Reaches Agreements For Extension Of Aircraft Leases, Can Eventually Purchase Leased Aircraft

Gulfstream International Group has reached a final agreement with the FAA providing for the settlement of certain proposed civil penalties, the company announced Tuesday in a news release. The agreement calls for the company to pay $550,000 over a five-year period.

It has also reached an agreement with Raytheon Aircraft Credit Corporation ("RACC") to extend its current Lease Amendment and Forbearance Agreement relating to 21 Beech 1900D airliners leased from RACC until December 6, 2010 (the "Lease Termination Date") on their existing terms and provide for, among other things, the opportunity to purchase the fleet of aircraft from RACC, enabling the company to reduce existing annual lease payments by approximately $5 million.

The Lease amendment and Forbearance Agreement, reached with RACC on May 14, 2010, also includes certain concessions with respect to past payment obligations due in December, 2010, as well as other indebtedness, which is contingent upon closing the aircraft fleet purchase by the Lease Termination Date, and would reduce the Company's overall obligations to RACC.

The net effect of the FAA and RACC agreements, subject to completing the aircraft fleet purchase, would result in a reduction of current liabilities in excess of $1.0 million.

David Hackett, CEO of Gulfstream, commented, "The ability to purchase our fleet of aircraft leased from RACC represents a major milestone in our goals of significantly lowering our operating costs and strengthening our balance sheet, strongly positioning us for a return to profitability. We also believe that settling the FAA's proposed civil penalty is in the best interest of our company and its stakeholders, and while we have differing views as to the merits of some of the claims, the Company will be able to ensure its focus remains on continuous improvement in operations and financial results."

FMI: www.gulfstreamair.com