EXHIBIT 99.1
[LOGO]
21 November 2000
Morgan Stanley Aircraft Finance
c/o Wilmington Trust Company
1100 North Market Street
Rodney Square North
Wilmington. Delaware 19890
USA
Subject: AISI Report No.: AOS076BVO
Sight Unseen Half Life Base Value, Half Life Current Market Value,
Adjusted Base Value and Adjusted Current Market Value Appraisal -
Sixty One Aircraft and One Spare Engine
Ref: (a) Morgan Stanley email Messages 20/21 June 2000
(b) Morgan Stanley email Messages 06/ 19/26/28 July 2000
(c) Morgan Stanley email Message 09 August 2000
(d) Morgan Stanley Letter 24 July 2000
Ladies and Gentlemen:
In response to your request, Aircraft Information Services, Inc. (AISI) is
pleased to offer Morgan Stanley Aircraft Finance (MSAF) our opinion of the sight
unseen half life base value, half life current market value, adjusted base value
and adjusted current market value as of 30 September 2000 of sixty one aircraft
and one spare engine as defined and listed in reference (a), (b), (c) and (d)
data and Table I of this report.
1. METHODOLOGY AND DEFINITIONS
The standard terms of reference for commercial aircraft or engine value are
`half-life base market value' and `half-life current market value' of an
`average' aircraft or engine. Base value is a theoretical value that assumes a
balanced market while current market value is the value in the real market; both
assume a hypothetical average aircraft or engine condition. AISI value
definitions are consistent with the current definitions of the International
Society of Transport Aircraft Trading (ISTAT), those of 01 January 1994. AISI is
a member of that organization and employs an ISTAT Certified and Senior
Certified Aircraft Appraiser.
Headquarters: 26072 Merit Circle, Suite 123, Laguna Hills, CA 92653
Tel: 949-582-8888 FAX: 949-582-8887 E-MAIL: AISINews@aol.com
21 November 2000
AISI File No. AOS076BVO
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AISI defines a `base value' as that of a transaction between equally willing and
informed buyer and seller, neither under compulsion to buy or sell, for a single
unit cash transaction with no hidden value or liability, and with supply and
demand of the sale item roughly in balance. Base values are typically given for
aircraft or engines in `new' condition, `average half-life' condition, or in a
specifically described condition unique to a single aircraft or engine at a
specific time. An `average' aircraft or engine is an operable airworthy aircraft
or engine in average physical condition and with average accumulated flight
hours and cycles, with clear title and, for aircraft, a standard unrestricted
certificate of airworthiness and registered in an authority which does not
represent a penalty to aircraft value or liquidity; with no damage history and
with inventory configuration and level of modification which is normal for the
title and, for aircraft, a standard unrestricted certificate of airworthiness
and registered in an authority which does not represent a penalty to aircraft
value or liquidity; with no damage history and with inventory configuration and
level of modification which is normal for the aircraft or engine's intended use
and age. AISI assumes average condition unless otherwise specified in this
report. `Half-life' condition assumes that every component or maintenance
service which has a prescribed interval that determines its service life,
overhaul interval or interval between maintenance services, is at a condition
which is one-half of the total interval. AISI defines engine `zero time since
overhaul' condition to be that of an engine fresh from an engine heavy
maintenance shop visit which overhauled all engine modules or all engine
compressor and combustor/turbine stages as appropriate, with all life-limited
components at half-life. It should be noted that AISI and ISTAT value
definitions apply to a transaction involving a single aircraft or engine, and
that transactions involving more than one aircraft or engine are often executed
at considerable and highly variable discounts to a single aircraft or engine
price, for a variety of reasons relating to an individual buyer or seller.
AISI defines a `current market value', which is synonymous with the older term
`fair market value' as that value which reflects the real market conditions,
whether at, above or below the base value conditions. Assumption of a single
unit sale and definitions of aircraft or engine condition, buyer/seller
qualifications and type of transaction remain unchanged from that of base value.
Current market value takes into consideration the status of the economy in which
the aircraft or engine is used, the status of supply and demand for the
particular aircraft or engine type, the value of recent transactions and the
opinions of informed buyers and sellers. Current market value assumes that there
is no short term time constraint to buy or sell.
AISI encourages the use of base values to consider historical trends, to
establish a consistent baseline for long term value comparisons and future value
considerations, or to consider how actual market values vary from theoretical
base values. Base values are less volatile than current market values and tend
to diminish regularly with time. Base values are normally inappropriate to
determine near term values. AISI encourages the use of current market values to
consider the probable near term value of an aircraft or engine.
