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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended June 30, 2000

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from to

Commission File No. 0-18368

----------------

AIRFUND International Limited Partnership
(Exact name of registrant as specified in its charter)

Massachusetts 04-3037350
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

88 Broad Street, Boston, MA 02110
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (617) 854-5800

(Former name, former address and former fiscal year, if changed since last
report.)

----------------

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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court 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 [_] No [_]

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AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

FORM 10-Q

INDEX

Page
-----

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Statement of Financial Position
at June 30, 2000 and December 31, 1999............................... 3

Statement of Operations
for the three and six months ended June 30, 2000 and 1999............ 4

Statement of Cash Flows
for the six months ended June 30, 2000 and 1999...................... 5

Notes to the Financial Statements..................................... 6-11

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................ 12-16

PART II. OTHER INFORMATION:

Items 1-6...................................................................... 17

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

STATEMENT OF FINANCIAL POSITION

June 30, 2000 and December 31, 1999
(Unaudited)

June 30, December 31,
2000 1999
----------- ------------

ASSETS
Cash and cash equivalents.......................................... $ 1,062,913 $ 3,180,907
Accounts receivable--affiliate..................................... -- 4,888
Investment in real estate venture.................................. 1,788,460 --
Equipment at cost, net of accumulated depreciation of $8,440,704
and
$7,912,079 at June 30, 2000 and December 31, 1999, respectively .. 11,677,607 12,206,232
----------- -----------
Total assets................................................... $14,528,980 $15,392,027
=========== ===========

LIABILITIES AND PARTNERS' CAPITAL
Notes payable...................................................... $ 3,485,292 $ 3,250,113
Accrued interest................................................... 29,338 44,209
Accrued liabilities................................................ 230,886 922,069
Accrued liabilities--affiliate..................................... 9,285 18,602
Deferred rental income............................................. 84,764 170,088
----------- -----------
Total liabilities.............................................. 3,839,565 4,405,081
----------- -----------
Partners' capital (deficit):
General Partner................................................... (1,164,526) (1,149,649)
Limited Partnership Interests (3,040,000 Units; initial purchase
price of $25 each)............................................... 11,853,941 12,136,595
----------- -----------
Total partners' capital........................................ 10,689,415 10,986,946
----------- -----------
Total liabilities and partners' capital........................ $14,528,980 $15,392,027
=========== ===========

The accompanying notes are an integral part of these financial statements.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

STATEMENT OF OPERATIONS

For the three and six months ended June 30, 2000 and 1999
(Unaudited)

For the three months ended For the six months ended
June 30, June 30,
-----------------------------------------------------
2000 1999 2000 1999
------------- ------------------------- ------------

Income:
Lease revenue................. $ 260,137 $ 835,093 $ 622,435 $ 1,671,368
Interest income............... 17,244 38,170 54,409 76,117
------------- ------------ ----------- ------------
Total income............... 277,381 873,263 676,844 1,747,485
------------- ------------ ----------- ------------

Expenses:
Depreciation.................. 185,296 511,105 528,625 1,022,209
Interest expense.............. 77,422 107,712 179,003 236,152
Equipment management fees--
affiliate.................... 13,007 41,754 31,122 83,568
Operating expenses--
affiliate.................... 104,865 94,007 224,085 152,139
Partnership's share of
unconsolidated
real estate venture's loss... 9,779 -- 11,540 --
------------- ------------ ----------- ------------
Total expenses............. 390,369 754,578 974,375 1,494,068
------------- ------------ ----------- ------------

Net income (loss).............. $ (112,988) $ 118,685 $ (297,531) $ 253,417
============= ============ =========== ============
Net income (loss)
per limited partnership unit.. $ (.03) $ .04 $ (.09) $ .08
============= ============ =========== ============

The accompanying notes are an integral part of these financial statements.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

STATEMENT OF CASH FLOWS

For the six months ended June 30, 2000 and 1999
(Unaudited)

2000 1999
---------- ----------

Cash flows provided by (used in) operating activities:
Net income (loss)......................................... $ (297,531) $ 253,417
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation............................................ 528,625 1,022,209
Partnership's share of unconsolidated real estate
venture's loss......................................... 11,540 --
Changes in assets and liabilities
Decrease in:
Accounts receivable--affiliate.......................... 4,888 --
Increase (decrease) in:
Accrued interest........................................ (14,871) (21,717)
Accrued liabilities..................................... (691,183) (51,623)
Accrued liabilities--affiliate.......................... (9,317) 32,098
Deferred rental income.................................. (85,324) 11,206
---------- ----------
Net cash provided by (used in) operating activities... (553,173) 1,245,590
---------- ----------

