Fly Leasing to Acquire Major Aircraft Portfolio

Dublin, Ireland, February 28, 2018 – Fly Leasing Limited ("FLY") (NYSE: FLY), a global leader in aircraft leasing, today announced that it has entered into a definitive agreement with AirAsia Berhad ("AAB") (KLSE: 5099) and its subsidiary, Asia Aviation Capital Limited (“AAC”), under which FLY will acquire 54 Airbus narrowbody aircraft and seven CFM engines on lease to AAB and its affiliates (the “AirAsia Group”), and one Airbus narrowbody aircraft on lease to a third-party airline. In addition, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in 2019.

At the closing of the initial stage of the transaction, FLY will acquire 34 Airbus A320-200 aircraft and seven aircraft engines. Of these aircraft, which have an average age of 6.6 years and a remaining lease term of 6.2 years, 33 are on lease to five different airlines within the AirAsia Group, and one aircraft is on lease to a third-party airline.

In addition to the aircraft acquired in the first stage of the transaction, FLY has agreed to acquire 21 A320neo family aircraft that will be subject to 12-year leases to AirAsia Group airlines. These 21 aircraft are scheduled to deliver new from the manufacturer between 2019 and 2021.

In the final stage of the transaction, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer in 2019.

Under the terms of the agreement, AAB will receive approximately $1.0 billion in cash and 3,333,333 newly-issued FLY shares at $15.00 per share as part of the initial stage of the transaction. The shares acquired by AAB will be subject to lock-up arrangements through 2021, and voting and standstill agreements, and will be entitled to registration rights.

In addition, an affiliate of Onex Corporation (“Onex”) and the management team of BBAM Limited Partnership (“BBAM”) will each acquire 666,667 newly-issued FLY shares at $15.00 per share, for total consideration of $20 million. When added to pre-existing shareholdings by Onex and the BBAM management team, these investors will hold a total of 5.5 million shares, or 17% of the company’s proforma outstanding shares.

The transaction is expected to close in the second and third quarters of 2018, subject to approval by AAB shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions.

The transaction is part of a larger acquisition under which FLY, together with BBAM’s other capital partners, Nomura Babcock & Brown and Incline Aviation, will acquire a total of 132 aircraft from AAB and its subsidiary AAC, as well as options to acquire 50 A320neo family aircraft, to be delivered in the future. AAB will also make a $50 million investment in Incline Aviation as part of its consideration.
FLY’s CEO Colm Barrington commented: "We are thrilled to partner with one of Asia’s premier and fastest expanding airline groups. These investments will grow FLY’s fleet with the most attractive and newest generation of narrowbody aircraft on known lease and financing terms. This transaction is expected to drive high levels of stable, long-term profitability and cash flows at FLY for the benefit of our stakeholders."

Tan Sri Tony Fernandes, AirAsia Group Chief Executive Officer, added: "The AirAsia Group is delighted to begin this new, long-term partnership with Steve and the rest of the team at BBAM. BBAM has a similar culture to AirAsia. Steve is a great entrepreneur with a strategic vision and he has built a strong team with great attention to detail that is incredibly passionate about what they do. I am confident that his management team will drive the value of our investment in both FLY and Incline.” Mr. Fernandes commented further, “This is a perfect outcome to a strategy we started in 2004 and I'm thrilled at the execution of our long-term vision. We have now disposed most of our physical non-core assets and we are thrilled to be embarking on our new digital strategy, which will build a very valuable group of assets.”

Steve Zissis, Chief Executive Officer of BBAM, commented: “BBAM is providing FLY with unique access to a major investment opportunity that FLY would not have been able to pursue on its own. We passionately believe BBAM’s unique structure enables us to offer unparalleled fleet planning solutions to our airline customers by enabling us to participate in large scale transactions that few of our peers can deliver.” Mr. Zissis further commented, “Tony and his team have built an incredible business at AirAsia and we feel fortunate in having this opportunity to build a long-term partnership with an organization of this caliber.”

Advisors
Vedder Price and Jones Day acted as legal advisors to FLY. BNP Paribas, Citi, Commonwealth Bank of Australia and Deutsche Bank have provided committed financing to FLY for the transaction. EY and KPMG acted as tax advisors to FLY.

Conference Call and Webcast for Investors and Analysts
In connection with the press release, management will host a conference call and webcast with slide presentation to discuss the acquisition on Thursday, March 1, at 9:00 am Eastern Time. Participants should dial +1 253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 6594009. Please call at least five minutes early to allow for connection time.

A live webcast with slide presentation will be available on the Events & Presentations page in the Investor Relations section of FLY’s website at www.flyleasing.com. A webcast replay will be available on the company’s website for one year.