Willis Lease Finance Earns $8.5 Million, or $0.94 per Share, in the Third Quarter of 2009

• Press Release
• Source: Willis Lease Finance Corp.
• On 2:40 pm EST, Monday November 9, 2009

NOVATO, Calif., Nov. 9, 2009 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (Nasdaq:WLFC - News), a leading lessor of commercial jet engines, today reported strong third quarter earnings and year-to-date profitability fueled by growth in its lease portfolio, higher maintenance reserve revenues and lower borrowing costs. Third quarter 2009 net income available to common shareholders totaled $8.5 million, or $0.94 per diluted common share, compared to $4.2 million, or $0.47 per diluted share in the second quarter of 2009 and $9.9 million, or $1.14 per diluted common share, in the like quarter a year ago.

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Symbol	Price	Change
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Net income available to common shareholders in the first nine months of 2009 totaled $19.0 million, or $2.13 per diluted common share, compared to $19.9 million, or $2.28 per diluted common share, in the first nine months of 2008.

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

 -- The lease portfolio increased 20.2% from a year ago to $921.0
    million, with four engines worth $39.9 million added in the last
    week of the quarter, having no impact on Q3-09 revenues. A
    portfolio of ten engines with a book value of $51.9 million
    contributed $1.6 million to revenues in the third quarter of 2008
    but was excluded from the quarter end portfolio value as it was
    sold just prior to quarter end in September 2008.
 -- Year-to-date operating cash flows increased 87% to $70.7 million.
 -- Third quarter average utilization was 89% compared to 91% a year
    ago.
 -- Maintenance reserve revenues contributed $17.7 million to third
    quarter revenue and $33.1 million year-to-date.
 -- There were no gains from sales of engines in the quarter, and year
    to date gain on sale was $0.7 million.  In 2008, gain on sale
    contributed $11.6 million to third quarter revenues due to the
    sale of eleven engines and contributed $12.8 million to year-to-
    date revenues.
 -- Year-to-date total revenue was down 3.3% 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.
 -- Year-to-date total net finance costs fell 8.4% reflecting lower
    interest costs tied to LIBOR and a second quarter gain on
    extinguishment of debt of $0.9 million generated from debt
    repurchase.
 -- Book value per common share was $20.15 compared to $18.68 a year
    ago.

"As was the case in the third quarter a year ago, our third quarter 2009 results have proved to be one of the best in our 30-year history," said Charles F. Willis, President and CEO. "Our results in the quarter a year ago were bolstered by the sale of eleven engines that contributed a gain of $11.6 million, which was not the case in the current quarter as no engines were sold in the period. Instead, our current quarter results were driven by strong revenues resulting from our growing engine portfolio and healthy maintenance reserve revenues combined with lower borrowing costs."

"We continue to support airlines under stress in a highly competitive market place, as they reduce capacity to meet the decline in passenger traffic," Willis noted. "Our ability to market our growing portfolio of new generation narrow body aircraft engines has been aided by our pooling programs. In particular, the North American CFM56-7B engine Lease Pool continues to support the growth in our share of the US market. In the third quarter, US airlines accounted for 28% of our lease rent revenues compared to 22% in the third quarter a year ago."

In the past two years, we have purchased more than $400 million of engines, significantly increasing our portfolio of fuel-efficient, new generation models," said Donald A. Nunemaker, Executive Vice President & General Manager-Leasing.

"With an average age of 6 years, our engine portfolio is one of the youngest in the industry," continued Nunemaker. "While we are seeing some pressure on lease rates, particularly for older engine types, demand has remained stable for leased engines as our airline customers continue to conserve capital and reduce expenses by delaying new engine purchases and deferring major overhaul expenditures. Demand for purchase/leaseback transactions remains strong. We expect that this trend will continue and will pursue transactions on an opportunistic basis."

"We continue to benefit from historically low interest rates, which reduced finance costs this year and boosted operating cash flow," said Brad Forsyth, Chief Financial Officer. "We are actively managing our exposure to potential rising interest rates in the future, through interest rate swap contracts. Our total hedge position is approximately 75% of our outstanding floating-rate debt, effectively locking in today's favorable swap rates for the next four to six years."

A change in the current quarter in the method used to allocate revenue to US states has resulted in a reduction in the state income tax rate that is used to calculate the company's combined federal and state income tax provision. Because the company has a significant deferred income tax liability on the balance sheet, the reduced rate was applied to the balance and resulted in a reduction in future taxes of $1.8 million. This adjustment was offset against the company's tax provision in the current period, boosting after-tax earnings by $1.8 million in the quarter. Together with the change in California tax law in the first quarter of 2009 that resulted in a $1.8 million reduction in future taxes due, the tax adjustments have increased after-tax earnings by $3.6 million in the first nine months of 2009. The company's effective combined federal/state tax rate is approximately 35%.

Balance Sheet

Year-to-date, 14 engines were purchased and 11 engines were sold or consigned. At September 30, 2009, the company had 163 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 $921.0 million, compared to 152 commercial aircraft engines, 3 aircraft parts packages, 4 aircraft and other engine-related equipment in its lease portfolio with a net book value of $766.4 million a year ago. As a result of the engine portfolio growth, Willis Lease increased its total assets 15% to $1.09 billion at September 30, 2009, compared to $950 million a year ago.