Cash flows used in investing activities:
Investment in real estate venture....................... (1,800,000) --
---------- ----------
Net cash used in investing activities................. (1,800,000) --
---------- ----------

Cash flows provided by (used in) financing activities:
Proceeds from notes payable............................. 666,217 --
Principal payments--notes payable....................... (431,038) (1,424,706)
---------- ----------
Net cash provided by (used in) financing activities... 235,179 (1,424,706)
---------- ----------
Net decrease in cash and cash equivalents................. (2,117,994) (179,116)
Cash and cash equivalents at beginning of period.......... 3,180,907 3,540,736
---------- ----------
Cash and cash equivalents at end of period................ $1,062,913 $3,361,620
========== ==========

Supplemental disclosure of cash flow information:
Cash paid during the period for interest................. $ 193,874 $ 257,869
========== ==========

The accompanying notes are an integral part of these financial statements.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2000
(Unaudited)
Note 1--Basis of Presentation

The financial statements presented herein are prepared in conformity with
generally accepted accounting principles for interim financial information and
with the instructions for preparing Form 10-Q under Rule 10-01 of Regulation S-
X of the Securities and Exchange Commission and are unaudited. As such, these
financial statements do not include all information and footnote disclosures
required under generally accepted accounting principles for complete financial
statements and, accordingly, the accompanying financial statements should be
read in conjunction with the footnotes presented in the 1999 Annual Report.
Except as disclosed herein, there have been no material changes to the
information presented in the footnotes to the 1999 Annual Report.

In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at June 30, 2000 and December 31, 1999 and results of operations for
the three and six month periods ended June 30, 2000 and 1999 have been made and
are reflected.

Note 2--Cash

At June 30, 2000, AIRFUND International Limited Partnership (the
"Partnership") had $948,517 invested in federal agency discount notes,
repurchase agreements secured by U.S. Treasury Bills or interests in U.S.
Government securities, or other highly liquid overnight investments.

Note 3--Revenue Recognition

Rents are payable to the Partnership monthly and quarterly and no
significant amounts are calculated on factors other than the passage of time.
All leases are accounted for as operating leases and are noncancellable. Rents
received prior to their due dates are deferred. In certain instances, the
Partnership may enter renewal or re-lease agreements which expire beyond the
Partnership's anticipated dissolution date. This circumstance is not expected
to prevent the orderly wind-up of the Partnership's business activities as the
General Partner and Equis Financial Group Limited Partnership ("EFG") would
seek to sell the then-remaining equipment assets either to the lessee or to a
third party, taking into consideration the amount of future noncancellable
rental payments associated with the attendant lease agreements. See also Note 7
to the financial statements presented in the Partnership's 1999 Annual Report
regarding the Class Action Lawsuit. Future minimum rents of $789,179 are due
for the year ending June 30, 2001.

Note 4--Equipment

The following is a summary of equipment owned by the Partnership at June 30,
2000. Remaining Lease Term (Months), as used below, represents the number of
months remaining from June 30, 2000 under contracted lease terms. A Remaining
Lease Term equal to zero reflects equipment held for sale or re-lease. In the
opinion of EFG, the acquisition cost of the equipment did not exceed its fair
market value.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

Remaining
Lease Term Equipment,
Equipment Type (Months) at Cost
-------------- ---------- -----------

One McDonnell-Douglas MD-82 (Finnair)..... 10 $ 6,881,219
One McDonnell-Douglas MD-82............... 0 6,881,219
Three Boeing 737-2H4...................... 0 6,355,873
-----------
Total equipment cost 20,118,311
Accumulated depreciation 8,440,704
-----------
Equipment, net of
accumulated depreciation $11,677,607
===========

The cost of each of the Partnership's aircraft represents a proportionate
ownership interest. The remaining interests are owned by other affiliated
partnerships sponsored by EFG. All Partnerships individually report, in
proportion to their respective ownership interests, their respective shares of
assets, liabilities, revenues, and expenses associated with the aircraft.

