Aircastle Announces Third Quarter 2013 Results

                Aircastle Announces Third Quarter 2013 Results

Quarterly Dividend Increased 21% to $0.20 per Share

PR Newswire

STAMFORD, Conn., Oct. 31, 2013

STAMFORD, Conn., Oct. 31, 2013 /PRNewswire/ --

Highlights

  oOperating and finance lease rental revenue of $165.3 million and Adjusted
    EBITDA^1 of $169.2 million
  oNet loss of ($74.6) million, or ($0.95) per diluted common share
  oAdjusted net loss^1 of ($69.1) million, or ($0.88) per diluted common
    share
  oNet income^1 of $21.0 million, or $0.27 per diluted share, and adjusted
    net income^1 of $26.5 million, or $0.34 per diluted share, excluding Q3
    pre-tax, non-cash impairment charges of $97.6 million related to our
    annual fleet review
  oInvested $980 million through Q3, and closed or secured $690 million of
    additional investments which are expected to close by the end of Q1 2014
  oQ3 fleet utilization of 100% and aircraft portfolio yield of approximately
    13.7%
  oIncreased the common dividend by 21% to $0.20 per common share; represents
    our 30^th consecutive quarterly dividend
  oSold 12.3 million common shares to Marubeni Corporation generating gross
    proceeds of $209 million during the third quarter

Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported a third
quarter 2013 net loss of ($74.6) million, or ($0.95) per diluted common share,
and an adjusted net loss of ($69.1) million, or ($0.88) per diluted common
share. The third quarter results included operating and finance lease rental
revenues of $165.3 million, an increase of 1.4%, versus $163.1 million in the
third quarter of 2012.

The third quarter 2013 results include $106.1 million of non-cash impairment
charges consisting mostly of charges related to our annual fleet review
totaling $97.6 million. These impairment charges relate to six 747-400
converted freighter aircraft and one 737-700 aircraft. Excluding these
charges, third quarter net income was $21.0 million or $0.27 per diluted
share, and adjusted net income was $26.5 million, or $0.34 per diluted share.

Also during the third quarter we recorded a non-cash impairment charge of $8.5
million related to the sale of one 23-year old 767-300ER. This charge was
offset by end of lease maintenance revenue and early lease termination fees
totaling $12.9 million.

Commenting on the results, Ron Wainshal, Aircastle's CEO, stated: "Aircastle's
operating results during the third quarter were excellent as we achieved 100%
utilization for our fleet while maintaining high rental yields. The Company
benefitted from strong portfolio management and favorable market conditions,
with the exception of the air freight sector, where stagnant demand and
increasing supply has resulted in a capacity glut and depressed lease rates.
Accordingly, while all of our aircraft are on lease, we wrote down the
carrying values of our 747-400 converted freighters on short term leases."

Wainshal added, "Aircastle's investment activity this year has been robust.
To date, we closed or secured $1.5 billion in investments for this year and an
additional $210 million which we expect will close during the first quarter of
2014. These acquisitions are deploying the capital provided through our
partnership with Marubeni in an accretive manner while enhancing the Company's
strong and sustainable cash flows. Consistent with our philosophy to share
increases in the Company's earnings base with shareholders our Board increased
the quarterly dividend to $0.20 per share, an increase of 21% since last
quarter and double the level since the beginning of 2011."

Third Quarter Results

Lease rental and finance lease revenues for the third quarter were $165.3
million, up $2.2 million, or 1.4%, period over period, due primarily to the
impact of aircraft acquisitions net of sales of $9.8 million, partially offset
by the impact of extensions, transitions and early lease terminations of $6.4
million and the conversion of operating leases to finance leases of $1.2
million.

Total revenues for the third quarter were $170.1 million, a decrease of $2.8
million, or 1.6%, versus the previous year. This decrease reflects $2.9
million of higher lease incentive amortization primarily related to
acquisition of aircraft with lease premiums, and lower other revenues of $2.8
million driven by higher early lease termination payments received in the
third quarter of 2012, along with $1.3 million of interest income from an
aircraft-backed debt investment acquired in March of 2012 that was repaid in
the first quarter of 2013. These reductions to revenues were partially offset
by $2.2 million of higher lease rental and finance lease revenues and higher
maintenance revenues of $2.0 million.