The revolving credit facility converted to a term note of $254.5 million on June 30, 2009, with approximately 8% of the outstanding amount due in monthly installments from July 2009 through June 2010 and the remaining 92% balance due at June 30, 2010. "We are making significant progress on renewing our credit facility with a variety of banking partners and expect that our engine leasing business model and strong operational and financial performance will provide us continued access to the capital markets," said Forsyth. The company's funded debt-to-equity ratio was 3.29 to 1 at September 30, 2009, compared to 3.11 to 1 a year ago.

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 Ended         Nine Months Ended
                  September 30,     %       September 30,     %
                  2009     2008   Change    2009     2008   Change
                -------  -------  ------  -------  -------  ------
 REVENUE
 Lease rent
  revenue       $25,806  $26,003   (0.8)% $76,984  $77,041   (0.1)%
 Maintenance
  reserve
  revenue        17,729    8,281   114.1%  33,063   24,083    37.3%
 Gain (Loss)
  on sale of
  leased
  equipment         (23)  11,557 (100.2)%     735   12,818  (94.3)%
 Other income       130       53   145.3%     829    1,435  (42.2)%
                -------  -------          -------  -------
 Total revenue   43,642   45,894   (4.9)% 111,611  115,377   (3.3)%
                -------  -------          -------  -------

 EXPENSES
 Depreciation
  expense        11,994   10,082    19.0%  32,343   27,807    16.3%
 Write-down
  of equipment    2,093      862   142.8%   3,021    2,673    13.0%
 General and
  administrative  9,622    9,210     4.5%  24,581   22,763     8.0%
 Net finance
  costs
   Interest
    expense       9,213    9,628   (4.3)%  26,330   28,989   (9.2)%
   Interest
    income          (42)    (413) (89.8)%    (246)  (1,476) (83.3)%
   Gain upon
    extinguishment
    of debt          --       --     0.0%    (895)      --   100.0%
                -------  -------          -------  -------
 Total net
  finance costs   9,171    9,215   (0.5)%  25,189   27,513   (8.4)%
                -------  -------          -------  -------
 Total expenses  32,880   29,369    12.0%  85,134   80,756     5.4%
                -------  -------          -------  -------

 Earnings from
  operations     10,762   16,525  (34.9)%  26,477   34,621  (23.5)%

 Earnings from
  joint venture     235      183    28.4%     690      565    22.1%

 Income before
  income taxes   10,997   16,708  (34.2)%  27,167   35,186  (22.8)%
 Income tax
  expense         1,698    5,983  (71.6)%   5,827   12,933  (54.9)%
                -------  -------          -------  -------
 Net income     $ 9,299  $10,725  (13.3)% $21,340  $22,253   (4.1)%

 Preferred
  stock dividends
  paid and
  declared-
  Series A          782      782     0.0%   2,346    2,346     0.0%
                -------  -------          -------  -------
 Net income
  attributable
  to common
  shareholders  $ 8,517  $ 9,943  (14.3)% $18,994  $19,907   (4.6)%
                =======  =======          =======  =======

 Basic earnings
  per common
  share         $  1.02  $  1.20          $  2.28  $  2.42
                =======  =======          =======  =======

 Diluted
  earnings per
  common share  $  0.94  $  1.14          $  2.13  $  2.28
                =======  =======          =======  =======

 Average common
  shares
  outstanding     8,391    8,253            8,347    8,223
 Diluted average
  common shares
  outstanding     9,051    8,757            8,934    8,749




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

                                   Sept. 30    Dec. 31     Sept. 30
                                     2009        2008        2008
                                  ----------  ----------  ----------
 ASSETS
 Cash and cash equivalents        $   36,063  $    8,618  $    1,508
 Restricted cash                      69,485      69,194     105,828
 Equipment held for operating
  lease, less accumulated
  depreciation                       920,976     829,739     766,379
 Equipment held for sale              18,823      21,191      20,561
 Operating lease related
  receivable, net of allowances        8,375       8,010       8,679
 Investments                          10,549      10,434      10,451
 Assets under derivative instruments   2,526         276         377
 Property, equipment & furnishings,
  less accumulated depreciation        7,317       7,751       7,895
 Equipment purchase deposits           5,146      13,474      13,221
 Other assets                         13,521      14,025      15,406
                                  ----------  ----------  ----------
 Total assets                     $1,092,781  $  982,712  $  950,305
                                  ==========  ==========  ==========

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Liabilities:
 Accounts payable and accrued
  expenses                        $   21,463  $   12,732  $   14,623
 Liabilities under derivative
  instruments                         17,473      20,810       8,078
 Deferred income taxes                62,892      56,118      58,696
 Notes payable                       713,569     641,125     612,155
 Maintenance reserves                 52,001      49,158      50,246
 Security deposits                     5,145       5,179       5,332
 Unearned lease revenue                3,135       5,383       4,575
                                  ----------  ----------  ----------
 Total liabilities                   875,678     790,505     753,705
                                  ----------  ----------  ----------

 Shareholders' equity:
 Preferred stock                  $   31,915  $   31,915  $   31,915
 Common stock ($0.01 par value)           92          91          88
 Paid-in capital in excess of par     60,298      57,939      57,752
 Retained earnings                   136,157     117,163     113,597
 Accumulated other comprehensive
  loss, net of tax                   (11,359)    (14,901)     (6,752)
                                  ----------  ----------  ----------
 Total shareholders' equity          217,103     192,207     196,600
                                  ----------  ----------  ----------

 Total liabilities and
  shareholders' equity            $1,092,781  $  982,712  $  950,305
                                  ==========  ==========  ==========

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