Certain of the Partnership's aircraft and the related lease payment streams
were used to secure the Partnership's term loans with third-party lenders. The
preceding summary includes leveraged equipment having an aggregate original
cost of approximately $13,762,000 and a net book value of $9,566,286 at June
30, 2000.

At June 30, 2000, the three Boeing 737-2H4 jet aircraft and one of the
McDonnell-Douglas MD-82 aircraft were held for sale or re-lease. These aircraft
had a total cost of approximately $13,237,000 and a net book value of
$6,894,322 at June 30, 2000. Each of the Partnership's interests in the Boeing
737 aircraft, formerly leased to Southwest Airlines Inc., had an original cost
of approximately $2,119,000 and a net book value of $703,774 at June 30, 2000.
The Partnership's interest in the McDonnell-Douglas MD-82 aircraft, formerly
leased to Finnair OY, had an original cost of approximately $6,881,000 and a
net book value of $4,783,000 at June 30, 2000. The aircraft were returned by
the lessees upon their respective lease term expirations in December 1999 and
January 2000. In July 2000, one of the Boeing 737 aircraft was sold, resulting
in proceeds to the Partnership of approximately $846,000 and a net gain, for
financial statement purposes, of approximately $142,000. The General Partner is
attempting to remarket the remaining aircraft.

Note 5--Investment in Real Estate Venture

On March 8, 2000, the Partnership and 10 affiliated partnerships (the
"Exchange Partnerships") collectively loaned $32.0 million to Echelon
Residential Holdings LLC ("Echelon Residential Holdings"), a newly formed real
estate development company. Echelon Residential Holdings is owned by several
investors, including James A. Coyne, Executive Vice President of EFG. Mr.
Coyne, in his individual capacity, is the only equity investor in Echelon
Residential Holdings related to EFG.

The Partnership's participation in the loan is $1,800,000. Echelon
Residential Holdings, through a wholly-owned subsidiary (Echelon Residential
LLC), used the loan proceeds to acquire various real estate assets from Echelon
International Corporation, a Florida-based real estate company. The loan has a
term of 30 months, maturing on September 8, 2002, and an annual interest rate
of 14% for the first 24 months and 18% for the final six months. Interest
accrues and compounds monthly and is payable at maturity. In connection with
the transaction, Echelon Residential Holdings has pledged a

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

security interest in all of its right, title and interest in and to its
membership interests in Echelon Residential LLC to the Exchange Partnerships as
collateral.

Using the guidance set forth in the Third Notice to Practitioners by the
American Institute of Certified Public Accountants ("AICPA") in February 1986
entitled "ADC Arrangements" (the "Third Notice"), the Partnership has evaluated
this investment to determine whether loan, joint venture or real estate
accounting is appropriate. Such determination affects the Partnership's balance
sheet classification of the investment and the recognition of revenues derived
therefrom. The Third Notice was issued to address those real estate
acquisition, development and construction arrangements where a lender has
virtually the same risk and potential awards as those of owners or joint
ventures. Emerging Issues Task Force ("EITF") 86-21, "Application of the AICPA
Notice to Practitioners regarding Acquisition, Development and Construction
Arrangements to Acquisition of an Operating Property" expanded the
applicability of the Third Notice to entities other than financial
institutions.

Based on the applicability of the Third Notice, EITF 86-21 and consideration
of the economic substance of the transaction, the loan is considered to be an
investment in a real estate venture for accounting purposes. In accordance with
the provisions of Statement of Position No. 78-9, "Accounting for Investments
in Real Estate Ventures", the Partnership reports its share of income or loss
of Echelon Residential Holdings under the equity method of accounting.

The Partnership's March 31, 2000 Form 10-Q previously reported the
investment in real estate venture as a loan receivable and recorded interest
income and receivable on the Partnership's March 31, 2000 financial statements.
The financial statements below have been adjusted to account for the loan as an
investment in real estate venture as of and for the three months ended March
31, 2000. The adjustments to the financial statements previously filed in the
Partnership's March 31, 2000 Form 10-Q represent less than 1% of the
Partnership's capital and include the reversal of $16,800 of interest income
recorded on this loan and a recognition of $1,761 for the Partnership's share
of losses in Echelon Residential Holdings.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

STATEMENT OF FINANCIAL POSITION

March 31, 2000
(Unaudited)