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AISI File No. AOS076BVO
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AISI determines an `adjusted market value' by determining the value of known
deviations from half-life condition, which may be better or worse than half-life
condition, and to account for better or worse than average physical condition,
and the inclusion of additional equipment, or absence of standard equipment.
No physical inspection of the Aircraft or Engine or their essential records was
made by AISI for the purposes of this report, nor has any attempt been made to
verify information provided to us, which is assumed to be correct and applicable
to the Aircraft.
Given the relatively broad range of values for transactions for an engine type
the meaning of `base value' for used engines is open to broad interpretation.
Normally base value is derived from historical normalized current market values
with manufacturer's list price as a start point, while current market value is
deduced directly from recent transactions. For used engines there are seldom
sufficient historical transactions to permit the same derivation of engine base
values as is possible for aircraft base values. In our opinion the used engine
market is will be close to current market values for most engine types. AISI's
definitions of engines are as follows:
BARE ENGINE
AISI defines a BARE ENGINE as an engine without accessories, but complete with
all engine related air, hydraulic and electrical lines which are not directly
part of accessories.
ENGINE ACCESSORIES
AISI defines a BASIC QEC (quick engine change set of equipment) as being
composed of two subsets of equipment according to original sources of
procurement.
- - EBU (engine build up) items which include all accessories, connecting
lines, engine mounts, tubes and ducting. When procured from sources other
than the airframe manufacturers, these items are referred to as baseline
QEC items.
- - BFE (buyer furnished equipment) items which include the starter, valves,
IDG and hydraulic pump.
Note the above subset definitions are valid for new engines and QEC kits; once
the engine and QEC are used, the distinctions between EBU and BFE becomes
irrelevant and are referred to collectively as basic QEC.
ENGINE WITH QEC
The engine with basic QEC is often referred to as the "demountable engine" by
manufacturers and as a "high neutral QEC" by airlines. The engine plus basic QEC
does not include engine inlet cowl, centerbody, nozzle, or plug. There will be
some variation in basic QEC inventory from engine type to type, and from
position to position.
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AISI File No. AOS076BVO
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AISI defines an engine with FULL QEC as a basic QEC engine plus inlet cowl,
centerbody, nozzle, and plug. Manufacturers often refer to this configuration as
a "fully demountable engine". There will be some variation in full QEC inventory
from engine type to type, and from position to position. None of the above
descriptions include the thrust reverser, which is valued separately.
2. VALUATION
Adjustments from half life have been applied based on the current maintenance
status of the Aircraft as indicated in the Maintenance Detail sheets supplied by
the client to AISI and in accordance with standard AISI methods. Adjustments are
calculated only where there is sufficient information to do so, or where
reasonable assumptions can be made.
With regard to airframe and gear maintenance, if no time between check/overhaul
(TBO) or time since check/overhaul (TSO) information was provided, and if the
total hours/cycles of the airframe do not exceed the TBO limits then the total
hours/cycles of the airframe were assumed to be the TSO. This was typical of
newer aircraft. If no information was provided and if the TSO could not be
calculated, then half life was assumed. With regard to the engines, due to the
limited information provided, all engines are considered to be in half life
condition.
All hours and cycle information provided for airframe, C Check, D Check, and
gear have been projected from the Maintenance Detail sheet dates to 30 September
2000 based on a daily utilization factor calculated for each aircraft: Per the
clients request, all maintenance work which became due as a result of projecting
the hour and cycle information to 30 September 2000 was assumed to have been
completed and a new cycle started.
It is our considered opinion that the half life base values, half life current
market values, adjusted base values, and adjusted current market values of the
Aircraft and Engine as of 30 September 2000 are as follows in Table I subject to
the assumptions, definitions, and disclaimers herein.
