FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For May 5, 2000
AERCO LIMITED
22 Grenville Street
St. Helier
Jersey, JE4 8PX
Channel Islands
------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F /X/ Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No /X/
<PAGE>
INDEX TO EXHIBITS
Item
1. AerCo Limited March 15, 2000 Quarterly Cash Report, Management Discussion
and Analysis of Financial Condition and Results of Operations and
Particulars of AerCo's portfolio.
Page 2 of 3
<PAGE>
SIGNATURE
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, thereunto duly authorized.
Dated: May 5, 2000
AERCO LIMITED
By: /s/ Frederick Bradley
------------------------------
Name: Frederick Bradley
Title: Attorney-in-Fact
Page 3 of 3
AerCo Group
Quarterly Report March 15, 2000
All amounts are in thousands of US dollars unless otherwise stated
Selected Financial Data for the period December 15, 1999 to March 15, 2000
(Note 1) and Cumulative to date
<TABLE>
Current Period Cumulative to date
----------------------------------------- --------------------------------------
Actual Prospectus Variance Actual Prospectus Variance
----------- ------------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash Collections
Gross Lease rentals 27,064 29,364 (2,300) 183,386 194,544 (11,158)
Repossession and other Stress
Related costs (1,469) (1,761) 292 (4,424) (11,598) 7,174
------ ------ ------ ------- ------- -------
Net Lease Rentals (A) 25,595 27,603 (2,008) 178,962 182,946 (3,984)
====== ====== ====== ======= ======= ======
Maintenance receipts 2,113 - 2,113 17,723 - 17,723
Interest received 906 561 345 5,201 3,733 1,468
Other cash received 16 - 16 28,221 109 28,112
------ ------ ------ ------- ------- -------
Total Cash Collections (B) 28,630 28,164 466 230,107 186,788 43,319
====== ====== ====== ======= ======= ======
Cash Expenses
Cash Operating Expenses
- - Maintenance (6,459) - (6,459) (28,607) - (28,607)
- - Insurance, re-leasing and other costs (218) (589) 371 (4,947) (3,976) (971)
------ ------ ------ ------- ------- -------
Subtotal (6,677) (589) (6,088) (33,554) (3,976) (29,578)
------ ------ ------ ------- ------- -------
Selling General & Administrative Expenses
- Servicer fees (852) (507) (345) (6,353) (4,271) (2,082)
- Other servicer provider fees
and overhead (806) (1,292) 486 (7,548) (8,612) 1,064
------ ------ ------ ------- ------- -------
Subtotal (1,658) (1,799) 141 (13,901) (12,883) (1,018)
------ ------ ------ ------- ------- -------
Total Cash Expenses (C) (8,335) (2,388) (5,947) (47,455) (16,859) (30,596)
====== ====== ====== ======= ======= ======
Movement in Expense/
Collection Account Balances/ (101) - (101) (768) - (768)
Security Deposits (D)
------ ------ ------ ------- ------- -------
Net Cash Collections ( (B)+(C)+(D) ) 20,194 25,776 (5,582) 181,884 169,929 11,955
====== ====== ====== ======= ======= ======
Note Payments
Interest Payments (Net of Swap Effects) 13,153 15,274 (2,121) 95,215 100,199 (4,984)
Principal Payments
A-1 - - - - - -
A-2 5,912 9,305 (3,393) 77,367 62,985 14,382
B-1 955 1,023 (68) 8,711 6,152 2,559
C-1 174 174 - 591 593 (2)
D-1 - - - - - -
------ ------ ------ ------- ------- -------
Subtotal 7,041 10,502 (3,461) 86,669 69,730 16,939
------ ------ ------ ------- ------- -------
Total Payments to Noteholders 20,194 25,776 (5,582) 181,884 169,929 11,955
====== ====== ====== ======= ======= ======
</TABLE>
<PAGE>
AerCo Group
Quarterly Report March 15, 2000
All amounts are in thousands of US dollars unless otherwise stated
Selected Financial Data as at March 15, 2000
- -------------------------------------------------------------------------------
Actual
---------------
Cash
Cash held in Liquidity Reserve Account 56,304
Aircraft Purchase Account -
Expense Account 5,000
- -------------------------------------------------------------------------------
Total Cash Available 61,304
- -------------------------------------------------------------------------------
Asset Value
Assumed Portfolio Value as at March 15, 2000 856,257
Liquidity Reserve Amount
Of which - Cash 56,304
- Letters of Credit held -
---------------
Subtotal 56,304
---------------
Less Lessee Security Deposits (16,304)
Subtotal 40,000
- -------------------------------------------------------------------------------
Total Asset Value (Note 2) 896,257