ASSETS
Cash and cash equivalents......................................... $ 1,212,344
Accounts receivable--affiliate.................................... 24
Investment in real estate venture................................. 1,798,239
Equipment at cost, net of accumulated depreciation of $8,255,398.. 11,862,913
-----------
Total assets.................................................. $14,873,520
===========

LIABILITIES AND PARTNERS' CAPITAL
Notes payable..................................................... $ 3,719,591
Accrued interest.................................................. 30,647
Accrued liabilities............................................... 232,264
Accrued liabilities--affiliate.................................... 6,775
Deferred rental income............................................ 81,840
-----------
Total liabilities............................................. 4,071,117
-----------
Partners' capital (deficit):
General Partner.................................................. (1,158,876)
Limited Partnership Interests (3,040,000 Units; initial purchase
price of $25 each).............................................. 11,961,279
-----------
Total partners' capital....................................... 10,802,403
-----------
Total liabilities and partners' capital....................... $14,873,520
===========

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

STATEMENT OF OPERATIONS

For the three months ended March 31, 2000
(Unaudited)

Income:
Lease revenue....................................................... $ 362,298
Interest income..................................................... 37,165
---------
Total income..................................................... 399,463
---------

Expenses:
Depreciation........................................................ 343,319
Interest expense.................................................... 101,581
Equipment management fees--affiliate................................ 18,115
Operating expenses--affiliate....................................... 119,230
Partnership's share of unconsolidated real estate venture's loss.... 1,761
---------
Total expenses................................................... 584,006
---------

Net loss............................................................. $(184,543)
=========
Net loss per limited partnership unit................................ $ (0.06)
=========

The Partnership's accompanying financial statements as of and for the six
months ended June 30, 2000 are presented in accordance with the guidance above.
The investment is net of the Partnership's share of losses in this real estate
venture. For the six months ended June 30, 2000, the Partnership's share of
losses is $11,540 and is reflected on the Statement of Operations as
"Partnership's share of unconsolidated real estate venture's loss".

The summarized financial information for Echelon Residential Holdings as of
and for the six months ended June 30, 2000 is as follows:

(Unaudited)

Total assets $54,704,360
Total liabilities $50,914,020
Total equity $ 3,790,340

Total revenues $ 905,751
Total expenses $ 2,593,700
Net loss $(1,687,949)

Note 6--Related Party Transactions

All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during the six month periods ended
June 30, 2000 and 1999, which were paid or accrued by the Partnership to EFG or
its Affiliates, are as follows:

For the six months ended
June 30,
-------------------------
2000 1999
------------ ------------

Equipment management fees........................... $ 31,122 $ 83,568
Administrative charges.............................. 21,205 45,619
Reimbursable operating expenses due to third
parties............................................ 202,880 106,520
------------ ------------
Total............................................. $ 255,207 $ 235,707
============ ============

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

All rents and the proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the
Partnership. At June 30, 2000, there were no funds owed to the Partnership
from EFG.

Note 7--Notes Payable

Notes payable at June 30, 2000 consisted of installment notes payable to
banks of $3,485,292. The installment notes bear an interest rate of either
8.225% or a fluctuating interest rate based on LIBOR (approximately 6.52% at
June 30, 2000) plus a margin. The Partnership has a balloon payment obligation
at the expiration of the renewal lease term related to the aircraft on lease to
Finnair OY of $432,267, which matures in April 2001. In addition, the
Partnership has a balloon payment obligation of $2,320,824 which matures in
August 2000. The General Partner is currently negotiating with the existing
lender to extend the term of this indebtedness.This obligation is related to
the Partnership's interest in a McDonnell-Douglas MD-82 aircraft that was
returned in January 2000 upon its lease term expiration. This aircraft is being
stored in a warehouse pending its remarketing. The carrying amount of notes
payable approximates fair value at June 30, 2000.

All of the Partnership's debt matures during the year ending June 30, 2001.

Note 8--Legal Proceedings

As described more fully in the Partnership's Annual Report on Form 10-K for
the year ended December 31, 1999, the Partnership is a Nominal Defendant in a
Class Action Lawsuit, the outcome of which could significantly alter the nature
of the Partnership's organization and its future business operations.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

FORM 10-Q
PART I. FINANCIAL INFORMATION

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Certain statements in this quarterly report of AIRFUND International Limited
Partnership (the "Partnership") that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to a variety of risks and
uncertainties. There are a number of factors that could cause actual results to
differ materially from those expressed in any forward-looking statements made
herein. These factors include, but are not limited to, the outcome of the Class
Action Lawsuit described in Note 7 to the financial statements presented in the
Partnership's 1999 Annual Report, the remarketing of the Partnership's
aircraft, and the performance of the Partnership's non-aircraft assets.