Adjusted EBITDA for the third quarter was $169.2 million, up $3.0 million, or
1.8%, versus the third quarter of 2012. Higher lease rental, finance lease
and maintenance revenues of $4.2 million, higher gain on the sale of flight
equipment of $3.1 million and lower maintenance expenses of $2.0 million were
partially offset by lower interest income and lower other fees and revenues of
$4.1 million and higher expenses of $2.2 million. Unrelated to the
767-300ER end of life aircraft referenced earlier, the gain on the sale of
flight equipment was primarily associated with a second 767-300ER that we sold
during the quarter for a gain of $3.0 million.

The net loss for the third quarter was ($74.6) million versus a net loss of
($45.8) million in the third quarter of 2012. The higher net loss was
primarily driven by $27.5 million of higher aircraft impairment charges taken
against the total of eight aircraft in the third quarter of 2013 versus the
prior year's third quarter. In addition, total revenues declined by $2.8
million while interest expense increased $3.7 million and depreciation expense
rose by $2.1 million. Offsetting this were higher gains on the sale of flight
equipment of $3.1 million, and lower maintenance costs and taxes of $4.3
million. Net income was $21.0 million, or $0.27 per diluted share, excluding
the non-cash impairment charge related to our annual fleet review.

The adjusted net loss for the quarter was ($69.1) million, versus an adjusted
net loss of ($37.5) million the prior year. The $27.5 million increase in
impairment charges, a $2.1 million increase in depreciation and an increase in
adjusted interest and other expense of $6.3 million was partially offset by a
$3.1 million gain on the sale of flight equipment and lower taxes of $2.3
million. Adjusted net income was $26.5 million, or $0.34 per diluted share,
excluding the non-cash impairment charge related to our annual fleet review.

Aviation Assets

Thus far in 2013, we have closed or committed to acquire 25 aircraft for $1.5
billion. Approximately $525 million of these investments were closed during
the third quarter and $480 million are expected to close by the end of 2013.
We also secured $210 million in acquisitions which we expect to close during
the first quarter of 2014. During the third quarter we sold one 767-300ER and
two 757-200 aircraft and recorded gains from the sale of this flight equipment
totaling $3.1 million. In addition, as discussed above, we sold a 23-year old
767-300ER, recorded an $8.5 million transactional impairment and recorded
$12.9 in maintenance revenue and early termination fees. 

As of September 30, 2013, Aircastle owned 161 aircraft having a net book value
of $5.1 billion. Of this total, 80 aircraft with a net book value of $2.7
billion are unencumbered. Including unrestricted cash, total unencumbered
assets were $3.0 billion.



                                                                Owned

                                                                Aircraft as of

                                                                September 30,

                                                                2013^(1)
                                                                  

Flight Equipment Held for Lease ($ mils.)                       $   5,086
                                                                  

Unencumbered Flight Equipment. ($ mils.)                        $   2,712
                                                               

Number of Aircraft                                              161
                                                               

Number of Unencumbered Aircraft                                 80
                                                               

Passenger Aircraft (% of NBV)                                   80%
                                                               

Freighter Aircraft (% of NBV)                                   20%
                                                               

Weighted Average Fleet Age – Combined (years)^(^2^)             10.0
                                                               

Weighted Average Remaining Combined Lease Term (years)^(^3^)    5.1
                                                               

Weighted Average Fleet Utilization for the Three Months         100%
Ended^(^4^)
                                                               

Portfolio Yield for the Three Months Ended^(5)                  13.7%

(1) Calculated using net book value of flight equipment held for lease,
net investment in finance leases and flight equipment held for sale at period
end.
(2) Weighted average age (years) by net book value.
(3) Weighted average remaining lease term (years) by net book value.
(4) Aircraft on-lease days as a percent of total days in period weighted
by net book value.
(5) Lease rental revenue for the period as a percent of the average net
book value of flight equipment held for lease for the period; quarterly
information is annualized.

Fleet Review and Asset Impairments

During the third quarter of 2013 we recorded $106.1 million of non-cash
impairment charges, of which $97.6 million related to our annual fleet
review. Due to sluggish market demand, increased supply, depressed lease
rates and rising storage levels for large, dedicated freighter aircraft, we
impaired six Boeing 747-400 converted freighter aircraft for $88.6 million to
write down these aircraft to their current market value. During the quarter we
also impaired one mid-age Boeing 737-700 aircraft for $8.9 million. The total
net book value for these seven aircraft was $313.2 million at the end of the
second quarter of 2013. All seven aircraft are currently on lease.

