SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
April 13, 1999
(Date of Earliest Event Reported)
MORGAN STANLEY AIRCRAFT FINANCE
(Exact Name of Registrant as Specified in Trust Agreement)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
333-56575 13-3375162
(Commission File (IRS Employer
Number) Identification No.)
Morgan Stanley Aircraft Finance
c/o Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington, Delaware 19890-1000
Attention: Corporate Trust Administration
(302) 651-1000
(Address and Telephone Number, Including Area Code, of
Registrant's Principal Executive Office)
<PAGE>
Item 5. Other Events
Attached hereto as Exhibit A is a copy of a Monthly Report to
Noteholders dated April 13, 1999 sent to each holder of Notes due March 15, 2023
of Morgan Stanley Aircraft Finance.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereto duly authorized.
MORGAN STANLEY AIRCRAFT FINANCE
Date: April 13, 1999 By: /s/ Alexander Frank
----------------------------------------------
Signatory Trustee
3
<PAGE>
EXHIBIT INDEX
Exhibit A - Report to Noteholders
4
MORGAN STANLEY AIRCRAFT FINANCE
REPORT TO NOTEHOLDERS
All amounts in US dollars unless otherwise stated
Payment Date 15th of each month
Convention Modified Following Business Day
Current Payment Date 15-Apr-99
Current Calculation Date 9-Apr-99
Previous Payment Date 15-Mar-99
Previous Calculation Date 09-Mar-99
<TABLE>
- ----------------------------------------------------------------------------------------
1. Account Activity Summary between Calculation Dates
- ----------------------------------------------------------------------------------------
Prior Deposits Withdrawals Balance on
Balance Calculation Date
9-Mar-99 9-Apr-99
- -------------------------------------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Expense Account 2,175,019.15 4,280,162.43 (1,997,345.10) 4,457,836.48
Collection Account 11,310,948.98 10,016,359.20 (11,310,959.00) 10,016,349.18
Aircraft Purchase Account - - - -
Liquidity Reserve cash balance 25,000,000.00 - - 25,000,000.00
- -------------------------------------------- --------------- --------------- --------------
Total 38,485,968.13 14,296,521.63 (13,308,304.10) 39,474,185.66
- -------------------------------------------- --------------- --------------- --------------
2. Analysis of Expenses Account Activity
- ----------------------------------------------------------------------------------------
<S> <C>
Opening Balance on Previous Calculation Date 2,175,019.15
Transfer from Collection Account on previous Payment Date 4,264,255.61
Permitted Aircraft Accrual
Interim Transfer from Collection Account
Interest Income 15,906.82
Balance on current Calculation Date
- Payments on previous payment date (802,506.58)
- Interim payments (1,184,503.00)
- other (10,335.52)
- ----------------------------------------------------------------------------------------
Balance on current Calculation Date 4,457,836.48
- ----------------------------------------------------------------------------------------
3. Analysis of Collection Account Activity
- ----------------------------------------------------------------------------------------
<S> <C>
Opening Balance on Previous Calculation Date 11,310,948.98
Collections during period
- lease rentals 8,859,116.00
- maintenance reserves 1,011,735.00
- other leasing income 3,588.68
- interest income 131,584.00
- interim transfer from Expense A/C 10,335.52
Transfers from Aircraft Purchase Account -
Drawings under Credit or Liquidity Enhancement Facilities -
Repayment of Drawings under Credit or Liquidity Enhancement Facilities -
Transfer to Expense Account on previous Payment Date
- Required Expense Amount (4,264,255.61)
- Permitted Aircraft Modifications
Net Swap payments on previous Payment Date (1,100,434.51)
Aggregate Note Payments on previous Payment Date (5,946,268.88)
Interim Transfer to Expense Account
- ----------------------------------------------------------------------------------------
Balance on current Calculation Date 10,016,349.18
- ----------------------------------------------------------------------------------------
Analysis of Liquidity Reserve Amount
<S> <C> <C>
First Collection Account Reserve 15,000,000.00
Second Collection Account Reserve 10,000,000.00
Morgan Stanley Facility 10,000,000.00
ILFC Facility
- Letter of Credit 10,000,000.00
- Cash Security Deposits 21,021,351.00 31,021,351.00
---------------
Liquidity Reserve Amount 66,021,351.00
---------------
Minimum Liquidity Reserve Amount 15,000,000.00
- ----------------------------------------------------------------------------------------
<PAGE>
Current Payment Date 15-Apr-99
Current Calculation Date 9-Apr-99
Previous Payment Date 15-Mar-99
Previous Calculation Date 09-Mar-99
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
Balance in Collection Account 10,016,349.18
Liquidity Reserve Amount 66,021,351.00
------------------
Available Collections 76,037,700.18
==================
3. Analysis of Collection Account Activity (Continued)
- ----------------------------------------------------------------------------------------------------------------
Analysis of Current Payment Date Distributions
<S> <C> <C>
(I) Required Expense Amount 679,301.04
(II) a) Class A Interest but excluding Step-up 2,973,808.93
b) Swap Payments other than subordinated swap payments 799,625.00
(iii) a) Repayment of Primary Eligible Credit Facilities -
b) First Collection Account top-up (Minimum liquidity reserve $15 m) 15,000,000.00
(iv) Class A Minimum principal payment -
(v) Class B Interest 450,330.64
(vi) Class B Minimum principal payment 314,439.30
(vii) Class C Interest 575,000.00
(viii) Class C Minimum principal payment -
(ix) Class D Interest 797,500.00
(x) Class D Minimum principal payment -
(xi) a) Secondary Eligible Credit Facilities (ILFC and Morgan Stanley Facilities) -
b) Second collection account top-up 51,021,351.00
(xii) Class A Scheduled principal -
(xiii) Class B Scheduled principal -
(xiv) Class C Scheduled principal -
(xv) Class D Scheduled principal -
(xvi) Permitted accruals for Modifications
(xvii) Step-up interest -
(xviii) Beneficial interest -
(xix) Class A Supplemental principal 3,426,344.27
(xx) Class B Supplemental principal -
(xxi) Class D Redemption Price -
(xxii) Class C Redemption Price -
(xxiii) Class B Redemption Price -
(xxiv) Class A Redemption Price -
(xxv) Subordinated Swap payments -
(xxvi) all remaining amounts to holders of Beneficial interests
Total Payments with respect to Payment Date 76,037,700.18
less collection Account Top Ups (iii) (b) and (xi) (b) above 66,021,351.00