- -------------------------------------------------------------------------------
Note Balances
A-1 340,000
A-2 212,281
B-1 76,292
C-1 84,444
D-1 80,000
---------------
Total 793,017
- -------------------------------------------------------------------------------
Ratios
Loan to Total Asset Value (Note 3)
A-1 61.62%
A-2 61.62%
B-1 70.13%
C-1 79.55%
D-1 88.48%
- -------------------------------------------------------------------------------
Interest Coverage Ratio (Note 4)
Class A 2.27
Class B 1.98
Class C 1.69
Class D 1.48
- -------------------------------------------------------------------------------
Debt Service Coverage Ratio (Note 5)
Class A 1.48
Class B 1.40
Class C 1.38
Class D 1.38
- -------------------------------------------------------------------------------
- ----------------------
Notes
1 The financial data as at March 15, 2000 includes payments made by AerCo on
March 15, 2000 but only includes receipts up to March 9, 2000 (i.e.the
calculation date for the Note Payment Date on March 15, 2000)
2 Total Asset Value is equal to Total Assumed Portfolio Value plus Liquidity
Reserve Amount minus Lessee Security Deposits.
3 Loan to Total Asset Value Ratio is equal to the aggregate principal amount
of each subclass of Notes, plus the aggregate principal amount of any other
subclass of Notes that ranks equally or senior in priority of payment,
expressed as a percentage of the Total Asset Value
4 Interest Coverage Ratio is equal to the Net Cash Collections expressed as a
ratio of the interest paid on each subclass of Notes plus the interest and
minimum principal payments paid on each subclass of Notes that rank senior
in priority of payment to the relevant subclass of Notes.
5 Debt Service Coverage Ratio is equal to Net Cash Collections expressed as a
ratio of the interest and minimum and scheduled principal payments paid on
each subclass of Notes plus the interest and minimum and scheduled
principal payments paid on each subclass of Notes that ranks equally or
senior in priority of payments with the relevant subclass of Notes.
<PAGE>
AERCO GROUP
Management Discussion & Analysis of
Financial Condition and Results of Operations
The financial information contained in this report was not prepared in
accordance with generally accepted accounting principles of the United States or
the United Kingdom but was prepared in accordance with the Company's obligations
under the Indenture. This report should be read in conjunction with the
Company's most recent financial information prepared in accordance with
generally accepted accounting principles of the United Kingdom, including a
reconciliation of net loss, shareholders' deficit and aircraft assets to
estimated amounts under generally accepted principles of the United States. For
this you should refer to the Company's Form 20-F which is on file at the
Securities and Exchange Commission.
Background
On July 15, 1998 ("the Closing Date"), AerCo Limited ("AerCo" or "the
Company"), a Jersey limited liability company, issued $800 million of Notes in
four subclasses, Subclass A-1, Subclass A-2, Subclass B-1 and Subclass C-1 (the
"Notes"). The Company also issued two additional subclasses of notes, the
Subclass D-1 Notes and the Subclass E-1 Notes which were initially purchased by
AerFi Group plc ("AerFi Group"). The Company used the proceeds from the issuance
of Notes, the Subclass D-1 Notes and the Subclass E-1 Notes (i) to acquire the
issued and outstanding capital stock of Aircraft Lease Portfolio Securitization
94-1 Limited, a Jersey limited liability company ("ALPS 94-1") (and thereby to
indirectly acquire ALPS 94-1's portfolio of 25 aircraft and the related leases),
(ii) to finance the repayment of all of ALPS 94-1's existing financial
indebtedness and (iii) to finance the acquisition of 10 aircraft and the related
leases from AerFi Group and its subsidiaries ("AerFi") through the acquisition
of 100% of the capital stock of three wholly owned subsidiaries of AerFi Group.
On May 14, 1999, AerCo consumated an exchange offer under which the Notes
were exchanged for new notes which are registered with the Securities and
Exchange Commission. The registration statement filed by AerCo in connection
with the exchange offer went effective on April 15, 1999 (the "Registration
Statement").
