Discovery Air Inc. announces results for its three months and nine months
ended October 31, 2009

LONDON, ON, Dec. 15 /CNW/ -

President and CEO's Comments

For several quarters our management team has demonstrated their ability to manage the business with precision in challenging conditions. I am pleased to report that our trend of improved year-over-year EBITDA margin, cash flow, and liquidity has continued this quarter despite significant revenue challenges. Having optimized our operating expense levels and strengthened our cash flow position, our management team is now focused on increasing revenue, even in current conditions. Our efforts over the past year have positioned us to drive forward the Corporation's over-arching objective of achieving meaningful long-term improvement in earnings per share. Over the next several quarters our management team will leverage our sound business position by focusing on sales and business development, and by focusing on an appropriate capital structure to allow us to achieve our over-arching objective.

Financial Highlights

    
    -   Weak market conditions continued to affect Discovery Air Inc.
        ("Discovery Air" or "Corporation") with revenues for both the third
        quarter and year-to-date being 20% lower than the prior year
        comparatives. The lower revenues reflect the impact of a significant
        slowdown in resource sector activity as well as weak forest fire
        activity in some of the major fire related markets the Corporation
        services. Discovery Air also recorded lower Government Services
        segment revenues in the current quarter, compared to the prior year
        largely due to a shift in customer scheduling priorities which
        contributed to lower segment flight hours and revenues year over
        year. Despite the quarterly year over year decline in revenues,
        year-to-date Government Services segment revenues exceed the prior
        year comparative by $6.0 million or 16%. This increase partially
        offset the lower revenues from some of the markets serviced by the
        Northern Services segment.

    -   EBITDA for the quarter and year-to-date of $9.9 million and
        $29.4 million was 5% and 9% lower, respectively, than the prior year.
        While much lower revenue levels for the current quarter and
        year-to-date had a negative impact on consolidated EBITDA, the full
        impact of lower revenues was partially offset by significant cost
        reductions undertaken to align operating expenses with the
        expectation for lower revenue levels this fiscal year.

    -   Adjusted EBITDA, which adjusts for the non-recurring corporate office
        relocation charge, was $10.1 million and $31.0 million for the
        quarter and year-to-date respectively, representing a year over year
        decrease of 4% for both periods.

    -   Net earnings for the quarter and year-to-date were $1.7 million and
        $4.6 million, respectively, reflecting a year over year decrease in
        net earnings of $0.9 million and $4.2 million. The net earnings
        reflect lower levels of operating profit, increased cost of debt
        financing, and a one time charged related to the relocation of the
        corporate head office from London, Ontario to Yellowknife. To date,
        Discovery Air has incurred $1.6 million of expenses related to the
        head office relocation.

    -   Discovery Air continued to maintain a stable financial position. As
        at October 31, 2009, Discovery Air's balance sheet recorded
        unrestricted cash of $6.7 million and it also had $14.3 million of
        unused borrowing capacity on its line of credit available to fund its
        operations.
    

The table below summarizes selected financial information for the three months and nine months ended October 31, 2009 as well as the comparative periods:

    
    ---------------------------------- ------------ ------------ ------------
                             3 months     3 months     9 months     9 months
    (thousands of dollars,      ended        ended        ended        ended
     except per share      October 31   October 31   October 31   October 31
     amounts)                    2009         2008         2009         2008
    ---------------------------------- ------------ ------------ ------------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Results of operations
      Revenue              $   34,125   $   42,536   $  105,424   $  132,340
      Operating expenses   $   24,072   $   32,042   $   74,384   $   99,910
      -------------------------------- ------------ ------------ ------------
      Earnings before
       undernoted items    $   10,053   $   10,494   $   31,040   $   32,430

      Interest expense     $    3,460   $    3,151   $   10,783   $    9,362
      Amortization         $    3,501   $    3,309   $   10,304   $    9,640
      Relocation of
       corporate office    $      120   $        -   $    1,611   $        -
      Financing transaction
       costs               $      125   $        -   $      955   $        -
      Earnings             $    1,668   $    2,645   $    4,551   $    8,814
      Earnings per common
       share:
        Basic              $     0.01   $     0.02   $     0.03   $     0.07
        Diluted            $     0.01   $     0.02   $     0.03   $     0.06

    Financial position
     and liquidity
      Total assets                                   $  262,895   $  404,683
      Total long-term debt                           $  140,783   $  145,210
      Cash provided by
       operations          $   22,385   $   18,286   $   19,643   $   15,001
      Working capital                                $   20,735   $   (5,240)

    Key non-GAAP
     performance measures*
      Adjusted earnings    $    1,753   $    2,645   $    5,689   $    8,814
      EBITDAR              $   12,125   $   14,019   $   35,372   $   43,098
      Adjusted EBITDAR     $   12,245   $   14,019   $   36,983   $   43,098
      EBITDA               $    9,933   $   10,494   $   29,429   $   32,430
      Adjusted EBITDA      $   10,053   $   10,494   $   31,040   $   32,430

    * References to "EBITDA" are to net earnings before interest, financing
        transaction costs, income taxes, depreciation and amortization
        (except for amortization of rotable and overhauled components which
        are treated as operating expenses), goodwill and intangible asset
        impairment charge, and non-controlling interest. "EBITDAR" is EBITDA
        before aircraft lease cost. "Adjusted EBITDA" is EBITDA before
        corporate office charge. "Adjusted EBITDAR" is EBITDAR before
        corporate office charge. "Adjusted earnings" is net earnings before
        charges arising from impairment of goodwill and intangible assets,
        relocation of corporate office and related income tax recovery.
        "Adjusted EBITDA margin" is Adjusted EBITDA expressed as a percentage
        of revenues.
    

The Corporation's interim financial statements and Management's Discussion and Analysis for the quarter ended October 31, 2009 have been filed concurrently and are available on Discovery Air's website at www.discoveryair.com and on SEDAR at www.sedar.com. The reader is encouraged to review the interim financial statements and Management's Discussion and Analysis for more complete disclosure on Discovery Air's financial condition and results of operations.

Discovery Air's Class A common shares trade on the Toronto Stock Exchange under the symbol DA.A.

Discovery Air's Debentures trade on the Toronto Stock Exchange under the symbol DA.DB.

SOURCE Discovery Air Inc.

For further information: For further information: Sheila Venman, Investor Relations, Phone: (519) 951-3580, Toll-free: (866) 903-3247, ext. 3580, E-mail: sheilav@discoveryair.com


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