------------------
10,016,349.18
==================
<PAGE>
- ----------------------------------------------------------------------------------------------------------------
Current Payment Date 15-Apr-99
Current Calculation Date 9-Apr-99
Previous Payment Date 15-Mar-99
Previous Calculation Date 9-Mar-99
- ----------------------------------------------------------------------------------------
4. Payments on the Notes by Subclass
- ----------------------------------------------------------------------------------------
Subclass Subclass Subclass
(a) Floating Rate Notes A-1 A-2 B-1
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Applicable LIBOR 4.93875% 4.93875% 4.93875%
Applicable Margin 0.2100% 0.3500% 0.6500%
Applicable Interest Rate 5.14875% 5.28875% 5.58875%
Day Count Act/360 Act/360 Act/360
Actual Number of Days 31 31 31
Interest Amount Payable 1,773,458.33 1,200,350.60 450,330.64
Step-up Interest Amount Payable - NA NA
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total Interest Paid 1,773,458.33 1,200,350.60 450,330.64
- ----------------------------------------------------------------------------------------
Expected Final Payment Date 15-Mar-00 15-Sep-05 15-Mar-13
Excess Amortisation Date 15-Mar-00 15-Apr-98 15-Apr-98
- ----------------------------------------------------------------------------------------
Original Balance 400,000,000.00 340,000,000.00 100,000,000.00
Opening Outstanding Principal Balance 400,000,000.00 263,569,942.19 93,574,522.50
- ----------------------------------------------------------------------------------------
Extended Pool Factors 100.00% 90.79% 99.52%
expected Pool Factors 100.00% 85.67% 95.75%
- ----------------------------------------------------------------------------------------
Extension Amount - - -
expected Pool Factor Amount - - -
Surplus Amortisation - 3,426,344.27 314,439.30
- ----------------------------------------------------------------------------------------
Total Principal Distribution Amount - 3,426,344.27 314,439.30
- ----------------------------------------------------------------------------------------
Redemption Amount
- - amount allocable to principal
- - amount allocable to premium
- ----------------------------------------------------------------------------------------
Closing Outstanding Principal Balance 400,000,000.00 260,143,597.92 93,260,083.20
- ----------------------------------------------------------------------------------------
- ------------------------------------------------------------------------
(b) Fixed Rate Notes C-1 D-1
- ------------------------------------------------------------------------
<S> <C> <C>
Applicable Interest Rate 6.90000% 8.70000%
Day count 30 / 360 30 / 360
Number of Days 30 30
Interest Amount Payable 575,000.00 797,500.00
- ------------------------------------------------------------------------
Total Interest Paid 575,000.00 797,500.00
- ------------------------------------------------------------------------
Expected Final Payment Date 15-Mar-13 15-Mar-14
Excess Amortisation Date 15-Mar-13 15-Mar-10
Opening Outstanding Principal Balance 100,000,000.00 110,000,000.00
- ------------------------------------------------------------------------
Extended Pool Factors 100.00% 100.00%
expected Pool Factors 100.00% 100.00%
- ------------------------------------------------------------------------
Extended Amount - -
expected Pool Factor amount - -
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Total Principal Distribution Amount - -
- ------------------------------------------------------------------------
Redemption Amount - -
- - amount allocable to principal - -
- - amount allocable to premium - -
- ------------------------------------------------------------------------
Closing Outstanding Principal Balance 100,000,000.00 110,000,000.00
- ------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Current Payment Date 15-Apr-99
Current Calculation Date 9-Apr-99
Previous Payment Date 15-Mar-99
Previous Calculation Date 9-Mar-99
- ----------------------------------------------------------------------------------------------
5. Floating Rate Note information for next Interest Accrual Period
Start of Interest Accrual Period 15-Apr-99
End of Interest Accrual Period 15-May-99
Reference Date 11-Apr-99
- ----------------------------------------------------------------------------------------------
A-1 A-2 B-1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Applicable LIBOR 4.92625% 4.92625% 4.92625%
Applicable Margin 0.2100% 0.3500% 0.6500%
Applicable Interest Rate 5.13625% 5.2763% 5.5763%
Actual Pool Factor 100.00% 76.51% 93.26%
- ----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fixed Rate Notes C-1 D-1
- -------------------------------------------------------------------------------
<S> <C> <C>
Actual Pool Factor 100.00% 100.00%
- -------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
6. Payments per $ 100,000 Inital Outstanding Principal Balance of Notes
- ----------------------------------------------------------------------------------------------
(a) Floating Rate Notes A-1 A-2 B-1
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Opening Outstanding Principal Balance 100,000.00 77,520.57 93,574.52
Total Principal Payments - 1,007.75 314.44
Closing Outstanding Principal Balance 100,000.00 76,512.82 93,260.08
Total Interest 443.36 353.04 450.33
Total Premium - - -
- ----------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(b) Fixed Rate Notes C-1 D-1
- -------------------------------------------------------------------------------
<S> <C> <C>
Opening Outstanding Principal Balance 100,000.00 100,000.00
Total Principal Payments - -
Closing Outstanding Principal Balance 100,000.00 100,000.00
Total Interest 575.00 725.00
Total Premium - -
- -------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Comparison of Actual to Date Cashflows versus Prospectus
April 15, 1999 Payment Date
<TABLE>
----------------------------------------------------------------------------
Year to Date
% of Prospectus Gross Lease Revenues
- ----------------------------------------------------------------------------------------------------- -----------------------------
Period ending 15-Apr-99 Actual Actual Prospectus * Variance Actual Prospectus * Variance
To Date To Date
- --------------------------------------------------------------------------------------------------- -------------------------------
Cash Collections
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Lease Rentals 8,859,116 134,285,832 147,251,593 (12,965,761) 91.2% 100.0% -8.8%