The discussion and analysis which follows is based on the results of
AerCo Limited and its subsidiaries as a single entity (collectively the "AerCo
Group").
General
AerCo is a special purpose vehicle which currently owns (directly and
indirectly) 33 aircraft, which are on operating leases, having sold one Fokker
100 aircraft in January 1999 and a second Fokker 100 aircraft in July 1999.
AerCo may also acquire additional aircraft and any related existing leases or
similar arrangements from various sellers, which may include AerFi. Additional
aircraft may include among other things, aircraft, engines and entities with an
ownership or leasehold interest in aircraft or engines. AerCo will finance
acquisitions of additional aircraft with external funds, including issuing
additional notes. Any acquisition of further aircraft will be subject to certain
confirmations from the Rating Agencies and compliance with certain operating
covenants of AerCo set out in the Indenture dated as of July 15, 1998 by and
between AerCo and Bankers Trust Company, as trustee of the Notes and the new
notes issued and to be issued under the exchange offer (the "Indenture").
AerCo Group's cash receipts and disbursements are determined, in part,
by the overall economic condition of the aircraft operating leasing market. This
in turn, is affected by various cyclical factors including interest rates, the
availability of credit, fuel costs and general and regional economic conditions
affecting airline operations and trading; aircraft 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; air traffic control infrastructure constraints; capital
market risks and general risk of lessee default.
<PAGE>
AerCo'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 AerCo.
This quarterly report presents information from the Closing Date to the
March 15, 2000 Payment Date and for the three month period from the December 15,
1999 Payment Date to the March 15, 2000 Payment Date (the "Current Period").
This report, however, limits its commentary to the Current Period.
Cashflow Performance Relative to the Assumptions
The Registration Statement contained assumptions in respect of AerCo
Group's future cashflows and cash expenses (the "Assumptions"). These are
identical to those contained in the offering memorandum issued by AerCo on June
23, 1998. In the Current Period, AerCo Group had net Cash Collections of $20.2
million compared with an assumed amount of $25.8 million. This is comprised of
total Cash Collections of $28.6 million, which were $0.4 million above the
assumed amount and total Cash Expenses of $8.4 million, which were $5.9 million
above the assumed amount. Cash Collections and Cash Expenses are discussed in
detail below.
Cash Collections
"Cash Collections" comprise lease rental payments, maintenance reserve
payments by lessees, cash interest paid on AerCo's cash balances and other cash
received. The Registration Statement assumed total Cash Collections for the
Current Period of $28.2 million. Total Cash Collections achieved in the period
were $28.6 million, a positive difference of $0.4 million. This difference is
due to a combination of factors set out below.
Gross lease rentals. Cash Collections relating to gross lease rentals
for the Current Period amounted to $27.0 million, $2.3 million less than the
amount assumed in the Registration Statement. This variance arises principally
due to the actual re-lease rates for the aircraft being less than assumed, in
addition to lost lease revenue as a result of the two Fokker 100 aircraft sold
previously.
Repossession and other stress related costs. The Registration Statement
assumed a 6% reduction in gross rentals due to downtime costs, repossession
costs and arrearages. These costs for the Current Period amounted to a cash
outflow of $1.5 million, compared with the cash outflow of $1.8 million in
assumed costs for this period. The cash outflow of $1.5 million arose
principally due to non payment of rentals by Tower Air, a North American lessee
representing 3.2% of the portfolio by appraised value at February 18, 2000 and a
Colombian lessee representing 4.5% of the portfolio by appraised value at
February 18, 2000.
Net lease rental. This comprises gross lease rentals, net of
repossession and other stress related costs ("Net Lease Rentals"). For the
Current Period, assumed Net Lease Rentals were $27.6 million. Actual Net Lease
Rentals were $25.6 million.
Maintenance receipts. In the Current Period, maintenance receipts were
$2.1 million and maintenance disbursements were $6.5 million. The Registration
Statement 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, actual maintenance receipts and
disbursements will vary such that it is unlikely that maintenance receipts will
equal maintenance disbursements in any such period.
Interest received. Actual interest received for the Current Period was
$0.9 million which is ahead of the amount assumed in the Registration Statement
for the same period of $0.6 million.
