FLY LEASING May 2016 DISCLAIMERS AND NOTES ForwardLooking - - PowerPoint PPT Presentation

FLY LEASING

May 2016

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DISCLAIMERS AND NOTES

Forward‐Looking Statements This presentation contains certain “forward‐looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward‐looking statements may be identified by words such as “expects,” “intends,” “anticipates,” “plans,” “believes,” “seeks,” “estimates,” “will,” or words of similar meaning and include, but are not limited to, statements regarding the

• utlook for FLY’s future business and financial performance. Forward‐looking statements are based on management’s current

expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to

• predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market,

regulatory and other factors and risks. Further information on the factors and risks that may affect FLY’s business is included in filings FLY makes with the Securities and Exchange Commission from time to time, including its Annual Report on Form 20‐F and its Reports on Form 6‐K. FLY expressly disclaims any obligation to update or revise any of these forward‐looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise. Notes:

• 1. All fleet and lease metrics are as of 31 December 2015 and are weighted by net book value.
• 2. Adjusted SG&A and Adjusted Return on Equity are non GAAP measures. See the Appendix for reconciliation.
• 3. Industry data per IATA.

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Buying Attractive Aircraft

Acquired 10 aircraft for $615 million in 2015

80 aircraft: $2.6 Billion Book Value

Leased to 44 airlines in 28 countries

Decreasing Debt & SG&A Costs

Cost of secured debt reduced to less than 4%

Managed by Industry Leader

BBAM manages 400+ aircraft, established in 1989

Growing Insider Ownership

Company insiders own 13%

Young Fleet on Long Leases

6.6 years average age and average lease term

FLY AT A GLANCE

Significant Share Repurchases

Repurchased 19% of shares since September 2015

Selling Older Aircraft

Sold and contracted to sell 57 older aircraft in 2015

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Global air traffic growing strongly

• 6.5% increase in 2015
• Similar thus far in 2016

Airlines prospering

• 2015 a record year for airline profits and 2016 expected to be better
• Strong demand helped by lower fares, low cost airlines, increasing middle

classes

• Costs helped by cheaper hedged fuel

Manufacturers experiencing strong demand

• Record backlog for several aircraft types

Strong demand for leased aircraft

• FLY has minimal remarketing in next few years

POSITIVE INDUSTRY CONDITIONS

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Lessee Country % of NBV Ethiopia 13% Philippines 11% UK 5% India 5% Germany 4% Thailand 4% Chile 3% China 3% USA 3% Czech Republic 3% Top 10 Lessees 54%

DIVERSE GROUP OF GLOBAL LESSEES

Region % of NBV

Asia & South Pacific1

36%

Europe

31%

Middle East & Africa

15%

North America

10%

Mexico, Central & South America

7%

Off‐Lease

1% Total 100%

(1) 9% in China.

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Improving EPS & ROE

Share Repurchases Reduce SG&A Actively Manage Liabilities Reinvest in Higher Yielding Assets Sell Under‐ Performing Assets Sold or contracted to sell 57 aircraft in 2015 (13 year average age)

DRIVERS OF IMPROVING ROE

Reduced cost

• f secured

debt to < 4% at YE 2015 Reduced Adjusted SG&A by 14% YoY Bought 10 newer aircraft for $615 million in 2015 (two year average age) Repurchased $105 million of shares at a significant discount to NBV

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FLY’S FOUR YEAR TRANSFORMATION

FY 2011 FY 2015 % Change

Fleet Age (years) 8.4 6.6 (21%) Lease Term (years) 3.7 6.6 78% Secured Cost of Debt 5.1% 3.9% (24%) Adjusted SG&A as a % of Total Revenue 9.5% 7.5% (21%) Adjusted Return on Equity 6.8% 18.7% 175%

Transformed Fleet—Younger, More Profitable

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2011 2015 Aircraft Type # % of NBV Age # % of NBV Age A320 Family 49 42% 8 27 24% 8 A330 1 2% 11 4 10% 6 A340 3 7% 7 3 5% 9 B737 Family 37 38% 7 39 43% 7 B717 / 757 17 9% 13 3 1% 20 B747 / 767 2 2% 17 1 1% 19 B777F ‐‐ ‐‐ ‐‐ 2 13% <1 B787 ‐‐ ‐‐ ‐‐ 1 3% 2 Total 109 100% 8.4 years 80 100% 6.6 years

