Exhibit 99.2
BK Associates, Inc.
1295 Northern Boulevard
Manhasset, New York 11030
(516) 365-6272 o Fax (516) 365-6287
February 22, 2001
Morgan Stanley Aircraft Finance
Gentlemen:
In response to your request, BK Associates, Inc. is pleased to provide this
opinion of the Base Values as of September 30, 2000 on each of 61 commercial
transport aircraft and one spare General Electric CF6-80C2 engine, which
comprise the MSAF Portfolio aircraft (Aircraft). The Aircraft are further
identified in the attached Figure 1 by type, serial number, date of manufacture
and engine model.
Set forth below is a summary of the methodology, considerations and assumptions
utilized in this appraisal.
BASE VALUE
Base value is the Appraiser's opinion of the underlying economic value of an
aircraft in an open, unrestricted, stable market environment with a reasonable
balance of supply and demand, and assumes full consideration of its "highest and
best use". An aircraft's base value is founded in the historical trend of values
and in the projection of future value trends and presumes an arm's length, cash
transaction between willing, able and knowledgeable parties, acting prudently,
with an absence of duress and with a reasonable period of time available for
marketing.
VALUE METHODOLOGY
As the definition suggests, Base Value is determined from historic and future
value trends and is not influenced by current market conditions. It is often
determined as a function of the original cost of the aircraft, technical
characteristics of competing aircraft, and development of new models. BK
Associates has determined from analysis of historic data, a relationship between
aircraft age and its value as a percentage of original value for the average
aircraft. These data form the basis for base value and forecast value
determinations but must be adjusted to reflect the value of engine and gross
weight options and other features of the aircraft.
BK ASSOCIATES, INC.
February 22, 2001
Page 2
Our maintenance adjusted Base Values include appropriate financial adjustments
based on our interpretation of the maintenance status data provided by Morgan
Stanley.
LIMITING CONDITIONS AND ASSUMPTIONS
BK has not inspected the Aircraft nor their maintenance records but relied upon
information supplied by Morgan Stanley and from BK's own database. In
determining our values, the following assumptions apply to the aircraft:
1. Our maintenance adjustments are approximate, based on industry average
costs, and normally include an adjustment for the time remaining to a "C"
check, time remaining to a "D" check, time remaining to landing gear
overhaul and time remaining to a heavy shop visit on engines. Instances
where insufficient data was available we assumed a half-time condition
existed, and instances where engines were reported at a repair facility we
valued that engine as fresh or zero-time since overhaul.
2. The aircraft is in compliance with a civil airworthiness authority approved
airline maintenance program, with all airworthiness directives, mandatory
modifications and applicable service bulletins currently up to industry
standard.
3. The interior of the aircraft is in a standard configuration for its
specific type, with the buyer furnished equipment and options of the types
and models generally accepted and utilized in the industry.
4. The aircraft is in current flight operations.
5. The aircraft is sold for cash without seller financing.
6. The aircraft is in average or better condition.
7. No accident damage has been incurred that would affect market values.
CONCLUSIONS
Based on the above methodology, considerations and assumptions, it is our
opinion that the current base value in U.S. dollars of each aircraft as of
September 30, 2000, including appropriate financial adjustments considering the
maintenance status of the Aircraft, is as shown in Figure 1 attached hereto.
BK ASSOCIATES, INC.
February 22, 2001
Page 3
BK Associates, Inc. has no present or contemplated future interest in the
Aircraft, nor any interest that would preclude our making a fair and unbiased
estimate. This appraisal represents the opinion of BK Associates, Inc. and
reflects our best judgment based on the information available to us at the time
of preparation and the time and budget constraints imposed by the client. It is
not given as a recommendation, or as an inducement, for any financial
transaction and further, BK Associates, Inc. assumes no responsibility or legal
liability for any action taken or not taken by the addressee, or any other
party, with regard to the appraised equipment. By accepting this appraisal, the
addressee agrees that BK Associates, Inc. shall bear no such responsibility or
legal liability. This appraisal is prepared for the use of the addressee and
shall not be provided to other parties without the express consent of the
addressee.
Sincerely yours,
BK ASSOCIATES, INC.