2
<PAGE>
Cash Expenses
"Cash Expenses" includes all fees, costs or expenses paid by any AerCo
Group member in the course of the business activities permitted to be conducted
by it under the Indenture. The cash outflows in respect of Cash Expenses shown
in the Registration Statement were assumed to be $2.4 million for the Current
Period. Actual cash expenses were $8.3 million. The difference is due to the
aggregate of net Operating Expenses and Selling, General and Administrative
Expenses as set out below exceeding the costs assumed in the Registration
Statement.
Operating Expenses
Maintenance. Maintenance disbursements in the Current Period were
approximately $6.5 million which is $4.4 million greater than the maintenance
receipts for the period. The level of maintenance disbursements in the period is
as a result of the coincidence of a number of airframe and engine overhauls due
to the fact that much of AerCo Group's fleet is of a relatively similar age
profile. This trend is expected to reverse over the two year period to March 31,
2002. As discussed above, the Registration Statement assumes that maintenance
receipts will equal maintenance disbursements over the term of the Notes;
however, it is unlikely that actual maintenance receipts will equal maintenance
disbursements in any particular Note Payment Period.
Insurance, re-leasing, repossession and other costs. The Registration
Statement assumed a 2.0% reduction in gross lease rentals due to certain leasing
costs, insurance, re-leasing and other costs. For the Current Period this
assumed amount was $0.6 million. Actual costs for the Current Period were $0.2
million, $0.4 million less than the assumed amount.
Selling, General and Administrative Expenses
Servicer fees. Fees paid to Babcock & Brown Limited, as Servicer,
during the Current Period amounted to $0.8 million which is greater than the
assumed cost of $0.5 million for the period. A portion of the Servicer's
incentive fee relating to prior periods was paid during the Current Period. A
significant portion of the Servicer's fees are calculated as a percentage of
rental revenue actually received.
Other service provider fees and overhead. Other service provider fees
and overhead amounted to $0.8 million, which was $0.5 million below the assumed
amount of $1.3 million for the Current Period due to the timing of certain
costs.
Note Payments
Interest payments. Actual interest payments to Noteholders, net of swap
costs, for the Current Period were $13.2 million, as compared with assumed
interest payments, net of swap costs, of $15.3 million. This positive variance
is principally due to principal balances on the Notes being less than the
assumed balance.
Principal payments. Total principal distributions in the Current Period
were $7.0 million, $3.5 million lower than assumed total debt amortization.
Principal amortization payments were made with respect to the Subclass A-2
Notes, Subclass B-1 Notes and Subclass C-1 Notes. All scheduled principal
distributions on the Subclass A-2, B-1 and C-1 Notes have been made.
3
<PAGE>
Other Financial Data
Cash
Cash held at March 15, 2000 was $61.3 million. Of this amount, $56.3
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). Finally, the amount of cash held reflects cash received in respect
of rentals and other collections in the period since the most recent Calculation
Date and amounts held in the Expense Account for payments in respect of monthly
recurring expenses and costs that are not regularly incurred but are anticipated
to become due and payable in the near future.
Aircraft Values
At July 15, 1998, the total assumed appraised value of the 35 aircraft
was $951.9 million. Following application of the declining value assumption set
out in the terms of the Notes, and the sale of two Fokker 100 aircraft, serial
numbers 11258 and 11342, the total assumed value of the 33 remaining aircraft
was $856.3 million at March 15, 2000.
Under the terms of the Notes, AerCo Group is obliged to obtain annual
appraisals of the base value of each of the aircraft from at least three
independent appraisers no earlier than 90 days and not later than 30 days prior
to March 31 of each year. The appraised value is equal to the average of the
opinions of the appraisers as to the base value of each aircraft without taking
into account the value of the leases, maintenance reserves or security deposits.
AerCo Group has recently obtained an appraisal of the fleet as of
February 18, 2000. On the basis of these appraisals the appraised value of the
33 aircraft was approximately $849.5 million. The decrease represented by the
average appraised value of the portfolio at February 18, 2000 compared with the
average appraised value at January 18, 1999 is approximately $11 million less
than the expected decrease implied by the terms of the Notes.