Repossession and other Stress
Related Costs (10,132) 1,392,255 (6,626,322) 8,018,577 0.9% -4.5% 5.4%
------------ -------------------------------------------- ---------------------------------
Net Lease Rentals 8,848,984 135,678,087 140,625,271 (4,947,184) 92.1% 95.5% -3.4%
Maintenance Receipts 1,011,735 17,713,395 0 17,713,395 12.0% 0.0% 12.0%
Maintenance Expenses (350,000) (7,081,588) 0 (7,081,588) -3.1% 0.0% -3.1%
------------ -------------------------------------------- ---------------------------------
Net Maintenance 661,735 10,631,806 0 10,631,806 8.9% 0.0% 8.9%
Interest Received 147,490 2,736,331 1,564,549 1,171,782 1.9% 1.1% 0.8%
Other leasing income 3,589 2,327,441 2,327,441 1.6% 0.0% 1.6%
------------ -------------------------------------------- ---------------------------------
Total Cash Received 9,661,799 151,373,665 142,189,820 9,183,845 102.8% 96.6% 6.2%
Cash Expenses
Cash Operating Expenses
- Insurance, re-leasing and
other costs (190,275) (1,834,709) (5,153,806) 3,319,096 -1.2% -3.5% 2.3%
-( increase) / decrease in
Accrued Expenses 1,039,775 (4,635,240) (4,635,240) -3.1% 0.0% -3.1%
------------ -------------------------------------------- ---------------------------------
subtotal 849,500 (6,469,949) (5,153,806) (1,316,144) -4.4% -3.5% -0.9%
SG&A
- Servicer Fees (412,920) (5,230,364) (5,930,839) 700,475 -3.6% -4.0% 0.5%
- Other Servicer provider
fees and Overhead (761,330) (2,704,870) (3,656,533) 951,663 -1.8% -2.5% 0.6%
------------ -------------------------------------------- ---------------------------------
subtotal (1,174,250) (7,935,234) (9,587,372) 1,652,138 -5.4% -6.5% 1.1%
------------ -------------------------------------------- ---------------------------------
Total Cash Expenses (324,751) (14,405,183) (14,741,177) 335,994 -9.8% -10.0% 0.2%
- ---------------------------------------------------------------------------------------------- ---------------------------------
NET CASH COLLECTIONS 9,337,048 136,968,482 127,448,643 9,519,839 93.0% 86.6% 6.5%
- ---------------------------------------------------------------------------------------------- ---------------------------------
Exceptional Items
- THY Note Distribution 27,143,085 27,143,085 0 18.4% 18.4% 0.0%
- ---------------------------------------------------------------------------------------------- ---------------------------------
TOTAL NET CASH COLLECTIONS 9,337,048 164,111,567 154,591,728 9,519,839 111.4% 105.0% 6.5%
- ---------------------------------------------------------------------------------------------- ---------------------------------
Interest Payments (Net of
Swap effects) 5,596,265 77,515,246 78,920,863 (1,405,617) 52.6% 53.6% -1.0%
Principal Payments
A-1 0 0 0 0 0.0% 0.0% 0.0%
A-2 3,426,344 79,856,403 68,930,948 10,925,455 54.2% 46.8% 7.4%
B-1 314,439 6,739,917 6,739,917 (0) 4.6% 4.6% 0.0%
C-1 0 0 0 0 0.0% 0.0% 0.0%
D-1 0 0 0 0 0.0% 0.0% 0.0%
----------- ------------------------------------------- ---------------------------------
subtotal 3,740,784 86,596,320 75,670,865 10,925,455 58.8% 51.4% 7.4%
- ---------------------------------------------------------------------------------------------- ---------------------------------
Total Payments to
Noteholders 9,337,048 164,111,566 154,591,728 9,519,838 111.4% 105.0% 6.5%
- ---------------------------------------------------------------------------------------------- ---------------------------------
Benefical Interest Distributions 0 (0) 0 (0) 0.0% 0.0% 0.0%
- ---------------------------------------------------------------------------------------------- ---------------------------------
</TABLE>
*Prospectus Cash Collections and Cash Expenses have been adjusted for
non-delivery of THY Aircraft, msn 25272.
<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------------------------------
Coverage Ratios
Closing Prospectus* Actual
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
a Net Cash Collections 154,591,728 165,711,566
b Swaps 6,116,864 6,960,482
c Class A Interest 47,465,568 45,312,831
d Class A Minimum 22,188,410 15,221,945
e Class B Interest 6,946,931 6,710,432
f Class B Minimum 6,739,917 6,739,917
g Class C Interest 7,705,000 7,771,667
h Class C Minimum - -
I Class D Interest 10,686,500 10,759,833
j Class D Minimum - -
k Class A Scheduled - -
l Class B Scheduled - -
m Class C Scheduled - -
n Class D Scheduled - -
o Permited Aircraft Modifications - 1,600,000
p Class A Supplemental 46,742,538 64,634,459
------------------ ------------------
Total 154,591,728 165,711,566
------------------ ------------------
Interest Coverage Ratio
Class A 3.26 3.66
Class B 2.02 2.46
Class C 1.70 2.03
Class D 1.52 1.79
Debt Coverage Ratio
Class A 1.52 1.79
Class B 1.52 1.79
Class C 1.52 1.79
Class D 1.52 1.79
Loan-to-Value Ratios
Assumed Portfolio Value 1,115,510,000 1,040,849,143
Adjusted Portfolio Value 1,007,567,314
Liquidity Reserve Amount
Of which - Cash 25,000,000 25,000,000 30,600,000
- Letters of Credit 40,000,000 41,226,351 41,226,351
-------------- ------------------ ------------------
Subtotal 65,000,000 66,226,351 71,826,351
Less Lessee
Security Deposit (20,000,000) (21,226,351) (21,226,351)
Less Accrued Expenses (5,600,000)
---------------------------------------- ------------------ ------------------
Subtotal 45,000,000 45,000,000 45,000,000
Total Asset Value 1,160,510,000 1,085,849,143 1,052,567,314
Note Balances a15-Apr-99
<S> <C> <C> <C> <C> <C> <C>
Class A 740,000,000 63.8% 671,069,052 61.8% 660,143,597 62.7%
Class B 100,000,000 72.4% 93,260,083 70.4% 93,260,083 71.6%
Class C 100,000,000 81.0% 100,000,000 79.6% 100,000,000 81.1%
Class D 110,000,000 90.5% 110,000,000 89.7% 110,000,000 91.5%
-------------- ------------------ ------------------
Total 1,050,000,000 974,329,135 963,403,680
-------------- ------------------ ------------------
Assumed Portfolio Value as a Percent of Adjusted Porfoli103.3%e
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Interest Coverage Ratio is equal to Net Cash Collections expressed as a ratio
of the interest payable on each subclass of Notes plus the interest and minimum
principal payments payable on each subclass of Notes that rank senior in
priority of payment to the relevant subclass of Notes.
2. Debt Service Ratio is equal to Net Cash Collections expressed as a ratio of
the interest and minimum and scheduled principal payments payable on each
subclass of Notes plus the interest and minimum and scheduled principal payments
payable on each subclass of Notes that ranks equally with or senior to the
relevant subclass of Notes in the priority of payments.
