SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 33-99970-01
---------
Airplanes Limited Airplanes U.S. Trust
Exact Name of Registrants as specified in memorandum of
association or trust agreement
Jersey, Channel Islands Delaware
(State or other jurisdiction of incorporation or organization)
7359 13-3521640
SIC Code (I.R.S. Employer Identification No.)
Airplanes Limited Airplanes U.S. Trust
22 Grenville Street 1100 North Market Street,
St. Helier Rodney Square North
Jersey, JE4 8PX Wilmington, Delaware
Channel Islands 19890-0001
(011 44 1534 609 000) (302-651-1000)
(Addresses and telephone numbers, including area codes,
of Registrants' principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Issuer Class December 31, 2000
Airplanes Limited Common Stock, $1.00 par value 30
Airplanes Limited and Airplanes U.S. Trust
Form 10-Q for the Three Month Period Ended December 31, 2000
Index
Part I. Financial Information Page No.
Item 1. Financial Statements (Unaudited) 3
- Unaudited Condensed Balance Sheets - December 31, 2000
and March 31, 2000
- Unaudited Condensed Statements of Operations - Three
Months Ended December 31, 2000 and December 31, 1999
- Unaudited Condensed Statements of Operations - Nine
Months Ended December 31, 2000 and December 31, 1999
- Unaudited Condensed Statements of Changes in
Shareholders Deficit/Net Liabilities - Nine Months
Ended December 31, 2000 and December 31, 1999
- Unaudited Condensed Statements of Cash Flows - Nine
Months Ended December 31, 2000 and December 31, 1999
- Notes to the Unaudited Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial 11
Condition and Results of Operations
- Introduction
- Results of Operations - Three Months Ended
December 31, 2000 Compared with Three Months
Ended December 31, 1999
- Results of Operations - Nine Months Ended
December 31, 2000 Compared with Nine Months
Ended December 31, 1999
- Comparison of Actual Cashflows Versus The
1998 Adjusted Base Case for the Three Month
Period Ended January 16, 2001
Item 3. Quantitative and Qualitative Disclosures about Market Risks 39
Part II. Other Information
Item 1. Legal Proceedings 44
Item 6. Exhibits and Reports on Form 8 - K 45
Signatures
Appendix 1 Airplanes Group Portfolio
2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
AIRPLANES GROUP
UNAUDITED CONDENSED BALANCE SHEETS
March 31, December 31,
---------------------------------------- -----------------------------------------
2000 2000
---------------------------------------- -----------------------------------------
Airplanes Airplanes Airplanes Airplanes
Limited Trust Combined Limited Trust Combined
------------ ------------ ------------ ------------ ------------ ------------
($millions) ($millions)
ASSETS
Cash 197 6 203 184 6 190
Accounts receivable
Trade receivables 24 8 32 25 13 38
Allowance for doubtful debts (10) (5) (15) (16) (8) (24)
Amounts due from Airplanes Limited - 28 28 - 39 39
Net investment in capital and sales
type leases 15 - 15 11 - 11
Aircraft, net 2,697 235 2,932 2,579 218 2,797
Other assets 3 8 11 5 - 5
------------ ------------ ------------ ------------ ------------ ------------
Total assets 2,926 280 3,206 2,788 268 3,056
============ ============ ============ ============ ============ ============
LIABILITIES
Accrued expenses and other liabilities 807 74 881 1,019 95 1,114
Amounts due from Airplanes Trust 28 - 28 39 - 39
Indebtedness 3,313 323 3,636 3,212 313 3,525
Provision for maintenance 258 16 274 245 14 259
Deferred income taxes 66 48 114 62 48 110
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities 4,472 461 4,933 4,577 470 5,047
------------ ------------ ------------ ------------ ------------ ------------
Net liabilities (1,546) (181) (1,727) (1,789) (202) (1,991)
------------ ------------ ------------ ------------ ------------ ------------
2,926 280 3,206 2,788 268 3,056
============ ============ ============ ============ ============ ============
3
AIRPLANES GROUP
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended December 31,
-----------------------------------------------------------------------------
1999 2000
------------------------------------ ---------------------------------------
Airplanes Airplanes Airplanes Airplanes
Limited Trust Combined Limited Trust Combined
----------- ---------- ----------- ------------- ----------- -----------
($millions) ($millions)
Revenues
Aircraft leasing 113 10 123 107 11 118
Aircraft Sales - - - 7 6 13
Other Income - - - - - -
Expenses
Cost of Aircraft Sold - - - (3) (5) (8)
Depreciation and amortisation (40) (4) (44) (39) (3) (42)
Net interest expense (108) (11) (119) (125) (12) (137)
Provision for maintenance (16) (1) (17) (13) - (13)
Bad and doubtful debts 7 - 7 - (1) (1)
Provision for loss making leases, net (1) - (1) (4) - (4)
Other lease costs (5) - (5) (6) - (6)
Selling, general and administrative
expenses (8) (1) (9) (8) (1) (9)
----------- ---------- ----------- ----------- ----------- -----------
Operating (loss) before
provision for income taxes (58) (7) (65) (84) (5) (89)
Income tax benefit/(charge) 3 - 3 1 - 1
----------- ---------- ----------- ----------- ----------- -----------
Net (loss) (55) (7) (62) (83) (5) (88)
=========== ========== =========== =========== =========== ===========
The accompanying notes are an integral part of the
unaudited condensed financial statements
4
AIRPLANES GROUP
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Nine Months Ended December 31,
-----------------------------------------------------------------------------
1999 2000
------------------------------------ ---------------------------------------
Airplanes Airplanes Airplanes Airplanes
Limited Trust Combined Limited Trust Combined
----------- ---------- ----------- ------------- ----------- -----------
($millions) ($millions)
Revenues
Aircraft leasing 352 31 383 324 32 356
Aircraft sales 2 - 2 8 6 14
Other income 1 - 1 - - -
Expenses
Cost of Aircraft sold (1) - (1) (4) (5) (9)
Depreciation and amortisation (119) (12) (131) (116) (12) (128)
Net interest expense (313) (32) (345) (360) (36) (396)
Provision for maintenance (49) (3) (52) (38) (1) (39)
Bad and doubtful debts - 1 1 (5) (3) (8)
Provision for loss making leases, net 5 1 6 (11) - (11)
Other lease costs (13) (1) (14) (20) (1) (21)
Selling, general and administrative
expenses (25) (2) (27) (24) (2) (26)
----------- ---------- ----------- ----------- ----------- -----------
Operating (loss) before
provision for income taxes (160) (17) (177) (246) (22) (268)
Income tax benefit/(charge) - - - 3 1 4
----------- ---------- ----------- ----------- ----------- -----------
Net (loss) (160) (17) (177) (243) (21) (264)
=========== ========== =========== =========== =========== ===========
The accompanying notes are an integral part of the
unaudited condensed financial statements
5
AIRPLANES GROUP
UNAUDITED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT/NET LIABILITIES
Nine Months Ended December 31, 1999 and December 31, 2000
Airplanes Limited Airplanes Trust Combined
---------------------------------------- ---------------- ------------
Share Net Shareholders' Net Shareholders
Capital Liabilities Deficit Liabilities Deficit/Net
Liabilities
---------------------------------------- ---------------- ------------
($millions) ($millions) ($millions) ($millions) ($millions)
Balance at March 31, 1999 - 1,311 1,311 163 1,474
Net loss for the period 160 160 17 177
---------- ---------- --------------- ---------------- -----------
Balance at December 31, 1999 - 1,471 1,471 180 1,651
========== ========== =============== ================ ===========
Balance at March 31, 2000 - 1,546 1,546 181 1,727
Net loss for the period 243 243 21 264
---------- ---------- --------------- ---------------- -----------
Balance at December 31, 2000 - 1,789 1,789 202 1,991
========== ========== =============== ================ ===========
6
AIRPLANES GROUP
UNAUDITED CONDENSED STATEMENTS OF CASHFLOWS
Nine Months Ended December 31,
----------------------------------------------------------------------------
1999 2000
------------------------------------- -------------------------------------
Airplanes Airplanes Airplanes Airplanes
Limited Trust Combined Limited Trust Combined
----------- ----------- ----------- ----------- ----------- -----------
($millions) ($millions)
Cash flows from operating activities
Net loss (160) (17) (177) (243) (21) (264)
Adjustment to reconcile (net loss)
to net cash provided by operating activities:
Depreciation and amortisation 119 12 131 116 12 128
Aircraft maintenance, net 7 1 8 (14) (2) (16)
Profit on disposal of aircraft (1) - (1) (4) (1) (5)
Deferred income taxes - - - (3) (1) (4)
Provision for loss making leases (5) (1) (6) 11 - 11
Provision for bad debts - (1) (1) 5 3 8
Accrued and deferred interest expense 173 17 190 212 21 233
Changes in operating assets & liabilities:
Accounts receivable 5 1 6 - (6) (6)
Intercompany account movements (2) 2 - 11 (11) -
Other accruals and liabilities (2) 1 (1) (9) 1 (8)
Other assets (2) - (2) - 8 8
----------- ----------- ----------- ----------- ----------- -----------
Net cash provided by operating activities 132 15 147 82 3 85
=========== =========== =========== =========== =========== ===========
Cash flows from investing activities
Purchase/Sale of aircraft - - - 4 7 11
Intercompany movements - Airplanes Group
Capital and sales type leases 6 - 6 4 - 4
----------- ----------- ----------- ----------- ----------- -----------
Net cash provided by
investing activities 6 - 6 8 7 15
=========== =========== =========== =========== =========== ===========
Cash flows from financing activities
Decrease in indebtedness (151) (15) (166) (103) (10) (113)
----------- ----------- ----------- ----------- ----------- -----------
Net cash used in
financing activites (151) (15) (166) (103) (10) (113)
=========== =========== =========== =========== =========== ===========
Net decrease in cash (13) - (13) (13) - (13)
Cash at beginning of period 218 6 224 197 6 203
----------- ----------- ----------- ----------- ----------- -----------
Cash at end of period 205 6 211 184 6 190
=========== =========== =========== =========== =========== ===========
Cash paid in respect of:
Interest 143 15 158 151 15 166
=========== =========== =========== =========== =========== ===========
7
Airplanes Group
Notes to the Unaudited Condensed Financial Statements
1. Securitization Transaction
On March 28, 1996, ("the Closing Date"), debis AirFinance Ireland plc
("debis AirFinance Ireland") (formerly AerFi Group plc) and its subsidiary
undertakings ("debis AirFinance) re-financed on a long term basis certain
indebtedness due to commercial banks and other senior secured debt. The
re-financing was effected through a major aircraft securitization transaction
("the Transaction").
Under the terms of the Transaction, the following special purpose vehicles
were formed: Airplanes Limited, a special purpose company formed under the laws
of Jersey, Channel Islands ("Airplanes Limited"), and Airplanes U.S. Trust, a
trust formed under the laws of Delaware ("Airplanes Trust" and together with
Airplanes Limited, "Airplanes Group"). Airplanes Group acquired directly or
indirectly from debis AirFinance Ireland a portfolio of 229 commercial aircraft
(collectively, the "Aircraft") and related leases (the "Leases"). The
Transaction was effected by transferring existing subsidiaries of debis
AirFinance that owned the Aircraft to Airplanes Limited and Airplanes Trust,
respectively. References to Airplanes Group in these notes to the unaudited
condensed financial statements may relate to Airplanes Limited and Airplanes
Trust on a combined or individual basis as applicable.
Simultaneously with such transfers, Airplanes Group issued notes of $4,048
million in aggregate principal amount in four classes: Class A, Class B, Class
C and Class D ("Notes") with approximately 90% of the principal amount of Notes
in each class being issued by Airplanes Limited and approximately 10% by
Airplanes Trust. Airplanes Group also issued Class E Notes of $604 million
ranking after the Notes and these were taken up by debis AirFinance as part
consideration for the transfer of the Aircraft and certain related lease
receivables. Of the $604 million Class E Notes issued, approximately $13
million were subsequently canceled on July 30, 1996 under the terms of the
Transaction.
On March 16, 1998, Airplanes Group successfully completed a refinancing of
$2,437 million of Class A and Class B Notes. On November 20, 1998, debis
AirFinance Ireland and its subsidiary, AerFi, Inc. transferred their Class E
Notes to General Electrical Capital Corporation. Indebtedness at December 31,
2000 represents the aggregate of the Class A - D Notes and Class E Notes in
issue (net of approximately $0.4 million of discounts on issue and net of $13
million of Class E Notes subsequently canceled as referred to above). Airplanes
Limited and Airplanes Trust have each fully and unconditionally guaranteed each
others' obligations under the relevant notes.
8
2. Basis of Preparation
The accompanying unaudited condensed financial statements of Airplanes
Limited, Airplanes Trust and the combined unaudited condensed balance sheets,
statements of operations, statement of changes in shareholders deficit/net
liabilities and statements of cash flows of Airplanes Group (together the
"financial statements") have been prepared on a going concern basis in
conformity with United States generally accepted accounting principles. The
financial statements are presented on a historical cost basis.
The accompanying financial statements for Airplanes Limited and Airplanes
Trust reflect all adjustments which in the opinion of management are necessary
to present a fair statement of the information presented as of December 31,
2000 and for the three month periods ending December 31, 2000 and December 31,
1999. Such adjustments are of a normal, recurring nature. The results of
operations for the three months ended December 31, 2000 are not necessarily
indicative of the results to be expected for the full year.
New Accounting Pronouncement
Derivative Instruments and Hedging Activities:
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Certain Hedging Activities." In June 2000, the FASB issued SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activity, an Amendment of SFAS No. 133." SFAS No. 133 and SFAS No. 138 require
that all derivative instruments be recorded on the balance sheet at their
respective fair values. SFAS No. 133 and SFAS No. 138 are effective for all
fiscal quarters of all fiscal years beginning after June 30, 2000. Airplanes
Group is planning to adopt SFAS No. 133 and SFAS No. 138 on April 1, 2001.
Upon adoption of the standards, all derivatives will be recognized on the
balance sheet at their fair value. All derivatives will be designated as either
a hedge of the fair value of a recognized asset or liability or of an
unrecognized firm commitment ("fair value" hedge), a hedge of a forecasted
transaction or of the variability of cash flows to be received or paid related
to a recognized asset or liability ("cash flow" hedge), a foreign-currency
fair-value or cash-flow hedge ("foreign currency" hedge) or a "held for
trading" instrument. Airplanes Group expects that all of its interest rate
swaps will be designated as cash flow hedges while its swaptions will be
designated as trading instruments.
Airplanes Group has a detailed hedging policy, which has been approved by the
Board of Directors and Controlling Trustees and the Rating Agencies. This
policy has been employed by the Administrative Agent since the inception of
Airplanes Group in 1996. As part of this hedging policy, Airplanes Group is in
the process of formally documenting all relationships between hedging
instruments and hedged items in the context of the requirements of SFAS No. 133
and SFAS No. 138.
This process includes linking all derivatives that are designated as cash-flow
hedges to specific liabilities on the balance sheet. Prior to April 1, 2001,
and in the future, Airplanes Group will formally assess, both at the hedge's
inception and on an ongoing basis, whether the derivatives
9
that are used in hedging transactions are highly effective in offsetting
changes in cash flows of hedged items.
Changes in the fair value of a derivative that is highly effective and that is
designated and qualifies as a cash-flow hedge will be recorded in other
comprehensive income, until earnings are affected by the variability in cash
flows of the designated hedged item.
Airplanes Group will discontinue hedge accounting prospectively when it is
determined that the derivative is no longer highly effective in offsetting
changes in the cash flows of the hedged item, the derivative expires or is
sold, terminated, or exercised, or it is determined that designation of the
derivative as a hedging instrument is no longer appropriate.
In all situations in which hedge accounting is discontinued, Airplanes Group
will continue to carry the derivative at its fair value on the balance sheet,
and will recognize any changes in its fair value in earnings.
In all situations where derivatives are designated as trading instruments, they
will be carried at fair value on the balance sheet and any changes in fair
value will be recognized in earnings.
