Willis Lease Finance Earns $4.2 Million in Second Quarter as Year-to-Date Income Increases 5.2%

• Press Release
• Source: Willis Lease Finance Corp.
• On 6:30 am EDT, Tuesday August 11, 2009

NOVATO, Calif., Aug. 11, 2009 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (Nasdaq:WLFC - News), a leading lessor of commercial jet engines, today reported solid second quarter and year-to-date profitability fueled by growth in its lease portfolio as well as lower borrowing costs. Second quarter 2009 net income available to common shareholders totaled $4.2 million, or $0.47 per diluted common share, compared to $5.6 million, or $0.65 per diluted common share, in the like quarter a year ago.

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Symbol	Price	Change
WLFC	13.27	0.00

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Net income available to common shareholders in the first six months of 2009 increased 5.2% to $10.5 million, or $1.18 per diluted common share, compared to $10.0 million, or $1.14 per diluted common share, in the first six months of 2008.

Second Quarter and Year-to-Date 2009 Highlights (at or for the periods ended June 30, 2009 compared to June 30, 2008)

 * The lease portfolio increased 14% from a year ago to $895 million,
   with 4 engines worth $37 million added in the last week of the
   quarter, having no impact on Q2-09 revenues.
 * Liquidity available for lease asset purchases of $176 million
   comprised of $118 million in available warehouse facilities, $39
   million of unrestricted cash and $19 million of restricted cash set
   aside for engine purchases, more than adequate to fund remaining
   2009 net purchase commitments of $74 million
 * Year-to-date operating cash flows increased 89% to $44.8 million.
 * Second quarter average utilization was 92% compared to 96% a year
   ago, which was an all-time high.
 * Year-to-date lease rent revenues rose 0.3% to $51.2 million.
 * Maintenance reserve revenues contributed $7.6 million to second
   quarter revenue and $15.3 million year-to-date.
 * Year-to-date total revenue was down $1.5 million or 2.2% primarily
   due to lower gains from sale of equipment in the current period and
   a $1.0 million settlement that boosted other income a year ago.
 * Second quarter total net finance costs fell 14.1% reflecting lower
   interest costs tied to LIBOR and a gain on extinguishment of debt
   of $0.9 million generated from debt repurchase.
 * Book value per common share was $19.65 compared to $17.79 a year
   ago.
 * Willis Lease was added to the Russell 2000 Index and included on
   Fortune Small Business Magazine's list of America's 100 fastest
   growing small public companies.

"We continue to see strong demand for leased engines as operators look to conserve capital and efficiently manage assets," said Charles F. Willis, President and CEO. "In today's environment, where 'cash is king', airlines are leasing engines to defer costly major overhauls of existing engines as well as to avoid making significant capital investments in new engines. We don't see this situation changing anytime soon. This bodes well for more purchase leaseback opportunities, which are typically long term leases, in the coming months as airlines choose to lease rather than own engines. The emphasis on reducing cash outlays also helps our short term leasing business, because we can provide the engines our customers want for varying lease terms such as three, six or nine months to get them through a tight cash period."

"Our North American CFM56-7B engine Lease Pool provides a great example of how we are working with our customers to help them achieve their objectives. Willis Lease engines now provide more than 20% of the on-wing spare engine support for the North American CFM56-7B Pool members," Willis said. "We are very pleased by the success of this unique program. It is opening doors worldwide for expansion of pooling programs into new markets and engine types. We are working on a number of initiatives to adapt the technology that is working so well in North America to develop a broader international pooling program aimed at enhancing our competitive advantage in the engine leasing market."

"Approximately 60% of our engine portfolio supports new generation narrowbody aircraft that are the most popular models in the global fleet. These engines, which include the CFM56-7B, CFM56-5B and the IAE V2500, are the focus of our portfolio expansion and the foundation of our pooling programs," said Donald A. Nunemaker, Executive Vice President & General Manager-Leasing. "Lease demand is holding up very well for these engine types, and through existing purchase commitments, we expect to add at least eight more to our portfolio before the end of the year."

"While the economic recession has had a tumultuous impact on the aviation industry, we are seeing some benefits. The historically low interest rates have provided cost savings in the form of reduced interest costs, our single largest cash expense," said Brad Forsyth, Chief Financial Officer. "In addition, we were able to repurchase $2.1 million of outstanding debt at a significant discount to face value, which generated a $0.9 million gain on extinguishment of debt this quarter." Despite the growth in debt levels, net finance costs declined 14.1% in the second quarter and 12.5% year-to-date, contributing to $44.8 million in operating cash flows in 2009 year-to-date compared to $23.7 million a year ago.