Three and six months ended June 30, 2000 compared to the three and six months
ended June 30, 1999

As an equipment leasing partnership, the Partnership was organized to
acquire and lease a portfolio of commercial jet aircraft subject to lease
agreements with third parties. Upon its inception in 1989, the Partnership
purchased three used commercial jet aircraft and a proportionate interest in a
fourth aircraft, which were leased by major carriers engaged in passenger
transportation. Initially, each aircraft generated rental revenues pursuant to
primary-term lease agreements. In 1991, one of the Partnership's original
aircraft was sold to a third party and a portion of the sale proceeds was
reinvested in a proportionate interest in another aircraft. Subsequently, all
of the aircraft in the Partnership's original portfolio have been re-leased,
renewed, exchanged for other aircraft, or sold. At June 30, 2000, the
Partnership owned a proportionate interest in five aircraft, one of which is
currently on lease. The four aircraft off lease and the remaining aircraft,
upon expiration of its lease agreement, will be re-leased or sold depending on
prevailing market conditions and the assessment of such conditions by Equis
Financial Group Limited Partnership ("EFG") to obtain the most advantageous
economic benefit. Presently, the Partnership is a Nominal Defendant in a Class
Action Lawsuit, the outcome of which could significantly alter the nature of
the Partnership's organization and its future business operations. See Note 7
to the financial statements presented in the Partnership's 1999 Annual Report.
Pursuant to the Amended and Restated Agreement and Certificate of Limited
Partnership (the "Restated Agreement, as amended"), the Partnership is
scheduled to be dissolved by December 31, 2004.

Results of Operations

For the three and six months ended June 30, 2000, the Partnership recognized
lease revenue of $260,137 and $622,435, respectively, compared to $835,093 and
$1,671,368, respectively, for the same periods in 1999. The decrease in lease
revenue from 1999 to 2000 resulted from the expiration of lease terms related
to the Partnership's interest in three Boeing 737-2H4 aircraft and a McDonnell-
Douglas MD-82 aircraft. The amount of future lease revenues in the near term
will be dependent upon the results of ongoing remarketing efforts related to
aircraft currently off lease. Subsequently, the Partnership's lease revenue is
expected to decline due to aircraft sales and lease term expirations.

The lease terms related to the three Boeing 737-2H4 aircraft, in which the
Partnership holds a proportionate interest, expired on December 31, 1999. In
July 2000, one of the Boeing 737-2H4 aircraft was sold resulting in
approximately $846,000 of proceeds and a net gain, for financial statement
purposes, of approximately $142,000 for the Partnership's proportional interest
in the aircraft. The remaining two aircraft are currently being stored in a
warehouse, while the General Partner pursues remarketing alternatives.

The Partnership recognized lease revenue of $625,104 related to these three
aircraft during the six months ended June 30, 1999.

One of the McDonnell-Douglas MD-82 aircraft, in which the Partnership holds
a proportionate interest, is currently on lease to Finnair OY. This lease,
which was renewed upon the expiration of the primary lease term in April 1999,
will expire in April 2001. The Partnership recognized lease revenue of $526,119
and $522,541 related to this aircraft during the six months ended June 30, 2000
and 1999, respectively. The lease term associated with the second McDonnell-
Douglas MD-82 aircraft, in which the Partnership holds an ownership interest,
expired in January 2000. That aircraft, which is being stored in a warehouse
pending its remarketing, generated lease revenue to the Partnership of $96,316
and $523,723, respectively, during the six months ended June 30, 2000 and 1999.

The Partnership's aircraft interests represent proportionate ownership
interests. The remaining interests are owned by other affiliated partnerships
sponsored by EFG. All partnerships individually report, in proportion to their
respective ownership interests, their respective shares of assets, liabilities,
revenues and expenses associated with the aircraft.

The ultimate realization of residual value for the Partnership's aircraft
will be dependent upon many factors, including EFG's ability to sell and re-
lease the aircraft. Changing market conditions, industry trends, technological
advances, and many other events can converge to enhance or detract from asset
values at any given time. EFG attempts to monitor these changes and the airline
industry in general in order to identify opportunities which may be
advantageous to the Partnership and which will maximize total cash returns for
each aircraft.