The accompanying financial statements of Airplanes Limited and Airplanes Trust
(pages 3 to 10) have been prepared in accordance with generally accepted
accounting principles for interim financial information and in accordance with
the requirements of the Report on Form 10-Q. Consequently, they do not include
all the disclosure normally required by generally accepted accounting
principles. For further information regarding Airplanes Group and its financial
condition, results of operations and cash flows, refer to the audited financial
statements and notes thereto included in Airplanes Group's annual Report on
Form 10-K for the year ended March 31, 2000, previously filed with the
Securities and Exchange Commission.
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Introduction
On March 28, 1996, Airplanes Pass Through Trust (the "Trust") issued $4,048
million of Pass Through Certificates (the "1996 Certificates") in four classes
- - Class A, Class B, Class C and Class D. The Class A 1996 Certificates were
further subdivided into five separate subclasses (A-1 through A-5). Each class
and subclass of the Certificates represents an interest in two corresponding
classes or subclasses of notes (collectively, the "1996 Notes") issued by
Airplanes Limited ("Airplanes Limited") and Airplanes U.S. Trust ("Airplanes
Trust"). Airplanes Limited, together with Airplanes Trust and their respective
subsidiaries comprise Airplanes Group ("Airplanes Group"). Airplanes Limited
and Airplanes Trust have each fully and unconditionally guaranteed (the "1996
Guarantees") the other's obligations under each class or subclass of 1996
Notes. Also on March 28, 1996, Airplanes Group received the net proceeds from
an underwritten offering of the 1996 Certificates (the "Underwritten Offering")
in exchange for the 1996 Notes. Airplanes Group used such net proceeds,
together with approximately $604 million in aggregate principal amount of a
fifth class of Airplanes Group notes (the "Class E Notes") to acquire certain
subsidiaries of debis AirFinance Ireland plc ("debis AirFinance Ireland")
(formerly known as AerFi Group plc) and, together with its subsidiaries and
affiliates, "debis AirFinance"). Of the $604 million of Class E Notes issued,
approximately $13 million were canceled in July 1996 based on the purchase
price adjustment provisions in the agreements pursuant to which these
subsidiaries of debis AirFinance Ireland were sold to Airplanes Group. The
acquired subsidiaries owned 229 aircraft (the "Aircraft") and related leases to
82 aircraft operators in 40 countries as at March 31, 1996. As at December 31,
2000, 31 of these Aircraft had been sold and one Aircraft had suffered a
constructive total loss. At December 31, 2000, 192 of the remaining 197
Aircraft were on lease to 65 operators in 36 countries.
On March 16, 1998, the Trust issued additional Class A Certificates in three
separate subclasses (A-6 through A-8) and new Class B Certificates (the "1998
Refinancing Certificates" and together with the 1996 Certificates, the
"Certificates"). Also on this date, the Trust completed an underwritten
offering of the 1998 Refinancing Certificates (the "Refinancing") in exchange
for an interest in two corresponding Subclass A-6, Subclass A-7, Subclass A-8
and Class B notes issued by Airplanes Limited and Airplanes Trust (the "1998
Refinancing Notes and together with the 1996 Notes, the "Notes"). Airplanes
Limited and Airplanes Trust have each guaranteed the other's obligations under
their respective 1998 Refinancing Notes (the "Refinancing Guarantees" and
together with the 1996 Guarantees, the "Guarantees"). The proceeds of this
offering were used to refinance the Trust's Subclass A-1, Subclass A-2,
Subclass A-3 and existing Class B 1996 Certificates.
On November 20, 1998, debis AirFinance Ireland and its subsidiary, AerFi, Inc.
transferred their Class E Notes to General Electric Capital Corporation.
The discussion and analysis which follows is based primarily on the combined
operating results of Airplanes Limited and Airplanes Trust and not on their
results reported as individual entities. It should be noted, however, that the
Notes and the Guarantees comprise obligations of two different legal entities
owning different assets. The Directors of Airplanes Limited and the Controlling
Trustees of Airplanes Trust believe that a combined discussion is the most
11
appropriate basis of presentation because, inter alia, Airplanes Limited and
Airplanes Trust are not intended to be regarded as separate businesses but
rather on the basis of one combined aircraft fleet. Furthermore, each of
Airplanes Limited and Airplanes Trust has fully and unconditionally guaranteed
the performance of the other under their respective Notes. The Guarantees have
been structured to ensure that no payments are made on a junior class of Notes
of Airplanes Limited or Airplanes Trust, as the case may be, before any amounts
due and payable on a more senior class of Notes of Airplanes Limited or
Airplanes Trust, respectively, are paid pursuant to the Guarantees.
General
Substantially all of Airplanes Group's business is expected to consist of
aircraft operating lease activities. However, Airplanes Group may also engage
in aircraft sales subject to certain limitations and guidelines. Airplanes
Group's revenues and operating results are determined by a number of
significant factors including (i) trading conditions in the civil aviation
industry, and in particular, the market for aircraft on operating leases, (ii)
the mix, relative age and popularity of the various aircraft types in the
portfolio of Aircraft owned by Airplanes Group and (iii) Airplanes Group's
financial resources and liquidity position relative to its competitors who may
possess substantially greater financial resources.
Recent Developments
The aircraft leasing industry is currently 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 of
certain aircraft types, particularly turboprop aircraft, certain older Stage 3
narrowbody aircraft and older widebody aircraft. At December 31, 2000,
Airplanes Group had 37 Aircraft to remarket before December 31, 2001. These
include 6 x B737 400s/500s, 5 x B727/B737-200As, 8 x DHC8s, 6 x MD83s, 1 x
MD11, 6 x DC8/DC9, 1 x B767 and 1 x B757-200. As a result of the current over
supply of aircraft in the market place, Airplanes Group may experience
difficulties in placing certain of these Aircraft at satisfactory lease rates
and without incurring substantial downtime. The recent sharp increase in fuel
prices has significantly increased operating costs for airlines. In addition,
the weakness of the Euro against the U.S. dollar, the currency in which rental
payments are made, has resulted in significant increases in operating costs for
many airlines based in the Euro zone. These factors may adversely impact the
ability of such airlines to perform their lease obligations to Airplanes Group
in the future.
One European lessee, representing 3.51% of the portfolio by Appraised Value at
January 31, 2001, has recently commenced negotiations with the Servicer on a
restructuring of its payment obligations under its leases with Airplanes Group,
which would also include an extension of certain of the leases to compensate
for any proposed reduction in lease rentals.
On January 10, 2001, TWA, one of our lessees, filed for Chapter 11 bankruptcy
protection in the U.S. in its attempts to restructure its operations. TWA
leases two aircraft from Airplanes Group, which represent 2.4% of the portfolio
by Appraised Value at January 31, 2001. There can be no assurances that TWA
will continue to make rental and other payments under the leases, which would
have an adverse impact on Airplanes Group's revenues and cashflows. TWA has not
indicated to date what its proposals are with respect to the Aircraft,
including whether it wishes to retain our Aircraft in its fleet following its
proposed restructuring.
12
At December 31, 2000, an Irish airline which had leased one A300-B4-200
Aircraft manufactured in 1981, representing 0.28% of the Portfolio by Appraised
Value was $3.4 million in arrears inclusive of previously rescheduled amounts.
A liquidator has been appointed to the airline to wind up its business. The
Servicer, on behalf of Airplanes Group, has signed a Letter of Intent for lease
of this Aircraft with another airline.
During 1999, Brazil experienced significant downturns in its economy and
financial markets, including large decreases in financial asset prices and
dramatic decreases in the value of its currency. While there has been some
stabilisation in the Brazilian economy within the last year, any future general
deterioration in the Brazilian economy will mean that lessees may be unable to
generate sufficient revenues in Brazilian currency to pay the U.S.
dollar-denominated rental payments under the leases. 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
January 31, 2001, Airplanes Group leased 62 Aircraft representing 29.91% of its
portfolio by Appraised Value to operators in Latin America of which 16 Aircraft
representing 12.20% of the portfolio by Appraised Value were leased to
operators in Brazil. Accordingly, any future deterioration in the Latin
American economies, especially Brazil, could lead to a material decrease in
Airplanes Group's leasing revenues and an increase in default related costs.
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.
Airplanes Group leases to three Colombian lessees which operate ten Aircraft,
representing 6.55% of the portfolio by Appraised Value. Continued weakness in
the value of the Colombian Peso, as well as general deterioration in the
Colombian economy, will mean that these lessees may be unable to generate
sufficient revenues in the Colombian currency to pay the U.S. dollar
denominated rental payments under the leases.
Airplanes Group leases six Aircraft to one Colombian lessee, representing 5.08%
of the portfolio by Appraised Value. At December 31, 2000, the lessee was $13.3
million in arrears. The Servicer has agreed not to exercise its remedies in
respect of events of default currently existing under the leases in order to
permit the Colombian lessee to have a stable business environment in which to
develop, negotiate and commence implementing a long-term business plan. During
this period, Airplanes Group will receive approximately 77% of amounts due
under the leases in cash, with the remainder provided by way of secured and
unsecured notes issued by the Colombian lessee, which had a maturity date of
January 31, 2001. The Colombian lessee's other aircraft lessors and major
creditors agreed similar forbearance arrangements. The Colombian lessee has
sought an extension of this date. The Servicer is in discussion with the
Colombian lessee regarding this request and the continued operation of the
leases, which may include the reduction of rentals or the return of some or all
of the Aircraft.
In 1998 and 1999, the economies of Indonesia, Thailand, South Korea, Malaysia
and the Philippines experienced particularly acute difficulties resulting in
many business failures, significant depreciation of local currencies against
the US 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. Several airlines in the
region rescheduled their aircraft purchase obligations, reduced headcount and
eliminated certain routes. Since 1990, the market in this region for aircraft
on operating lease has
13
demonstrated significant growth rates. However, if the recessionary conditions
that occurred in 1998 and 1999 were to re-occur they would have an adverse
impact on operators in the region as well as global aircraft demand. At January
31, 2001, Airplanes Group leased 20 Aircraft, representing 10.02% of its
Portfolio by Appraised Value, to operators in Asia and the Far East.
Airplanes Group currently leases three MD11 Aircraft to a Latin American
lessee. The leases expire between December 2001 and September 2002. Because the
market for these Aircraft in their current passenger configuration is
currently, and is expected to remain, very weak, Airplanes Group is examining
all possibilities in respect of the remarketing of these Aircraft, including,
subject to the restrictions in our indenture, the possibility of selling the
Aircraft or of converting them to freighter Aircraft. Conversion of the
Aircraft to freighter Aircraft would involve substantial cash expenditure by
Airplanes Group although there is a significant demand for MD-11 freighter
aircraft and they generally obtain higher lease rates than when configured as
passenger aircraft.
The U.S. Federal Aviation Administration (the "FAA") recently issued an
Airworthiness Directive ("AD") concerning insulation for the purpose of
increasing fire safety on MD-80 and MD-11 aircraft. At December 31, 2000, 29
Aircraft representing 21.29% of the portfolio by Appraised Value were MD11s and
MD80s. Airplanes Group will incur significant costs in ensuring these Aircraft
comply with these standards. It is estimated that the necessary modification of
the 29 Aircraft will cost approximately $18 million. The modification of 17 of
the 29 Aircraft is expected to be completed in the period to December 2001 at
an estimated cost of approximately $11 million. The remaining 12 Aircraft are
expected to be modified in the period to 2005.
The FAA is expected to issue an AD by the end of 2001 mandating the
modification of effected lapjoints on Boeing 737 aircraft when the aircraft has
completed 50,000 cycles. The estimated cost to implement those modifications
for each aircraft is approximately $230,000 per aircraft. Based on the current
cycles completed to date by our 95 Boeing 737 aircraft, representing 33.36% of
our portfolio by Appraised Value at January 31, 2001, our Boeing 737 aircraft
are not likely to require these modifications prior to 2007. However, we could
incur significant costs in the future in ensuring our Boeing 737 aircraft
comply with these standards, which could impact adversely our results of
operations.
The FAA is also expected to issue an AD within 12 months mandating a re-design
of the rudder systems of Boeing 737 aircraft. The average cost per aircraft of
these modifications is expected to be approximately $50,000. Depending on the
time period within which the modifications are required to be made, the costs
may be the responsibility of existing lessees. However, if the costs are not
the responsibility of some or all existing lessees, we could incur significant
cost in ensuring that our Boeing 737 aircraft comply with these modifications,
which could impact adversely our results of operations.
14
Results of Operations - Three Months Ended December 31, 2000 Compared with
Three Months Ended December 31, 1999.
Airplanes Group's results for the three months ended December 31, 2000
reflected a continuation of difficult trading conditions for certain of its
lessees, along with an unfavourable market for some of its Aircraft, in
particular turboprop Aircraft, certain older Stage 3 narrowbody Aircraft and
widebody Aircraft, and increased levels of Aircraft downtime. Overall,
Airplanes Group generated $21 million in cash from operations in the three
months to December 31, 2000 compared to $58 million in the same period of the
previous year. The decrease in cash generated from operations in the three
month period to December 31, 2000 is primarily attributable to a reduction in
lease revenues due to a greater number of off lease Aircraft during the three
months ended December 31, 2000 and previous Aircraft sales. In addition, in the
three months to December 2000, there was a net increase in the level of
receivables, as compared to the three months to December 1999 when there was a
reduction in receivables. There was a net loss after taxation for the three
months to December 31, 2000 of $88 million (Airplanes Limited: $83 million;
Airplanes Trust: $5 million) compared to a net loss after taxation for the
three months to December 31, 1999 of $62 million (Airplanes Limited: $55
million; Airplanes Trust: $7 million). The increase in the net loss for the
period was primarily attributable to additional interest being charged on
accrued but unpaid Class E Note interest, a reduction in revenue due to
Aircraft downtime and provisions for loss making leases and bad debts.
Leasing Revenues
Leasing revenues (which include maintenance reserve receipts which Airplanes
Group receives from certain of its lessees) for the three months ended December
31, 2000 were $118 million (Airplanes Limited: $107 million; Airplanes Trust:
$11 million) compared with $123 million (Airplanes Limited: $113 million;
Airplanes Trust: $10 million) for the three months ended December 31, 1999. The
decrease in 2000 was primarily attributable to a reduction in lease revenues
due to a greater number off lease Aircraft during the three months ended
December 31, 2000 and to the reduction in the number of Aircraft on lease in
the period to December 31, 2000, as a consequence of previous Aircraft sales.
At December 31, 2000, Airplanes Group had 193 of its 197 Aircraft on lease
(Airplanes Limited: 176 Aircraft; Airplanes Trust: 17 Aircraft) compared to 195
of its 201 Aircraft on lease (Airplanes Limited: 177 Aircraft; Airplanes Trust:
18 Aircraft) at December 31, 1999.
Depreciation and Amortization
The charge for depreciation and amortization in the three months ended December
31, 2000 amounted to $42 million (Airplanes Limited: $39 million; Airplanes
Trust: $3 million) which is comparable with $44 million (Airplanes Limited: $40
million; Airplanes Trust: $4 million) for the comparative period in 1999.
Aircraft Sales
Sales revenues of $13 million (Airplanes Limited: $7 million, Airplanes Trust:
$6 million) in respect of the sale of three engines from two A300 Aircraft, the
airframes of which had been sold separately and the sale of one B737-200A
Aircraft, were received in the three months ended December 31, 2000. The net
book value of the Aircraft sold was $8 million (Airplanes Limited: $3 million,
Airplanes Trust: $5 million) in the period ended December 31, 2000.
15
Net Interest Expense
Net interest expense was $137 million (Airplanes Limited: $125 million;
Airplanes Trust: $12 million) in the three month period ended December 31, 2000
compared to $119 million (Airplanes Limited: $108 million; Airplanes Trust: $11
million) in the three month period ended December 31, 1999. The increase in the
amount of interest charged was primarily due to a combination of offsetting
factors: additional interest charged on accrued but unpaid Class E Note
interest of $18 million and lower average debt in the three months to December
31, 2000 being largely offset by a higher interest rate.