The impairment charges taken during the quarter reflect our current estimates
of future lease rates and residual values associated with these aircraft in
the current market environment. We concluded that these assets will not
recover from their current market levels.

In addition, during the quarter we agreed to early terminate the lease and
sell one 23-year old 767-300ER aircraft, and recorded an $8.5 million
impairment which was offset by $12.1 million of maintenance revenue and $0.9
million of other early termination revenue.

Common Dividend

On October 29, 2013, Aircastle's Board of Directors declared a fourth quarter
2013 cash dividend on its common shares of $0.20 per share, payable on
December 13, 2013 to shareholders of record on November 29, 2013. This is a
21% increase over the previous quarter's cash dividend.

Since early 2011, we have repurchased 11.7 million common shares at an average
cost of $11.87 per share, and we continue to have $30 million remaining under
the current repurchase authorization.

Financing Update

On July 12, 2013, we successfully completed the issuance to Marubeni
Corporation of 12,320,000 common shares, representing 15.25% of Aircastle's
issued and outstanding common shares, after giving effect to the issuance, at
a price of $17.00 per share, for gross proceeds of approximately $209
million. Combined with additional subsequent purchases of Aircastle common
shares in the secondary market, as of October 28, 2013, Marubeni Corporation
owned a total of 14,389,100 shares, representing approximately 17.8% of
Aircastle's issued and outstanding common shares as of the end of the third
quarter.

In early August, we increased our unsecured revolving credit facility from
$150 million to $335 million. We also expanded the bank group from four to
seven global financial institutions and extended the maturity of the facility
to a three year term to expire in August 2016.

In August of 2013, we also issued a fixed rate ECA bond with a face value of
$78.2 million. The bond is guaranteed by COFACE and the proceeds repaid an
interim floating rate bank financing associated with an A330-200 aircraft that
we acquired in 2012. The bond has a fixed coupon rate of 3.488% and matures
in 2024.

Conference Call

In connection with this earnings release, management will host an earnings
conference call on Thursday, October 31, 2013 at 10:00AM Eastern time. All
interested parties are welcome to participate on the live call. The
conference call can be accessed by dialing (800) 967-7138 (from within the
U.S. and Canada) or (719) 457-2607 (from outside of the U.S. and Canada) ten
minutes prior to the scheduled start and referencing the passcode "6107583".

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 one month 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 12:00PM Eastern time on Saturday, November 30, 2013 by dialing
(888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820 (from
outside of the U.S. and Canada); please reference passcode "6107583".

About Aircastle Limited

Aircastle Limited acquires, leases and sells commercial jet aircraft to
airlines throughout the world. As of September 30, 2013, Aircastle's aircraft
portfolio consisted of 161 aircraft on lease with 68 customers located in 37
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 EBITDA and Adjusted Net Income 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 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 report. 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 expectations include, but are not limited to, capital markets
disruption or volatility which could adversely affect our continued ability to
obtain additional capital to finance new investments or our working capital
needs; government fiscal or tax policies, general economic and business
conditions or other factors affecting demand for aircraft or aircraft values
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 political unrest in
North Africa, the Middle East or elsewhere, 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's filings with the SEC, including as previously disclosed in
Aircastle's 2012 Annual Report on Form 10-K, and elsewhere in this report. 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 report. 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 Supplemental Financial Information accompanying this press
release for a reconciliation of GAAP to non-GAAP numbers.



