Willis Lease Finance 3Q06 Lease Revenue Up 12% as Engine Portfolio Grows 20%.

SAUSALITO, Calif. -- Willis Lease Finance Corporation (NASDAQ:WLFC), a leading lessor of commercial jet engines, today reported lease revenue rose 12% in the third quarter of 2006 and 11% year-to-date with 20% growth in its jet engine portfolio since September 2005.

Third quarter net income totaled $1.7 million on revenue of $21.5 million, compared to a loss of $501,000 on revenue of $16.7 million in the third quarter of 2005. After payment and accrual of dividends on the preferred shares, net income available to common shareholders was $904,000, or $0.09 per share, in the third quarter of 2006.

In the first nine months of 2006, net income was $3.2 million on revenue of $59.4 million, compared to $2.0 million on revenue of $50.6 million in the first nine months of 2005. After payment and accrual of preferred dividends of $2.0 million, net income available to common shareholders was $1.2 million, or $0.12 per share, for the first nine months of 2006.

Results for the third quarter and first nine months of 2006 are not directly comparable to the year ago periods due to a number of factors including the following:

* Stock option expense, a non-cash item, was $125,000 in the third quarter of 2006 and $480,000 year-to-date, and is included in general and administrative expense in 2006 due to the adoption of a new accounting standard. In 2005, stock option expense was not included in general and administrative expense but was disclosed in the footnotes to the financial statements at $168,000 for the third quarter and $433,000 for the first nine months of 2005.

* Prior to December 2005, changes in the fair value of derivatives were recorded in the income statement. After December 1, 2005, hedge accounting was used to account for the change in fair value of cash flow hedges through accumulated other comprehensive income on the balance sheet for all qualified hedges. The change in fair value of derivative instruments had no impact on third quarter 2006 net finance costs as all derivative instruments qualified for hedge accounting, but reduced net finance costs by $332,000 in the third quarter a year ago. Year-to-date, the realized and unrealized gain on derivative instruments reduced net finance costs by $153,000 compared to $721,000 in the first nine months of 2005.

* Preferred dividends paid and accrued were $782,000 in the third quarter and $2.0 million year-to-date following the issuance of preferred stock on February 7, 2006.