The weighted average interest rate on the Class A - D Notes during the three
months to December 31, 2000 was 7.69% and the average debt in respect of the
Class A - D Notes outstanding during the period was $2,961 million. The Class E
Notes accrue interest at a rate of 20% per annum (as adjusted by reference to
the U.S. consumer price index, effective March 28, 1996). The weighted average
interest rate on the Class A - D Notes during the three months to December 31,
1999 was 6.57% and the average debt in respect of the Class A - D Notes
outstanding during the period was $3,187 million.
The difference for the three months ended December 31, 2000 in Airplanes
Group's net interest expense of $137 million (Airplanes Limited: $125 million;
Airplanes Trust: $12 million) and cash paid in respect of interest of $52
million (Airplanes Limited: $47 million; Airplanes Trust: $5 million) is
substantially accounted for by the fact that interest on the Class E Notes is
accrued but unpaid.
Net interest expense is stated after deducting interest income earned during
the relevant period. In the three months ended December 31, 2000, Airplanes
Group earned interest income (including lessee default interest) of $3 million
(Airplanes Limited: $4 million; Airplanes Trust: Nil) compared with $3 million
in the three months ended December 31, 1999 (Airplanes Limited: $3 million;
Airplanes Trust: Nil).
At December 31, 2000, Airplanes Group had options on interest rate swaps
("Swaptions") with a notional principal balance of $250 million. (See Item 3.
Quantitative and Qualitative Disclosures about Market Risks).
Bad Debt and Loss-Making Lease Provisions
Airplanes Group's practice is to provide specifically for any amounts due but
unpaid by lessees based primarily on the amount due in excess of security held
and also taking into account the financial strength and condition of a lessee
and the economic conditions existing in the lessee's operating environment.
While a number of Airplanes Group's lessees failed to meet their contractual
obligations in the three month period ended December 31, 2000, resulting in the
requirement for additional provisions in respect of bad and doubtful debts in
respect of these lessees, the credit exposure with regard to certain other
carriers improved in the period. Overall, there was a net charge of $1 million
in respect of bad and doubtful debts (Airplanes Limited: Nil million; Airplanes
Trust: $1 million) in the three months ended December 31, 2000, compared with
an overall net credit of $7 million for the three months ended December 31,
1999 (Airplanes Limited: $7 million; Airplanes Trust: Nil). The net charge in
the three months ended December 31, 2000 was primarily as a result of
provisions in respect of one Colombian lessee.
16
A lease agreement is deemed to be 'loss making' in circumstances where the
contracted rental payments are insufficient to cover the depreciation and
allocated interest attributable to the Aircraft plus certain direct costs, such
as legal fees and registration costs, attributable to the lease over its term.
For these purposes, interest is allocated to individual Aircraft based on the
weighted average interest cost of the principal balance of the Notes and the
Class E Notes (excluding, in the case of the Class E Notes, the element of
interest (9% per annum) which is payable only in the event that the principal
amount of all the Notes is repaid). This results in a significant number of
leases being `loss making' while still being cash positive. In the three months
to December 31, 2000, the only significant "loss making" lease signed related
to a B767-300ER Aircraft on lease to a North American lessee. Consequently,
there was an overall net charge of $4 million (Airplanes Limited: $4 million;
Airplanes Trust: $Nil million) in respect of `loss making' leases in the three
months ended December 31, 2000, compared with the three month period to
December 31, 1999, where there was an overall net charge of $1 million
(Airplanes Limited: $1 million; Airplanes Trust: $Nil).
Other Lease Costs
Other lease costs, comprising mainly Aircraft related technical expenditure
associated with remarketing the Aircraft, in the three months ended December
31, 2000 amounted to $6 million (Airplanes Limited: $6 million; Airplanes
Trust: $Nil million) compared to other lease costs of $5 million (Airplanes
Limited: $5 million; Airplanes Trust: $Nil million) in the three months to
December 31, 1999. The increase in the three months ended December 31, 2000 is
as a result of a $5 million increase in technical expenditure due to a higher
number of Aircraft being remarketed, partially offset by a release of $4
million in relation to a continuing review of the adequacy of maintenance
reserves when Aircraft are re-leased.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three month period to
December 31, 2000 amounted to $9 million (Airplanes Limited: $8 million;
Airplanes Trust: $1 million). This is a comparable expense to that incurred in
the three months to December 31, 1999 of $9 million (Airplanes Limited: $8
million; Airplanes Trust: $1 million).
The most significant element of selling, general and administrative expenses
are the Aircraft servicing fees paid to GECAS. Substantially all of these
amounts represent asset based fees calculated as an annual percentage of agreed
values of Aircraft under management pursuant to a servicing agreement. Selling,
general and administrative expenses in the three months to December 31, 2000
and the three months to December 31, 1999 include $6 million (Airplanes
Limited: $6 million; Airplanes Trust: $Nil million) relating to GECAS servicing
fees.
A further significant element of Airplanes Group's actual selling, general and
administrative expenses reported in the period to December 31, 2000 was $2
million (Airplanes Limited: $2 million; Airplanes Trust: $Nil) in respect of
administrative agency and cash management fees payable to subsidiaries of debis
AirFinance Ireland, similar to the charge of $2 million for the period to
December 31, 1999.
Operating Loss
The operating loss for the three months ended December 31, 2000 was $89 million
(Airplanes Limited: $84 million; Airplanes Trust: $5 million) compared with an
operating loss of $65 million for the three months ended December 31, 1999
(Airplanes Limited: $58 million;
17
Airplanes Trust: $7 million). Airplanes Limited and Airplanes Trust are
expected to continue to report substantial losses in the future.
Taxes
There was a tax credit of $1 million (Airplanes Limited: $1 million; Airplanes
Trust : $Nil million) required in the three months to December 31, 2000, as
compared with a tax credit of $3 million (Airplanes Limited: $3 million,
Airplanes Trust: $Nil) for the three months ended December 31, 1999.
Net Loss
The net loss after taxation for the three months ended December 31, 2000 was
$88 million (Airplanes Limited: $83 million; Airplanes Trust: $5 million)
compared with a net loss after taxation for the three months ended December 31,
1999 of $62 million (Airplanes Limited: $55 million; Airplanes Trust: $7
million).
18
Financial Resources and Liquidity
Commentary on Statement of Cashflows
There was a net decrease in the cash balance of $3 million for the three months
to December 31, 2000, compared with a net decrease in cash of $2 million for
the three months to December 31, 1999.
Liquidity
The cash balances at December 31, 2000 amounted to $190 million (Airplanes
Limited: $184 million; Airplanes Trust: $6 million) compared to cash balances
at December 31, 1999 of $203 million (Airplanes Limited: $197 million;
Airplanes Trust: $6 million.)
Operating Activities
Net cash provided by operating activities in the three months ended December
31, 2000 amounted to $21 million (Airplanes Limited: $25 million; Airplanes
Trust: $(4) million) compared with $58 million in the three months ended
December 31, 1999 (Airplanes Limited: $52 million; Airplanes Trust: $6
million). This includes cash paid in respect of interest of $52 million in the
three months to December 31, 2000 (Airplanes Limited: $47 million; Airplanes
Trust: $5 million) compared with $51 million in the three months to December
31, 1999 (Airplanes Limited: $46 million; Airplanes Trust: $5 million). The
decrease in cash provided by operating activities in the three month period to
December 31, 2000 is primarily attributable to a greater number of off lease
Aircraft during the three months ended December 31, 2000 and a reduction in
lease revenues due to prior Aircraft sales.
Investing and Financing Activities
Cash flows from investing activities in the three months to December 31, 2000
reflect the cash provided by capital and sales type leases which was $1 million
(Airplanes Limited: $1 million; Airplanes Trust: $Nil) as compared with $2
million in the three months ended December 31, 1999 (Airplanes Limited: $2
million; Airplanes Trust: $Nil).
The three months to December 31, 2000 also included receipt of $13 million
(Airplanes Limited: $6 million; Airplanes Trust: $7 million) in relation to the
sale of one B737-200 Aircraft and three engines in respect of two A300
Aircraft, the airframes of which were previously sold.
Cash flows from financing activities in the three months to December 31, 2000
primarily reflect the repayment of $36 million of principal on Subclass A-6
Notes and Class B Notes, by Airplanes Group (Airplanes Limited: $33 million;
Airplanes Trust: $3 million) compared with $62 million of principal repaid on
Subclass A-6, Class B and Class C Notes by Airplanes Group (Airplanes Limited:
$56 million; Airplanes Trust: $6 million) in the three months to December 31,
1999. The decrease in principal repayments in the three months ended December
31, 2000 as compared to the three months ended December 31, 1999, is due to a
decrease in cash provided by operating activities as discussed above.
19
Indebtedness
Airplanes Group's indebtedness consisted of Class A-E Notes in the amount of
$3,525 million (Airplanes Limited: $3,212 million; Airplanes Trust: $313
million) at December 31, 2000 and $3,636 million (Airplanes Limited: $3,313
million; Airplanes Trust: $323 million) at December 31, 1999. Airplanes Group
had $591 million Class E Notes outstanding at December 31, 2000 and December
31, 1999. In order to repay principal on the Subclass A-4, A-7 and A-8 Notes on
their expected maturity dates, Airplanes Group will have to refinance such
Notes in the capital markets. In order to avoid stepped up interest costs, $200
million of Subclass A-4 Notes, $550 million of Subclass A-7 Notes and $700
million in Subclass A-8 Notes will have to be refinanced through the sale of
further pass-through certificates by March 2003, 2001 and 2003, respectively.
There can be no assurance that the Trust will be able to sell further
pass-through certificates in the amounts and at the times required and any
failure to do so may have the impact of increasing Airplanes Group's borrowing
costs.
20
Results of Operations - Nine Months Ended December 31, 2000 Compared with Nine
Months Ended December 31, 1999.
Airplanes Group's results for the nine months ended December 31, 2000 reflected
a continuation of difficult trading conditions for certain of its lessees,
along with an unfavourable market for some of its Aircraft, in particular
turboprop Aircraft, certain older Stage 3 narrowbody Aircraft and widebody
Aircraft, and increased levels of Aircraft downtime. Overall, Airplanes Group
generated $85 million in cash from operations in the nine months to December
31, 2000 compared to $147 million in the same period of the previous year. The
decrease in cash generated from operations in the nine month period to December
31, 2000 is primarily attributable to a reduction in lease revenues due to a
greater number of off lease Aircraft during the nine months ended December 31,
2000 and previous Aircraft sales. In addition, there was a net outflow of
maintenance payments and a net increase in the level of receivables, as
compared with the nine months to December 1999. This was partially offset by a
cash receipt from General Electric Capital Corporation under the terms of a Tax
Sharing Agreement (see Part II. Other Information - Item 1.). There was a net
loss after taxation for the nine months to December 31, 2000 of $264 million
(Airplanes Limited: $243 million; Airplanes Trust: $21 million) compared to a
net loss after taxation for the nine months to December 31, 1999 of $177
million (Airplanes Limited: $160 million; Airplanes Trust: $17 million). The
increase in the net loss for the period was primarily attributable to
additional interest being charged on accrued but unpaid Class E Note interest,
a reduction in revenue due to Aircraft downtime and provisions for loss making
leases and bad debts.
Leasing Revenues
Leasing revenues (which include maintenance reserve receipts which Airplanes
Group receives from certain of its lessees) for the nine months ended December
31, 2000 were $356 million (Airplanes Limited: $324 million; Airplanes Trust:
$32 million) compared with $383 million (Airplanes Limited: $352 million;
Airplanes Trust: $31 million) for the nine months ended December 31, 1999. The
decrease in 2000 was primarily attributable to the reduction in the number of
Aircraft on lease in the period to December 31, 2000, as a consequence of a
greater number of Aircraft off lease during the nine months ended December 31,
2000 and to a lesser extent, previous Aircraft sales. At December 31, 2000,
Airplanes Group had 193 of its 197 Aircraft on lease (Airplanes Limited: 176
Aircraft; Airplanes Trust: 17 Aircraft) compared to 195 of its 201 Aircraft on
lease (Airplanes Limited: 177 Aircraft; Airplanes Trust: 18 Aircraft) at
December 31, 1999.
Aircraft Sales
Sales revenues of $14 million (Airplanes Limited: $8 million, Airplanes Trust:
$6 million) in respect of the sale of an airframe of one A300 Aircraft, the
sale of three engines from two A300 Aircraft, the airframes of which had been
sold separately and the sale of one B737-200A Aircraft were received in the
nine months ended December 31, 2000. Sales revenues of $2 million (Airplanes
Limited $2 million; Airplanes Trust: $ Nil million) in respect of the sale of
one B737-200 Aircraft and an engine from an A300 Aircraft, the airframe of
which had previously been sold, were received in the nine months ended December
31, 1999. The net book values of the Aircraft sold were $9 million (Airplanes
Limited: $4 million, Airplanes Trust: $5 million) in the period ended December
31, 2000 and $1 million (Airplanes Limited: $1 million Airplanes Trust: $ Nil
million) in the period ended December 31, 1999.
21
Other Income
During the nine months ended December 31,1999, Airplanes Group exercised an
option to purchase shares in an airline. The option was granted under a lease
which Airplanes Group acquired when it acquired its Portfolio in 1996. The
shares were subsequently sold, yielding a profit of $1 million.
Depreciation and Amortization
The charge for depreciation and amortization in the nine months ended December
31, 2000 amounted to $128 million (Airplanes Limited: $116 million; Airplanes
Trust: $12 million) which is comparable with $131 million (Airplanes Limited:
$119 million; Airplanes Trust: $12 million) for the comparative period in 1999.
Net Interest Expense
Net interest expense was $396 million (Airplanes Limited: $360 million;
Airplanes Trust: $36 million) in the nine month period ended December 31, 2000
compared to $345 million (Airplanes Limited: $313 million; Airplanes Trust: $32
million) in the nine month period ended December 31, 1999. The increase in the
amount of interest charged was primarily due to a combination of offsetting
factors: additional interest charged on accrued but unpaid Class E Note
interest of $52 million and lower average debt in the nine months to December
31, 2000 being largely offset by a higher interest rate.
The weighted average interest rate on the Class A - D Notes (also taking
account the interest rate swaps entered into by Airplanes Group) during the
nine months to December 31, 2000 was 7.67% and the average debt in respect of
the Class A - D Notes outstanding during the period was $3,002 million. The
Class E Notes accrue interest at a rate of 20% per annum (as adjusted by
reference to the U.S. consumer price index, effective March 28, 1996). The
weighted average interest rate on the Class A - D Notes during the nine months
to December 31, 1999 was 6.59% and the average debt in respect of the Class A -
D Notes outstanding during the period was $3,216 million.
The difference for the nine months ended December 31, 2000 in Airplanes Group's
net interest expense of $396 million (Airplanes Limited: $360 million;
Airplanes Trust: $36 million) and cash paid in respect of interest of $166
million (Airplanes Limited: $151 million; Airplanes Trust: $15 million) is
substantially accounted for by the fact that interest on the Class E Notes is
accrued but unpaid.
Net interest expense is stated after deducting interest income earned during
the relevant period. In the nine months ended December 31, 2000, Airplanes
Group earned interest income (including lessee default interest) of $8 million
(Airplanes Limited: $8 million; Airplanes Trust: $Nil) compared with $10
million in the nine months ended December 31, 1999 (Airplanes Limited: $6
million; Airplanes Trust:$Nil).
At December 31, 2000, Airplanes Group had options on interest rate swaps
("Swaptions") with a notional principal balance of $250 million. (See Item 3.
Quantitative and Qualitative Disclosures about Market Risks).
22
Bad Debt and Loss-Making Lease Provisions
Airplanes Group's practice is to provide specifically for any amounts due but
unpaid by lessees based primarily on the amount due in excess of security held
and also taking into account the financial strength and condition of a lessee
and the economic conditions existing in the lessee's operating environment.