Contact:
Frank Constantinople, SVP Investor Relations
Tel: +1-203-504-1063
fconstantinople@aircastle.com

The IGB Group
Leon Berman
Tel: +1-212-477-8438
lberman@igbir.com



Aircastle Limited and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)
                                                   December31,  September30,
                                                   2012          2013
                                                                 (Unaudited)
ASSETS
Cash and cash equivalents                          $ 618,217     $  238,150
Accounts receivable                                5,625         5,127
Restricted cash and cash equivalents               111,942       191,843
Restricted liquidity facility collateral           107,000       107,000
Flight equipment held for lease, net of
accumulated depreciation of $1,305,064 and         4,662,661     4,938,113
$1,424,057
Net investment in finance leases                   119,951       148,005
Other assets                                       186,764       177,242
Total assets                                       $ 5,812,160   $  5,805,480
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Borrowings from secured financings (including
borrowings of ACS Ireland VIEs of $207,926 and     $ 1,848,034   $  1,581,118
$168,107, respectively)
Borrowings from unsecured financings               1,750,642     1,750,556
Accounts payable, accrued expenses and other       108,593       134,892
liabilities
Lease rentals received in advance                  53,189        48,379
Liquidity facility                                 107,000       107,000
Security deposits                                  87,707        110,410
Maintenance payments                               379,391       428,615
Fair value of derivative liabilities               61,978        44,307
Total liabilities                                  4,396,534     4,205,277
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Preference shares, $.01par value,
50,000,000shares authorized, no shares issued and
outstanding
Common shares, $.01pr value, 250,000,000shares
authorized, 68,639,729 shares issued and
outstanding at December31, 2012; and 80,776,975   686           808
shares issued and outstanding at September 30,
2013
Additional paid-in capital                         1,360,555     1,560,509
Retained earnings                                  180,675       126,140
Accumulated other comprehensive loss               (126,290)     (87,254)
Total shareholders' equity                         1,415,626     1,600,203
Total liabilities and shareholders' equity         $ 5,812,160   $  5,805,480





Aircastle Limited and Subsidiaries
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
(Unaudited)
                             Three Months Ended        Nine Months Ended
                             September 30,             September 30,
                             2012         2013         2012        2013
Revenues:
Lease rental revenue         $ 159,547    $ 161,148    $ 465,413   $ 475,656
Finance lease revenue        3,518        4,122        4,474       12,120
Amortization of lease
premiums, discounts and      (6,838)      (9,737)      (6,392)     (25,527)
lease incentives
Maintenance revenue          10,944       12,932       37,126      42,983
Total lease revenue          167,171      168,465      500,621     505,232
Other revenue                5,695        1,625        9,341       11,425
Total revenues               172,866      170,090      509,962     516,657
Operating expenses:
Depreciation                 68,413       70,469       200,024     212,448
Interest, net                54,101       57,843       167,203     183,651
Selling, general and
administrative (including
non-cash share based payment
expense of $1,128 and $1,067
for the three months ended,  11,907       12,830       36,616      39,297
and $3,233 and $2,931 for
the nine months ended
September 30, 2012 and 2013,
respectively)
Impairment of Aircraft       78,676       106,136      88,787      112,335
Maintenance and other costs  3,926        1,914        11,943      11,464
Total expenses               217,023      249,192      504,573     559,195
Other income:
Gain on sale of flight       11           3,092        3,062       25,601
equipment
Other                        —            855          604         5,016
Total other income           11           3,947        3,666       30,617
Income (loss) from
continuing operations before (44,146)     (75,155)     9,055       (11,921)
income taxes
Income tax provision         1,701        (597)        5,976       6,719
(benefit)
Net income (loss)            $ (45,847)   $ (74,558)   $ 3,079     $ (18,640)
Earnings (loss) per common
share — Basic:
Net income (loss) per share  $ (0.65)     $ (0.95)     $ 0.04      $ (0.26)
Earnings (loss) per common
share — Diluted:
Net income (loss) per share  $ (0.65)     $ (0.95)     $ 0.04      $ (0.26)
Dividends declared per share $ 0.15       $ 0.165      $ 0.45      $ 0.495



Aircastle Limited and Subsidiaries
Consolidated Statements of Comprehensive Income (Loss)
(Dollars in thousands)
(Unaudited)
                              Three Months Ended        Nine Months Ended
                              September 30,             September 30,
                              2012         2013         2012       2013
Net income (loss)             $ (45,847)   $ (74,558)   $ 3,079    $ (18,640)
Other comprehensive income,
net of tax:
Net change in fair value of
derivatives, net of tax
 expense of $37 and $78
for the three months ended
and                           1,426        1,798        23,708     13,751
 $465 and $389 for the
nine months ended, September
 30, 2012 and 2013,
respectively
Net derivative loss           8,966        7,300        21,903     25,285
reclassified into earnings
Other comprehensive income    10,392       9,098        45,611     39,036
Total comprehensive income    $ (35,455)   $ (65,460)   $ 48,690   $ 20,396
(loss)



