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Jazz Air Income Fund announces strong second quarter 2009

Aug. 6, 2009, Halifax– Jazz Air Income Fund has announced strong financial results for the second quarter of 2009. Jazz is among the few airlines in North America to post a profit in the second quarter.


August 6, 2009
By Administrator

Aug. 6, 2009, Halifax– Jazz Air Income Fund has announced strong financial results for the second quarter of 2009. Jazz is among the few airlines in North America to post a profit in the second quarter.

Q2 2009 Highlights

The following are highlights of the Fund's financial performance for the three month period ended June 30, 2009, compared to the same period in 2008.

<bu>Distributable cash(1) of $40.6 million, up 34.0%.
Adjusted earnings per unit of $0.29, up 31.8%(2).
EBITDA(1) of $44.3 million, up 19.4%.
Performance incentive of $4.7 million, up 17.0%.
Cost per Available Seat Mile down 10.6%.
</bu>Net income of $25.4 million, up 7.7%.

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Please note that as of January 1, 2009, the financial results of Jazz Air LP are no longer being reported separately. As a result, the Fund's year-to-date operating income, net earnings, and earnings per unit have been adjusted to remove the effect of certain consolidation amounts and to arrive at comparable results to those previously reported for Jazz.

"Despite the economic challenges all companies are facing, I'm very encouraged by the Fund's ability to report again this quarter some of the more positive financial and operational results within the North American aviation industry," said Joseph Randell, President and Chief Executive Officer of Jazz.

"The strength in our performance is indicative of our solid management practices, cost control and never-relenting attention to safety and operational excellence. Our employees are amongst the best in the industry."

Mr. Randell went on to say, "I'm confident we'll deliver value to our stakeholders under the terms of our amended Capacity Purchase Agreement with Air Canada announced on July 28, 2009. The amended agreement maintains a minimum annual Block Hour level of 339,000 with a target of 375,000 annual Block Hours. With this reduced revenue base, we anticipate being able to sustain the revised cash distribution of $0.60 per unit annually, including when the new tax regime relating to Specified Investment Flow-Through entities takes effect in 2011."

Second Quarter 2009 Compared to Second Quarter 2008

Operating revenue was $373.6 million, compared to $409.8 million, representing a decrease of 8.8%. The decrease in operating revenue was primarily attributable to a 31.8% reduction in revenues relating to pass-through costs under the Capacity Purchase Agreement (the "CPA"), a 2.4% reduction in Billable Block Hours, and a 2.5% reduction in departures. These reductions were offset in part by a higher US dollar exchange rate and rate increases made pursuant to the CPA.

Performance incentives payable by Air Canada to Jazz under the CPA amounted to $4.7 million, as compared to $4.0 million. Jazz therefore earned 79% of the incentives available under the CPA versus 73% in the prior period. Incentives earned in this quarter were higher primarily as a result of an increase in CPA controllable revenue and improvements in customer check-in and in-flight customer satisfaction. Other revenue sources decreased from $3.1 million to $2.4 million.

Total operating expenses decreased 11.6% from $381.0 million to $336.9 million. Non-operating expenses amounted to $0.8 million, a decrease of $0.6 million. This decrease was mainly attributable to the effect of a higher U.S. dollar exchange rates and a gain on the disposal of property and equipment, offset by increased net interest expense.

CPA Controllable Costs increased by 5.4% primarily as a result of increases in aircraft rent arising as a result of a higher US dollar exchange rate; increases in aircraft maintenance, material and supply costs due to increased rates payable under new maintenance contracts and a higher U.S. dollar exchange rate.

EBITDA(1) was $44.3 million compared to $37.1 million in 2008, representing an increase of 19.4%. Operating income of $26.2 million increased 41.5% from $18.5 million in the second quarter of 2008. Distributable cash was $40.6 million up from $30.3 million, an increase of 34.0%.

The Controllable Adjusted Actual Margin was 12.74%, which is less than the target of 14.32% by 158 basis points or approximately $3.9 million. This shortfall was primarily attributable to incentive compensation expense which is excluded from the CPA revenue rate development. Prior period rates provided sufficient margin to cover incentive compensation expenses. This compares to the second quarter of 2008 Controllable Adjusted Actual Margin of 10.53%, which was 356 basis points or approximately $8.2 million less than the target margin of 14.09%.

CPA revenue increased 8.0%, primarily as a result of an increase in the mark-up charged by Jazz under the CPA contract from 16.40% to 16.72% (Jazz was entitled to this increase due its out-performance of the controllable target margin from 2006 to 2008). an increase in CPA Controllable Costs rates for 2009 to 2011, and a higher US dollar exchange rate; offset by a reduction in Billable Block Hours.

Net income for the second quarter was $25.4 million compared to $23.6 million, representing an increase of 7.7%.

The Fund's unaudited interim consolidated financial statements for the period ended June 30, 2009, and accompanying Management's Discussion and Analysis (MD&A) are available on Jazz's website www.flyjazz.ca and at www.sedar.com. A copy may also be obtained on request by contacting Jazz's Investor Relations at: investorsinfo@flyjazz.ca or (902) 873-5094.

Quarterly Investor Conference Call / Audio Webcast

Jazz will hold an analyst call at 09:00 a.m. ET on Thursday, Aug. 6, 2009 to discuss the second quarter results of the Fund. The call may be accessed by dialing 1-800-594- 3615 or (416) 644-3423 for the Toronto area. The call will be simultaneously audio webcast via: http://www.newswire.ca/en/webcast/ or in the Investor Relations section of Jazz's website at www.flyjazz.ca . This is a listen-in only audio webcast. Media Player or Real Player is required to listen to the broadcast; please download well in advance of the call.

The conference call webcast will be archived on Jazz's Investor Relations website at www.flyjazz.ca . A playback of the call can also be accessed until midnight ET, Thursday, August 13, 2009, by dialing (416) 640-1917 or toll free 1- 877-289-8525, and passcode – 21310635# (pound key).