While a number of Airplanes Group's lessees failed to meet their contractual
obligations in the nine month period ended December 31, 2000, resulting in the
requirement for additional provisions in respect of bad and doubtful debts in
respect of these lessees, the credit exposure with regard to certain other
carriers improved in the period. Overall, there was a net charge of $8 million
in respect of bad and doubtful debts (Airplanes Limited: $5 million; Airplanes
Trust: $3 million) in the nine months ended December 31, 2000, compared with an
overall net release of $1 million for the nine months ended December 31, 1999
(Airplanes Limited: $ Nil million; Airplanes Trust: a credit of $1 million).
The net charge in the nine months ended December 31, 2000 was primarily as a
result of provisions in respect of one Turkish lessee, one Colombian lessee,
one Irish lessee and one US lessee.
A lease agreement is deemed to be `loss making' in circumstances where the
contracted rental payments are insufficient to cover the depreciation and
allocated interest attributable to the aircraft plus certain direct costs, such
as legal fees and registration costs, attributable to the lease over its term.
For these purposes, interest is allocated to individual Aircraft based on the
weighted average interest cost of the principal balance of the Notes and the
Class E Notes (excluding, in the case of the Class E Notes, the element of
interest (9% per annum) which is payable only in the event that the principal
amount of all the Notes is repaid). This results in a significant number of
leases being `loss making' while still being cash positive. In the nine months
to December 31, 2000, the significant "loss making" leases signed related to
two B737-400 Aircraft and one B737-200 Aircraft on lease to two European
lessees and three DC9 Aircraft and two B767 Aircraft on lease to two North
American lessees. Consequently, there was an overall net charge of $11 million
(Airplanes Limited: $11 million; Airplanes Trust: $Nil million) in respect of
`loss making' leases in the nine months ended December 31, 2000, compared with
the nine month period to December 31, 1999, where there was an overall net
release of $6 million (Airplanes Limited: $5 million; Airplanes Trust: $1
million).
Other Lease Costs
Other lease costs, comprising mainly Aircraft related technical expenditure
associated with remarketing the Aircraft, in the nine months ended December 31,
2000 amounted to $21 million (Airplanes Limited: $20 million; Airplanes Trust:
$1 million) compared to other lease costs of $14 million (Airplanes Limited:
$13 million; Airplanes Trust: $1 million) in the nine months to December 31,
1999. The increase in the nine months ended December 31, 2000 as a result of a
$5 million increase in technical expenditure due to an increased number of
Aircraft being remarketed, partially offset by a release of $6 million in
relation to a continuing review of the adequacy of maintenance reserves when
Aircraft are re-leased.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the nine month period to
December 31, 2000 amounted to $26 million (Airplanes Limited: $24 million;
Airplanes Trust: $2 million). This is a comparable expense to that incurred in
the nine months to December 31, 1999 of $27 million (Airplanes Limited: $25
million; Airplanes Trust: $2 million).
The most significant element of selling, general and administrative expenses
are the Aircraft servicing fees
23
paid to GECAS. Substantially all of these amounts represent asset based fees
calculated as an annual percentage of agreed values of Aircraft under
management pursuant to a servicing agreement. Selling, general and
administrative expenses in the nine months to December 31, 2000 and the nine
months to December 31, 1999 include $18 million (Airplanes Limited: $17
million; Airplanes Trust: $6 million) relating to GECAS servicing fees.
A further significant element of Airplanes Group's actual selling, general and
administrative expenses reported in the period to December 31, 2000 was $7
million (Airplanes Limited: $7 million; Airplanes Trust: Nil) in respect of
administrative agency and cash management fees payable to subsidiaries of debis
AirFinance Ireland, similar to the charge of $7 million for the period to
December 31, 1999.
Operating Loss
The operating loss for the nine months ended December 31, 2000 was $268 million
(Airplanes Limited: $246 million; Airplanes Trust: $22 million) compared with
an operating loss of $177 million for the nine months ended December 31, 1999
(Airplanes Limited: $160 million; Airplanes Trust: $17 million). Airplanes
Limited and Airplanes Trust are expected to continue to report substantial
losses in the future.
Taxes
There was a tax credit of $4 million (Airplanes Limited: $3 million; Airplanes
Trust : $1 million) required in the nine months to December 31, 2000, as
compared with no tax benefit or charge for the nine months ended December 31,
1999.
Net Loss
The net loss after taxation for the nine months ended December 31, 2000 was
$264 million (Airplanes Limited: $243 million; Airplanes Trust: $21 million)
compared with a net loss after taxation for the nine months ended December 31,
1999 of $177 million (Airplanes Limited: $160 million; Airplanes Trust: $17
million).
24
Financial Resources and Liquidity
Commentary on Statement of Cashflows
There was a decrease of $13 million in the cash balance for the nine months to
December 31, 2000, compared with a net decrease in the cash balance of $11
million for the nine months to December 31, 1999.
Liquidity
The cash balances at December 31, 2000 amounted to $190 million (Airplanes
Limited: $184 million; Airplanes Trust: $6 million) compared to cash balances
at December 31, 1999 of $213 million (Airplanes Limited: $207 million;
Airplanes Trust: $6 million.)
Operating Activities
Net cash provided by operating activities in the nine months ended December 31,
2000 amounted to $85 million (Airplanes Limited: $82 million; Airplanes Trust:
$3 million) compared with $147 million in the nine months ended December 31,
1999 (Airplanes Limited: $132 million; Airplanes Trust: $15 million). This
includes cash paid in respect of interest of $166 million in the nine monts to
December 31, 2000 (Airplanes Limited: $151 million; Airplanes Trust: $15
million) compared with $158 million in the nine months to December 31, 1999
(Airplanes Limited: $143 million; Airplanes Trust: $15 million). The decrease
in cash provided by operating activities in the nine month period to December
31, 2000 is primarily attributable to a greater number of off lease Aircraft
during the nine months ended December 31, 2000 and a reduction in lease
revenues due to previous Aircraft sales. In addition, in the nine months to
December 31, 2000, there was a net increase in the level of receivables
balances, as compared to the nine months to December 31, 1999 when there was a
reduction in receivables.
Investing and Financing Activities
Cash flows from investing activities in the nine months to December 31, 2000
reflect the cash provided by capital and sales type leases which was $4 million
(Airplanes Limited: $4 million; Airplanes Trust: $Nil) as compared with $6
million in the nine months ended December 31, 1999 (Airplanes Limited: $6
million; Airplanes Trust: $Nil). In the nine months ended December 31, 2000,
Airplanes Group also received sales proceeds of $14 million (Airplanes Limited:
$8 million; Airplanes Trust: $6 million) compared to the receipt of $2 million
(Airplanes Limited: $2 million, Airplanes Trust: $Nil) in the nine months ended
December 31, 1999.
Cash flows from financing activities in the nine months to December 31, 2000
primarily reflect the repayment of $113 million of principal on Subclass A-6
Notes and Class B Notes by Airplanes Group (Airplanes Limited: $103 million;
Airplanes Trust: $10 million) compared with $166 million of principal repaid on
Subclass A-6, Class B and Class C Notes by Airplanes Group (Airplanes Limited:
$151 million; Airplanes Trust: $15 million) in the nine months to December 31,
1999. The decrease in principal repayments in the nine months ended December
31, 2000 as compared to the nine months ended December 31, 1999, is due to a
decrease in cash provided by operating activities as discussed above.
25
Comparison of Actual Cash Flows versus the 1998 Adjusted Base Case for the
Three Month Period ended January 16, 2001.
The discussion and analysis which follows is based on the results of Airplanes
Limited and Airplanes Trust and their subsidiaries as a single entity
(collectively "Airplanes Group").
The financial information set forth below was not prepared in accordance with
generally accepted accounting principles of the United States. This information
should be read in conjunction with Airplanes Group's most recent financial
information prepared in accordance with generally accepted accounting
principles of the United States. For this you should refer to Airplanes Group's
Form 10-K for the year ended March 31, 2000 and Forms 10-Q for the financial
quarters to June 30, 2000 and September 30, 2000 which are on file at the
Securities and Exchange Commission and pages 3 to 10 of this Form 10-Q Report.
For the purposes of this report, the "Three Month Period", comprises
information from the monthly cash reports as filed at the Securities and
Exchange Commission as Forms 8-K for the relevant months dated November 15,
2000, December 15, 2000 and January 16, 2001. The financial data in these
reports includes cash receipts from October 11, 2000 (first day of the
Collection Period for the November 2000 Report) up to January 9, 2001 (last day
of the Collection Period for the January 2001 Report). Page 35 presents the
cumulative cashflow information from March 1998 to the January 2001 Payment
Date. This report, however, limits its commentary to the Three Month Period.
The March 9, 1998 Offering Memorandum (the "Offering Memorandum") for the 1998
Refinancing Certificates contains assumptions in respect of Airplanes Group's
future cash flows and expenses (the "1998 Base Case"). The 1998 Base Case has
been adjusted to take account of 20 Aircraft sales which have occurred (three
DC8-71Fs, one B737-300, four B737-200As, one B737-200QC, three A300-B4-100s and
eight DC9s) and which were not anticipated in the 1998 Base Case (the "Adjusted
Base Case"). For the purpose of this report, "Net Cash Collections" is defined
as Total Cash Collections less Total Cash Expenses, Interest Payments and Swap
Payments. A discussion of the Total Cash Collections, Total Cash Expenses,
Interest Payments and Principal Payments in the Three Month Period is given
below and should be read in conjunction with the analysis on page 34.
Cash Collections
"Total Cash Collections" include Net Lease Rentals (Contracted Lease Rentals
less Movement in Current Arrears Balance and Net Stress-Related Costs),
Interest Earned, Aircraft Sales, Net Maintenance and Other Receipts. In the
Three Month Period, Airplanes Group generated approximately $107.0 million in
Total Cash Collections, $19.6 million less than the Adjusted Base Case. This
difference is due to a combination of the factors set out below (the numbers in
square brackets below refer to the line item number shown on page 33).
26
[2] Renegotiated Leases
Renegotiated Leases refers to the loss in rental revenue caused by a
lessee negotiating a reduction in the lease rental. Typically, this can be
a permanent reduction over the remaining lease term in exchange for other
contractual concessions. In the Three Month Period, the amount of revenue
loss attributed to Renegotiated Leases was $0.3 million and relates to
leases renegotiated with two lessees. The new rentals were reset at the
then prevailing market rate for these Aircraft types.
[3] Rental Resets Including Interest Rate Adjustments for Floating Rate Leases
Rental Resets is a measure of the loss in rental revenue when new lease
rates are different to those assumed in the Adjusted Base Case, including
lease rate adjustments for changes in interest rates on floating rate
leases. This amounted to $4.5 million in the Three Month Period.
[5] Contracted Lease Rentals
Contracted Lease Rentals represents the current contracted lease rental
rollout which equates to the Adjusted Base Case Lease Rentals less
adjustments for Renegotiated Leases and Rental Resets. For the Three Month
Period, Contracted Lease Rentals were $109.9 million, $4.8 million less
than assumed in the Adjusted Base Case. The difference is due to losses
from Renegotiated Leases and Rental Resets as discussed above.
[6] Movement in Current Arrears Balance
Current Arrears is the total contracted lease rentals outstanding from
current lessees at a given date and excludes any amounts classified as Bad
Debts. There was a net negative movement of $5.4 million in the Current
Arrears Balance over the Three Month Period.
Net Stress-Related Costs
Net Stress-Related Costs is a combination of all the factors which can
cause actual lease rentals received to differ from the Contracted Lease
Rentals. The Adjusted Base Case assumed gross stress-related costs equal
to 6.0% of the 1998 Base Case Lease Rentals. However, the Adjusted Base
Case also assumed the recovery of certain deferred arrears equal to 0.1%
of the Adjusted Base Case Lease Rentals in the Three Month Period
resulting in an overall Net Stress-Related Costs assumption of 5.9% of the
Adjusted Base Case Lease Rentals. For the Three Month Period, Net
Stress-Related Costs incurred amounted to a net cash outflow of $10.2
million (8.9% of Lease Rentals) compared to $6.8 million outflow assumed
in the Adjusted Base Case, a variance of $3.5 million that is due to the
following five factors described in items [8] to [12] below.
[8] Bad Debts
Bad Debts are arrears owed by lessees who have defaulted and which are
deemed irrecoverable. There were no bad debts during the Three Month
Period.
27
[9] Deferred Arrears Balance
Deferred Arrears Balance refers to current arrears that have been
capitalized and restructured into a deferred balance. In the Three Month
Period, Airplanes Group received payments totaling $0.8 million in
accordance with these restructurings.
[10] Aircraft on Ground ("AOG")
AOG is defined as the Adjusted Base Case lease rental lost when an
Aircraft is off-lease and non-revenue earning. Airplanes Group had ten
Aircraft AOG at various different times during the Three Month Period and
at December 31, 2000, four Aircraft were AOG. In the Three Month Period,
the Adjusted Base Case lease rental lost due to Aircraft AOG amounted to
$4.0 million.
[11] Other Leasing Income
Other Leasing Income consists of miscellaneous income received in
connection with a lease other than contracted rentals, maintenance
receipts and security deposits, such as early termination payments or
default interest. In the Three Month Period, other leasing income amounted
to $0.5 million.
[12] Repossession Costs
Repossession Costs cover legal and aircraft technical costs incurred as a
result of repossessing an Aircraft. In the Three Month Period, Airplanes
Group made payments totalling $7.5 million as a result of the repossession
of one B747 freighter Aircraft from Tower Air in February 2000, one
B767-300ER from Transbrasil in May 2000, two B737-400 Aircraft from
Istanbul in July 2000 and one A300-B4-200 from Transaer International in
October 2000.
[14] Net Lease Rentals
Net Lease Rentals is Contracted Lease Rentals less any movement in Current
Arrears Balance and Net Stress-Related Costs. In the Three Month Period,
Net Lease Rentals amounted to $94.2 million, $13.7 million less than
assumed in the Adjusted Base Case. The variance was attributable to the
combined effect of the factors outlined in items [2] and [3] and in items
[6] to [12] above.
[15] Interest Earned
Interest Earned relates to interest received on cash balances held in the
Collection and Expense Accounts. Cash held in the Collection Account
consists of the cash liquidity reserve amount of $120 million plus the
security deposit amount, in addition to the intra-month cash balances for
all the rentals and maintenance payments collected prior to the monthly
payment date. The Expense Account contains cash set aside to pay for
expenses which are expected to be payable over the next month. In the
Three Month Period, interest earned amounted to $3.0 million, $0.5 million
more than assumed in the Adjusted Base Case. The difference is due to a
combination of two factors: the Adjusted Base Case made no assumption as
to the interest earned on the intra-month cash balances in the Collection
Account and Expense Account and the average actual reinvestment rate for
the Three Month Period was 6.5% as compared to 5.75% assumed in the
Adjusted Base Case.
28
[16] Aircraft Sales
Aircraft sales proceeds totalling $16.0 million were received in the Three
Month Period in respect of one B737-200-QC Aircraft, three CF6-50C2
engines (the airframes in respect of these Aircraft were previously sold)
and three B737-200A Aircraft (final bullet payments on exercise of
purchase options at finance lease expiry).
Since March 1998, Airplanes Group has received net sales proceeds of
$154.0 million in respect of the sale of twenty seven Aircraft (including
final bullet payments on four finance leases), twenty of which were not
anticipated in the 1998 Base Case.
The net sales proceeds also include $0.3 million of deposits received in
respect of one B737-200-QC Aircraft which is anticipated to be sold in the
next three month period.
The net sales proceeds on the twenty seven Aircraft of $153.7 million
compares with an overall Note Target Price at date of each respective sale
of $139.9 million and a depreciated (using the 1998 Base Case depreciation
assumptions) Initial Appraised Value (appraised as of October 1995) of
$150.2 million.
[17] Net Maintenance
Net Maintenance refers to maintenance reserve revenue received less any
maintenance reimbursements paid to lessees. In the Three Month Period,
negative net maintenance costs of $6.3 million were incurred. The Adjusted
Base Case makes no assumptions for Net Maintenance as it assumes that,
over time, maintenance revenue will equal maintenance expenditure.
However, it is unlikely that in any particular three month reporting
period, maintenance revenue will exactly equal maintenance expenses.
