Discovery Air Inc. announces results for its three months and six months
ended July 31, 2009

LONDON , ON, Sept. 14 /CNW/ - Discovery Air Inc. ("Discovery Air" or the "Corporation") today announced its financial results for the three months and six months ended July 31, 2009 . The table below summarizes selected financial information for these periods as well as the comparative periods:

    
    ---------------------------------- ------------ ------------ ------------
                             3 months     3 months     6 months     6 months
    (thousands of dollars,      ended        ended        ended        ended
     except per share         July 31      July 31      July 31      July 31
     amounts)                    2009         2008         2009         2008
    ---------------------------------- ------------ ------------ ------------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Results of operations

      Revenue              $   45,733   $   59,050   $   71,299   $   89,804
      Operating expenses   $   26,584   $   39,429   $   50,312   $   67,868
      --------------------------------------------- -------------------------
      Earnings before
       undernoted items    $   19,149   $   19,621   $   20,987   $   21,936

      Interest expense     $    3,824   $    3,186   $    7,323   $    6,211
      Amortization         $    3,405   $    3,214   $    6,803   $    6,331
      Relocation of
       corporate office    $      318   $        -   $    1,491   $        -
      Financing
       transaction costs   $        -   $        -   $      830   $        -
      Net earnings and
       comprehensive
       income              $    8,004   $    8,869   $    2,883   $    6,169
      Earnings per common
       share:
        Basic              $     0.06   $     0.07   $     0.02   $     0.05
        Diluted            $     0.06   $     0.07   $     0.02   $     0.05

    Financial position
     and liquidity

      Total assets                                   $  269,072   $  409,279
      Total long-term debt                           $  142,246   $  142,121
      Cash provided by
       operations          $    9,177   $    6,396   $   (2,742)  $   (3,286)
      Working capital                                $   23,946   $   (5,675)

    Key non-GAAP
     performance
     measures*

      Adjusted earnings    $    8,229   $    8,869   $    3,936   $    6,169
      EBITDAR              $   21,229   $   24,422   $   23,247   $   29,079
      Adjusted EBITDAR     $   21,547   $   24,422   $   24,738   $   29,079
      EBITDA               $   18,831   $   19,621   $   19,496   $   21,936
      EBITDA Margin               41%          33%          27%          24%
      Adjusted EBITDA      $   19,149   $   19,621   $   20,987   $   21,936
      Adjusted EBITDA
       Margin                     42%          33%          29%          24%

    * 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 adjusted for
        relocation of corporate office charge. "Adjusted EBITDAR" is EBITDAR
        adjusted for relocation of corporate office charge. "Adjusted
        earnings" are net earnings adjusted for goodwill and intangible
        assets impairment charge, relocation of corporate office charge and
        related income taxes provision (recovery). "Adjusted EBITDA margin"
        is the level of Adjusted EBITDA expressed as a percentage of
        revenues.

    Financial Highlights

    -   The Corporation recorded $8.0 million in earnings for the quarter in
        an environment where revenue levels continued to be adversely
        impacted by the current weak economic environment as well as weather
        conditions.

    -   Consolidated revenues continued to be impacted by the dramatic
        slowdown in resource sector activity. Revenue and earnings in the
        most recent quarter were also impacted by weak forest fire market
        conditions that existed during July in some of the major geographic
        fire markets serviced by the Corporation. July and August are
        typically the peak periods of revenue and earnings for the
        Corporation's forest fire suppression services. These negative
        factors were partially offset by higher demand for airborne training
        services that resulted from the Corporation's increased investment in
        its Alpha jet fleet. The mix of these factors resulted in
        consolidated revenues for the quarter and year-to-date being 23% and
        21% lower than the comparative period last year.

    -   The Corporation's management focused on closely managing the level of
        expenses in all of its businesses and particularly those businesses
        that are being adversely impacted by weak economic conditions. As a
        result, consolidated operating expenses for the quarter were 33%
        lower than the previous year. Year-to-date, the Corporation was able
        to reduce its costs by 26% compared to the prior year.

    -   The Corporation reported EBITDA for the quarter and year-to-date of
        $18.8 million and $19.5 million respectively, representing a year
        over year decrease of 4% and 11% respectively. Adjusted EBITDA, which
        adjusts for the non-recurring corporate office relocation charge, was
        $19.1 million and $21.0 million for the quarter and year-to-date
        respectively, representing a year over year decrease of 2% and 4%
        respectively.

    -   Year-to-date Adjusted EBITDA margin improved from 24% last year to
        29% in the current year. Despite the notable decline in the current
        year's revenues to date, the Corporation was able to minimize the
        full impact of the lower revenues to earnings by streamlining its
        operating costs in anticipation of the lower revenues expected in the
        resource sector base. Also contributing to the current year increase
        in Adjusted EBITDA margin was the favourable overall mix of
        consolidated revenues by aircraft type.

    -   The Corporation's management continued to actively monitor and manage
        external factors that could adversely impact its working capital and
        balance sheet liquidity.
    

President and CEO's Comments

In the midst of a severe economic downturn, I am extremely pleased to report net earnings of $8 million this quarter. Despite our revenues being negatively impacted by a decline in mining exploration activity in the north and a very weak fire season in Ontario and other markets we traditionally serve, we have achieved an Adjusted EBITDA of $19 million and improved EBITDA margins as compared to the same period last year. This is clear evidence of our company-wide focus on both cost control and an aggressive effort to rapidly scale our businesses to levels consistent with current market conditions.

Most importantly, our businesses continue to provide customers with a safe, effective, and highly reliable level of service, a testimony to the dedicated employees at each of our operating units. In addition, Top Aces recently put its sixteenth Alpha jet into service which has allowed us to produce improved revenue results in our Government Services segment and better serve one of our key customers, the men and women of the Canadian Forces.

I am also pleased that we have been able to maintain financial liquidity through a focus on working capital and cash management by every member of our team. As a result, our cash flow from operations has improved despite the dramatic revenue declines.

We have experienced a significant transformation over the last 12 months, and our results this quarter demonstrate that we are now well positioned to improve our performance in these tough economic times. This transformation has allowed us to begin a process of pursuing new growth opportunities, focus on a long term strategy, and ultimately benefit from any improvements in overall economic conditions.

The Corporation's interim financial statements and Management's Discussion and Analysis for the quarter ended July 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.

For further information: Sheila Venman, Director of Investor Relations, Phone: [phone], Toll-free: 1-866-903-3247, ext. 3580, E-mail: [email protected]