO, Ron Wainshal, added, "I am excited about the growth of
our business and our ability to source a broad range of new investments in a
competitive marketplace.  In the first five months of 2007, we already
committed and closed more assets than 2006 and I anticipate we will continue
to build on this success while focusing on efficiently financing and managing
the integration of aircraft in our portfolio."


    Capital Markets Activity


    In conjunction with the Guggenheim acquisition agreement, Aircastle
increased its capacity under its senior secured warehouse facility and its
senior secured revolving credit facility to $1.25 billion and $450.0 million,
respectively, and successfully completed a follow-on equity offering which
generated $512.3 million in gross proceeds during February 2007. After
completion of the follow-on equity offering, borrowing capacity under the
revolving credit facility was reduced to $250.0 million.


    Conference Call


    In connection with this earnings release, management will host an earnings
conference call on Monday, May 14, 2007 at 11:00 A.M. Eastern time. All
interested parties are welcome to participate on the live call. The conference
call can be accessed by dialing (877) 704-5379 (from within the U.S.) or (913)
312-1293 (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 Monday, May 21, 2007 by dialing
(888) 203-1112 (from within the U.S.) or (719) 457-0820 (from outside of the
U.S.); please reference passcode "7195493."


    About Aircastle Limited


    Aircastle Limited is a global aviation company that acquires and leases
high-utility commercial jet aircraft to airlines throughout the world. As of
April 30, 2007, Aircastle had acquired and committed to acquire aviation
assets having an aggregate purchase price equal to $2.5 billion and $1.4
billion, respectively, for a total of approximately $3.9 billion.


    Safe Harbor


    Certain items in this press release 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 and lease aircraft, pay and grow dividends, realize gains
or income from our debt investments, secure financing and increase revenues
and earnings. Words such as "anticipate(s)", "expect(s)", "intend(s)",
"plan(s)", "target(s)", "project(s)", "believe(s)", "will", "would",
"seek(s)", "estimate(s)" 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. Factors that could cause actual results to
differ materially from Aircastle Limited's expectations include, but are not
limited to, our significant customer concentration; our continued ability to
obtain additional capital to finance our growth; our continued ability to
acquire aircraft at attractive prices; our continued ability to obtain
favorable tax treatment in Bermuda and other jurisdictions; our ability to pay
or maintain dividends; our ability to lease aircraft at favorable rates and
maintain the value of our aircraft; our ability to realize gains or income
from our debt investments; general economic conditions and economic conditions
in the markets in which we operate; competitive pressures within the industry
and/or markets in which we operate; the creditworthiness of our airline
customers; interest rate fluctuations; our ability to obtain certain required
licenses and approvals; the impact of future terrorist attacks or wars on the
airline industry; our concentration of leases in certain geographical regions;
and other risks detailed from time to time in Aircastle's filings with the
Securities and Exchange Commission ('SEC"), including its Annual Report on
Form 10-K filed with the SEC on March 22, 2007. Such forward-looking
statements speak only as of the date of this press release. Aircastle
expressly disclaims any obligation to release publicly any updates or
revisions to any forward-looking statements contained herein to reflect any
change in the Company's expectations with regard thereto or change in events,
conditions or circumstances on which any statement is based.


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

                                 (Unaudited)

                                                        Three Months Ended
                                                              March 31,
                                                          2006        2007
    Revenues
      Lease rentals                                      $29,752     $67,358
      Interest income                                      1,641       2,588
      Other revenue                                            -          58
        Total revenues                                    31,393      70,004
    Expenses
      Depreciation                                         9,076      21,633
      Interest (net of interest income of
       $1,035 and $1,761 for 2006 and
       2007, respectively)                                 7,364      16,730
      Selling, general and administrative
       (including non-cash share based
       payment expense of $1,292 and
       $1,258 for 2006 and 2007,
       respectively)                                       5,874       8,497
      Other expenses                                         640         382
        Total expenses                                    22,954      47,242
        Income from continuing operations
         before income taxes                               8,439      22,762
      Income tax provision                                 1,004       1,905
      Income from continuing operations                    7,435      20,857
      Earnings from discontinued
       operations, net of income taxes                     3,745         684
      Net income                                         $11,180     $21,541
      Basic earnings per share:
        Income from continuing operations                   $.18        $.35
        Earnings from discontinued
         operations, net of income taxes                     .09         .01
        Net income per share                                $.27        $.36
      Diluted earnings per share:
        Income from continuing operations                   $.18        $.35
        Earnings from discontinued
         operations, net of income taxes                     .09         .01
        Net income per share                                $.27        $.36
      Dividends declared per share                            $-        $.50



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


                                                    December 31,    March 31,
                                                         2006         2007
                                                                   (unaudited)
    ASSETS

    Cash and cash equivalents                           $58,118      $49,008
    Accounts receivable                                   7,696        3,516