CASH EXPENSES
"Total Cash Expenses" include Aircraft Operating Expenses and Selling, General
and Administrative ("SG&A") Expenses. In the Three Month Period, Total Cash
Expenses were $15.9 million compared to $11.0 million assumed in the Adjusted
Base Case, a negative variance of $4.9 million. A number of offsetting factors
discussed below have given rise to this.
Aircraft Operating Expenses includes all operational costs related to the
leasing of Aircraft including costs of insurance, re-leasing and other overhead
costs.
[20] Re-leasing and other overhead costs
Re-leasing and other overhead costs consist of miscellaneous re-delivery
and leasing costs associated with re-leasing events, costs of insurance
and other lessee-related overhead costs. In the Three Month Period, these
costs amounted to $8.5 million (or 7.4% of Lease Rentals) compared to $2.3
million (or 2% of Lease Rentals) assumed in the Adjusted Base Case.
29
Actual Re-leasing and other overhead costs exceeded the Adjusted Base Case
assumption primarily due to higher than assumed transition costs on
Aircraft delivering to new lessees and payments made in the form of lessor
contributions to defray certain technical costs during the term of certain
leases.
SG&A Expenses relate to fees paid to the Servicer and to other service
providers.
[21] Aircraft Servicer Fees
The Aircraft Servicer Fees are defined as amounts paid to the Servicer in
accordance with the terms of the Servicing Agreement. In the Three Month
Period, the total Aircraft Servicer fees paid were $5.4 million, $0.3
million less than assumed in the Adjusted Base Case.
Aircraft Servicer Fees consist of:
$mm
Retainer Fee.................................................. 5.4
Minimum Incentive Fee......................................... 0.0
Core Cashflow/Sales Incentive Fee............................. 0.0
---
Total Aircraft Servicer Fee................................... 5.4
===
The Retainer Fee is a fixed amount per month per Aircraft and changes only
as Aircraft are sold.
[23] Other Servicer Fees and Other Overheads
Other Servicer Fees and Other Overheads relate to fees and expenses paid
to other Service providers including the Administrative Agent, the Cash
Manager, financial advisors, legal advisors, accountants and the
directors. In the Three Month Period, Other Servicer Fees amounted to $2.0
million, $1.1 million less than an assumed expense of $3.1 million in the
Adjusted Base Case.
[30] Interest Payments and [31] Swap Payments
In the Three Month Period, interest payments to investors amounted to
$57.8 million which is $4.9 million higher than the Adjusted Base Case.
The variance reflects higher actual amounts outstanding on each Note class
than assumed, and a higher than expected level of average interest rates
offset by no interest payments on the Class E Notes (refer to Item [33]
below). The Adjusted Base Case assumed LIBOR to be 5.75% whereas the
average monthly LIBOR rate was 6.7%. Airplanes Group had net swap payments
of $0.2 million compared with nil assumed in the Adjusted Base Case for
the Three Month Period.
30
[33] Principal Payments
In the period from March 11, 1998 to January 16, 2001, total principal
payments amounted to $570.9 million, (comprising of $485.4 million on the
Class A Notes, $55.5 million on the Class B Notes, $25.2 million on the
Class C Notes and $4.9 million on the Class D Notes), $97.8 million less
than assumed in the Adjusted Base Case. The breakdown of the $97.8 million
variance is set out on page 33. In the Three Month Period, total principal
payments amounted to $33.2 million, (comprising of $28.3 million on the
Class A Notes and $4.9 million on the Class B Notes), $29.7 million less
than assumed in the Adjusted Base Case. The breakdown of the $29.7 million
variance is set out on page 32.
Applying the declining value assumptions to the original March 1996 fleet
appraisal and adjusting for Aircraft sales, the total appraised value of
the Aircraft was assumed to be $4,073.0 million at March 15, 1998 and
$3,449.3 million at January 16, 2001. The fleet is appraised annually and
the appraisal dated February 18, 2000, which was effective for Payment
Dates up to and including the January 2001 Payment Date, valued the
existing fleet at $3,317.6 million. Applying the declining value
assumptions to the February 2000 fleet appraisal, the total appraised
value was $3,157.7 million at January 16, 2001.
Based on the appraisal dated February 18, 2000, the decline in Aircraft
valuations in the year to February 2000 was approximately $15 million less
than the decrease implied by the Aircraft depreciation schedules that form
part of the terms of the Notes. However, as a consequence of the overall
decline in appraised values experienced since March 1996, combined with
overall cash performance in that period, Airplanes Group has continued to
pay Class A Principal Adjustment Amounts from the March 2000 Payment Date
(the first Payment Date for which the 2000 appraisal was effective).
Cashflows were sufficient on the March and April 2000 Payment Dates to pay
the Class C and Class D Scheduled Principal Amounts and Class E Minimum
Interest. However, as a result of an adverse movement in cashflow
performance in the nine month period since the April 2000 Payment Date
which arose due to the factors described above and in Airplanes Group's
Forms 10-Q for the financial quarters to June 30, 2000 and September 30,
2000, available cashflows were not sufficient to pay all of the scheduled
Class A Principal Adjustment Amounts in the nine month period. As a
result, no payments of the Class C and D Scheduled Principal Amounts were
made in the nine month period to December 31, 2000.
Consequently at January 16, 2001, Class A Principal Adjustment Amounts
outstanding were $23.7 million ($9.5 million at October 16, 2000) and
total deferrals of Class C and Class D Scheduled Principal Amounts
amounted to $11.7 million and $5.4 million respectively ($7.7 million and
$3.4 million respectively at October 16, 2000). The Class E Minimum
Interest Amount has been suspended since April 2000.
Based on the most recent annual appraisal dated January 31, 2001, the
decline in aircraft valuations in the period to the February 2001 Payment
Date was approximately $10 million more than the decrease assumed in the
aircraft depreciation schedules. The decline in appraised values in this
period, combined with the overall decline in appraised values since March
1996 and overall cash performance in that period, results in an increase
in the Principal Adjustment Amount on the Class A Notes from $32.4 million
to $38.6 million.
The continued payment of Class A Principal Adjustment Amount will result
in the continued
31
reallocation of cashflows in favour of the Class A Notes until such time
as the Class A target loan to value ratios provided by the terms of the
Notes have been restored. Accordingly, payments of the Class C and D
Scheduled Principal Amounts will continue to be deferred and the current
suspension of payments of the Class E Minimum Interest Amount will also
continue. At the February 2001 Payment Date, total deferrals of Class C
and Class D Scheduled Principal Amounts are $13.1 million and $6.1 million
respectively.
There can be no assurances that these arrears will be paid in full or that
variations in future cashflows or future appraisals will not lead to
delays in the payment of Class A Principal Adjustment Amounts or increases
in arrears of Class C and Class D Scheduled Principal Amounts.
32
Note Report Line Name Description
- ---- ---------------- -----------
CASH COLLECTIONS
[1] Lease Rentals.........................Assumptions as per the Adjusted Base Case
[2] - Renegotiated Leases.................Change in contracted rental cash flow caused by a renegotiated
lease
[3] - Rental Resets.......................Re-leasing events where new lease rate deviated from the
Adjusted Base Case
[4] - Other...............................
[5] S [1]..[4] Contracted Lease Rentals..............Current Contracted Lease Rentals due as at the latest
Calculation Date
[6] Movement in Current Arrears Balance Current Contracted Lease Rentals not received as at the latest
Calculation Date, excluding Bad Debts
[7] Less Net Stress related Costs
[8] - Bad Debts...........................Arrears owed by former lessees and deemed irrecoverable
[9] - Deferred Arrears Balance............Current arrears that have been capitalised and restructured as a
Note Payable
[10] - AOG.................................Loss of rental due to an aircraft being off-lease and
non-revenue earning
[11] - Other Leasing Income................Includes lease termination payments, rental guarantees and late
payments charges
[12] - Repossession........................Legal and technical costs incurred in repossessing Aircraft.
[13] S [8]..[12] Sub-total
[14] [5]+[6]+[13] Net Lease Rentals.....................Contracted Lease Rentals less Movement in Current Arrears
Balance and Net Stress related costs
[15] Interest Earned.......................Interest earned on monthly cash balances
[16] Aircraft Sales........................Proceeds, net of fees and expenses, from the sale of Aircraft.
[17] Net Maintenance.......................Maintenance Revenue Reserve received less reimbursements to
lessees
[18] Other Receipts........................Net proceeds received from the sale of shares held in an airline
and amounts received under the Tax Sharing Agreement for the
utilisation by GE Capital of tax losses of Airplanes Group
companies.
[19] S [14]..[18] Total Cash Collections................Net Lease Rentals + Interest Earned + Aircraft Sales + Net
Maintenance + Other Receipts
CASH EXPENSES
Aircraft Operating Expenses...........All operational costs related to the leasing of aircraft.
[20] - Releasing and Other Overheads.......Costs associated with transferring an aircraft from one lessee
to another, costs of insurance and other lessee-related overheads
SG&A Expenses
[21] Aircraft Servicer Fees................Monthly and annual fees paid to Aircraft Servicer
- Retainer Fee........................Fixed amount per month per aircraft
- Minimum Incentive Fee...............Minimum annual fee paid to Servicer for performance above an
annually agreed target.
- Core Cashflow/Sales Incentive Fee...Fees (in excess of Minimum Fee above) paid to Servicer for
performance above an annually agreed target/on sale of an aircraft.
[22] [21] Sub-total
[23] Other Servicer Fees and Other Administrative Agent, trustee and professional fees paid to
Overheads.............................other service providers and other overheads
[24] [22]+[23] Sub-total
[25] [20]+[24] Total Cash Expenses...................Aircraft Operating Expenses + SG&A Expenses
NET CASH COLLECTIONS
[26] [19] Total Cash Collections................Line 19 above
[27] [25] Total Cash Expenses...................Line 25 above
[28] Movement in Expense Account...........Relates to reduction in accrued expense amounts
[29] Refinancing Expenses (accrued March Costs relating to the March 98 refinancing accrued on closing
98)...................................and paid post March 98
[30] Interest Payments.....................Interest paid on all outstanding debt
[31] Swap payments Net swap payments (paid)/received
[32] S [26]..[31] Total
[33] Principal payments Principal payments on debt
33
Airplanes Cashflow Performance for the Period from October 11, 2000 to January 16, 2001 (3 Months)
Comparison of Actual Cashflows versus Adjusted Base Case* Cashflows
% of 1998 Lease Rentals under
the Adjusted Base Case
Adjusted Adjusted
Actual Base Case* Variance Actual Base Case* Variance Base Case**
------ ---------- -------- ------ ---------- -------- -----------
CASH COLLECTIONS $M $M $M $M
1 Lease Rentals 114.6 114.6 0.0 100.0% 100.0% 0.0% 119.2
2 - Renegotiated Leases (0.3) 0.0 (0.3) (0.2%) 0.0% (0.2%) 0.0
3 - Rental Resets (4.5) 0.0 (4.5) (3.9%) 0.0% (3.9%) 0.0
4 - Other 0.0 0.0 0.0 0.0% 0.0% 0.0% 0.0
------- ------- ----- ----- ----- ----- ------
5 1-4 Contracted Lease Rentals 109.9 114.6 (4.8) 95.8% 100.0% (4.2%) 119.2
6 Movement in Current Arrears (5.4) 0.0 (5.4) (4.7%) 0.0% (4.7%) 0.0
Balance
7 less Net Stress Related Costs
8 - Bad Debts 0.0 (1.1) 1.1 0.0% (1.0%) 1.0% (1.2)
9 - Deferred Arrears Balance 0.8 0.1 0.6 0.7% 0.1% 0.5% 0.1
10 - AOG (4.0) (4.8) 0.9 (3.4%) (4.2%) 0.8% (5.0)
11 - Other Leasing Income 0.5 0.0 0.5 0.4% 0.0% 0.4% 0.0
12 - Repossession (7.5) (0.9) (6.6) (6.5%) (0.8%) (5.7%) (1.0)
------- ------- ----- ----- ----- ----- ------
13 8-12 Sub-total (10.2) (6.8) (3.5) (8.9%) (5.9%) (3.0%) (7.0)
14 5+6+13 Net Lease Rental 94.2 107.9 (13.7) 82.2% 94.1% (11.9%) 112.2
15 Interest Earned 3.0 2.5 0.5 2.7% 2.2% 0.5% 2.5
16 Aircraft Sales 16.0 16.3 (0.3) 14.0% 14.2% (0.2%) 8.0
17 Net Maintenance (6.3) 0.0 (6.3) (5.5%) 0.0% (5.5%) 0.0
18 Other Receipts 0.0 0.0 0.0 0.0% 0.0% 0.0% 0.0
------- ------- ----- ----- ----- ----- ------
19 14-18 Total Cash Collections 107.0 126.7 (19.6) 93.4% 110.5% (17.1%) 122.7
======= ======= ===== ===== ===== ===== ======
CASH EXPENSES
Aircraft Operating Expenses
20 - Re-leasing and other overheads (8.5) (2.3) (6.2) (7.4%) (2.0%) (5.4%) (2.4)
SG&A Expenses
21 Aircraft Servicer Fees
- Retainer Fee (5.4) (5.3) (0.1) (4.7%) (4.6%) (0.1%) (5.3)
- Minimum Incentive Fee 0.0 (0.4) 0.4 0.0% (0.3%) 0.3% (0.4)
- Core Cashflow/Sales Incentive Fee 0.0 0.0 0.0 0.0% 0.0% 0.0% 0.0
------- ------- ----- ----- ----- ----- ------
22 21 Sub-total (5.4) (5.7) 0.3 (4.7%) (5.0%) 0.3% (5.7)
23 Other Servicer Fees and Other
Overheads (2.0) (3.1) 1.0 (1.8%) (2.7%) 0.9% (3.1)
------- ------- ----- ----- ----- ----- ------
24 22+23 Sub-total (7.4) (8.8) 1.3 (6.5%) (7.6%) 1.2% (8.8)
------- ------- ----- ----- ----- ----- ------
25 24+20 Total Cash Expenses (15.9) (11.0) (4.9) (13.9%) (9.6%) (4.3%) (11.1)
======= ======= ===== ===== ===== ===== ======
NET CASH COLLECTIONS
26 19 Total Cash Collections 107.0 126.7 (19.6) 93.4% 110.5% (17.1%) 122.7
27 25 Total Cash Expenses (15.9) (11.0) (4.9) (13.9%) (9.6%) (4.3%) (11.1)
28 Movement in Expense Account 0.0 0.0 0.0 0.0% 0.0% 0.0% 0.0
29 Refinancing Expenses (accrued Mar
98) 0.0 0.0 0.0 0.0% 0.0% 0.0% 0.0
30 Interest Payments (57.8) (52.8) (4.9) (50.4%) (46.1%) (4.3%) (53.9)
31 Swap Payments (0.2) 0.0 (0.2) (0.1%) 0.0% (0.2%) 0.0
------- ------- ----- ----- ----- ----- ------
