New Flyer Provides Performance Update for the Financial Year Ended December 31, 2006

Winnipeg, Manitoba, Canada January 19, 2007

New Flyer Industries Inc. (TSX:NFI.UN) announced today that the anticipated financial results of its New Flyer Holdings Inc. subsidiary (the Company) for the financial year ended December 31, 2006 will be lower than the levels anticipated in New Flyer’s previous news releases as a result of a shortfall in production and deliveries. Although the Company has not yet completed the preparation of its financial results for the year ended December 31, 2006, based on the preliminary estimates and the financial information available to date, management believes that Adjusted EBITDA will be approximately 84% of the previously anticipated Adjusted EBITDA level of US$ 71.5 million. Final year-end results may vary from management’s current expectations referred to in this release as the Company completes its year-end accounting process including its assessment of reserves for warranty and inventory provisions. The Company expects to announce definitive results and issue its financial statements for the year ended December 31, 2006 prior to March 31, 2007.

After the resolution of the labour strike at the Company’s Winnipeg facility in May 2006 and the increase of production levels back to the pre-strike levels in June 2006, the Company planned to increase production in the second half of 2006 to substantially recover to the 2006 pre-strike delivery plan of 1,648 equivalent units. Management anticipated that by achieving the plan in the second half of 2006, the Company would realize Adjusted EBITDA for the 2006 fiscal year as a whole approximately equivalent to the Adjusted EBITDA of US$ 71.5 million reported for the twelve-month period ended April 2, 2006.

The Company did significantly increase production levels and deliveries in the second half of 2006. However, the Company was only able to achieve approximately 90% of its post-strike production and delivery plans. As previously disclosed, the reduction in deliveries has not resulted in any cancellations of bus orders nor has it affected the Company’s ability to fund operations. Management expects that the Company will recover a majority of these production and delivery shortfalls in the first half of 2007.

The shortfall in production and deliveries of buses to customers were attributable to the following factors:

There was a delay in the Company’s ability to recruit sufficient numbers of additional skilled production staff until October 2006. The adjustment of the production schedule among the Company’s plants and increased demand on the Company’s suppliers and vendors due to the production ramp-up strained the on-time performance of the Company’s supply chain This further resulted in work-in-process levels increasing and the Company deferring line entries in the fourth quarter of 2006.

During December 2006, multiple distributors of components for a significant bus contract failed to supply the components on schedule, requiring the Company to make alternative arrangements to obtain these components. The associated delays resulted in the Company not being able to complete and deliver buses to the customer prior to December 31, 2006 resulting in a reduction in Adjusted EBITDA of approximately US$ 4 million.

Management estimates Adjusted EBITDA for the fourth quarter of 2006 of approximately US$ 20 million. This translates into estimated Adjusted EBITDA for the second half of 2006 of approximately US$ 37 million. In comparison, Adjusted EBITDA for the first half of 2006 was US$ 22.6 million.

The Company has a revolving credit facility of US$ 40 million, which was undrawn as at December 31, 2006. The Company’s cash position at the end of the year was approximately US$ 4 million.

Throughout 2006 the Company maintained its regular monthly distributions amounting to an aggregate C$ 1.10 per Income Deposit Security per annum. The Company has no plans to change distribution levels.

Non-GAAP Measures

References to "EBITDA" are to earnings before interest expense, income taxes, depreciation and amortization; losses or gains on disposal of property, plant and equipment; share-based compensation expense; unrealized foreign exchange losses or gains on non-current monetary items and forward foreign exchange contracts; fair value adjustments to other liabilities – Class B and Class C common shares of New Flyer Holdings, Inc. ("Holdings"); and distributions on Class B and Class C common shares of Holdings. References to "Adjusted EBITDA" are to EBITDA after adjusting for: the effects of certain non-recurring and/or non-operations related items that have impacted the business and are not expected to recur, including certain business disposition costs relating to the acquisition of the Company on August 19, 2005, fair market value adjustments to inventory resulting from purchase accounting for the acquisition of the Company on August 19, 2005, and management fees.

Management believes EBITDA, Adjusted EBITDA and Distributable Cash (as defined below) are useful measures in evaluating the performance of the Company. Specifically, management believes that Adjusted EBITDA is the appropriate measure from which to make adjustments to determine "Distributable Cash" (being Adjusted EBITDA decreased for maintenance capital expenditures, principal payments on capital leases, interest on the Company's credit facility and capital leases, interest on the subordinated notes of New Flyer Industries Canada ULC (not forming part of the Income Deposit Securities) and cash taxes). EBITDA, Adjusted EBITDA and Distributable Cash are not earnings measures recognized under GAAP and do not have standardized meanings as prescribed by GAAP. Therefore, EBITDA, Adjusted EBITDA and Distributable Cash may not be comparable to similar measures presented by other entities. Investors are cautioned that EBITDA, Adjusted EBITDA and Distributable Cash should not be construed as an alternative to net income or loss determined in accordance with GAAP as an indicator of New Flyer's performance or to cash flows from operating, investing and financing activities as measures of liquidity and cash flows.

About New Flyer

New Flyer is the leading manufacturer of heavy-duty transit buses in Canada and the United States. The Company's three facilities - in Winnipeg, MB, St. Cloud, MN and Crookston, MN - are all ISO 9001, ISO 14001 and OHSAS 18001 certified. With a skilled workforce of approximately 2,100 employees, New Flyer is a technology leader in the heavy-duty transit market, offering the broadest product line in the industry, including drive systems powered by clean diesel, LNG, CNG and electric trolley, as well as energy-efficient gasoline-electric and diesel-electric hybrid vehicles. All of New Flyer's products are supported by an industry-leading, comprehensive parts and service network. New Flyer's Income Deposit Securities are listed on the Toronto Stock Exchange under the symbol NFI.UN.

Forward-Looking Statements

This press release contains "forward-looking statements", which reflect the expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. The words "believes", "anticipates", "plans", "expects", "intends", "projects", "estimates" and similar expressions are intended to identify forward-looking statements. These forward-looking statements include estimated results for the 2006 fiscal year, the second half of that year, and the fourth quarter of that year. These forward-looking statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this press release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. Such differences may be caused by factors which include, but are not limited to, competition in the heavy-duty transit bus industry, availability of funding to the Company’s customers at current levels or at all, material losses and costs may be incurred as a result of product warranty costs, material losses and costs may be incurred as a result of product liability claims, the Company’s success depends on a limited number of key executives who the Company may not be able to adequately replace in the event that they leave the Company, the absence of fixed term customer contracts and the termination of contracts by customers for convenience, the current "Buy-America" legislation may change and/or become more onerous, production delays may result in liquidated damages under the Company’s contracts with its customers, currency fluctuations could adversely affect the Company’s financial results or competitive position in the industry, the Company may not be able to maintain performance bonds or letters of credit required by its contracts, third party debt service obligations may have important consequences to the Company, interest rates could change substantially and materially impact the Company’s profitability, the dependence on limited sources of supply and the Company’s profitability and performance can be adversely affected by increases in raw material and component costs. The Company cautions that this list of factors is not exhaustive. These factors and other risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities and are available on SEDAR at www.sedar.com.

Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These forward-looking statements are made as of the date of this press release and the Issuer and the Company assume no obligation to update or revise them to reflect new events or circumstances.

For further information, please contact
New Flyer Industries Inc.
Glenn Asham, Chief Financial Officer
Phone: (204) 224-1251