"We also continue to add to our hedging positions to reduce our exposure to potential rising interest rates in the future," Forsyth added. "We added $125.0 million in interest rate swaps in the second quarter and $240.0 million since December 2008 when swap rates dropped to historic lows, bringing our total hedge position to approximately 75% of our outstanding floating-rate debt, effectively locking in today's favorable swap rates for the next four to six years."

As discussed last quarter, the change in California tax law resulted in a $1.8 million reduction in future taxes due. This adjustment was offset against the first quarter tax provision, increasing after-tax earnings by $1.8 million in the first six months of 2009. The company's effective combined federal/state tax rate is approximately 36%.

Balance Sheet

Year-to-date, 10 engines were purchased and 6 engines were sold or consigned. At June 30, 2009, the company had 164 commercial aircraft engines, 3 aircraft parts packages and 4 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $895.0 million, compared to 160 commercial aircraft engines, 3 aircraft parts packages, 4 aircraft and other engine-related equipment in its lease portfolio with a net book value of $786.8 million a year ago. As a result of the engine portfolio growth, total assets grew 18% to $1.08 billion at June 30, 2009, compared to $920 million a year ago.

The revolving credit facility converted to a term note of $254.5 million on June 30, 2009, with approximately 5% of the outstanding amount due in monthly installments from July 2009 through June 2010 and the remaining 95% balance due at June 30, 2010. "We are currently working with our banking partners to renew this facility. While credit markets are less favorable than when this facility was amended and extended in 2007, we are generating interest from a number of our current banks as well as new revolver participants," said Forsyth. The company's funded debt-to-equity ratio was 3.36 to 1 at June 30, 2009, compared to 3.21 to 1 at June 30, 2008.

About Willis Lease Finance

Willis Lease Finance Corporation leases spare commercial aircraft engines and aircraft to commercial airlines, aircraft engine manufacturers, air cargo carriers and maintenance, repair and overhaul facilities worldwide. These leasing activities are integrated with the purchase and resale of used and refurbished commercial aircraft engines. In June 2009, Willis Lease Finance was added to the Russell 2000 Index, a subset of the Russell 3000 Index, which are both widely used by professional money managers as benchmarks for investment strategies. In July 2009, Willis Lease Finance was ranked 19th on Fortune Small Business Magazine's America's list of 100 fastest growing small public companies.

Except for historical information, the matters discussed in this press release contain forward-looking statements that involve risks and uncertainties. Do not unduly rely on forward-looking statements, which give only expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made; and we undertake no obligation to update them. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include, but are not limited to, the effects on the airline industry and the global economy of events such as terrorist activity, changes in oil prices and other disruptions to the world markets; trends in the airline industry and our ability to capitalize on those trends, including growth rates of markets and other economic factors; risks associated with owning and leasing jet engines and aircraft; our ability to successfully negotiate equipment purchases, sales and leases, to collect outstanding amounts due and to control costs and expenses; changes in interest rates and availability of capital, both to us and our customers; our ability to continue to meet the changing customer demands; regulatory changes affecting airline operations, aircraft maintenance, accounting standards and taxes; the market value of engines and other assets in our portfolio; and risks detailed in the Company's Annual Report on Form 10-K and other continuing reports filed with the Securities and Exchange Commission.

                   WILLIS LEASE FINANCE CORPORATION
                           AND SUBSIDIARIES
                  Consolidated Statements of Income
           (In thousands, except per share data, unaudited)

                       Three Months            Six Months Ended
                      Ended June 30,    %           June 30,      %
                      2009      2008  Change    2009      2008  Change
                     -------  ------- -------  -------  ------- -------
 REVENUE
 Lease rent revenue  $25,283  $26,216  (3.6)%  $51,178  $51,038   0.3%
 Maintenance reserve
  revenue              7,558    9,515 (20.6)%   15,334   15,802  (3.0)%
 Gain on sale of
  leased equipment       395    1,261 (68.7)%      758    1,261 (39.9)%
 Other income            154      248 (37.9)%      699    1,382 (49.4)%
                     -------  -------          -------  -------
 Total revenue        33,390   37,240 (10.3)%   67,969   69,483  (2.2)%
                     -------  -------          -------  -------

