B&B Air to Repurchase Shares and Invest in Management Company

DUBLIN, April 2 /PRNewswire-FirstCall/ -- Babcock & Brown Air Limited (NYSE: FLY) ("B&B Air"), a global lessor of modern, fuel-efficient commercial jet aircraft announced today that it will be partnering with the current management team of Babcock & Brown Aircraft Management to invest in BBAM LP, a newly formed, privately-held aircraft leasing and management business. B&B Air has agreed to purchase a 15% interest in the new business which will provide management services to B&B Air and will service B&B Air's portfolio.  At closing, the remaining 85% interest in the new business will be owned by the current management team of Babcock & Brown Aircraft Management.  From the commencement of its operations, BBAM LP will be one of the world's leading aircraft leasing and management companies.

In a related transaction, B&B Air has also entered into an agreement to repurchase 2,011,264 B&B Air shares from Babcock & Brown Limited ("B&B") at a price of $8.78 per share. These repurchased shares represent approximately 6.6% of B&B Air's outstanding shares as of December 31, 2009.

The current management team of Babcock & Brown Aircraft Management has entered into an agreement to purchase substantially all of the aviation assets of B&B and its affiliates, including Babcock & Brown Aircraft Management, Babcock & Brown Air Management Co. Limited and certain other companies that manage and service B&B Air and its aircraft portfolio. In addition to the management and servicing agreements with B&B Air and its 62 aircraft, the newly formed BBAM LP will be a party to servicing and remarketing agreements covering an additional 230 aircraft. It is expected that substantially all the current employees involved in these businesses will transfer to BBAM LP.

As part of the transactions, the management team of BBAM LP has agreed to acquire an additional 1,000,000 B&B Air shares from B&B at a price of $8.78 per share. These purchased shares represent approximately 3.3% of B&B Air's outstanding shares as of December 31, 2009. Upon completion of the transactions described above, B&B Air and the management team of BBAM LP will have acquired 3,011,264 shares, representing approximately 9.9% of B&B Air's outstanding shares as of December 31, 2009.

B&B Air's investment in BBAM LP and its repurchase of the shares will be funded from its unrestricted cash. On completion of the transactions, B&B Air will seek shareholder approval for a change in the company's name.

"The investment in BBAM LP and the significant share repurchase represent the latest steps by B&B Air to deliver on our commitment to grow the per share value of the business through a combination of share and debt repurchases, asset acquisitions and asset sales. We are particularly excited about the prospect of participating in aircraft management through our investment in BBAM LP alongside its experienced team," said Colm Barrington, Chief Executive Officer of B&B Air. "B&B Air's strong balance sheet and significant unrestricted cash allow the company to make progress on shareholder value enhancing initiatives and we will continue to allocate our capital to maximize shareholder returns."

Steve Zissis, the President of BBAM LP and the Chairman of B&B Air, added, "I am pleased with B&B Air's decision to partner with BBAM LP's management in the acquisition of Babcock & Brown's aviation business. At the closing of the transactions, the management team of BBAM LP will own 1,000,000 shares of B&B Air and B&B Air will own 15% of BBAM LP. These transactions fully align the interests of B&B Air's manager and servicer with those of its shareholders. BBAM LP is one of the world's leading aircraft leasing and management companies and is committed to maximizing shareholder value for B&B Air's shareholders through active management of its portfolio and its balance sheet."

The independent Directors of B&B Air were advised by Morgan Stanley & Co. Incorporated as part of the transaction.

The closing of these transactions is subject to customary closing conditions, including obtaining certain necessary consents and approvals. In connection with the closing of the transactions, B&B Air intends to make certain amendments to its management agreement, debt facilities and related servicing agreements.

About B&B Air

B&B Air acquires and leases modern, high-demand and fuel-efficient commercial jet aircraft under multi-year operating lease contracts to a diverse group of airlines throughout the world. B&B Air is managed and serviced by Babcock & Brown Aircraft Management, one of the world's leading aircraft leasing and management companies with more than 20 years of experience. For more information about B&B Air, visit our website at www.babcockbrownair.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release 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 outlook for B&B Air'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. B&B Air 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.

SOURCE Babcock & Brown Air Limited