3. Total Asset Value is equal to Total Assumed Portfolio Value plus Liquidity
Reserve Amount minus Lessee Security Deposits.
4. Assumed Portfolio Value represents the Inital Appraised Value of each
aircraft in the Portfolio multipled by the Depreciation Factor at Calculation
date divided by the Depreciation Factor at Closing date.
5. Adjusted Portfolio Value represents the Base Value of each aircraft in the
Portfolio as detemined by the most recent Appraisal multipled by the
Depreciation Factor at Calculation date divided by the Depreciation Factor at
Closing date.
6. The lower of the Assumed Portfolio Value or 105% of the Adjusted Portfolio
Value is used to calculate the principal repayment amounts to Noteholders
<PAGE>
MORGAN STANLEY AIRCRAFT FINANCE
Management Discussion & Analysis of Cash Performance
Background
On March 3, 1998, Morgan Stanley Aircraft Finance ("MSAF"), a Delaware
business trust, issued $1,050 million of Notes in five subclasses- Subclass A-1,
Subclass A-2, Subclass B-1, Subclass C-1 and Subclass D-1 (the "Notes"). The
Notes were issued in connection with MSAF's agreement to acquire 33 aircraft
plus a spare engine with a total appraised value at September 30, 1997 of
$1,115.51 million from International Lease Finance Corporation ("ILFC").
All but one of the 33 aircraft were acquired by MSAF. The undelivered
aircraft was a B737 with an appraised value of $28.82 million. Pursuant to the
indenture relating to the Notes (the "Indenture"), MSAF decided not to
substitute this aircraft but to distribute to Noteholders $26.0 million which
represents that portion of the proceeds from the offering of the Notes relating
to this aircraft on June 15, 1998. As a result, the overall size of the aircraft
fleet is now 32 aircraft plus a spare engine with a revised total appraised
value at September 30, 1998 of $1,029.4 million. Applying the declining value
assumption to the original September 30, 1997 fleet appraisal, the total
appraised value was assumed to be $1,047.9 million at February 16, 1999. See
"Aircraft Values" below. As of April 1, 1999, all 32 aircraft plus the engine
were subject to leases with 30 lessees in 19 countries as shown in Schedule A
attached.
The discussion and analysis, which follows, is based on the results of
MSAF and its subsidiaries as a single entity (collectively the "MSAF Group").
General
MSAF Group is a special purpose vehicle which owns aircraft subject to
operating leases and, in certain instances, a finance lease. MSAF may also make
aircraft acquisitions and aircraft sales. MSAF intends to acquire additional
commercial passenger or freight aircraft from various sellers and will finance
the acquisition of such aircraft by issuing additional notes. Any acquisition of
further aircraft will be subject to certain confirmations with respect to the
Notes from rating agencies and compliance with certain operating covenants of
MSAF set out in the Indenture.
<PAGE>
MSAF's cash receipts and disbursements are determined, in part, by the
overall economic condition of the operating leasing market. The operating
leasing market, in turn, is affected by various cyclical factors including
interest rates, the availability of credit, fuel costs and general and regional
economic conditions affecting lessee operations and trading; manufacturer
production levels; passenger demand; retirement and obsolescence of aircraft
models; manufacturers exiting or entering the market or ceasing to produce
aircraft types; re-introduction into service of aircraft previously in storage;
governmental regulation; and air traffic control infrastructure constraints such
as limitations on the number of landing slots.
MSAF's ability to compete against other lessors is determined, in part,
by (i) the composition of its fleet in terms of mix, relative age and popularity
of the aircraft types; (ii) operating restrictions imposed by the Indenture, and
(iii) the ability of other lessors, who may possess substantially greater
financial resources, to offer leases on more favorable terms than MSAF.
This report presents information for the period from and including
November 17, 1998 to and including the Note Payment Date on February 16, 1999.
The financial data includes payments made by MSAF on February 16, 1999 but
includes receipts from November 10, 1998 up to February 9, 1999,this being the
calculation date for the February 16, 1999 Note Payment Date.
Cashflow Performance Relative to the Assumptions
The February 20, 1998 Offering Memorandum for the Notes (the "Offering
Memorandum") contains assumptions in respect of MSAF's future cashflows and cash
expenses (the "Assumptions"). In the period from November 17, 1998 to February
16, 1999, MSAF generated approximately $0.9 million in net cash collections in
excess of the Assumptions, due to higher than expected net maintenance revenues.
Cash Collections
"Cash Collections" comprise lease rental payments, maintenance reserve
payments by lessees and cash interest paid on MSAF's cash balances. The Offering
Memorandum assumed Cash Collections for the period from November 17, 1998 to
February 16, 1999 of $30.2 million. Total Cash Collections achieved in this
period were $32.0 million, a positive difference of $1.8 million. This
difference is due to a combination of factors set out below.
<PAGE>
Gross lease rentals. Cash Collections relating to gross lease rentals
for the period from November 17, 1998 to February 16, 1999 amounted to $28.3
million or approximately $3 million less than the $31.3 million assumed in the
period. Lessee rental arrears, outstanding restructured payments, bad debts and
lost revenue due to aircraft on ground explain this variance. See "Developments
- - Lessee Difficulties" below.
Repossession and other stress related costs (net of security deposits
applied). Repossession and other stress related costs (net of security deposits
applied) for the period from November 17, 1998 to February 16, 1999 amounted to
an inflow of $0.7 million, compared to a cost of $1.4 million in assumed stress
related costs for this period. The inflow of $0.7 million reflects the
application of a security deposit from one terminated lease. As of April 1,
1999, this aircraft was subject to a signed lease agreement with a new lessee.
Net lease rentals. The Offering Memorandum assumes a 4.5% reduction in
gross lease rentals due to certain stress related costs (repossession costs, AOG
costs and arrearages) ("Net Lease Rentals"). For the period from November 17,
1998 to February 16, 1999, assumed Net Lease Rentals were $29.9 million. Actual
Net Lease Rentals for the period were $29.0 million, $0.9 million less than the
Assumptions principally because of lower than assumed gross lease rentals, which
were partially offset by lower than assumed repossession and other stress
related costs. It is likely that net lease rentals will remain weak in the
current financial year, due to potential lessee defaults, arrears and increased
repossession and other stress-related costs. See "Developments - Lessee
Difficulties" below.
