New Flyer Provides Performance Update for the Second Quarter of 2006 and Impact from Labour Strike

Winnipeg, Manitoba, Canada; June 16, 2006; New Flyer Industries Inc. (TSX:NFI.UN) announced today the anticipated financial impact of the labour strike on operating results for the second quarter of 2006. The Company previously had announced that operating results for the second quarter of 2006 would be adversely affected due to the labour strike by the unionized workforce at its Winnipeg facilities from April 5, 2006 to April 30, 2006.

Although the second quarter of 2006 has not been completed, based on the Company’s preliminary estimates and the financial information available to date, New Flyer’s management anticipates that EBITDA will be significantly lower than EBITDA for the first quarter of 2006 of US$15.2 million. Management expects that EBITDA for the second quarter of 2006 will range from US$7.5 million to US$9.0 million, primarily due to the following strike-related factors that had an adverse impact on revenues and EBITDA:

The Company experienced a production decline of 101 units (which is approximately 25% of planned production for the second quarter).
The Company continued to incur indirect manufacturing overhead costs in order to support the planned production level increases of its US operations during the strike and to position the Company to recover the lost revenue during the second half of 2006.
The margins on the buses that are expected to be manufactured and shipped during the second quarter are significantly lower than the buses that were produced in the first quarter of 2006. The lost production during the strike, which management expects to recover in the second half of 2006, was represented by higher-margin orders. Further, the Company incurred significant costs due to having to outsource certain fabricated parts that were produced by the Winnipeg labour force. The Company also experienced labour inefficiencies as a result of moving production from its Canadian plant to its US plants.
Due to this shift in production from the Canadian plant to the US operations, finished goods and work-in process levels are expected to be temporarily higher than normal at the end of the second quarter by approximately 25 units. These buses are expected to be either complete buses in-transit to customers or substantially complete buses awaiting customer inspection for shipment.

The Company did not receive any cancellations of bus orders from customers nor did the strike affect the Company’s ability to fund operations.

Management anticipates that the previously announced plan to increase production in the second half of 2006 should result in the Company substantially achieving the pre-strike 2006 production plan of 1,648 units and should result in the Company recovering Adjusted EBITDA for the 2006 fiscal year as a whole to approximately the same level of Adjusted EBITDA reported for the twelve-month period ended April 2, 2006.

The Company has made distributions at historical levels during the second quarter and, management does not believe that the unfavourable financial impact of the labour strike will affect the Company’s ability to maintain the current distribution levels for the remainder of the year.

Management’s expectations relating to the Company’s ability to achieve the production, EBITDA, Adjusted EBITDA and distribution results referred to above are based on the assumption that the Company will be able to successfully execute the planned increased levels of production in the second half of 2006 and to do so within the planned costs. See also "Forward-Looking Statements" below.

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. There were no adjustments to EBITDA for first quarter ending April 2, 2006.

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 1,800 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 second quarter of 2006 and for the balance of 2006. 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