 EXPENSES
 Depreciation expense  9,997    9,085  10.0%    20,349   17,725  14.8%
 Write-down of
  equipment              175    1,811 (90.3)%      928    1,811 (48.8)%
 General and
  administrative       7,708    7,275   6.0%    14,959   13,553  10.4%
 Net finance costs
  Interest expense     8,807    9,584  (8.1)%   17,117   19,361 (11.6)%
  Interest income        (54)    (439)(87.7)%     (204)  (1,063)(80.8)%
  Gain on
   extinguishment of
   debt                 (895)      -- 100.0%      (895)      -- 100.0%
                     -------  -------          -------  -------
 Total net finance
  costs                7,858    9,145 (14.1)%   16,018   18,298 (12.5)%
                     -------  -------          -------  -------
 Total expenses       25,738   27,316  (5.8)%   52,254   51,387   1.7%
                     -------  -------          -------  -------

 Earnings from
  operations           7,652    9,924 (22.9)%   15,715   18,096 (13.2)%

 Earnings from joint
  venture                240      200  20.0%       455      382  19.1%
                     -------  -------          -------  -------

 Income before income
  taxes                7,892   10,124 (22.0)%   16,170   18,478 (12.5)%
 Income tax expense    2,873    3,702 (22.4)%    4,129    6,951 (40.6)%
                     -------  -------          -------  -------
 Net income          $ 5,019  $ 6,422 (21.8)%  $12,041  $11,527   4.5%

 Preferred stock
  dividends paid and
  declared-Series A      782      782   0.0%     1,564    1,564   0.0%
                     -------  -------          -------  -------
 Net income
  attributable to
  common
  shareholders       $ 4,237  $ 5,640 (24.9)%  $10,477  $ 9,963   5.2%
                     =======  =======          =======  =======

 Basic earnings per
  common share       $  0.51  $  0.69          $  1.26  $  1.21
                     =======  =======          =======  =======

 Diluted earnings per
  common share       $  0.47  $  0.65          $  1.18  $  1.14
                     =======  =======          =======  =======

 Average common
  shares outstanding   8,342    8,225            8,324    8,208
 Diluted average
  common shares
  outstanding          8,926    8,735            8,852    8,745


                   WILLIS LEASE FINANCE CORPORATION
                           AND SUBSIDIARIES
                     Consolidated Balance Sheets
             (In thousands, except share data, unaudited)

                                     June 30,    December    June 30,
                                       2009      31, 2008      2008
                                    ----------  ----------  ----------
 ASSETS
 Cash and cash equivalents          $   39,067  $    8,618  $    1,576
 Restricted cash                        81,482      69,194      64,198
 Equipment held for operating lease,
  less accumulated depreciation        894,992     829,739     786,791
 Equipment held for sale                11,238      21,191       9,079
 Operating lease related receivable,
  net of allowances                      9,535       8,010       6,623
 Investments                            10,474      10,434      10,458
 Assets under derivative instruments     7,480         276         467
 Property, equipment & furnishings,
  less accumulated depreciation          7,471       7,751       7,424
 Equipment purchase deposits             5,625      13,474      18,326
 Other assets                           17,370      14,025      15,366
                                    ----------  ----------  ----------
 Total assets                       $1,084,734  $  982,712  $  920,308
                                    ==========  ==========  ==========

 LIABILITIES AND SHAREHOLDERS'
  EQUITY
 Liabilities:
 Accounts payable and accrued
  expenses                          $   14,002  $   12,732  $   11,286
 Liabilities under derivative
  instruments                           16,023      20,810       7,029
 Deferred income taxes                  63,672      56,118      53,578
 Notes payable                         711,445     641,125     598,968
 Maintenance reserves                   58,316      49,158      52,811
 Security deposits                       5,992       5,179       6,407
 Unearned lease revenue                  3,400       5,383       3,859
                                    ----------  ----------  ----------
 Total liabilities                     872,850     790,505     733,938
                                    ----------  ----------  ----------

 Shareholders' equity:
 Preferred stock                    $   31,915  $   31,915  $   31,915
 Common stock ($0.01 par value)             92          91          87
 Paid-in capital in excess of par       59,535      57,939      56,745
 Retained earnings                     127,640     117,163     103,653
 Accumulated other comprehensive
  loss, net of tax                      (7,298)    (14,901)     (6,030)
                                    ----------  ----------  ----------
 Total shareholders' equity            211,884     192,207     186,370
                                    ----------  ----------  ----------

 Total liabilities and              ----------  ----------  ----------
  shareholders' equity              $1,084,734  $  982,712  $  920,308
                                    ==========  ==========  ==========

Willis Lease Finance Corporation
Brad Forsyth, Chief Financial Officer
(415) 408-4700