Maintenance. In the period from November 17, 1998 to February
16, 1999, maintenance receipts were $4.3 million, exceeding maintenance
disbursements of $1.8 million by $2.5 million. The Offering Memorandum assumes
that maintenance receipts will equal maintenance disbursements over the term of
the Notes, and therefore, maintenance receipts and maintenance disbursements are
both assumed to be zero in each Note Payment Period. In any particular Note
Payment Period, however, there will be actual maintenance receipts and
disbursements and it is unlikely that maintenance receipts will equal
maintenance disbursements in any such period. It is likely that maintenance
disbursements will increase due to anticipated engine overhauls and re-leasing
expenses which we originally expected to incur in 1998 but which we now expect
to incur in the current year. As of February 16, 1999, there was approximately
$3.2 million held in the Expense Account for projected maintenance expenses over
the following three months.
<PAGE>
Interest received. Actual interest received for the period from
November 17, 1998 to February 16, 1999 was $0.5 million compared to $0.4 million
assumed in the Offering Memorandum for the same period. The difference is due to
a combination of two offsetting factors. First, actual interest received
includes interest received on amounts in the Expense Account and interim
balances in the Collection Account which are not included in the Offering
Memorandum assumptions. Second and partially offsetting the impact of these
higher cash balances on which interest has been earned, the Offering Memorandum
assumed a reinvestment rate of 5.75% while the average reinvestment rate for the
period was approximately 5.27%.
Other cash received. Other cash received for the period from November
17, 1998 to February 16, 1999 was approximately $0.1 million or $0.1 million
more than assumed in the Offering Memorandum. Other cash received consists of
late lease payment charges and interest earned on a former lessee's deposit.
Cash Expenses
"Cash Operating Expenses" includes all fees, costs or expenses paid by
any MSAF Group member in the course of the business activities permitted to be
conducted by it under the Indenture. The cash outflows in respect of Operating
Expenses shown in the Offering Memorandum were assumed to be $1.1 million for
the period from November 17, 1998 to February 16, 1999. Total cash expenses paid
in this period were approximately $2.3 million, a negative variance of $1.2
million. This variance is due to a combination of factors set out below.
Cash Operating Expenses
Insurance, re-leasing and other costs. Insurance, re-leasing and other
costs incurred were approximately $0.4 million from November 17, 1998 to
February 16, 1999, which was $0.7 million less than the assumed costs of $1.1
million for the period.
Increase in Accrued Expenses. $1.8 million of accrued expenses was
transferred to the expense account in the period from November 17, 1998 to
February 16, 1999 and is expected to be payable in the current year. The balance
in the Expense Account on February 16, 1999 was $4.3 million. Approximately $3.2
million of this $4.3 million relates to accrued maintenance expenses while the
remaining $1.1 million relates to accrued insurance, re-leasing and other costs.
The Offering Memorandum assumes there are no accrued expenses.
<PAGE>
Selling, General and Administrative
Servicer fees. Fees paid to ILFC, as Servicer, during the period from
November 16, 1998 to February 16, 1999 amounted to $1.8 million, which is $0.2
million higher than the assumed cost of $1.6 million for the period. A
significant portion of the Servicer fees are calculated as a percent of rental
revenue actually received. While actual rental revenue received was lower than
assumed in the Offering Memorandum, total fees paid were higher as they included
an Annual Incentive fee of $0.5 million, paid in December 1998.
Other service provider fees and overhead. Other service provider fees
and overhead amounted to $0.4 million for the period from November 17, 1998 to
February 16th, 1999. This is $0.4 million below the assumed amount of $0.8
million for the period, partly due to lower than assumed Administrative Agent's
fee because of lower rental revenues but mainly due to lower than assumed
overhead costs.
Note Payments
Interest payments. Actual interest payments to Noteholders net of swap
effects were $17.5 million, slightly higher than assumed net payments of $17.4
million for the period from November 17, 1998 to February 16, 1999.
Principal payments. Total principal distributions in the period from
November 17, 1998, to February 16, 1999 were $10.1 million, an excess of $0.9
million over assumed total debt amortization for this period, reflecting the
higher than assumed net cash collections as discussed above. The principal
amortization payments were made with respect to the A-2 and B-1 Notes.
Other Financial Data
Cash
Cash held at February 16, 1999 was $29.2 million. Of this amount, $25
million represents the cash portion of the Liquidity Reserve Amount (which is
used as a source of liquidity for, among other things, maintenance obligations,
security deposit return obligations, cash operating expenses and contingent
liabilities) and $4.3 million represents accrued expenses and is held in the
Expense Account. The $4.3 million of Accrued Expenses is in respect of likely
maintenance and re-leasing expenses expected to fall due in the next quarter.
<PAGE>
In addition to the $25 million cash portion at February, 16, 1999, the
Liquidity Reserve Amount also contained $40.4 million of undrawn credit and
liquidity facilities from Morgan Stanley Dean Witter and ILFC.
Aircraft Values
Under the terms of the Notes, MSAF is obliged to obtain annual
appraisals of the Base Value of each aircraft from three independent appraisers
by October 31 of each year. Generally, where the appraisals indicate a Base
Value decline significantly in excess of the value decline assumed under the
terms of the Notes, excess cash flow is redirected to the extent required to the
Class A Notes via the Class A Scheduled Principal Payment Amount. The most
recent appraisals occurred in September 30, 1998 and the next are due to occur
no later than October 31, 1999. A copy of the most recent Appraisals is attached
in Schedule A. The actual appraised value of the fleet as at September 30, 1998
was $1,029.4 million versus an assumed value of $ 1,058.3 million as at November
17, 1999.
A-D Note Balance
As of February 16, 1999, the aggregate amount of Class A-D Notes
outstanding was $968.7 million, approximately $12.7 million lower than assumed
due to higher than assumed principal repayments with respect to the Class A-2
Notes.
Developments
Lessee Difficulties
As of April 1, 1999, two lessees were in arrears. The aircraft on lease
to the two lessees in arrears represent approximately 9.0% of the appraised
value of the portfolio at September 30,1998 and both lessees are based in
Brazil. The amounts outstanding and overdue for the two lessees in respect of
Rental Payments, Maintenance Reserves and other miscellaneous amounts due under
the Leases (net of default interest and certain cash in transit) with respect to
these lessees amounted to approximately $5.1 million. The weighted average
number of days past due of such arrears was 68 days. See "Latin America" below.
Since November 30, 1998 two lessees have been terminated early. The two
early lease terminations were uncontested by the lessees. Both aircraft have
been re-leased to new lessees and the aircraft are currently undergoing
redelivery modifications prior to delivery, scheduled for April 1999.