The total economic value realized upon final disposition of each aircraft is
comprised of all primary lease term revenue generated from that aircraft,
together with its residual value. The latter consists of cash proceeds realized
upon the aircraft's sale in addition to all other cash receipts obtained from
renting the aircraft on a re-lease, renewal or month-to-month basis.
Consequently, the amount of any future gain or loss reported in the financial
statements will not necessarily be indicative of the total residual value the
Partnership achieved from leasing the aircraft.

Interest income for the three and six months ended June 30, 2000 was $17,244
and $54,409, respectively, compared to $38,170 and $76,117 for the same periods
in 1999. Interest income is typically generated from temporary investment of
rental receipts and equipment sale proceeds in short-term instruments. On March
8, 2000, the Partnership utilized $1,800,000 of available cash for a loan to
Echelon Residential Holdings LLC ("Echelon Residential Holdings"). (See Note 5
to the financial statements herein).The amount of future interest income is
expected to fluctuate as a result of changing interest rates and the amount of
cash available for investment, among other factors.

During the three and six months ended June 30, 2000, the Partnership
incurred interest expense of $77,422 and $179,003, respectively, compared to
$107,712 and $236,152 for the same periods in 1999. Interest expense will
continue to decrease in future periods as the principal balance of notes
payable is reduced through the application of rent receipts to outstanding
debt.

Management fees were $13,007 and $31,122 for the three and six month periods
ended June 30, 2000, respectively, compared to $41,754 and $83,568,
respectively, for the same periods in 1999. Management fees are based on 5% of
gross lease revenue.

Operating expenses were $104,865 and $224,085, respectively, for the three
and six months ended June 30, 2000 compared to $94,007 and $152,139,
respectively, for the same periods in 1999. The primary reason for the increase
in operating expenses from 1999 to 2000 is storage costs associated with the
Partnership's off-lease aircraft. Operating expenses include administrative
charges and professional service costs, such as audit and legal fees, as well
as printing, distribution and remarketing expenses. In certain cases, repairs
and maintenance costs may be incurred in connection with aircraft being
remarketed.

Depreciation expense was $185,296 and $528,625, respectively, for the three
and six months ended June 30, 2000, compared to $511,105 and $1,022,209 for the
same periods in 1999.

For the three and six months ended June 30, 2000, the Partnership's share of
losses in Echelon Residential Holdings is $9,779 and $11,540, respectively, and
is reflected on the Statement of Operations as "Partnership's share of
unconsolidated real estate venture's loss". See further discussion below.

Liquidity and Capital Resources and Discussion of Cash Flows
The Partnership by its nature is a limited life entity. As an aircraft
leasing program, the Partnership's principal operating activities derive from
aircraft rental transactions. Accordingly, the Partnership's principal source
of cash from operations is provided by the collection of periodic rents. These
cash inflows are used to satisfy debt service obligations associated with
leveraged leases, and to pay management fees and operating costs. Operating
activities generated a net cash outflow of $553,173 and a net cash inflow of
$1,245,590 for the six months ended June 30, 2000 and 1999, respectively.
Overall, expenses associated with rental activities, such as management fees,
and net cash flow from operating activities will decline as the Partnership
remarkets its aircraft. The Partnership, however, will continue to incur costs
to facilitate the remarketing of its aircraft in the future. Ultimately, the
Partnership will dispose of all aircraft under lease. This will occur through
sale transactions whereby each aircraft will be sold to the existing lessee or
to a third party. Generally, this will occur upon expiration of each aircraft's
primary or renewal/re-lease term. See additional discussion below regarding a
loan made by the Partnership to Echelon Residential Holdings in March 2000.

At June 30, 2000, the Partnership was due aggregate future minimum lease
payments of $789,179 from contractual lease agreements, a portion of which will
be used to amortize the principal balance of notes payable of $3,485,292. (See
Notes 3 and 7 to the financial statements.) At the expiration of the individual
lease term underlying the Partnership's future minimum lease payments, the
Partnership will sell the aircraft or enter into a re-lease or renewal
agreement. See the discussion above regarding an aircraft sale in July 2000. In
addition, the General Partner and EFG currently are attempting to remarket the
three aircraft that are currently off lease. Such remarketing activities will
result in the realization of additional cash inflows in the form of sale
proceeds or rents from renewals and re-leases, the timing and extent of which
cannot be predicted with certainty.