A-D Note Balance
As of March 15, 2000, the aggregate amount of the Notes outstanding was
$793.0 million, approximately $20.6 million lower than assumed due to higher
actual than assumed principal repayments with respect to the Subclass A-2 Notes
and Subclass B-1 Notes principally as a result of aircraft sales.
Developments
Recent Developments
The aircraft leasing industry is being adversely affected by a
significant increase in the numbers of aircraft available for lease or sale,
with a corresponding negative impact on aircraft values and lease rates for
certain aircraft types, particularly older widebody aircraft. As a result of the
current oversupply of aircraft in the market place, AerCo may experience
difficulties in placing certain of its aircraft at satisfactory lease rates and
without incurring substantial downtime. AerCo has seven aircraft to remarket
before June 30, 2001. These comprise 1 x B737-300, 3 x B737-400, 1 x A300, and 2
x B767-300ER. The market for B767 aircraft, in particular, is extremely
difficult at present. The lease in respect of one B767-300ER aircraft, which
represents 6.9% of the portfolio at February 18, 2000, is scheduled to expire on
May 10, 2000. In addition, AerCo may also have to place one B747-200 aircraft in
the event that it is returned to AerCo by Tower Air due to the financial
difficulties being experienced by that airline - see below. AerCo is not
confident that it has any immediate definite placement opportunities
4
<PAGE>
for the B767 aircraft or the B747 aircraft, in the event it is returned. In
addition, the opportunities for lease or sale of these aircraft types are
currently extremely limited. As a consequence AerCo will suffer a material
decrease in leasing revenues if these aircraft are non-revenue earning for any
significant period of time. If the B747-200 aircraft on lease to Tower Air is
returned, the technical costs required to ensure that the aircraft is in a
suitable condition for releasing will be significant which may impact
significantly the value of this aircraft. Accordingly, AerCo is examining all
possibilities in respect of the B747-200 aircraft, including a worst case
scenario which would involve realising the scrap value.
Certain of AerCo's North American lessees have suffered acute adverse
trading conditions during the quarter, particularly, Tower Air and Canadian
Airlines.
At March 31, 2000 Tower Air owed AerCo $2.9 million. On February 29,
2000, Tower Air, representing 3.2% of the portfolio by appraised value at
February 18, 2000, filed for Chapter 11 bankruptcy protection in the U.S. in its
attempts to restructure its operations. This lessee has been in financial
difficulty for some time and has recently announced plans to lay-off
approximately 300 employees. As of May 1, 2000, Tower Air announced the
cessation of all scheduled flights. The Chapter 11 bankruptcy protection period
has been extended to May 5, 2000. The Servicer is currently in negotiations with
Tower Air in respect of the airline's obligations to AerCo. There can be no
assurance as to the outcome of these negotiations. In particular, it is unclear
whether Tower Air will repay its arrearages or be able to pay future lease
rentals, even assuming AerCo's aircraft remains with Tower Air.
During the quarter Canadian Airlines, representing 3.5% of the
portfolio by appraised value at February 18, 2000, announced a moratorium on
payments to its creditors and lessors in order to allow Air Canada to
restructure Canadian Airlines debt in the context of Air Canada acquiring
Canadian Airlines. The moratorium is effective from February 1, 2000 to April
30, 2000. It is proposed that the AerCo rentals for the period, totaling $0.8
million, plus interest will be repaid by drawdown against Canadian's letter of
credit of $1.4 million held by AerCo. Furthermore, it is proposed that the lease
be extended for a further two year period. Canadian Airlines owed AerCo $0.5
million at March 31, 2000.
Trading conditions in the civil aviation industry have been adversely
affected by the severe economic and financial difficulties experienced in Latin
America. This downturn has undermined business confidence in the region and has
had an adverse impact on the results of operations of some of AerCo's lessees in
the region which may adversely affect AerCo's future revenues and cashflows.
Colombia has recently suffered as a result of the deterioration in the
value of the Colombian Peso and the resulting negative impact on the Colombian
economy. AerCo leases to one Colombian lessee which operates one aircraft,
representing 4.6% of the portfolio by appraised value at February 18, 2000.
Continued weakness in the value of the Colombian Peso, as well as general
deterioration in the Colombian economy, will mean that this lessee may be unable
to generate sufficient revenues in the Colombian currency to pay the dollar
denominated rental payments under the lease.
