(RTTNews) - Wednesday, aircraft lessor Babcock & Brown Air Ltd. (FLY: News ) reported slightly lower net income and flat earnings per share for the third quarter, as a moderate increase in revenue was offset by higher expenses.

The County Dublin, Ireland-based company's third-quarter net income declined to $14.4 million from $16.0 million in the prior-year quarter. However, on a per share basis, earnings remained flat at $0.48 as previous share repurchases reduced the number of shares outstanding.

The third quarter 2009 results include a pre-tax gain of $12.5 million from repurchasing of notes and amortization of $3.4 million associated with the cost to purchase options on notes payable. The 2008 third quarter results included a gain of $5.0 million associated with the sale of an aircraft and $4.0 million of end of lease revenue.

Revenues for the third quarter of 2009 increased to $67.8 million from $66.3 million for the third quarter of 2008.

Operating lease revenue for the third quarter decreased to $54.3 million from $60.5 million in the year-earlier quarter, primarily due to declines in lease rates that adjust with LIBOR, the absence of rent from the aircraft sold in the third and fourth quarters of 2008, and end of lease revenue, with no corresponding amount in the third quarter of 2009.

Total expenses for the quarter rose to $50.2 million from $47.9 million in the year-earlier quarter. The increase was primarily due to amortization of debt purchase option, partially offset by a reduction in repossession and re-marketing costs.
Available cash flow for the third quarter was $29.1 million, compared to $40.2 million for the same period in the previous year. The company defines available cash flow as net income plus depreciation, lease incentive amortization, amortization of debt issue costs and the deferred tax provision.

B&B Air's portfolio utilization factor for the third quarter was 98%. At September 30, 2009, all but one of the aircraft in B&B Air's portfolio were on lease to 36 lessees in 19 countries.

For the nine-month period, net income increased to $75.4 million or $2.43 per share from $38.8 million or $1.16 per share for the same period in the 2008. Revenue for the period increased to $241.4 million from $175.5 million, largely due to revenues associated with gains on the purchase of notes payable in 2009.

FLY is gaining $0.62 or 7.52%, and is trading at $8.87 on a volume of 65 thousand shares on the New York Stock Exchange.

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by RTT Staff Writer

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