Aircastle Limited and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
                                                       Nine Months Ended
                                                       September 30,
                                                       2012        2013
Cash flows from operating activities:
Net income (loss)                                      $ 3,079     $ (18,640)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation                                           200,024     212,448
Amortization of deferred financing costs               10,082      11,757
Amortization of net lease discounts and lease          6,392       25,527
incentives
Deferred income taxes                                  3,609       3,419
Non-cash share based payment expense                   3,233       2,931
Cash flow hedges reclassified into earnings            21,903      25,285
Ineffective portion of cash flow hedges                1,840       197
Security deposits and maintenance payments included in (36,312)    (32,047)
earnings
Gain on sale of flight equipment                       (3,062)     (25,601)
Impairment of aircraft                                 88,787      112,335
Other                                                  1,820       (4,481)
Changes in certain assets and liabilities:
Accounts receivable                                    (9,180)     1,588
Other assets                                           (3,278)     1,155
Accounts payable, accrued expenses and other           14,071      7,978
liabilities
Lease rentals received in advance                      2,948       (4,538)
Net cash provided by operating activities              305,956     319,313
Cash flows from investing activities:
Acquisition and improvement of flight equipment and    (450,962)   (837,183)
lease incentives
Proceeds from sale of flight equipment                 54,439      285,199
Restricted cash and cash equivalents related to sale   35,762      (2,200)
of flight equipment
Aircraft purchase deposits and progress payments       (25,155)    (5,655)
Net investment in finance leases                       (91,500)    (11,595)
Collections on finance leases                          2,041       6,658
Purchase of debt investment                            (43,626)    —
Principal repayments on debt investment                3,245       42,001
Other                                                  (544)       (852)
Net cash used in investing activities                  (516,300)   (523,627)
Cash flows from financing activities:
Issuance of shares net of repurchases                  (30,692)    197,478
Proceeds from notes and term debt financings           877,100     78,230
Securitization and term debt financing repayments      (783,976)   (430,482)
Deferred financing costs                               (17,794)    (2,910)
Restricted secured liquidity facility collateral       3,000       —
Secured liquidity facility collateral                  (3,000)     —
Restricted cash and cash equivalents related to        102,315     (77,701)
financing activities
Security deposits received                             11,400      19,545
Security deposits returned                             (3,217)     (3,890)
Maintenance payments received                          103,527     134,758
Maintenance payments returned                          (36,967)    (54,886)
Payments for terminated cash flow hedges               (50,757)    —
Dividends paid                                         (32,158)    (35,895)
Net cash (used in) provided by financing activities    138,781     (175,753)
Net increase (decrease) in cash and cash equivalents   (71,563)    (380,067)
Cash and cash equivalents at beginning of period       295,522     618,217
Cash and cash equivalents at end of period             $ 223,959   $ 238,150



Aircastle Limited and Subsidiaries
Supplemental Financial Information
(Amount in thousands, except per share amounts)
(Unaudited)
                      Three Months Ended            Nine Months Ended
                      September 30,                 September 30,
                      2012            2013           2012          2013
Revenues              $ 172,866       $ 170,090     $ 509,962     $ 516,657
EBITDA                $  85,206      $  62,894    $ 382,674     $ 409,705
Adjusted EBITDA       $ 166,258       $ 169,242     $ 475,343     $ 521,244
Adjusted net income   $ (37,491)     $ (69,091)    $  20,637    $   4,361
(loss)
Adjusted net income
(loss) allocable to   $ (37,491)     $ (69,091)     $ 20,466     $   4,327
common shares
Per common share -    $   (0.53)   $   (0.88)   $   0.29   $   0.06
Basic
Per common share -    $   (0.53)   $   (0.88)   $   0.29   $   0.06
Diluted
Basic common shares   70,349          78,544         71,249        71,462
outstanding
Diluted common shares 70,349          78,544         71,249        71,462
outstanding

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

Effect of Non-Cash Impairment Charges related to Annual Fleet Review on Third
Quarter 2013 Financial Results

(Unaudited)