<PAGE>
Europe / Middle East
In light of continued non-payment of rental and maintenance
prepayments, the Servicer agreed to terminate the lease with Onur Air early and
repossess the aircraft. The aircraft represents 4.3% of the appraised value of
the portfolio at September 30, 1998. As of April 1, 1999, Onur Air was in
arrears, owing $1.4 million in rental and maintenance reserves (net of security
deposits). Amounts owed were restructured as part of the early termination
agreement and are scheduled for repayment in full by October 1999.The aircraft
has been re-leased to Air Alfa, a Turkish based charter airline.
Asia
During the period from March 3, 1998 to February 16, 1999, the
economies of Asia were severely affected by economic and financial difficulties.
Currently, MSAF leases 13.0% of its fleet in the Asia Region (5.5% in South
Korea, 4.9% in Taiwan and 2.6% in China) and 6.7% in Pacific and Other regions
(6.7% in Fiji) by appraised value of the portfolio at September 30, 1998. As of
April 1, 1999 none of these lessees were in arrears although severe financial
difficulties have been reported for certain other air carriers in the region.
One of the lessees restructured its lease payments which will result in a lower
rental payment over the remaining lease term.
Latin America
Considerable uncertainty currently affects the major economies in Latin
America. As of April 1, 1999, MSAF leased 17.4% of its fleet in Latin America
(6.3% in Mexico and 11.1% in Brazil) by appraised value of the portfolio at
September 30, 1998.
In January 1999, Brazil decided to float its currency on the
international currency market which resulted in a devaluation of its currency
and increased its exchange rate volatility. One of MSAF's Brazilian lessees,
which accounts for 6.1% of the appraised value of the portfolio at September 30,
1998, requested a short-term stay in lease payments during the current period of
exchange rate volatility. The lessee is currently in discussion with its
principal lessors, regarding its financial position, the outcome of which may
well be the restructuring of its lease payments to MSAF. The rentals of another
lessee, representing 2.1% of the appraised value of the portfolio at September
30, 1998, have been restructured. The lessee has agreed with the Servicer to
defer part of its rental for a six month period and to pay the arrearage, with
interest, in full by January next year. The rental arrears of the third
Brazilian lessee, which accounts for 2.9% of the appraised value of the
portfolio at September 30, 1998, were restructured in December 1998, and the
lessee is in arrears with respect to the restructured payments amounts as well
as subsequent lease payments.
<PAGE>
In January 1999, the Servicer agreed with Guyana Airways to
terminate the lease early and repossess the aircraft. As part of the termination
agreement , the airline has agreed to repay certain arrears, costs and expenses
associated with the redelivery of this aircraft. The Guyana aircraft is a
B757-200 and accounts for 3.3% of the appraised value of the portfolio at
September 30, 1998.The aircraft is subject to a new lease with a US carrier,
National Airlines.
<PAGE>
<TABLE>
Quarterly Analysis
Comparison of Actual Cashflows Versus Prospectus
for the period from Nov 17, 1998 to Feb 16, 1999
------------------------------------------------
Start Date 11/17/98
End Date 2/16/99
-----------------------------------------------------------------------------
Quarterly Data
% of Prospectus Gross Lease Revenues
- -------------------------------------------------------------------- -------------------------------------
Period ending Actual Prospectus * Variance Actual Prospectus * Variance
To Date To Date
- -------------------------------------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross Lease Rentals
Gross Lease Rentals 28,351,681 31,292,894 (2,941,213) 90.6% 100.0% -9.4%
Repossession and other
Stress Related Costs 697,020 (1,408,180) 2,105,200 2.2% -4.5% 6.7%
------------------------------------- -------------------------------------
Net Lease Rentals 29,048,701 29,884,714 (836,013) 92.8% 95.5% -2.7%
Maintenance Receipts 4,334,063 0 4,334,063 13.8% 0.0% 13.8%
Maintenance Expenses (1,811,296) 0 (1,811,296) -5.8% 0.0% -5.8%
------------------------------------- -------------------------------------
Net Maintenance 2,522,767 0 2,522,767 8.1% 0.0% 8.1%
Interest Received 454,797 350,238 104,559 1.5% 1.1% 0.3%
Other Cash Received 14,672 14,672 0.0% 0.0% 0.0%
------------------------------------- -------------------------------------
Total Cash Received 32,040,936 30,234,952 1,805,985 102.4% 96.6% 5.8%
Cash Expenses
Cash Operating Expenses
- Insurance, re-leasing
and other costs (361,332) (1,095,251) 733,919 -1.2% -3.5% 2.3%
- (increase)/decrease in
Accrued Expenses (1,801,809) 0 (1,801,809) -5.8% 0.0% -5.8%
------------------------------------- -------------------------------------
subtotal (2,163,141) (1,095,251) (1,067,890) -6.9% -3.5% -3.4%
SG&A
- Servicer Fees (1,774,927) (1,594,307) (180,620) -5.7% -5.1% -0.6%
- Other Servicer provider
fees and Overhead (437,238) (805,074) 367,836 -1.4% -2.6% 1.2%
------------------------------------- -------------------------------------
subtotal (2,212,166) (2,399,382) 187,216 -7.1% -7.7% 0.6%
------------------------------------- -------------------------------------
Total Cash Expenses (4,375,307) (3,494,633) (880,674) -14.0% -11.2% -2.8%
- -------------------------------------------------------------------- -------------------------------------
NET CASH COLLECTIONS 27,665,630 26,740,319 925,311 88.4% 85.5% 3.0%
- -------------------------------------------------------------------- -------------------------------------
Interest Payments (Net of
Swap effects) 17,515,666 17,451,532 64,134 56.0% 55.8% 0.2%
Principal Payments
A-1 0 0 0 0.0% 0.0% 0.0%
A-2 9,218,226 8,357,049 861,177 29.5% 26.7% 2.8%
B-1 931,738 931,738 (0) 3.0% 3.0% 0.0%
C-1 0 0 0 0.0% 0.0% 0.0%
D-1 0 0 0 0.0% 0.0% 0.0%
------------------------------------- -------------------------------------
subtotal 10,149,964 9,288,787 861,177 32.4% 29.7% 2.8%
- -------------------------------------------------------------------- -------------------------------------
Total Payments to Noteholders 27,665,630 26,740,319 925,311 88.4% 85.5% 3.0%
- -------------------------------------------------------------------- -------------------------------------
Benefical Interest Distributions 0 0 0 0.0% 0.0% 0.0%
- ------------------------------------------------------------------------------------------------------------
*Prospectus Cash Collections and Cash Expenses have been adjusted for
non-delivery of THY Aircraft, msn 25272.