Brazil has experienced significant downturns in its economy and
financial markets, with large decreases in financial asset prices and, since it
devalued its currency on January 13, 1999, dramatic decreases in the value of
its currency. Continued weakness in the value of the Brazilian real, as well as
general deterioration in the Brazilian economy will mean that lessees may be
unable to generate sufficient revenues in Brazilian currency to pay the
dollar-denominated rental payments under the leases. Failure by Brazil to
overcome its current financial crisis could result in the crisis spreading to
other Latin American economies and economies in other emerging markets. At
present, it appears that some consolidation may take place in the Brazilian
airline industry with the possible merger of a number of airlines being
suggested by market analysts. Future developments in the political systems or
economies of Brazil and other Latin American countries may have a material
adverse effect on lessee operations in those countries. At March 31, 2000, AerCo
leased seven aircraft representing 20.5% of its portfolio by appraised value at
February 18, 2000 to operators in Latin America of which four aircraft
representing 7.2% of the portfolio by appraised value were leased to operators
in Brazil. Accordingly, further deterioration in the Latin American economies,
especially Brazil, could lead to a material decrease in AerCo's leasing revenues
and an increase in default related costs.
5
<PAGE>
At March 31, 2000, three lessees in Turkey operate four aircraft
representing 11.3% of the aircraft by appraised value at February 18, 2000.
Turkey was hit by a severe earthquake in August 1999. Two of these airlines
operate charter flights which are heavily dependent on tourists travelling to
Turkey. Damage caused by the earthquake and any fall-off in tourist traffic may
adversely affect the ability of these airlines to operate and meet their
obligations under the leases. In addition, the recent fall in value of the
Deutsche Mark, the principal currency in which the Turkish airlines receive
their revenues, may affect the ability of these airlines to meet the dollar
denominated rental and other payments due under the leases.
The economies of Indonesia, Thailand, South Korea, Malaysia and the
Philippines have experienced particularly acute difficulties resulting in many
business failures, significant depreciation of local currencies against the
dollar (the currency in which lease payments are payable), sovereign and
corporate credit ratings downgrades and defaults and, in certain cases,
internationally organized financial stability measures. The economic
difficulties in Indonesia have resulted in civil disturbances and a change of
government in that country. Several airlines in the region have announced their
intention to reschedule their aircraft purchase obligations, reduce headcount
and eliminate certain routes. Since 1990, the market in this region for aircraft
on operating lease has demonstrated significant growth rates. However, should
these recessionary conditions last for a significant period of time these will
have an adverse impact on operators in the region as well as global aircraft
demand. At March 31, 2000, AerCo leased eight aircraft, representing 22.2% of
its portfolio by appraised value at February 18, 2000 to operators in Asia and
the Far East.
Lessee Performance
Weakly capitalized airlines are more likely than well capitalized
airlines to seek operating leases. Therefore, many of the lessees are in a
relatively weak financial position and several of them have faced and continue
to face severe economic difficulties.
As of March 31, 2000, amounts outstanding for more than 30 days for
rental payments, maintenance reserves and other amounts due under the leases
equaled $6.8 million for four lessees who had a total of five aircraft on lease.
This outstanding amount included $2.6 million of deferred receivables which is
repayable over 36 months in respect of one lessee who had two aircraft on lease.
Non-deferred amounts outstanding for 30 to 90 days equaled $1.8 million and
amounts outstanding for more than 90 days equaled $2.4 million.
As of March 31, 2000, a Latin American lessee representing 4.6% of the
portfolio by appraised value at February 18, 2000 owed $1.6 million with $1.5
million in arrears for more than 30 days. The Servicer has agreed with the
lessee that an amount of $0.8 million will be paid immediately with the balance
scheduled to be cleared by December 31, 2000.
PAL, the lessee of two B737-300 aircraft representing 4.9% of the
portfolio by appraised value at February 18, 2000 has been adversely affected by
the Asian economic crisis. The Servicer has agreed with PAL to a schedule
covering the payment of arrearages over the period to December 31, 2003 and the
extension of the leases. At March 31, 2000, these arrearages amounted to $2.6
million. All amounts have been paid in accordance with the scheduled terms at
this time.