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Half Life Half Life Adjusted Adjusted
Base Value Current Market Base Value Current Market
Value Value
Serial Date of MTOW Sep 2000 Sep 2000 Sep 2000 Sep 2000
No Aircraft Type Number Manufacturer Engine Type (Lbs) US Dollars US Dollars US Dollars US Dollars
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1 A300-600R 555 Mar-90 PW4158 375,880 $42,350,000 $39,550,000 $42,890,000 $40,090,000
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2 A300-600R 625 Mar-92 PW4158 375,890 $47,650,000 $44,450,000 $48,160,000 $44,960,000
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3 A310-300 409 Nov-85 JT9D-7R4E1 337,304 $21,150,000 $17,900,000 $21,780,000 $18,530,000
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4 A310-300 410 Nov-85 JT9D-7R4E1 337,304 $21,150,000 $17,900,000 $21,870,000 $18,620,000
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5 A310-300 437 Jan-87 JT9D-7R4E1 337,304 $25,850,000 $22,400,000 $26,420,000 $22,970,000
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6 A320-200 279 Feb-92 CFM56-5A3 169,756 $28,350,000 $28,350,000 $28,110,000 $28,110,000
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7 A320-200 393 Feb-93 V2500-A1 166,447 $28,300,000 $28,300,000 $28,450,000 $28,450,000
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8 A320-200 414 Mar-93 V2500-A1 166,447 $28,300,000 $28,300,000 $28,220,000 $28,220,000
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9 A320-200 397 May-93 CFM56-5A3 169,756 $29,750,000 $29,750,000 $29,790,000 $29,790,000
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10 A320-200 446 Oct-93 CFM56-5A3 169,756 $29,750,000 $29,750,000 $29,830,000 $29,830,000
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11 A320-200 428 May-94 V2500-A1 169,756 $30,250,000 $30,250,000 $30,730,000 $30,730,000
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12 A321-100 557 Dec-95 V2530-A5 183,390 $37,820,000 $35,620,000 $38,410,000 $36,210,000
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13 A321-100 597 May-96 V2530-A5 182,983 $40,440,000 $37,540,000 $40,490,000 $37,590,000
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14 A330-300 54 Apr-94 CF6-80E1 473,989 $78,910,000 $72,400,000 $78,530,000 $72,020,000
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15 A340-300 94 Mar-95 CFM56-5C3G 566,587 $98,570,000 $78,320,000 $99,790,000 $79,540,000
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16 B737-300 23255 Jun-85 CFM56-3B1 135,000 $17,150,000 $17,150,000 $17,120,000 $17,120,000
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17 B737-300 23256 Jul-85 CFM56-3B1 135,000 $17,150,000 $17,150,000 $17,680,000 $17,680,000
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18 B737-300 24299 Nov-88 CFM56-3B2 137,000 $19,810,000 $19,810,000 $19,900,000 $19,900,000
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19 B737-300 24449 Apr-90 CFM56-3B2 138,500 $21,570,000 $21,570,000 $21,030,000 $21,030,000
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20 B737-300 25161 Feb-92 CFM56-3B2 138,500 $23,480,000 $23,480,000 $23,930,000 $23,930,000
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21 B737-300 26295 Dec-93 CFM56-3C1 135,000 $24,970,000 $24,970,000 $24,470,000 $24,470,000
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22 B737-300 26309 Dec-94 CFM56-3B1 135,000 $25,490,000 $25,490,000 $25,120,000 $25,120,000
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23 B737-300 27635 May-95 CFM56-3C1 138,500 $28,060,000 $27,930,000 $28,630,000 $28,500,000
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24 B737-300F 23811 Sep-87 CFM56-3B2 138,500 $20,670,000 $20,670,000 $20,640,000 $20,640,000
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25 B737-300QC 23788 May-87 CFM56-3B2 139,500 $20,720,000 $20,720,000 $20,320,000 $20,320,000
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26 B737-400 24234 Oct-88 CFM56-3B2 143,500 $21,590,000 $21,590,000 $21,680,000 $21,680,000
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27 B737-400 24707 Jun-91 CFM56-3C1 138,500 $24,600,000 $24,600,000 $24,760,000 $24,760,000
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28 B737-400 25371 Jan-92 CFM56-3C1 150,000 $26,320,000 $26,320,000 $25,520,000 $25,520,000
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29 B737-400 26279 Feb-92 CFM56-3C1 150,000 $26,320,000 $26,320,000 $26,890,000 $26,890,000
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30 B737-400 25104 May-93 CFM56-3C1 143,500 $27,230,000 $27,230,000 $27,980,000 $27,980,000
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31 B737-400 25105 Jul-93 CFM56-3C1 143,500 $27,230,000 $27,230,000 $27,340,000 $27,340,000
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32 B737-400 26291 Aug-93 CFM56-3C1 150,000 $27,520,000 $27,520,000 $27,040,000 $27,040,000
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33 B737-400 26308 Nov-94 CFM56-3C1 130,000 $28,020,000 $28,020,000 $27,940,000 $27,940,000
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34 B737-500 25165 Apr-93 CFM56-3B1 121,254 $19,810,000 $19,810,000 $19,200,000 $19,200,000
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35 B737-500 26304 Sep-94 CFM56-3C1 116,500 $21,800,000 $21,800,000 $21,370,000 $21,370,000