SIGNIFICANT PORTFOLIO IMPROVEMENT

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• $750 million acquisition target
• $445 million pipeline identified
• Average age of ~2 years, remaining lease term of ~11 years
• Ample liquidity:
• $800+ million in cash and unencumbered assets to invest in younger aircraft
• New $385 million aircraft acquisition facility
• Acquisitions immediately accretive to bottom line

2013 2014 2015 Aircraft Acquired 14 22 10 Average Age at Acquisition Date 2 3 2 Total Acquisition Costs $642 million $952 million $615 million

Historical Aircraft Acquisitions 2016 Aircraft Acquisitions

FLY’S ACQUISITION STRATEGY

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Sales of older, less profitable aircraft generated significant cash Portfolio metrics improving from fleet rejuvenation Investment in newer aircraft accretive to revenue and bottom line Strategic approach to liability and cost management reducing costs Focus on creating value for stakeholders through improved ROE and EPS

MAJOR TRANSFORMATION UNDERWAY

APPENDIX

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Capital Structure

(1) Represents the contractual interest rates and effect of derivative instruments and excludes the amortization of debt discounts and debt issuance costs. (2) In April 2015, FLY re‐priced its 2012 Term Loan reducing the margin by 0.75% and the LIBOR floor by 0.25%. (3) Facility terminated in March 2015. (4) Represents the ratio of total debt, less unrestricted cash and cash equivalents, divided by shareholders’ equity.

CAPITAL STRUCTURE & LIQUIDITY SUMMARY

($ in millions)

Year Ending December 31, 2015 Year Ending December 31, 2014 Unrestricted cash and cash equivalents $276 $338 Restricted cash available to purchase aircraft 11 ‐ O / S Rate1 O / S Rate1 Maturity Securitization $296 3.38% $546 3.04% 2033 2012 Term Loan2 428 4.39% 452 5.19% 2019 Nord LB Facility 255 4.04% 416 4.15% 2018 CBA Debt 88 5.02% 115 4.63% 2018‐2020 Bank Debt Facilities 663 3.63% 723 3.89% 2016‐2027 Aircraft Acquisition Facility3 ‐ ‐ 122 4.15% ‐ Unamortized Discounts (25) (41) Total Secured Debt $1,705 3.91% $2,333 4.04% 2020 Notes 375 6.75% 375 6.75% 2020 2021 Notes 325 6.38% 325 6.38% 2021 Unamortized Discounts (9) (11) Total Unsecured Debt $691 6.58% $689 6.58% Total Debt 2,396 4.68% 3,022 4.61% Shareholders' Equity 657 756 Total Capitalization $3,053 $3,778 Net Debt to Equity4 3.2x 3.6x Secured Debt to Total Debt 71% 77% Total Debt to Total Capitalization 78% 80%

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(# of aircraft)

FLY took advantage of robust market conditions in 2015 to sell and remarket aircraft, decreasing remarketing exposure

FLY REMARKETING OVERVIEW

Annual Aircraft Remarketing Requirements

1 11 9 10 6 2 4 6 8 10 12 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

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ADJUSTED NET INCOME & ADJUSTED ROE

$ in thousands

FY 2015 FY 2014 Net Income 22,798 60,184 Plus: Aircraft Impairment 66,093 1,200 Amortization of debt discounts and debt issuance costs 11,922 12,516 Amortization of lease discounts/premiums and other items 2,046 2,841 Amortization of GAAM acquisition date fair market value adjustments 3,650 6,260 Net loss (gain) on debt modification and extinguishment 17,491 (2,194) Share‐based compensation expense 195 30 Unrealized foreign exchange gain (1,247) ‐ Deferred income taxes expense 4,919 5,733 Loss on ineffective, dedesignated and terminated derivatives 4,134 72 Adjusted Net Income 132,001 86,642 Average Shareholders' Equity 706,609 749,175 Adjusted ROE 18.7% 11.6%

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ADJUSTED SG&A

$ in thousands

FY 2015 FY 2014 Selling, General & Administrative 33,674 41,033 Less: Share‐Based Compensation 195 30 Unrealized Foreign Exchange Gain (1,247) ‐ Adjusted Selling, General & Administrative 34,726 41,003 Total Revenue 462,397 425,548 Adjusted SG&A as a % of Total Revenue 7.5% 9.6%