As of March 31, 2000, Tower Air, a North American lessee, representing
3.2% of the portfolio by appraised value at February 18, 2000, owed $2.9 million
with $0.7 million in arrears for 30 to 90 days and $1.7 million in arrears for
more than 90 days. The Servicer is in discussions with the lessee regarding the
payment of this amount and future lease rentals - see "Recent Developments"
above.
6
<PAGE>
<TABLE>
Further particulars of AerCo's portfolio as of March 15, 2000 (except for
appraised values which are as of February 18, 2000) are contained in the
table below.
- ------------------------------------------------------------------------------------------------------------------------
Appraised
Date of Value at
Country of Aircraft Engine Serial Manufacture/ February
No. Region Current Lessee Lessee Type Configuration Number Conversion 18, 2000
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Asia - Emerging China China Xinjiang B757-200 RB211-535E4 26153 Aug-92 39,400
2. Asia - Emerging China Yunnan B737-300 CFM56-3C1 26068 Jun-92 24,103
3. Asia - Emerging India Indian Airlines A300B4-200 CF6-50C2 240 May-83 11,187
4. Asia - Emerging Philippines PAL B737-300 CFM56-3B1 24465 Aug-89 20,233
5. Asia - Emerging Philippines PAL B737-300 CFM56-3B1 24677 Mar-90 20,990
6. Asia - Emerging South Korea Asiana B737-400 CFM56-3C1 25764 Jul-92 25,353
7. Asia - Emerging South Korea Asiana B737-400 CFM56-3C1 25765 Jul-92 25,563
8. Asia - Emerging Taiwan FEAT MD83 JT8D-219 49952 Dec-91 21,867
9. Europe - Developed Italy Air Europe A320 CFM5-5A1 85 Feb-90 25,427
10. Europe - Developed Ireland Aer Lingus B737-400 CFM56-3C1 24685 May-90 24,807
11. Europe - Developed Spain Spanair B767-300ER PW4060 24999 Feb-91 57,383
12. Europe - Developed Spain Spanair MD83 JT8D-219 49627 Apr-89 19,393
13. Europe - Developed Spain Spanair MD83 JT8D-219 49790 Oct-89 19,693
14. Europe - Developed United Kingdom Air 2000 B757-200 RB211-535E4 26158 Feb-93 40,547
15. Europe - Developed United Kingdom Airtours A320-200 CFM56-5A3 299 Apr-92 28,860
16. Europe - Developed United Kingdom Airtours A320-200 V2500-A1 362 Nov-92 29,170
17. Europe - Developed United Kingdom BMA B737-400 CFM56-3C1 23868 Oct-88 21,460
18. Europe - Developed United Kingdom Monarch A320-200 CFM56-5A3 391 Feb-93 30,523
19. Europe - Emerging Hungary Malev B737-300 CFM56-3C1 24909 Apr-91 22,943
20. Europe - Emerging Turkey Pegasus B737-400 CFM56-3C1 23979 Jan-89 21,797
21. Europe - Emerging Turkey Sun Express B737-300 CFM56-3C1 24908 Mar-91 22,880
22. Europe - Emerging Turkey THY B737-400 CFM56-3C1 24904 Feb-91 25,583
23. Europe - Emerging Turkey THY B737-400 CFM56-3C1 26066 Jun-92 25,743
24. Latin America Brazil TAM Fokker 100 TAY650-15 11341 Aug-91 13,270
25. Latin America Brazil TAM Fokker 100 TAY650-15 11350 Apr-92 13,393
26. Latin America Brazil TAM Fokker 100 TAY650-15 11351 Sep-91 13,360
27. Latin America Brazil Nordeste B737-500 CFM56-3C1 26067 Jun-92 21,217
28. Latin America Chile Lan Chile B767-300ER PW4060 24947 Mar-91 58,620
29. Latin America Chile AILL (1) DC8-71F CFM56-2C1 46040 Mar-91 15,353
30. Latin America Columbia Avianca B757-200 RB211-535E4 26152 Aug-92 38,527
31. North America Canada Canadian A320-200 CFM56-5A1 403 Dec-93 29,907
32. North America United States BAX Global DC8-71F CFM56-2C1 46064 Mar-92 13,927
33. North America United States Tower Air B747-200 JT9D-7Q 22496 Oct-81 27,003
=========
Total 849,482
</TABLE>
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1. Aircraft International Leasing Limited is an indirect 100% subsidiary of
Lan Chile