                                               After-tax
                               Adjusted Net    effect of        Adjusted Net
                               Income          non-cash         Income
Three Months Ended September   calculation     impairment       calculation
30, 2013                       including       charges related  excluding the
($ in thousands)               non-cash        to               effect of
                               impairment      annual fleet     non-cash
                               charges         review           impairment
                                               on Q3:13         charges
                                               results
Net income (loss)              $( 74,558)      $95,598          $21,040
Ineffective portion of cash    91              -                91
flow hedges
Gain on mark to market of
interest rate derivative       ( 855)          -                ( 855
contracts
Write-off of deferred          150             -                150
financing fees
Stock compensation expense     1,067           -                1,067
Term Financing No. 1           4,591           -                4,591
Amortization
Securitization No. 1 hedge     423             -                423
loss amortization charges
Adjusted net income (loss)     $( 69,091)      $95,598          $26,507
Net income (loss) per share    $( 0.95)        $1.22            $0.27
- basic
Net income (loss) per share    $( 0.95)        $1.22            $0.27
- diluted
Adjusted net income (loss)     $( 0.88)        $1.22            $0.34
per share - basic
Adjusted net income (loss)     $( 0.88)        $1.22            $0.34
per share - diluted

Note: The tax effect related to the annual fleet review is $1,994 which
reduces the non-cash impairment charge from $97,592 to $95,598. Per share
amounts do not add due to rounding.



Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
EBITDA and Adjusted EBITDA Reconciliation
(Dollars in thousands)
(Unaudited)
                             Three Months Ended        Nine Months Ended
                             September 30,             September 30,
                             2012         2013         2012        2013
                             (Dollars in thousands)
Net income (loss)            $ (45,847)   $ (74,558)   $ 3,079     $ (18,640)
Depreciation                 68,413       70,469       200,024     212,448
Amortization of net lease
discounts and lease          6,838        9,737        6,392       25,527
incentives
Interest, net                54,101       57,843       167,203     183,651
Income tax provision         1,701        (597)        5,976       6,719
EBITDA                       $ 85,206     $ 62,894     $ 382,674   $ 409,705
Adjustments:
Impairment of aircraft       78,676       106,136      88,787      112,335
Non-cash share based payment 1,128        1,067        3,233       2,931
expense
Gain on mark to market of
interest rate derivative     —            (855)        (599)       (3,727)
contracts
Contract termination expense 1,248        —            1,248       —
Adjusted EBITDA              $ 166,258    $ 169,242    $ 475,343   $ 521,244

We define EBITDA as income (loss) 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-USGAAP measure is helpful in identifying trends in our performance.

This measure provides an assessment of controllable expenses and affords
management the ability to make decisions which are expected to facilitate
meeting current financial goals as well as achieving optimal financial
performance. It provides an indicator for management to determine if
adjustments to current spending decisions are needed.

EBITDA provides us with a measure of operating performance because it assists
us in comparing our operating performance on a consistent basis as it removes
the impact of our capital structure (primarily interest charges on our
outstanding debt) and asset base (primarily depreciation and amortization)
from our operating results. Accordingly, this metric measures our financial
performance based on operational factors that management can impact in the
short-term, namely the cost structure, or expenses, of the organization.
EBITDA is one of the metrics used by senior management and the board of
directors to review the consolidated financial performance of our business.

We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to
give effect to adjustments required in calculating covenant ratios and
compliance as that term is defined in the indenture governing our senior
unsecured notes. Adjusted EBITDA is a material component of these covenants.



Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
Adjusted Net Income (Loss) Reconciliation
(Dollars in thousands)
(Unaudited)
                     Three Months Ended September  Nine Months Ended September
                     30,                           30,
                     2012             2013         2012           2013
                     (Dollars in thousands)
Net income (loss)    $  (45,847)      $ (74,558)   $  3,079       $  (18,640)
 Loan        —                —            —              2,954
termination fee^(1)
Ineffective portion
and termination of   1,474            91           1,840          2,222
hedges^(1)
Gain on mark to
market of interest   —                (855)        (599)          (3,727)
rate derivative
contracts^(2)
 Write-off
of deferred          —                150          2,914          3,975
financing fees^(1)
Stock compensation   1,128            1,067        3,233          2,931
expense^(3)
 Term
Financing No. 1
hedge loss           4,506            4,591        8,922          13,478
amortization
charges^(1)

Securitization No. 1
hedge loss           —                423          —              1,168
amortization charges
^(1)
 Contract     1,248            —            1,248          —
termination expense
Adjusted net income  $  (37,491)      $ (69,091)   $  20,637      $  4,361
(loss)





(1) Included in Interest, net.
(2) Included in Other income (expense).
(3) Included in Selling, general and administrative expenses.