    Debt securities                                     121,273      124,532

    Restricted cash and cash equivalents                106,069      121,442

    Flight equipment held for sale                       31,280       30,462
    Flight equipment held for lease, net of
     accumulated depreciation of $64,111 and $85,593  1,559,364    1,991,768
    Leasehold improvements, furnishings and
     equipment, net of accumulated depreciation
     of $694 and $842                                     1,506        1,340
    Fair value of derivative assets                         313          163
    Aircraft purchase deposits                            4,650       13,250
    Other assets                                         28,434       34,767
        Total assets                                 $1,918,703   $2,370,248

    LIABILITIES AND SHAREHOLDERS' EQUITY
    LIABILITIES

    Borrowings under credit facilities                 $442,660     $376,283
    Borrowings from securitization                      549,400      544,000
    Accounts payable, accrued expenses and other
     liabilities                                         31,384       34,440
    Dividends payable                                    22,584       33,640
    Lease rentals received in advance                    11,068       14,044
    Repurchase agreements                                83,694       80,044
    Security deposits                                    39,767       48,734

    Maintenance payments                                 82,914      102,472
    Fair value of derivative liabilities                 18,035       29,425
        Total liabilities                             1,281,506    1,263,082

    Commitments and Contingencies

    SHAREHOLDERS' EQUITY
    Preference shares, $.01 par value, 50,000,000
     shares authorized, no shares issued and outstanding
     at December 31, 2006 and March 31, 2007                  -            -
    Common shares, $.01 par value, 250,000,000 shares
     authorized, 51,621,279 shares issued and
     outstanding at December 31, 2006; and 67,268,329
     shares issued and outstanding at March 31, 2007        516          670
    Additional paid-in capital                          630,154    1,124,103
    Dividends in excess of earnings                      (3,382)     (15,475)
    Accumulated other comprehensive income (loss)         9,909       (2,132)
      Total shareholders' equity                        637,197    1,107,166
      Total liabilities and shareholders' equity     $1,918,703   $2,370,248




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


                                                          Three Months Ended
                                                                March 31,
                                                            2006        2007
    Cash flows from Operating activities
    Net income                                           $11,180     $21,541
      Adjustments to reconcile net income to net
       cash provided by operating activities (inclusive
       of amounts related to discontinued operations)
        Depreciation                                       9,915      22,394
        Amortization of deferred financing costs             793       1,514
        Amortization of lease premiums and
         discounts, and other related lease items           (163)     (1,701)
        Deferred income taxes                                155       1,892
        Accretion of purchase discounts on debt
         securities                                         (266)       (208)
        Non-cash share based payment expense               1,292       1,258
        Cash flow hedges reclassified into
         earnings                                              -      (1,007)
        Ineffective portion of cash flow hedges             (253)         42
        Gain on the sale of flight equipment              (2,240)          -
        Changes in certain assets and liabilities:
          Accounts receivable                               (377)      4,180
          Restricted cash and cash equivalents           (31,689)    (15,373)
          Other assets                                      (222)       (458)
          Accounts payable, accrued expenses and
           other liabilities                                (570)     (5,056)
          Lease rentals received in advance                  920       2,976
          Security deposits and maintenance payments      25,429      28,525
            Net cash provided by operating activities     13,904      60,519
    Cash flows from investing activities
      Acquisition and improvement of flight equipment   (200,456)   (446,390)
      Disposition of flight equipment held for sale       57,157           -
      Restricted cash from disposition of flight
       equipment held for sale                           (20,325)          -
      Purchase of debt securities                        (92,726)    (15,251)
      Margin call on derivative                                -      (5,660)
      Leasehold improvements, furnishings and equipment     (199)          -
      Aircraft purchase deposits                          (1,716)     (8,600)
      Principal repayments on debt securities              3,106      12,664

        Net cash used in investing activities           (255,159)   (463,237)
    Cash flows from financing activities
      Issuance of common shares, net                      36,932     493,056
      Repurchase of shares from employee                       -        (210)
      Credit facility borrowings                         114,937     486,584
      Securitization repayments                                -      (5,400)

      Credit facility repayments                         (36,666)   (552,961)
      Deferred financing costs                            (2,106)     (1,227)
      Proceeds from repurchase agreements                 75,968         140
      Principal repayment on repurchase agreement           (199)     (3,790)
      Dividends paid                                           -     (22,584)
        Net cash provided by financing activities        188,866     393,608
    Net decrease in cash and cash equivalents            (52,389)     (9,110)
    Cash and cash equivalents at beginning of period      79,943      58,118
    Cash and cash equivalents at end of period           $27,554     $49,008



SOURCE  Aircastle Limited


    CONTACT:  Julia Hallisey, Investor Relations of Aircastle Limited,

+1-203-504-1063

    Web site:  http://www.aircastle.com