/s/ R. L. Britton
R. L. Britton
Vice President
ISTAT Senior Certified Appraiser
FIGURE 1
MSAF AIRCRAFT
PORTFOLIO
AS OF SEPTEMBER 30, 2000
HALFTIME MTC ADJ'D
ACFT SERIAL MFG. BASE VALUE BASE VALUE
ITEM TYPE NUMBER DATE ENGINE TOGW ($ MIL) ($ MIL)
---- ---- ------ ---- ------ ---- --------- ----------
1 A300-622R 555 Mar-90 PW4158 375,890 44.25 45.23
2 A300-622R 625 Mar-92 PW4158 375,890 50.40 50.62
3 A310-322 409 Nov-85 JT9D-7R4 337,365 26.02 27.77
4 A310-322 410 Nov-85 JT9D-7R4 337,365 26.02 28.66
5 A310-322 437 Jan-87 JT9D-7R4 337,365 29.72 32.30
6 A320-211 279 Feb-92 CFM56-5A3 169,785 29.00 29.06
7 A320-231 393 Feb-93 V2500-Al 166,447 29.52 29.52
8 A320-212 397 May-93 CFM56-5A3 169,785 30.90 30.84
9 A320-231 414 May-93 V2500-Al 166,447 28.82 29.83
10 A320-231 428 May-94 V2500-A1 169,785 31.88 32.92
11 A320-212 446 Oct-93 CFM56-5A3 169,785 31.45 33.07
12 A321-131 557 Dec-95 V2530-A5 183,000 41.70 43.46
13 A321-131 597 May-96 V2530-A5 183,000 42.85 41.19
14 A330-301 54 Apr-94 CF6-80E1 474,000 80.08 79.46
15 A340-312 94 Mar-95 CFM56-5C3 566,587 89.00 88.00
16 B737-3Q8 23255 Jun-85 CFM56-3B1 135,000 13.43 13.84
17 B737-3Q8 23256 Jul-85 CFM56-3B1 135,000 13.48 14.13
18 B737-3Q8QC 23788 May-87 CFM56-3B2 139,500 18.50 18.66
19 B737-3S3F 23811 Sep-87 CFM56-3B2 138,500 18.48 18.76
20 B737-3Q8 24299 Nov-88 CFM56-3B2 137,000 18.95 18.97
21 B737-382 24449 Apr-90 CFM56-3B2 138,500 21.48 20.35
22 B737-382 25161 Feb-92 CFM56-3B2 138,500 23.83 24.30
23 B737-3Q8 26295 Dec-93 CFM56-3C1 135,000 26.83 27.20
24 B737-3Q8 26309 Dec-94 CFM56-3B1 135,000 27.83 28.37
25 B737-3K2 27635 May-95 CFM56-3C1 138,500 28.75 28.56
26 B737-4Q8 24234 Oct-88 CFM56-3B2 143,500 19.50 19.86
27 B737-4Q8 24707 Jun-91 CFM56-3C1 138,500 25.00 25.24
28 B737-4Q8 25104 May-93 CFM56-3C1 143,500 27.60 28.08
29 B737-4Q8 25105 Jul-93 CFM56-3C1 143,500 27.85 28.39
30 B737-4Q8 25371 Jan-92 CFM56-3C1 150,000 26.00 26.01
31 B737-4Q8 26279 Feb-92 CFM56-3C1 150,000 26.10 26.27
32 B737-4Q8 26291 Aug-93 CFM56-3C1 150,000 28.05 27.93
33 B737-4Q8 26308 Nov-94 CFM56-3C1 130,000 29.34 29.27
HALFTIME MTC ADJ'D
ACFT SERIAL MFG. BASE VALUE BASE VALUE
ITEM TYPE NUMBER DATE ENGINE TOGW ($ MIL) ($ MIL)
---- ---- ------ ---- ------ ---- ---------- ----------
34 B737-548 25165 Apr-93 CFM56-3B1 121,500 20.48 19.02
35 B737-505 26304 Sep-94 CFM56-3C1 116,500 22.53 21.22
36 B747-341 24106 Apr-88 CF6-80C2 833,000 42.63 44.14
37 B747-4Q8 24955 Sep-91 RB211-525H2 870,000 105.20 102.61
38 B757-28AER 23767 Apr-87 RB211-535E4 240,000 29.25 28.14
39 B757-28A 24260 Dec-88 RB211-535E4 250,000 31.20 31.42
40 B757-2Q8 24367 Feb-89 RB211-535E4 250,000 31.55 30.67
41 B757-2Q8ER 24965 Mar-92 PW2040 255,500 39.88 40.45
42 B757-2Q8ER 25044 May-91 PW2040 250,000 38.00 38.69
43 B757-204ER 26266 Jan-93 RB211-535E4 250,000 41.40 41.68
44 B757-2Q8ER 26272 Mar-94 PW2037 230,000 43.70 43.05
45 B757-2Q8ER 28160 Jul-96 PW2037 235,000 48.53 47.95
46 B767-204ER 23807 Aug-87 CF6-80A 345,000 36.35 37.39
47 B767-38E 24798 Oct-90 CF6-80C2 345,000 43.23 41.96
48 B767-319ER 24875 Jun-91 CF6-80C2 408,000 56.25 57.00
49 B767-38EER 25132 Feb-92 CF6-80C2 407,000 57.98 56.92
50 B767-39HER 26256 Apr-93 CF6-80C2 407,000 63.58 63.61
51 B767-3X2ER 26260 Sep-94 CF6-80C2 407,000 66.38 65.10
52 F50 20232 Aug-92 PW125B 45,900 7.50 7.33
53 F50 20233 Jan-92 PW125B 45,900 7.25 7.12
54 F70 11564 Dec-95 TAY 620-15 81,000 14.25 13.83
55 F70 11565 Feb-96 TAY 620-15 81,000 14.40 13.97
56 F70 11569 Mar-96 TAY 620-15 81,000 14.40 13.97
57 MD82 49825 Mar-89 JT8D-219 149,500 19.40 19.83
58 MD83 49657 Feb-88 JT8D-219 160,000 18.50 18.75
59 MD83 49822 Dec-88 JT8D-219 160,000 19.60 18.56
60 MD83 49824 Mar-89 JT8D-219 160,000 19.95 20.78
61 MD83 53050 May-90 JT8D-219 149,500 20.78 19.74
SPARE ENG 704279 1995 CF6-80C2 5.60 5.91
TOTALS 2,012.28 2,016.93