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36 B747-300 24106 Apr-88 CF6-80C2B1 833,000 $41,150,000 $23,890,000 $40,290,000 $23,030,000
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37 B747-400 24955 Sep-91 RB211-525H2 870,000 $97,310,000 $83,910,000 $96,210,000 $82,810,000
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38 B757-200 Etop 23767 Apr-87 RB211-535E4 240,000 $30,000,000 $28,450,000 $29,330,000 $27,780,000
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39 B757-200 Etop 24260 Dec-88 RB211-535E4 250,000 $32,600,000 $30,900,000 $32,890,000 $31,190,000
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40 B757-200 Etop 24367 Feb-89 RB211-535E4 250,000 $34,540,000 $32,690,000 $34,080,000 $32,230,000
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41 B757-200 Etop 25044 May-91 PW2040 250,000 $38,860,000 $36,710,000 $39,400,000 $37,250,000
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42 B757-200 Etop 24965 Mar-92 PW2040 255,500 $41,190,000 $38,890,000 $41,480,000 $39,180,000
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43 B757-200 Etop 26266 Jan-93 RB211-535E4 250,000 $42,600,000 $40,150,000 $42,840,000 $40,390,000
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44 B757-200 Etop 26272 Mar-94 PW2037 230,000 $42,850,000 $40,250,000 $43,280,000 $40,680,000
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45 B757-200 Etop 28160 Jul-96 PW2037 235,000 $47,150,000 $44,250,000 $46,710,000 $43,810,000
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46 B767-200ER 23807 Aug-87 CF6-80A2 345,000 $33,360,000 $30,560,000 $33,300,000 $30,500,000
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47 B767-300ER 24798 Oct-90 CF6-80C2B2F 345,000 $51,550,000 $47,550,000 $51,440,000 $47,440,000
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48 B767-300ER 24875 Jun-91 CF6-80C2B6 408,000 $58,960,000 $54,810,000 $59,700,000 $55,550,000
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49 B767-300ER 25132 Feb-92 CF6-80C2B6F 407,000 $62,290,000 $57,990,000 $62,320,000 $58,020,000
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50 B767-300ER 26256 Apr-93 CF6-80C2B6F 407,000 $65,490,000 $61,040,000 $65,380,000 $60,930,000
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51 B767-300ER 26260 Sep-94 CF6-80C2B6 407,000 $68,490,000 $63,890,000 $67,660,000 $63,060,000
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52 Fokker 50 20233 Jan-92 PW125B 45,900 $5,580,000 $5,080,000 $5,490,000 $4,990,000
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53 Fokker 50 20232 Aug-92 PW125B 45,900 $5,580,000 $5,080,000 $5,500,000 $5,000,000
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54 Fokker 70 11564 Dec-95 Tay 620-15 81,000 $11,000,000 $10,000,000 $10,840,000 $9,840,000
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55 Fokker 70 11565 Feb-96 Tay 620-15 81,000 $12,500,000 $11,500,000 $12,330,000 $11,330,000
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56 Fokker 70 11569 Mar-96 Tay 620-15 81,000 $12,500,000 $11,500,000 $12,330,000 $11,330,000
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57 MD-82 49825 Mar-89 JT8D-219 149,500 $18,500,000 $17,500,000 $18,740,000 $17,740,000
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58 MD-83 49657 Feb-88 JT8D-219 160,000 $18,350,000 $17,600,000 $18,250,000 $17,500,000
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59 MD-83 49822 Dec-88 JT8D-219 160,000 $18,290,000 $17,540,000 $17,950,000 $17,200,000
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60 MD-83 49824 Mar-89 JT8D-219 160,000 $19,190,000 $18,440,000 $19,510,000 $18,760,000
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61 MD 83 53050 May-90 JT8D-219 149,500 $19,620,000 $18,870,000 $19,110,000 $18,360,000
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62 Spare Engine 704279 Jan-95 CF6-80C2B6F Basic QEC $5,250,000 $5,250,000 $5,250,000 $5,250,000
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TOTALS $1,992,850,000 $1,864,450,000 $1,993,640,000 $1,865,240,000
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AISI File No. AOS076BVO
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Unless otherwise agreed by Aircraft Information Services, Inc. (AISI) in
writing, this report shall be for the sole use of the client/addressee. This
report is offered as a fair and unbiased assessment of the subject aircraft or
equipment. AISI has no past, present, or anticipated future interest in the
subject aircraft or equipment. The conclusions and opinions expressed in this
report are based on published information, information provided by others,
reasonable interpretations and calculations thereof and are given in good faith.
Such conclusions and opinions are judgments that reflect conditions and values
which are current at the time of this report. The values and conditions reported
upon are subject to any subsequent change. AISI shall not be liable to any party
for damages arising out of reliance or alleged reliance on this report, or for
any parties action or failure to act as a result of reliance or alleged reliance
on this report.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ John D. McNicol
John D. McNicol
VICE PRESIDENT
APPRAISALS AND FORECASTS