Management believes that ANI, when viewed in conjunction with the Company's
results under USGAAP and the below reconciliation, provides useful
information about operating and period-over-period performance, and provides
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 and gains or losses related to
flight equipment and debt investments.



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

                           September 30, 2013         September 30, 2013
Weighted-average shares:   Shares       Percent^(2)   Shares      Percent^(2)
Common shares outstanding  78,544       99.15%        71,462         99.22%
– Basic
Unvested restricted common 669          0.85%         563            0.78%
shares
Total weighted-average     79,214       100.00%       75,025         100.00%
shares outstanding
Net income (loss)
allocation
Net income (loss)          $(74,558)    100.00%       $(18,640)      100.00%
Distributed and
undistributed earnings     -            (0.00%)       -              (0.00%)
allocated to unvested
restricted shares
Earnings (loss) available  $(73,928))   100.00%       $(18,640)      100.00%
to common shares
Adjusted net income (loss)
allocation
Adjusted net income (loss) $(69,091)    100.00%       $4,361         100.00%
Amounts allocated to       -            (0.00%)       (34)           (0.78%)
unvested restricted shares
Amounts allocated to       $(69,091)    100.00%       $4,327         99.22%
common shares

^(1) ^For the three and nine months ended September 30, 2013 the company
had no dilutive shares.
^(2) ^Percentages rounded to two decimal places.

Under the two-class method, adjusted net income (loss) per common share is
computed by dividing the sum of distributed adjusted net income (loss)
allocated to common shareholders and undistributed adjusted net income (loss)
allocated to common shareholders by the weighted average number of common
shares outstanding for the period. In applying the two-class method,
distributed and undistributed adjusted net income (loss) is allocated to both
common shares and restricted common shares based on the total weighted average
shares outstanding during the period. Because the holders of the participating
restricted common shares were not contractually required to share in the
Company's losses, in applying the two-class method to compute basic and
diluted adjusted net loss per common share, no allocation to restricted common
shares was made for the three months ended September 30, 2012 and 2013.







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

                              September 30, 2012        September 30, 2012
Weighted-average shares:      Shares      Percent^(2)   Shares    Percent^(2)
Common shares outstanding –   70,349      99.19%        71,249    99.17%
Basic
Unvested restricted common    571         0.81%         597       0.83%
shares
Total weighted-average shares 70,921      100.00%       71,846    100.00%
outstanding
Net income (loss) allocation
Net income (loss)             $(45,847)   100.00%       $3,079    100.00%
Distributed and undistributed
earnings allocated to         -           (0.00%)       (25)      (0.83%)
unvested restricted shares
Earnings (loss) available to  $(45,847)   100.00%       $3,054    99.17%
common shares
Adjusted net income (loss)
allocation
Adjusted net income (loss)    $(37,491)   100.00%       $20,637   100.00%
Amounts allocated to unvested -           (0.00%)       (171)     (0.83%)
restricted shares
Amounts allocated to common   $(37,491)   100.00%       $20,466   99.17%
shares



^(1) ^For the three and nine months ended September 30, 2012 the company
had no dilutive shares.
^(2) ^Percentages rounded to two decimal places.

Under the two-class method, adjusted net income (loss) per common share is
computed by dividing the sum of distributed adjusted net income (loss)
allocated to common shareholders and undistributed adjusted net income (loss)
allocated to common shareholders by the weighted average number of common
shares outstanding for the period. In applying the two-class method,
distributed and undistributed adjusted net income (loss) is allocated to both
common shares and restricted common shares based on the total weighted average
shares outstanding during the period. Because the holders of the participating
restricted common shares were not contractually required to share in the
Company's losses, in applying the two-class method to compute basic and
diluted adjusted net loss per common share, no allocation to restricted common
shares was made for the three months ended September 30, 2012 and 2013.

SOURCE Aircastle Limited

Website: http://www.aircastle.com
 
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