32 26-31 TOTAL 33.2 62.8 (29.7) 28.9% 54.8% (25.9%) 57.7
======= ======= ===== ===== ===== ===== ======
33 PRINCIPAL PAYMENTS
Subclass A6 28.3 50.8 (22.5) 24.7% 44.3% (19.6%) 45.5
Subclass B 4.9 6.0 (1.1) 4.3% 5.2% (1.0%) 6.2
Subclass C 0.0 4.1 (4.1) 0.0% 3.5% (3.5%) 4.1
Subclass D 0.0 2.0 (2.0) 0.0% 1.7% (1.7%) 2.0
------- ------- ----- ----- ----- ----- ------
Total 33.2 62.8 (29.7) 28.9% 54.8% (25.9%) 57.7
======= ======= ===== ===== ===== ===== ======
Debt Balances at January 16, 2001
Subclass A4 200.0 200.0 200.0
Subclass A6 458.2 393.8 458.0
Subclass A7 550.0 550.0 550.0
Subclass A8 700.0 700.0 700.0
Subclass B 281.5 265.3 270.5
Subclass C 349.8 338.1 338.1
Subclass D 395.1 389.6 389.7
------- ------- -------
2,934.6 2,836.8 2,906.3
======= ======= =======
34
Airplanes Cashflow Performance for the Period from March 11, 1998 to January 16, 2001 (34 Months)
Comparison of Actual Cashflows versus Adjusted Base Case* Cashflows
% of 1998 Lease Rentals under
the Adjusted Base Case
Adjusted Adjusted
Actual Base Case* Variance Actual Base Case* Variance Base Case**
------ ---------- -------- ------ ---------- -------- -----------
CASH COLLECTIONS $M $M $M $M
1 Lease Rentals 1,323.4 1,323.4 0.0 100.0% 100.0% 0.0% 1,366.6
2 - Renegotiated Leases (2.5) 0.0 (2.5) (0.2%) 0.0% (0.2%) 0.0
3 - Rental Resets (21.8) 0.0 (21.8) (1.6%) 0.0% (1.6%) 0.0
4 - Other 0.0 0.0 0.0 0.0% 0.0% 0.0% 0.0
------- ------- ----- ----- ----- ----- -------
5 1-4 Contracted Lease Rentals 1,299.2 1,323.4 (24.3) 98.2% 100.0% (1.8%) 1,366.6
6 Movement in Current Arrears (22.9) 0.0 (22.9) (1.7%) 0.0% (1.7%) 0.0
Balance
7 less Net Stress Related Costs
8 - Bad Debts (5.2) (13.4) 8.2 (0.4%) (1.0%) 0.6% (13.8)
9 - Deferred Arrears Balance 16.3 15.2 1.1 1.2% 1.1% 0.1% 15.2
10 - AOG (47.5) (56.2) 8.7 (3.6%) (4.2%) 0.7% (58.0)
11 - Other Leasing Income 4.8 0.0 4.8 0.4% 0.0% 0.4% 0.0
12 - Repossession (16.3) (10.7) (5.6) (1.2%) (0.8%) (0.4%) (11.1)
------- ------- ----- ----- ----- ----- -------
13 8-12 Sub-total (48.0) (65.1) 17.2 (3.6%) (4.9%) 1.3% (67.7)
14 5+6+13 Net Lease Rental 1,228.3 1,258.3 (30.0) 92.8% 95.1% (2.3%) 1,298.9
15 Interest Earned 33.5 28.5 5.1 2.5% 2.2% 0.4% 28.5
16 Aircraft Sales 154.0 153.7 0.2 11.6% 11.6% 0.0% 56.1
17 Net Maintenance (36.8) 0.0 (36.8) (2.8%) 0.0% (2.8%) 0.0
18 Other Receipts 9.4 0.0 9.4 0.7% 0.0% 0.7% 0.0
------- ------- ----- ----- ----- ----- -------
19 14-18 Total Cash Collections 1,388.4 1,440.5 (52.1) 104.9% 108.8% (3.9%) 1,383.4
======= ======= ===== ===== ===== ===== =======
CASH EXPENSES
Aircraft Operating Expenses
20 - Re-leasing and other overheads (78.4) (26.8) (51.6) (5.9%) (2.0%) (3.9%) (27.6)
SG&A Expenses
21 Aircraft Servicer Fees
- Retainer Fee (61.1) (60.2) (0.9) (4.6%) (4.5%) (0.1%) (60.2)
- Minimum Incentive Fee (4.5) (4.3) (0.2) (0.3%) (0.3%) (0.0%) (4.3)
- Core Cashflow/Sales Incentive
Fee (3.5) 0.0 (3.5) (0.3%) 0.0% (0.3%) 0.0
------- ------- ----- ----- ----- ----- -------
22 21 Sub-total (69.1) (64.5) (4.6) (5.2%) (4.9%) (0.3%) (64.4)
23 Other Servicer Fees and Other
Overheads (36.4) (34.7) (1.7) (2.7%) (2.6%) (0.1%) (34.7)
------- ------- ----- ----- ----- ----- -------
24 22+23 Sub-total (105.5) (99.2) (6.3) (8.0%) (7.5%) (0.5%) (99.2)
------- ------- ----- ----- ----- ----- -------
25 24+20 Total Cash Expenses (183.9) (126.0) (57.9) (13.9%) (9.5%) (4.4%) (126.8)
======= ======= ===== ===== ===== ===== =======
NET CASH COLLECTIONS
26 19 Total Cash Collections 1,388.4 1,440.5 (52.1) 104.9% 108.8% (3.9%) 1,383.4
27 25 Total Cash Expenses (183.9) (126.0) (57.9) (13.9%) (9.5%) (4.4%) (126.8)
28 Movement in Expense Account 24.7 0.0 24.7 1.9% 0.0% 1.9% 0.0
29 Refinancing Expenses (accrued Mar
98) (16.8) 0.0 (16.8) (1.3%) 0.0% (1.3%) 0.0
30 Interest Payments (641.1) (644.0) 2.8 (48.4%) (48.7%) 0.2% (655.5)
31 Swap Payments (0.3) (1.9) 1.6 (0.0%) (0.1%) 0.1% (1.9)
------- ------- ----- ----- ----- ----- -------
32 26-31 TOTAL 570.9 668.7 (97.7) 43.1% 50.5% (7.4%) 599.3
======= ======= ===== ===== ===== ===== =======
33 PRINCIPAL PAYMENTS
Subclass A5 93.6 93.6 (0.0) 7.1% 7.1% (0.0%) 93.6
Subclass A6 391.8 456.2 (64.4) 29.6% 34.5% (4.9%) 392.0
Subclass B 55.5 71.7 (16.3) 4.2% 5.4% (1.2%) 66.5
Subclass C 25.2 36.9 (11.7) 1.9% 2.8% (0.9%) 36.9
Subclass D 4.9 10.3 (5.4) 0.4% 0.8% (0.4%) 10.3
------- ------- ----- ----- ----- ----- -------
Total 570.9 668.7 (97.8) 43.1% 50.5% (7.4%) 599.3
======= ======= ===== ===== ===== ===== =======
Debt Balances at January 16, 2001
Subclass A4 200.0 200.0 200.0
Subclass A6 458.2 393.8 458.0
Subclass A7 550.0 550.0 550.0
Subclass A8 700.0 700.0 700.0
Subclass B 281.5 265.3 270.5
Subclass C 349.8 338.1 338.1
Subclass D 395.1 389.6 389.7
------- ------- -------
2,934.6 2,836.8 2,906.3
35
Mar-98 Adjusted
Closing Actual Base Case*
------- ------ ----------
Net Cash Collections 570.9 668.7
Add Back Interest and Swap Payments 641.4 645.8
------- -------
a Net Cash Collections 1,212.4 1,314.5
======= =======
(excl. interest and swap payments)
b Swaps 0.3 1.9
c Class A Interest 371.2 366.1
d Class A Minimum 0.0 0.0
e Class B Interest 57.2 56.0
f Class B Minimum 50.3 31.7
g Class C Interest 83.6 82.8
h Class D Interest 122.8 122.3
i Class A Principal Adjustment 360.7 0.0
i Class C Scheduled 25.2 36.9
k Class D Scheduled 4.9 10.3
l Permitted Aircraft Modifications 0.0 0.0
m Step-up Interest 0.0 0.0
n Class E Minimum Interest 6.4 16.7
o Class B Supplemental 5.2 40.1
p Class A Supplemental 124.6 549.8
------- -------
Total 1,212.4 1,314.5
======= =======
[1] Interest Coverage Ratio
Class A 3.3 3.6 = a/(b+c)
Class B 2.8 3.1 = a/(b+c+d+e)
Class C 2.2 2.4 = a/(b+c+d+e+f+g)
Class D 1.8 2.0 = a/(b+c+d+e+f+g+h)
[2] Debt Coverage Ratio
Class A 3.3 3.6 = a/(b+c+d)
Class B 2.5 2.9 = a/(b+c+d+e+f)
Class C 1.1 1.9 = a/(b+c+d+e+f+g+h+I+j)
Class D 1.1 1.9 = a/(b+c+d+e+f+g+h+I+j+k)
Loan to Value Ratios (in US dollars)
[3] Expected Portfolio Value 4,073.0 3,449.3
[4] Adjusted Portfolio Value 3,157.7
Liquidity Reserve Amount
Of which - Cash 174.4 156.2 174.4
- Accrued Expenses 12.0
- Letters of Credit held
------- ------- -------
Subtotal 174.4 168.2 174.4
Less Lessee Security Deposits 54.4 36.2 54.4
------- ------- -------
Subtotal 120.0 132.0 120.0
------- ------- -------
[5] Total Asset Value 4,193.0 3,289.7 3,569.3
Note Balances as at January 16, 2001
Class A 2,393.6 57.1% 1,908.2 58.0% 1,843.8 51.7%
Class B 337.0 65.1% 281.5 66.6% 265.3 59.1%
Class C 375.0 74.1% 349.8 77.2% 338.1 68.6%
Class D 400.0 83.6% 395.1 89.2% 389.6 79.5%
------- ------- -------
3,505.6 2,934.6 2,836.8
* Adjusted Base Case equals the 1998 Base Case as adjusted for Aircraft
sales which have occurred and which were not anticipated in the 1998 Base
Case Assumptions
** Base Case equals the 1998 Base Case.
[1] Interest Coverage Ratio is equal to Net Cash Collections (excl. interest
and swap payments) 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 (excl. interest and
swap payments) expressed as a ratio of the interest and minimum/scheduled
principal payments payable on each subclass of Note plus the interest and
minimum/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. In respect of the Class A Notes, Principal
Adjustment Amount payments have been excluded as they are a function of
aircraft values.
[3] Expected Portfolio Value represents the Initial Appraised Value of each
Aircraft in the Portfolio multiplied by the Depreciation Factor at
Payment Date divided by the Depreciation Factor at March 1996 Closing
Date.
[4] Adjusted Portfolio Value represents the Base Value of each Aircraft in
the Portfolio as determined by the most recent Appraisal multiplied by
the Depreciation Factor at Payment Date divided by the Depreciation
Factor as of the relevant Appraisal date.
36
[5] Total Asset Value is equal to Total Expected/Adjusted Portfolio Value
plus Liquidity Reserve Amount minus Lessee Security Deposits.
37
Item 3. Quantitative and Qualitative Disclosures about Market Risks
Interest Rate Sensitivity
Airplanes Group's principal market risk exposure is to changes in interest
rates. This exposure arises from its Notes and the derivative instruments used
by Airplanes Group to manage its interest rate risk.
The terms of each subclass of Notes, including the outstanding principal amount
and estimated fair value as of December 31, 2000, are as follows:
Annual Interest Estimated
Rate Principal Amount Expected Final Final Fair Value at
Subclass of Notes (Payable Monthly) at quarter end Payment Date Maturity Date December 31, 2000
- ----------------- ----------------- -------------- ------------- ------------- -----------------
$ Millions $ Millions
Subclass A-4 (LIBOR+.62%) 200 March 15, 2003 March 15, 2019 200
Subclass A-6 (LIBOR+.34%) 462 January 15, 2004 March 15, 2019 461
Subclass A-7 (LIBOR+.26%) 550 March 15, 2001 March 15, 2019 550
Subclass A-8 (LIBOR+.375%) 700 March 15, 2003 March 15, 2019 697
Class B (LIBOR+.75%) 281 March 15, 2009 March 15, 2019 276
Class C (8.15%) 350 March 15, 2011 March 15, 2019 339
Class D (10.875%) 395 March 15, 2012 March 15, 2019 289
----- -----
2,938 2,812
===== =====
Interest Rate Management
The leasing revenues of Airplanes Group are generated primarily from lease
rental payments which are either fixed or floating. In the case of floating
rate leases, an element of the rental varies in line with changes in LIBOR,
generally nine-month LIBOR. Some leases carry fixed and floating rental
payments for different rental periods. There has been an increasing tendency
for fixed rate leases to be written and approximately 60% of the leases are
fixed rate leases.
In general, an interest rate exposure arises to the extent that Airplanes
Group's fixed and floating interest obligations in respect of the Class A-D
Notes do not correlate to the mix of fixed and floating rental payments for
different rental periods. This interest rate exposure can be managed through
the use of interest rate swaps. The Class A and B Notes bear floating rates of
interest and the Class C and D Notes bear fixed rates of interest. The mix of
fixed and floating rental payments contains a higher percentage of fixed rate
payments than the percentage of fixed rate interest payments on the Notes. One
reason for this is the fact that the reset periods on floating rental payments
are generally longer than the monthly reset periods on the floating rate Notes.
In order to correlate the contracted fixed and floating rental payments to the
fixed and floating interest payments on the Notes, Airplanes Group enters into
interest rate swaps (the `Swaps'). Under the Swaps, Airplanes Group pays fixed
amounts and receives floating amounts on a monthly basis. The Swaps amortize
having regard to the expected paydown schedule of the Class A and B Notes, the
expiry dates of the leases under which lessees are contracted to make fixed
rate rental payments and the LIBOR reset dates under the floating rates leases.
At least every three months, and in practice more frequently, AerFi Financial
Services (Ireland) Limited, a subsidiary of debis AirFinance Ireland, as
Airplanes Group's administrative agent (the "Administrative Agent"), seeks to
enter into additional swaps or sell at market value or unwind part or all of
the Swaps and any future swaps in order to rebalance the fixed and floating mix
38
of interest obligations and the fixed and floating mix of rental payments. At
December 31, 2000, Airplanes Group had unamortized Swaps with an aggregate
notional principal balance of $2,010 million. The aggregate notional principal
of these Swaps will be reduced to $1.625 million by the end of the fiscal year
ended March 31, 2001. These Swaps will be further reduced to an aggregate
notional principal balance of $1,045 million by the year ended March 31, 2002,
to an aggregate notional principal balance of $380 by the year ended March 31,
2003 and to an aggregate notional principal balance of $90 million by the year
ended March 31, 2004. None of the Swaps have maturity dates extending beyond
September 2004. The aggregate estimated fair market value of the Swaps at
December 31, 2000 was $(18.2) million.
Airplanes Group Swap Book at December 31, 2000
Final
Swap No. Notional Amount(i) Effective Maturity Fixed Rate Estimated Fair Market
($ Millions) Date Date Payable(ii) Value as at December 31, 2000
1 170 07/31/00 01/15/01 6.7390% (6,444)
2 10 10/28/99 01/15/01 5.9250% 6,955
3 10 12/23/97 03/15/01 5.8175% 17,183
4 55 10/16/00 03/15/01 6.6550% (22,847)
5 20 11/17/99 04/15/01 5.8550% 35,362
6 50 03/28/96 04/15/01 6.0925% 53,624
7 55 08/15/00 05/15/01 6.7750% (54,704)
8 55 06/15/01 06/15/01 6.2250% (16,971)
9 50 12/15/00 06/15/01 6.5400% (56,917)
10 20 10/28/97 06/15/01 5.9600% 20,328
11 15 12/15/99 08/15/01 6.2000% (1,045)
12 20 05/27/98 04/15/02 6.2800% (136,292)
13 40 08/16/99 04/15/02 6.2250% (201,063)
14 15 12/15/99 04/15/02 6.3100% (81,069)
15 10 04/17/00 05/15/02 6.7150% (75,788)
16 15 10/27/98 05/15/02 6.2900% (162,333)
17 345 11/15/99 06/15/02 6.1200% (505,645)
18 15 02/16/99 07/15/02 6.2700% (114,316)
19 20 09/15/98 08/15/02 6.1700% (36,569)
20 15 06/15/00 12/15/02 7.1125% (1,730,683)
21 120 07/15/98 12/15/02 6.2400% (1,061,099)
22 30 08/25/98 02/15/03 6.3900% (466,558)
23 15 10/15/98 02/15/03 6.3800% (316,441)
24 10 11/16/98 02/15/03 6.3900% (169,870)
25 50 12/15/98 02/15/03 6.2840% (472,809)
26 15 02/15/00 03/15/03 6.3965% (218,596)
27 40 06/01/99 03/15/03 6.2200% (303,939)
28 15 01/18/00 03/15/03 6.3850% (254,152)
29 30 12/21/99 03/15/03 6.5875% (580,556)
30 0 04/15/01 04/15/03 7.1850% (568,043)
31 35 06/21/99 06/15/03 6.3100% (716,870)
32 55 07/15/99 08/15/03 6.2900% (737,439)
33 15 01/18/00 10/15/03 6.4650% (236,608)
34 30 08/17/99 11/15/03 6.3300% (470,375)
35 35 12/15/00 11/15/03 7.3625% (1,359,823)
36 25 04/26/00 11/15/03 6.6975% (333,887)
37 15 09/20/00 11/15/03 6.5625% (877,562)
38 125 11/15/03 11/15/03 6.5775% (380,185)
39
39 20 03/24/00 12/15/03 6.8450% (668,988)
40 85 05/15/00 01/15/04 7.2995% (1,426,913)
41 25 06/26/00 02/15/04 6.9775% (576,670)
42 60 08/15/00 02/15/04 6.7700% (1,302,873)
43 95 08/18/00 04/15/04 6.7700% (445,345)
44 0 04/17/01 05/15/04 6.8290% (853,602)
45 60 10/16/00 07/15/04 6.5850% (434,679)
46 0 09/17/01 09/15/04 5.7125% (14,672)
----- ----------
2,010 (18,317,790)
===== ==========
(i) While some of the above may have a fixed notional amount, many amortise
over the period to the final maturity date.