</TABLE>
<PAGE>
<TABLE>
Comparison of Actual to Date Cashflows versus Prospectus
From March 3, 1998 (Note Issuance Date) to February 16, 1999
----------------------------------------------------------------------------------
Year to Date
------------
% of Prospectus Gross Lease Revenues
- ------------------------------------------------------------------------- ----------------------------------------
Period ending 16-Feb-99 Actual Prospectus * Variance Actual Prospectus * Variance
- ------------
To Date To Date
- ------------------------------------------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cash Collections
Gross Lease Rentals 115,824,103 125,412,288 (9,588,185) 92.4% 100.0% -7.6%
Repossession and other
Stress Related 1,251,537 (5,643,553) 6,895,090 1.0% -4.5% 5.5%
--------------------------------------- ----------------------------------------
Net Lease Rentals 117,075,640 119,768,735 (2,693,095) 93.4% 95.5% -2.1%
Maintenance Receipts 15,730,147 0 15,730,147 12.5% 0.0% 12.5%
Maintenance Expenses (4,901,142) 0 (4,901,142) -3.4% 0.0% -3.4%
--------------------------------------- ----------------------------------------
Net Maintenance 10,829,005 0 10,829,005 9.2% 0.0% 9.2%
Interest Received 2,455,741 1,331,057 1,124,684 2.0% 1.1% 0.9%
Other leasing income 2,223,652 0 2,223,652 1.8% 0.0% 1.8%
--------------------------------------- ----------------------------------------
Total Cash Received 132,584,038 121,099,792 11,484,246 105.7% 96.6% 9.2%
Cash Expenses
Cash Operating Expenses
- Insurance, re-leasing
and other costs (1,564,910) (4,389,430) 2,824,521 -1.2% -3.5% 2.3%
- (increase)/decrease in
Accrued Expenses (4,249,699) 0 (4,249,699) -3.4% 0.0% -3.4%
--------------------------------------- ----------------------------------------
subtotal (5,814,608) (4,389,430) (1,425,178) -4.6% -3.5% -1.1%
SG&A
- Servicer Fees (4,394,179) (4,840,992) 446,813 -3.5% -3.9% 0.4%
- Other Servicer provider
fees and Overhead (1,790,523) (3,107,014) 1,316,492 -1.4% -2.5% 1.0%
--------------------------------------- ----------------------------------------
subtotal (6,184,701) (7,948,006) 1,763,305 -4.9% -6.3% 1.4%
--------------------------------------- ----------------------------------------
Total Cash Expenses (11,999,310) (12,337,436) 338,127 -9.6% -9.8% 0.3%
- ------------------------------------------------------------------------- ----------------------------------------
NET CASH COLLECTIONS 120,584,728 108,762,355 11,822,373 96.2% 86.7% 9.4%
- ------------------------------------------------------------------------- ----------------------------------------
Exceptional Items
- THY Note Distribution 27,143,085 27,143,085 0 21.6% 21.6% 0.0%
- ------------------------------------------------------------------------- ----------------------------------------
TOTAL NET CASH COLLECTIONS 147,727,813 135,905,440 11,822,373 117.8% 108.4% 9.4%
- ------------------------------------------------------------------------- ----------------------------------------
Interest Payments (Net of
Swap effects) 66,459,142 67,384,492 (925,350) 53.0% 53.7% -0.7%
Principal Payments
A-1 0 0 0 0.0% 0.0% 0.0%
A-2 75,156,342 62,408,620 12,747,722 59.9% 49.8% 10.2%
B-1 6,112,329 6,112,329 (0) 4.9% 4.9% 0.0%
C-1 0 0 0 0.0% 0.0% 0.0%
D-1 0 0 0 0.0% 0.0% 0.0%
--------------------------------------- ----------------------------------------
subtotal 81,268,670 68,520,948 12,747,722 64.8% 54.6% 10.2%
- ------------------------------------------------------------------------ ----------------------------------------
Total Payments to Noteholders 147,727,813 135,905,440 11,822,372 117.8% 108.4% 9.4%
- ------------------------------------------------------------------------ ----------------------------------------
Benefical Interest Distributions (0) 0 (0) 0.0% 0.0% 0.0%
- ------------------------------------------------------------------------- ----------------------------------------
*Prospectus Cash Collections and Cash Expenses have been adjusted for
non-delivery of THY Aircraft, msn 25272.
</TABLE>
<PAGE>
<TABLE>
Comparison of Actual to Date Cashflows versus Prospectus
From March 3, 1998 (Note Issuance Date) to February 16, 1999
---------------------------------------------------------------------------------------------------
Coverage Ratios
Closing Prospectus* Actual
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
a Net Cash Collections 135,905,440 149,327,813
b Swaps 4,970,730 5,060,423
c Class A Interest 40,803,383 39,745,434
d Class A Minimum 22,188,410 15,221,945
e Class B Interest 5,963,879 5,866,785
f Class B Minimum 6,112,329 6,112,329
g Class C Interest 6,555,000 6,621,667
h Class C Minimum - -
I Class D Interest 9,091,500 9,164,833
j Class D Minimum - -
k Class A Scheduled - -
l Class B Scheduled - -
m Class C Scheduled - -
n Class D Scheduled - -
o Permited Aircraft Modifications - 1,600,000
p Class A Supplemental 40,220,209 59,934,397
--------------- -----------
Total 135,905,440 149,327,813
--------------- -----------
Interest Coverage Ratio
Class A 3.33 3.76
Class B 1.97 2.45
Class C 1.67 2.03
Class D 1.50 1.80
Debt Coverage Ratio
Class A 1.50 1.80
Class B 1.50 1.80
Class C 1.50 1.80
Class D 1.50 1.80
Loan-to-Value Ratios
Assumed Portfolio
Value 1,115,510,000 1,047,853,475
Adjusted Portfolio
Value 1,014,246,130
Liquidity Reserve
Amount Of which
- Cash 25,000,000 25,000,000 29,300,000
- Letters of
Credit
held 40,000,000 41,226,351 41,226,351
------------- ------------- -------------
Subtotal 65,000,000 66,226,351 70,526,351
Less Lessee Security
Deposits (20,000,000) (21,226,351) (21,226,351)
Less Accrued Expenses (4,300,000)
------------- ------------- -------------
Subtotal 45,000,000 45,000,000 45,000,000
Total Asset Value 1,160,510,000 1,092,853,475 1,059,246,130
Note Balances
as at 16-Feb-99
Class A 740,000,000 63.8% 677,591,380 62.0% 664,843,658 62.8%
Class B 100,000,000 72.4% 93,887,671 70.6% 93,887,671 71.6%
Class C 100,000,000 81.0% 100,000,000 79.7% 100,000,000 81.1%
Class D 110,000,000 90.5% 110,000,000 89.8% 110,000,000 91.5%
------------- ------------- -------------
Total 1,050,000,000 981,479,052 968,731,330
------------- ------------- -------------
Assumed Portfolio Value as a Percent of
Adjusted Portfolio Value as at April 15, 1999 103.3%
---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
1. Interest Coverage Ratio is equal to Net Cash Collections expressed as a ratio
of the interest payable on each subclass of Notes plus the interest and minimum
principal payments payable on each subclass of Notes that rank senior in
priority of payment to the relevant subclass of Notes.