The Partnership obtained long-term financing in connection with the
McDonnell Douglas MD-82 and the Boeing 737-2H4 aircraft. The corresponding note
agreements are recourse only to the specific equipment financed and to the
minimum rental payments contracted to be received during the debt amortization
periods. As rental payments are collected, they are used to repay associated
indebtedness. The Partnership has a balloon payment obligation of $432,267
related to the indebtedness associated with the McDonnell Douglas MD-82
aircraft leased to Finnair OY, which matures in April 2001. The debt associated
with the Boeing 737-2H4 aircraft was fully amortized at December 31, 1999.

In addition, in February 2000, the Partnership and certain affiliated
investment programs (collectively, the "Programs") refinanced the indebtedness
which matured in January 2000 associated with a McDonnell-Douglas MD-82
aircraft formerly leased to Finnair OY. In addition to refinancing the existing
indebtedness of $3,370,000, the Programs received additional debt proceeds of
$1,350,000 required to perform a D-Check on the aircraft. The Partnership
received $666,217 from such proceeds. The note bears a fluctuating interest
rate based on LIBOR plus a margin with interest payments due monthly. The
Partnership's aggregate share of the refinanced and new indebtedness was
$2,320,824, which matures in August 2000. The General Partner is currently
negotiating with the existing lender to extend the term of this indebtedness.
The aircraft was returned in January 2000 upon its lease term expiration and is
currently being stored in a warehouse pending its remarketing.

In connection with a preliminary settlement agreement for the Class Action
Lawsuit described in Note 7 to the financial statements presented in the
Partnership's 1999 Annual Report, the Partnership is permitted to invest in new
equipment or other business activities, subject to certain limitations. On
March 8, 2000, the Partnership and 10 affiliated partnerships (the "Exchange
Partnerships") collectively loaned $32.0 million to Echelon Residential
Holdings, a newly-formed real estate development company owned by several
investors, including James A. Coyne, Executive Vice President of EFG. Mr.
Coyne, in his individual capacity, is the only equity investor in Echelon
Residential Holdings related to EFG.

The Partnership's participation in the loan is $1,800,000. Echelon
Residential Holdings, through a wholly-owned subsidiary (Echelon Residential
LLC), used the loan proceeds to acquire various real estate assets from Echelon
International Corporation, a Florida-based real estate company. The loan
has a term of 30 months, maturing on September 8, 2002, and an annual interest
rate of 14% for the first 24 months and 18% for the final six months. Interest
accrues and compounds monthly and is payable at maturity. In connection with
the transaction, Echelon Residential Holdings has pledged a security interest
in all of its right, title and interest in and to its membership interests in
Echelon Residential LLC to the Exchange Partnerships as collateral.

As discussed in Note 5 in the Partnership's financial statements, the loan
is considered to be an investment in a real estate venture for accounting
purposes. In accordance with the provisions of Statement of Position No. 78-9,
"Accounting for Investments in Real Estate Ventures", the Partnership reports
its share of income or loss in Echelon Residential Holdings under the equity
method of accounting.

There are no formal restrictions under the Restated Agreement, as amended,
that materially limit the Partnership's ability to pay cash distributions,
except that the General Partner may suspend or limit cash distributions to
ensure that the Partnership maintains sufficient working capital reserves to
cover, among other things, operating costs and potential expenditures, such as
refurbishment costs to remarket aircraft upon lease expiration. Liquidity is
especially important as the Partnership matures and sells aircraft, because the
remaining aircraft portfolio consists of fewer revenue-producing assets that
are available to cover prospective cash disbursements. Insufficient liquidity
could inhibit the Partnership's ability to sustain its operations or maximize
the realization of proceeds from remarketing its remaining aircraft.