(ii) Each of the above Swaps is calculated on a monthly fixed actual/360
adjusted basis, with the exception of Swap No. 8 which is calculated on a
monthly fixed 30/360 unadjusted basis.
(iii) Under all Swaps, Airplanes Group receives floating at one month LIBOR,
which resets monthly.
Pursuant to a decision of the Directors of Airplanes Limited and the
Controlling Trustees of Airplanes Trust on November 8, 1999, Airplanes Group
either re-couponed or unwound and replaced thirty of its portfolio of forty
four Swaps. Twenty of these Swaps were adjusted so that Airplanes Group's fixed
payment rate more closely reflected current market rates. Airplanes Group
received a net cash payment of $9.33 million with respect to these twenty
Swaps. In addition, ten of the thirty Swaps were terminated, in return for a
net payment to Airplanes Group of $1.92 million. In aggregate therefore,
Airplanes Group received a net cash inflow of $11.25 million, but will now have
higher ongoing swap costs as a result of re-calibrating the Swaps to current
market rates. Simultaneously with these terminations, Airplanes Group put in
place a replacement Swap to maintain a fully hedged position. These adjustments
and terminations released the positive value in Airplanes Group's Swaps and
allowed that value to be available to be applied to additional payments of the
Class A Principal Adjustment Amount. These transactions were conducted in
accordance with Airplanes Group's interest rate risk management policies.
The realized gain on the termination of these Swaps has been deferred and is
being recognized over the life of the hedged transaction in accordance with the
guidance provided in ET Issue No. 84-7, "Termination of Interest Rate Swaps".
Additional interest rate exposure will arise to the extent that lessees owing
fixed rate rental payments default and interest rates have declined between the
contract date of the lease and the date of default. This exposure is managed
through the purchase of Swaptions. Airplanes Group purchases Swaptions which,
if exercised, will allow Airplanes Group to enter into interest rate swap
transactions under which it will pay floating amounts and received fixed
amounts. These Swaptions can be exercised in the event of defaults by lessees
owing fixed rate rental payments in circumstances where interest rates have
declined since the contract date of such leases. Because not all lessees making
fixed rate rental payments are expected to default and not all lessee defaults
are expected to occur following a decline in interest rates, Airplanes Group
purchases Swaptions in aggregate in a notional amount less than the full extent
40
of the exposure associated with the lessees making fixed rate rental payments.
This notional amount (the `Target Hedge') will be varied from time to time to
reflect, inter alia, changes in the mix of payment bases under future leases
and in the prevailing level of interest rates. From time to time the
Administrative Agent may also sell at market value or unwind part or all of the
outstanding Swaptions, for example, to reflect any decreases in the Target
Hedge. In the period from March 28, 1996 to December 31, 2000, Airplanes Group
purchased Swaptions for interest rate swaps with an aggregate notional
principal balance of $483 million and sold Swaptions with an aggregate notional
principal balance of $194 million and Swaptions with an aggregate notional
principal of $39 million matured. The net aggregate notional principal balance
of Swaptions at December 31, 2000 therefore amounted to $250 million. The
aggregated estimated fair market values of the Swaptions at December 31, 2000
was $0.5 million.
Airplanes Group Swaption Book at December 31, 2000
Notional amount
Swaption as at December 31, 2000(i) Effective Final Fixed Rate Estimated Fair Market
No. ($ Millions) Date Maturity Date Receivable(ii) Value as at
December 31, 2000($)
1 7 02/17/98 01/15/01 5.00% 3,896
2 24 01/15/98 05/15/01 5.00% 26,044
3 50 09/15/98 12/15/01 5.30% 1,622
4 30 01/15/98 04/15/02 5.00% 151,677
5 20 02/17/98 09/15/02 5.10% 32,838
6 14 04/15/98 09/15/02 5.10% 22,986
7 15 03/16/98 03/15/03 5.10% 36,757
8 50 07/15/98 03/15/03 5.10% 116,578
9 20 04/15/98 06/15/03 5.10% 54,884
10 10 09/15/98 09/15/03 5.30% 771
11 10 02/16/99 02/15/04 5.40% 56,783
--- -------
250 504,836
-------
(i) Under each Swaption, if exercised, Airplanes Group would receive fixed
amounts at the rate indicated above on a monthly fixed 30/360 unadjusted
basis.
(ii) Under each Swaption, if exercised, Airplanes Group would pay floating
amounts at one month LIBOR, which resets monthly.
Through the use of the Swaps, Swaptions and other interest rate hedging
products, it is Airplanes Group's policy not to be adversely exposed to
material movements in interest rates. There can be no assurance, however, that
Airplanes Group's interest rate risk management strategies will be effective in
this regard.
The Directors of Airplanes Limited and the Controlling Trustees of Airplanes
Trust are responsible for reviewing and approving the overall interest rate
management policy and transaction authority limits. Specific hedging contracts
are approved by officers of the Administrative Agent acting within the overall
policies and limits. Counterparty risk is monitored on an ongoing basis.
Counterparties are subject to the prior approval of the Directors of Airplanes
Limited and the Controlling Trustees of Airplanes Trust. Airplanes Group's
counterparties consist of the affiliates of major U.S. and European financial
institutions which have credit ratings, or which provide collateralisation
arrangements, consistent with maintaining the ratings of the Class A Notes.
41
The quantitative disclosure and other statements in this section are
forward-looking statements that involve risks and uncertainties. Although
Airplanes Group's policy is to limit its exposure to changes in interest rates,
it could suffer higher cashflow losses as a result of actual future changes in
interest rates. It should also be noted that Airplanes Group's future exposure
to interest rate movements will change as the composition of its lease
portfolio changes or if it issues new subclasses of additional notes or
refinancing notes with different interest rate provisions from the Notes.
Please refer to "Risk Factors" in the Airplanes Group Form 10-K filed with the
SEC on June 29, 2000 for more information about risks, especially lessee credit
risk, that could intensify Airplanes Group's exposure to changes in interest
rates.
42
Part II. Other Information
Item 1. Legal Proceedings
VASP
On November 5, 1992, debis AirFinance Ireland obtained a preliminary injunction
for repossession and export of thirteen aircraft and three spare engines (the
"Repossessed Assets") from VASP, a Brazilian airline, which had defaulted under
its lease agreements with debis AirFinance Ireland. On May 10, 1993, at a full
hearing, the Brazilian courts gave a decision fully validating the repossession
injunction. VASP appealed this decision to the High Court of the State of Sao
Paolo (the "High Court"). On December 18, 1996, the High Court found in favor
of VASP in its appeal against the court order granting debis AirFinance Ireland
repossession and export of the Repossessed Assets. debis AirFinance Ireland was
instructed to return the Repossessed Assets for lease by VASP under the terms
of the original lease agreements between debis AirFinance Ireland and VASP,
within thirty days of notification by VASP that it requires return of the
assets. The decision of the High Court was stayed pending a number of
clarificatory motions by both sides before the same court. In responding to
those motions, the High Court granted VASP the right to seek damages against
debis AirFinance Ireland in lieu of the return of the Repossessed Assets. debis
AirFinance Ireland is appealing the December 1996 decision and the court's
responses to the clarificatory motions. As part of its appeals, debis
AirFinance Ireland filed a recession action with the High Court which seeks to
overturn the decisions of the High Court and which seeks a stay on the December
1996 decision pending determination of its recession action.
Seven of the thirteen aircraft which were repossessed by debis AirFinance
Ireland from VASP following the 1992 injunction and the 1993 decision are now
owned by Airplanes Group although none of them are habitually based in Brazil.
However, a number of these aircraft operate into Brazil from time to time. The
judgment of the High Court only applies to those assets which are the subject
matter of the proceedings. VASP sought to have debis AirFinance Ireland return
the Repossessed Assets, in connection with which the High Court served notice
on debis AirFinance Ireland for return of the Repossessed Assets for the
account, and at the risk, of VASP. debis AirFinance Ireland has challenged a
number of matters relating to the notice, including its validity. In addition,
VASP filed a petition for calculation of the amount which it alleges should be
paid by debis AirFinance Ireland, based on the High Court decision, seeking
damages in respect of (i) debis AirFinance Ireland's alleged failure to comply
with the court order requiring return of the Repossessed Assets and (ii) the
period during which VASP was prevented from using the Repossessed Assets. debis
AirFinance Ireland has challenged VASP's petition on the basis that if VASP
believes it has an action for alleged damages against debis AirFinance Ireland
in respect of the period during which VASP was prevented from using the
Repossessed Assets, VASP must commence such an action in accordance with normal
Brazilian court procedures before a court of first instance. These preliminary
matters still await a decision by the lower court. Before the High Court, debis
AirFinance Ireland successfully challenged VASP's petition for calculation of
alleged damages arising from debis AirFinance Ireland's alleged failure to
comply with the court order requiring return of the Repossessed Assets. As a
consequence, VASP, should it seek to recover such alleged damages, will have to
prove the existence and extent of its alleged damages. The only immediate risk
to the Repossessed Assets would arise where they are located in Brazil and
where VASP was successful in enforcing its judgement having sought repossession
rather than damages.
43
In January 2000, the High Court, pending further consideration of debis
AirFinance Ireland's recession action, stayed all proceedings by VASP which
seek to implement the 1996 decision.
debis AirFinance Ireland has informed Airplanes Group that it has been advised
that the December 1996 decision of the High Court in this matter is incorrect
as a matter of Brazilian law. debis AirFinance Ireland has further informed
Airplanes Group that it is actively pursuing all courses of action that may be
available to it, including appeals to superior courts and intends to defend its
position vigorously and to pursue each of its claims and counter claims against
VASP. debis AirFinance Ireland has advised Airplanes Group that it believes the
outcome of these matters will not have a material adverse effect on Airplanes
Group's liquidity, results of operations or financial condition.
Other Matters
Prior to the transfer of the Class E Notes held by debis AirFinance Ireland and
its subsidiary, AerFi, Inc. to General Electric Capital Corporation, AeroUSA,
Inc. and AeroUSA 3, Inc., both Connecticut corporations, filed United States
federal consolidated tax returns and certain state and local tax returns with
AerFi, Inc., and its subsidiaries. There are ongoing tax audits by certain
state and local tax authorities with respect to taxes previously reported by
AerFi, Inc. and its subsidiaries. debis AirFinance Ireland believes that none
of these audits will have a material adverse impact upon the liquidity, results
of operations, financial condition or liquidity of AeroUSA Inc or AeroUSA 3,
Inc.
Subsequent to November 20, 1998, AeroUSA Inc. and AeroUSA 3, Inc. file
consolidated United States federal tax returns and certain state and local tax
returns with General Electric Capital Corporation, such returns being filed on
a calendar basis. In addition, on November 20, 1998, Airplanes Trust entered
into a Tax Sharing Agreement with General Electric Capital Corporation which is
substantially similar to the Tax Sharing Agreement between Airplanes Trust and
AerFi, Inc. which was in place prior to that date, and which terminated on
November 20, 1998, except with respect to those provisions relating to the
position prior to the date on which AeroUSA, Inc. and AeroUSA 3, Inc. were
deconsolidated from AerFi, Inc.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.2 Memorandum and Articles of Association of Airplanes Limited
(incorporating all amendments up to and including
September 29, 2000).
3.3 Amendment dated September 29, 2000 by and among
Wilmington Trust Company, as Delaware Trustee, and
the Controlling Trustees referred to therein, to the
Airplanes US Trust Amended and Restated Trust
Agreement among AerFi Inc., as Settlor, Wilmington
Trust Company and the Controlling Trustees.
(b) Reports on Form 8-K: Filed for event dates November 17, 2000;
December 15, 2000; January 15, 2001 (relating to the monthly
report to holders of the Certificates).