2. Debt Service Ratio is equal to Net Cash Collections expressed as a ratio of
the interest and minimum and scheduled principal payments payable on each
subclass of Notes plus the interest and minimum and scheduled principal payments
payable on each subclass of Notes that ranks equally with or senior to the
relevant subclass of Notes in the priority of payments.
3. Total Asset Value is equal to Total Assumed Portfolio Value plus Liquidity
Reserve Amount minus Lessee Security Deposits.
4. Assumed Portfolio Value represents the Inital Appraised Value of each
aircraft in the Portfolio multipled by the Depreciation Factor at Calculation
date divided by the Depreciation Factor at Closing date.
5. Adjusted Portfolio Value represents the Base Value of each aircraft in the
Portfolio as detemined by the most recent Appraisal multipled by the
Depreciation Factor at Calculation date divided by the Depreciation Factor at
Closing date.
6. The lower of the Assumed Portfolio Value or 105% of the Adjusted Portfolio
Value is used to calculate the principal repayment amounts to Noteholders
<PAGE>
<TABLE>
Schedule A
Morgan Stanley Aircraft Finance Portfolio Details
All amounts in thousands of US dollars unless otherwise stated
Figures as of April 1,1999
--------------------------
30-Sep-98
Country of Engine Serial Date of Adjusted Base % of
Region (1) Current Less Current Lessee Type Configuration Number Manufacture Value (2) Total
---------- ------------ -------------- ---- ------------- ------ ----------- ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Europe France Air Liberte MD-83 JT8D-219 49822 Dec-88 19,433 1.9%
2 (Developed) France Aeropostale B737-3S3QC CFM 56-3C1 23788 May-87 21,420 2.1%
3 Greece Olympic Airways B737-4Q8 CFM 56-3C1 25371 Jan-92 27,137 2.6%
4 Netherlands KLM engine CF6-80C2B6F 704279 Jun-95 5,593 0.5%
5 Netherlands Transavia B737-3K2 CFM 56-3C1 27635 May-95 29,863 2.9%
6 Ireland TransAer A320-200 V2500-A1 414 May-93 31,503 3.1%
7 Portugal TAP B737-382 CFM 56-3B2 25161 Feb-92 25,020 2.4%
8 Sweden Transwede SAFE B737-548 CFM 56-3B1 25165 Apr-93 20,860 2.0%
9 Switzerland Flightlease A310-300 JT9D-7R4E1 410 Nov-85 25,377 2.5%
10 UK Britannia/Ansett B767-204ER CF6-80A 23807 Aug-87 36,390 3.5%
11 UK Caledonian A320-200 V2500-A1 393 Feb-93 31,310 3.0%
12 UK Monarch A320-200 V2500-A1 279 Feb-92 30,467 3.0%
13 UK Unijet B767-39HER CF6-80C2B6F 26256 Apr-93 67,767 6.6%
14 UK Flying Colours B757-28A RB211-535-E4-37 24367 Feb-89 34,870 3.4%
15 North America USA Alaska B737-4Q8 CFM 56-3C1 25104 May-93 28,210 2.7%
16 (Developed) USA TWA MD-83 JT8D-219 49824 Mar-89 20,423 2.0%
17 USA TWA MD-82 JT8D-217C 49825 Mar-89 18,270 1.8%
18 USA National Airlines B757-28A RB211-535-E4 24260 Dec-88 33,953 3.3%
19 Europe Hungary Malev F-70 TAY MK620-15 11564 Dec-95 15,627 1.5%
20 and Middle
East Hungary Malev F-70 TAY MK620-15 11565 Feb-96 16,353 1.6%
21 (Emerging) Hungary Malev F-70 TAY MK620-15 11569 Mar-96 16,460 1.6%
22 Turkey Air Alfa A321-100 V2530-A5 597 May-96 44,623 4.3%
23 Asia Korea Asiana B767-300 CF6-80C2B6F 24798 Oct-90 56,127 5.5%
24 (Emerging) Taiwan China Airlines A300-600R A300-600R 555 Mar-90 50,720 4.9%
25 China China Hainan B737-3Q8 CFM 56-3C1 26295 Dec-93 26,783 2.6%
26 Latin America Brasil Varig A310-300 JT9D-7R4E1 437 Nov-86 30,183 2.9%
27 (Emerging) Brasil Passeredo B747-341B CF6-80C2 24106 Apr-88 62,673 6.1%
28 Brasil VASP B737-3Q8 CFM-3B2 24299 Nov-88 21,407 2.1%
29 Mexico Aero Mexico B757-2Q8 PW 2037 26272 Mar-94 42,727 4.2%
30 Mexico TAESA B737-4Q8 CFM 56-3B2 24234 Oct-88 22,340 2.2%
31 Other Fiji Air Pacific B767-3X2ER CF6-80C2B4 26260 Sep-94 68,913 6.7%
32 Iceland IcelandAir B737-3S3F CFM 56-3B2 23811 Oct-87 21,423 2.1%
33 Oman Oman Air A310-300 JT9D-7R4E1 409 Nov-85 25,210 2.4%
--------------------
Total 1,029,437 100%
====================
------------------
(1) Regions are defined according to MSCI designations.
(2) Adjusted Base Value is the Base Value of each aircraft as per the
September 30, 1998 Appraisal.
(3) Total Number of Lessees =30
(4) Total Number of Countries = 19
</TABLE>