The management and remarketing of aircraft can involve, among other things,
significant costs and lengthy remarketing initiatives. Although the
Partnership's lessees are required to maintain the aircraft during the period
of lease contract, repair, maintenance, and/or refurbishment costs at lease
expiration can be substantial. For example, an aircraft that is returned to the
Partnership meeting minimum airworthiness standards, such as flight hours or
engine cycles, nonetheless may require heavy maintenance in order to bring its
engines, airframe and other hardware up to standards that will permit its
prospective use in commercial air transportation. At June 30, 2000, the
Partnership had ownership interests in five commercial jet aircraft. Three of
the aircraft are Boeing 737 aircraft formerly leased to Southwest Airlines,
Inc. ("Southwest"). The lease agreements for each of these aircraft expired on
December 31, 1999 and Southwest elected to return the aircraft. The aircraft
are Stage 2 aircraft, meaning that they are prohibited from operating in the
United States after December 31, 1999 unless they are retro-fitted with hush-
kits to meet Stage 3 noise regulations promulgated by the Federal Aviation
Administration. The cost to hush-kit an aircraft, such as the Partnership's
Boeing 737s, can approach $2.0 million. In July 2000, one of the Boeing 737
aircraft was sold. At this time, the General Partner is attempting to remarket
the remaining Boeing 737 aircraft without further capital investment by either
re-leasing the aircraft to a user outside of the United States or selling the
aircraft as they are without retro-fitting the aircraft to conform to Stage 3
standards. The remaining two aircraft in the Partnership's portfolio already
are Stage 3 compliant.

One of these aircraft had a lease term that expired in January 2000 and is
being held in storage pending the outcome of ongoing remarketing efforts. The
other aircraft has a lease term expiring in April 2001.

The Partnership's capital account balances for federal income tax and for
financial reporting purposes are different primarily due to differing
treatments of income and expense items for income tax purposes in comparison to
financial reporting purposes, generally referred to as permanent or timing
differences. See Note 6 to the financial statements presented in the
Partnership's 1999 Annual Report. For instance, selling commissions and
organization and offering costs pertaining to syndication of the Partnership's
limited partnership units are not deductible for federal income tax purposes,
but are recorded as a reduction of partners' capital for financial reporting
purposes. Therefore, such differences are permanent differences between capital
accounts for financial reporting and federal income tax purposes. Other
differences between the bases of capital accounts for federal income tax and
financial reporting purposes occur due to timing differences consisting of the
cumulative difference between income or loss for tax purposes and financial
statement income or loss. The principal component of the cumulative difference
between financial statement income or loss and tax income or loss results from
different depreciation policies for book and tax purposes.

For financial reporting purposes, the General Partner has accumulated a
capital deficit at June 30, 2000. This is the result of aggregate cash
distributions to the General Partner being in excess of its capital
contribution of $1,000 and its allocation of financial statement net income or
loss. Ultimately, the existence of a capital deficit for the General Partner
for financial reporting purposes is not indicative of any further capital
obligations to the Partnership by the General Partner. The Restated Agreement,
as amended, requires that upon the dissolution of the Partnership, the General
Partner will be required to contribute to the Partnership an amount equal to
any negative balance which may exist in the General Partner's tax capital
account. At December 31, 1999, the General Partner had a positive tax capital
account balance.

The Partnership is a Nominal Defendant in a Class Action Lawsuit described
in Note 7 to the financial statements presented in the Partnership's 1999
Annual Report. The proposed settlement to that lawsuit, if effected, will
materially change the future organizational structure and business interests of
the Partnership, as well as its cash distribution policies. In addition, the
General Partner will continue to suspend the payment of quarterly cash
distributions pending final resolution of the Class Action Lawsuit.
Accordingly, future cash distributions are not expected to be paid until the
Class Action Lawsuit is adjudicated.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

FORM 10-Q

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
Response:
Refer to Note 8 to the financial statements herein.

Item 2. Changes in Securities
Response: None

Item 3. Defaults upon Senior Securities
Response: None

Item 4. Submission of Matters to a Vote of Security Holders
Response: None

Item 5. Other Information
Response: None

Item 6(a). Exhibits
27 Financial Data Schedule

Item 6(b). Reports on Form 8-K
Response: None

EXHIBIT INDEX
-------------

Exhibit Description
- ------- -----------
27 Financial Data Schedule

SIGNATURE PAGE

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on behalf of the registrant and in the capacity
and on the date indicated.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

By: AFG Aircraft Management Corporation, a
Massachusetts corporation and the General
Partner of the Registrant.

/s/ Michael J. Butterfield
By: ______________________________________________
Michael J. Butterfield
Treasurer of AFG Aircraft Management Corporation
(Duly Authorized Officer and
Principal Accounting Officer)

Date: August 14, 2000