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 13, 2001 AIRPLANES LIMITED
By: /s/ WILLIAM M. MCCANN
--------------------------
William M. McCann
Director and Principal
Accounting Officer
Date: February 13, 2001 AIRPLANES U.S. TRUST
By: /s/ WILLIAM M. MCCANN
--------------------------
William M. McCann
Controlling Trustee and
Principal Accounting Officer
APPENDIX 1
Particulars of the Portfolio as of January 31, 2000 by reference to Appraised
Value at January 31, 2001 are contained in the table below
Date of Appraised
Manufac- Value
Aircraft Engine Serial ture/Con- 31-Jan-01
Region Country Lessee Type Configuration Number Note version FMV
- ------ ------- ------ -------- ------------- ------ ---- --------- ---------
Africa Tunisia Tuninter B737-300 CFM56-3C1 24905 1-Feb-91 22,000
Tunisia Nouvelair Tunisie MD83 JT8D-219 49672 1-Jul-88 17,640
Asia & Far East Pakistan Pakistan Int Airline A300-B4-200 CF6-50C2 269 11-Aug-83 8,960
Indonesia PT Mandala Airline B737-200A JT8D-17 21685 1-Jan-79 4,563
Indonesia PT Mandala Airline B737-200A JT8D-15 22278 19-Mar-80 5,590
Indonesia PT Mandala Airline B737-200A JT8D-17A 22803 14-Feb-83 4,907
Indonesia PT Mandala Airline B737-200A JT8D-17A 22804 1-Feb-83 6,077
Indonesia PT Mandala Airline B737-200A JT8D-17A 23023 30-Mar-83 5,277
Bangladesh GMG Airlines DHC8-300 PW123 307 1-Dec-91 7,140
South Korea Asiana Airlines B737-400 CFM56-3C1 24493 14-Jul-89 21,897
South Korea Asiana Airlines B737-400 CFM56-3C1 24520 21-Dec-89 22,050
Indonesia Garuda B737-400 CFM56-3C1 24683 7-Aug-90 23,020
Philippines Philippine Airline B737-400 CFM56-3C1 24684 1-Apr-90 22,827
Philippines Air Philippines B737-300 CFM56-3B1 24770 1-Oct-90 19,603
China China Southern B737-500 CFM56-3C1 24897 26-Feb-91 19,383
Malaysia Air Asia Sdn. Bhd. B737-300 CFM56-3C1 24907 1-Mar-91 21,930
China China Southern B737-500 CFM56-3C1 25182 3-Feb-92 18,517
China China Southern B737-500 CFM56-3C1 25183 14-Feb-92 20,543
China China Southern B737-500 CFM56-3C1 25188 12-Mar-92 18,873
China Xinjiang B757-200 RB211-535E4-37 26156 25-Nov-92 37,517
Taiwan Far Eastern Air Transport MD83ort JT8D-219 49950 1-Nov-91 20,667
Indonesia Merpati Nusantara Airlines B737-200A JT8D-15 22368 1-Sep-80 4,880
Australia & New Zealand Australia National Jet Systems DHC8-100 PW121 229 1-Sep-90 6,040
New Zealand New Zealand Int'l Airlines METRO-III TPE331-11 705 1-Aug-88 973
New Zealand New Zealand Int'l Airlines METRO-III TPE331-11 711 1-Mar-88 997
New Zealand New Zealand Int'l Airlines METRO-III TPE331-11 712 1-Jun-88 982
Europe Turkey MNG Airlines Cargo A300C4-200 CF6-50C2 83 1-May-79 14,680
United Kingdom Titan Airways Limited ATR42-300 PW120 109 14-Oct-88 4,647
United Kingdom Titan Airways Limited ATR42-300 PW120 113 18-Nov-88 4,720
France Air France A320-200 CFM56-5A3 203 1-Sep-91 27,147
France Air France A320-200 CFM56 220 1-Sep-91 26,740
Netherlands Schreiner Airways DHC8-300 PW123 232 20-Oct-90 6,480
Netherlands Schreiner Airways DHC8-300 PW123 244 1-Dec-90 6,777
Netherlands Schreiner Airways DHC8-300 PW123 266 20-Mar-91 7,113
Netherlands Schreiner Airways DHC8-300 PW123 276 13-May-91 7,177
Netherlands Schreiner Airways DHC8-300 PW123 283 1-Sep-91 7,123
Norway Wideroe's Flyveselskap a/s DHC8-300 PW123 293 1-Oct-91 7,117
United Kingdom Airtours International A320-200 CFM56 294 2-Apr-92 27,300
United Kingdom Brymon Airways DHC8-300 PW123 296 1-Oct-91 7,477
Netherlands Schreiner Airways DHC8-300 PW123 298 1-Apr-92 7,460
Netherlands Schreiner Airways DHC8-300 PW123 300 1-Apr-92 7,457
United Kingdom Airtours International A320-200 CFM56 301 22-Apr-92 27,880
United Kingdom Brymon Airways DHC8-300 PW123 334 8-Oct-92 7,747
Norway Wideroe's Flyveselskap a/s DHC8-300 PW123 342 1-Dec-92 7,933
United Kingdom Airtours International A320-200 CFM56 348 17-Jun-92 27,670
United Kingdom Airtours International A320-200 CFM56-5A3 349 30-Oct-92 28,207
Bulgaria Balkan Bulgarian Airlines B737-300 CFM56-3B2 23749 1-May-87 17,753
Bulgaria Balkan Bulgarian Airlines B737-300 CFM56-3B2 23923 1-Apr-88 17,667
Turkey Pegasus B737-400 CFM56-3C1 24345 1-Jun-89 21,773
Turkey Pegasus B737-400 CFM56-3C1 24687 25-May-90 22,720
Spain Futura B737-400 CFM56-3C1 24689 3-Jul-90 22,883
Spain Futura B737-400 CFM56-3C1 24690 1-Jul-90 23,073
Spain Air Europa B737-400 CFM56-3C1 24906 24-Feb-91 23,920
Czech Republic Travel Servis a.s. B737-400 CFM56-3C1 24911 1-Apr-91 23,883
Spain Air Europa B737-400 CFM56-3C1 24912 14-Jun-91 24,290
Turkey Turk Hava Yollari B737-400 CFM56-3C1 24917 24-Jun-91 24,607
Italy Air One SpA B737-300 CFM56-3C1 25179 12-Feb-92 22,563
Spain Futura B737-400 CFM56-3C1 25180 21-Jan-92 24,857
Turkey Turk Hava Yollari B737-400 CFM56-3C1 25181 3-Feb-92 25,153
Turkey Turk Hava Yollari B737-400 CFM56-3C1 25184 2-Mar-92 25,450
Italy Air One SpA B737-300 CFM56-3C1 25187 14-Mar-92 22,720
Hungary Malev B737-400 CFM56-3C1 25190 7-Apr-92 23,953
Turkey Turk Hava Yollari B737-400 CFM56-3C1 25261 9-Apr-92 25,220
Turkey Turk Hava Yollari B737-500 CFM56-3C1 25288 16-Jun-92 19,987
Turkey Turk Hava Yollari B737-500 CFM56-3C1 25289 12-Jun-92 19,983
Turkey Turk Hava Yollari B737-400 CFM56-3C1 26065 1-May-92 25,267
Hungary Malev B737-400 CFM56-3C1 26069 2-Nov-92 25,763
Hungary Malev B737-400 CFM56-3C1 26071 13-Nov-92 25,897
Sweden Britannia Airways B757-200 RB2110-535E4-37 26151 23-Jul-92 36,933
Italy Eurofly S.P.A MD83 JT8D-219 49390 1-Apr-86 15,747
Macedonia Interimpex-Avioimpex MD83 JT8D-219 49442 29-Apr-87 15,963
Spain Spanair MD83 JT8D-219 49620 1-Jul-88 18,100
Spain Spanair MD83 JT8D-219 49624 1-Aug-88 17,400
Spain Spanair MD83 JT8D-219 49626 22-Oct-88 17,740
Italy Eurofly S.P.A MD83 JT8D-219 49631 14-Jun-89 18,367
Spain Spanair MD83 JT8D-219 49709 1-Dec-88 17,537
Italy Meridiana SpA MD83 JT8D-219 49792 1-Nov-89 17,967
Italy Meridiana SpA MD83 JT8D-219 49935 26-Sep-90 20,320
Spain Spanair MD83 JT8D-219 49936 6-Oct-90 19,933
Spain Spanair MD83 JT8D-219 49938 1-Dec-90 18,903
France Air Liberte S.A. MD83 JT8D-219 49943 1-Jul-91 20,517
Italy Meridiana SpA MD83 JT8D-219 49951 25-Aug-91 21,073
Latin America Argentina Aerolineas Argentinas S.A. B737-200A JT8D-17 21192 1-Mar-76 4,200
Argentina LAPA B737-200A JT8D-17 21193 1-Jul-76 3,587
Mexico Mexicana B727-200A JT8D-17R 21346 1-Oct-80 3,837
Mexico Mexicana B727-200A JT8D-17R 21600 1-Nov-80 3,250
Chile Lan Chile Airlines B737-200A JT8D-15 22397 1-Feb-81 4,870
Chile Lan Chile Airlines B737-200A JT8D-17A 22407 1-Sep-80 5,043
Argentina LAPA B737-200A JT8D-15 22633 1-Mar-81 5,457
Chile Lan Chile Airlines B737-200A JT8D-17A 23024 1-May-83 6,173
Mexico Aeromexico DC9-32 JT8D-17 48125 1-Apr-80 3,353
Mexico Aeromexico DC9-32 JT8D-17 48126 1-Apr-80 4,300
Mexico Aeromexico DC9-32 JT8D-17 48127 1-Jul-80 3,327
Mexico Aeromexico DC9-32 JT8D-17 48128 1-Aug-80 3,840
Mexico Aeromexico DC9-32 JT8D-17 48129 1-Nov-80 3,580
Mexico Aeromexico DC9-32 JT8D-17 48130 1-Dec-80 3,720
Antigua Liat DHC8-100 PW120-A 113 1-Sep-88 4,433
Antigua Liat DHC8-100 PW120-A 140 1-Mar-89 4,500
Antigua Liat DHC8-100 PW120-A 144 1-Mar-89 4,803
Netherlands
Antilles ALM DHC8-300C PW123 230 1-Feb-91 7,083
Netherlands
Antilles ALM DHC8-300C PW123 242 1-Nov-90 7,053
Antigua Liat DHC8-100 PW120-A 270 1-May-91 5,420
Colombia ACES ATR42-300 PW121-5A1 284 1-Jan-92 6,150
Mexico Mexicana F100 TAY650-15 11266 17-Aug-90 11,527
Brazil TAM F100 TAY650-15 11284 31-Jul-90 11,230
Brazil TAM F100 TAY650-15 11285 1-Aug-90 11,240
Brazil TAM F100 TAY650-15 11304 27-Feb-91 11,593
Brazil TAM F100 TAY650-15 11305 19-Apr-91 12,120
Mexico Mexicana F100 TAY650-15 11309 16-May-91 11,850
Mexico Mexicana F100 TAY650-15 11319 5-Apr-91 11,697
Brazil TAM F100 TAY650-15 11336 5-Jun-91 11,960
Mexico Mexicana F100 TAY650-15 11339 1-Jul-91 12,420
Brazil TAM F100 TAY650-15 11347 1-Oct-91 12,117
Brazil TAM F100 TAY650-15 11348 6-Aug-91 12,327
Brazil TAM F100 TAY650-15 11371 19-Dec-91 12,720
Mexico Mexicana F100 TAY650-15 11374 20-Jan-92 12,197
Mexico Mexicana F100 TAY650-15 11375 1-Dec-92 12,697
Mexico Mexicana F100 TAY650-15 11382 1-Jan-93 12,690
Mexico Mexicana F100 TAY650-15 11384 1-Jan-93 12,500
Brazil Rio Sul B737-500 CFM56-3C1 25185 18-Feb-92 20,343
Brazil Rio Sul B737-500 CFM56-3C1 25186 11-Mar-92 19,953
Brazil Rio Sul B737-500 CFM56-3C1 25191 10-Apr-92 19,633
Brazil Rio Sul B737-500 CFM56-3C1 25192 14-Apr-92 20,247
Colombia Avianca B767-200ER PW4056 25421 14-Jan-92 43,003
Brazil Rio Sul B737-500 CFM56-3C1 26075 23-Oct-92 21,013
Colombia Avianca B757-200 RB211-535E4-37 26154 22-Sep-92 36,217
Chile Lan Chile Airlines B767-300ER PW4060 26204 1-Oct-92 57,397
Chile Aircraft Int. Leasing Limited DC8-71F CFM56-2C1 45810 9-Apr-92 12,913
Colombia Tampa DC8-71F CFM56-2C1 45849 9-Mar-91 12,927
Colombia Tampa DC8-71F CFM56-2C1 45945 19-May-92 13,577
Chile Aircraft Int. Leasing Limited DC8-71F CFM56-2C1 45970 15-Oct-92 13,633
Chile Aircraft Int. Leasing Limited DC8-71F CFM56-2C1 45976 10-Aug-91 13,270
Colombia Tampa DC8-71F CFM56-2C1 46066 24-Apr-91 13,273
Brazil VARIG MD11 CF6-80C2-D1F 48499 31-Dec-91 60,187
Brazil VARIG MD11 CF6-80C2-D1F 48500 1-Mar-92 62,883
Brazil VARIG MD11 CF6-80C2-D1F 48501 1-Sep-92 63,080
Mexico Aeromexico MD82 JT8D-217 49660 1-Mar-88 16,677
Mexico Aeromexico MD82 JT8D-217A 49667 21-Jan-88 16,550
Mexico Aeromexico MD87 JT8D-219 49673 1-Dec-88 12,150
Trinidad &
Tobago BWIA International MD83 JT8D-219 49789 23-Sep-89 17,917
Colombia Avianca MD83 JT8D-219 49939 26-Oct-90 19,250
Colombia Avianca MD83 JT8D-219 49946 18-Jul-91 19,553
Colombia Avianca MD83 JT8D-219 53120 29-Jul-92 20,783
Colombia Avianca MD83 JT8D-219 53125 2-Apr-92 20,547
North America United States
of America Hawaiian Airlines DC9-51 JT8D-17 47742 1-Jun-77 3,260
United States
of America Hawaiian Airlines DC9-51 JT8D-17 47784 1-May-79 3,203
United States
of America Hawaiian Airlines DC9-51 JT8D-17 47796 1-Apr-79 3,327
United States
of America Hawaiian Airlines DC9-51 JT8D-17 48122 26-Jan-81 3,803
Canada Air Canada A320-200 CFM56-5A1 174 1-Apr-91 25,247
Canada Air Canada A320-200 CFM56-5A1 175 1-Apr-91 24,927
Canada Air Canada A320-200 CFM56-5A1 232 1-Oct-91 26,070
United States
of America Idefix ATR42-300 PW120 249 1-Jun-91 5,843
United States
of America Allegheny Airlines DHC8-100 PW121 258 1-Jan-91 5,493
Canada Air Canada A320-200 CFM56-5A1 284 9-Mar-92 27,500
Canada Air Canada A320-200 CFM56-5A1 309 13-May-92 27,627
Canada Air Canada A320-200 CFM56-5A1 404 1-Jan-94 30,203
United States
of America Polar Air Cargo B747-200SF JT9D-7Q 21730 27-Mar-98 30,223
United States
of America Frontier Airlines, Inc. B737-300 CFM56-3B1 23177 1-Apr-86 14,670
United States
of America America West B737-300QC CFM56-3B1 23499 1-Jun-86 17,773
United States
of America America West B737-300QC CFM56-3B1 23500 1-Jun-86 17,840
Canada Air Canada B767-300ER PW4060 24948 19-Jul-91 52,830
United States
of America TWA B767-300ER PW4060 25411 15-Jan-92 57,733
Canada Air Canada B767-300ER PW4060 26200 1-Sep-92 58,580
United States
of America BAX Global DC8-71F CFM56-2C1 45811 30-May-91 13,760
United States
of America BAX Global DC8-71F CFM56-2C1 45813 28-Apr-92 13,353
United States
of America BAX Global DC8-71F CFM56-2C1 45946 23-Apr-92 13,153
United States
of America BAX Global DC8-71F CFM56-2C1 45971 13-Feb-92 12,893
United States
of America BAX Global DC8-71F CFM56-2C1 45973 27-Feb-92 13,127
United States
of America BAX Global DC8-71F CFM56-2C1 45978 23-Apr-93 13,180
United States
of America BAX Global DC8-71F CFM56-2C1 45993 23-Jun-93 13,247
United States
of America BAX Global DC8-71F CFM56-2C1 45994 1-Sep-94 13,277
United States
of America Emery Worldwide DC8-71F CFM56-2C1 45996 29-Oct-92 13,877
United States
of America Emery Worldwide DC8-71F CFM56-2C1 45997 7-Dec-93 13,260
United States
of America BAX Global DC8-71F CFM56-2C1 45998 21-May-93 13,137
United States
of America BAX Global DC8-71F CFM56-2C1 46065 12-Jan-92 13,663
United States
of America Emery Worldwide DC8-73CF CFM56-2C1 46091 1-Dec-89 16,797
United States
of America TWA MD83 JT8D-219 49575 1-Oct-87 17,090
United States
of America American Airlines MD83 JT8D-219 49941 1-Dec-90 19,873
United States
of America American Airlines MD83 JT8D-219 49949 5-Aug-91 20,363
Canada Air Canada B737-200A JT8D-9A 21639 (I) 1-Nov-78 1,279
Canada Air Canada B737-200A JT8D-9A 21712 (I) 1-Feb-79 1,397
United States
of America Vanguard Airlines B737-200A JT8D-15 21735 1-Jun-79 5,653
Canada Air Canada B737-200A JT8D-9A 22873 (I) 1-Jul-82 4,848
United States
of America Vanguard Airlines B737-200A JT8D-15 22979 1-Mar-83 6,757
Others Kazakstan Air Kazakstan B737-200A JT8D-15 22090 1-May-80 4,993
Kazakstan Air Kazakstan B737-200A JT8D-15 22453 1-Mar-81 5,470
Ukraine Ukraine International B737-200A JT8D-17A 22802 1-Feb-83 6,520
Off Lease Off Lease Off Lease A300-B4-200 CF6-50C2 131 (ii) 7-Feb-81 8,797
Off Lease Off Lease B737-200A JT8D-17 21196 (ii) 1-Jul-76 3,327
Off Lease Off Lease B737-200A JT8D-15 22369 (ii) 1-Sep-80 4,850
Off Lease Off Lease DHC8-300 PW123 267 (ii) 4-Apr-91 7,067
Off Lease Off Lease B737-400 CFM56-3C1 24691 (ii) 9-Aug-90 23,223
Off Lease Off Lease B737-400 CFM56-3C1 26081 (ii) 10-Mar-93 25,557
3,135,367
(I) Aircraft Lease Receivable Book Values are used for the aircraft subject to
Finance Leases rather than appraised values.
(ii) Of the off lease aircraft at January 31, three were available for marketing
and three were subject to leases and have delivered to the relevant
lessees since January 31.