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

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 September 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 [_]

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

FORM 10-Q

INDEX

Page
----

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

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

Statement of Operations
for the three and nine months ended September 30, 2000 and 1999........... 4

Statement of Cash Flows
for the nine months ended September 30, 2000 and 1999..................... 5

Notes to the Financial Statements............................................ 6-9

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................. 10-14

PART II. OTHER INFORMATION:

Items 1-6............................................................................. 15

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

STATEMENT OF FINANCIAL POSITION

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

September 30, December 31,
2000 1999
------------ -----------

ASSETS
Cash and cash equivalents................................................ $ 1,436,960 $ 3,180,907
Rents receivable......................................................... 62,200 -
Accounts receivable - affiliate.......................................... 37,702 4,888
Accounts receivable - other.............................................. 162,262 -
Investment in real estate venture........................................ 1,759,277 -
Equipment at cost, net of accumulated depreciation of $7,266,175 and
$7,912,079 at September 30, 2000 and December 31, 1999, respectively 10,733,512 12,206,232
------------- -------------
Total assets................................................... $ 14,191,913 $ 15,392,027
============= =============

LIABILITIES AND PARTNERS' CAPITAL
Notes payable............................................................ $ 3,246,175 $ 3,250,113
Accrued interest......................................................... 25,569 44,209
Accrued liabilities...................................................... 927,316 922,069
Accrued liabilities-affiliate............................................ 29,341 18,602
Deferred rental income................................................... 90,190 170,088
------------- -------------
Total liabilities.............................................. 4,318,591 4,405,081
------------- -------------
Partners' capital (deficit):
General Partner....................................................... (1,205,330) (1,149,649)
Limited Partnership Interests (3,040,000 Units; initial purchase
price of $25 each).................................................. 11,078,652 12,136,595
------------- -------------
Total partners' capital........................................ 9,873,322 10,986,946
------------- -------------
Total liabilities and partners' capital........................ $ 14,191,913 $ 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 nine months ended September 30, 2000 and 1999
(Unaudited)

For the three months ended For the nine months ended
September 30, September 30,
2000 1999 2000 1999
------------- ------------- ------------- -------------

Income:
Lease revenue........................... $ 352,390 $ 840,415 $ 974,825 $ 2,511,783
Interest income......................... 28,723 41,056 83,132 117,173
Gain on sale of equipment............... 142,721 - 142,721 -
------------- ------------- ------------- -------------
Total income..................... 523,834 881,471 1,200,678 2,628,956
------------- ------------- ------------- -------------
Expenses:
Depreciation............................ 240,321 515,286 768,946 1,537,495
Interest expense........................ 84,081 89,587 263,084 325,739
Equipment management fees--affiliate..... 17,619 42,021 48,741 125,589
Operating expenses--affiliate............ 968,723 48,349 1,192,808 200,488
Partnership's share of unconsolidated
real estate venture's loss............ 29,183 - 40,723 -
------------- ------------- ------------- -------------
Total expenses................... 1,339,927 695,243 2,314,302 2,189,311
------------- ------------- ------------- -------------
Net (loss) income ......................... $ (816,093) $ 186,228 $ (1,113,624) $ 439,645
============= ============= ============= =============
Net (loss) income
per limited partnership unit............ $ (0.26) $ 0.06 $ (0.35) $ 0.14
============= ============= ============= =============

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

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2000 and 1999
(Unaudited)

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

Cash flows provided by (used in) operating activities:
Net (loss) income ..................................................... $ (1,113,624) $ 439,645
Adjustments to reconcile net (loss) income to net cash (used in)
provided by operating activities:
Depreciation...................................................... 768,946 1,537,495
Gain on sale of equipment......................................... (142,721) -
Partnership's share of unconsolidated real estate venture's loss.. 40,723 -
Changes in assets and liabilities
Increase in:
Rents receivable.................................................. (62,200) (104,184)
Accounts receivable - affiliate................................... (32,814)
Accounts receivable - other....................................... (162,262) -
Increase (decrease) in:
Accrued interest.................................................. (18,640) (29,905)
Accrued liabilities............................................... 5,247 (85,177)
Accrued liabilities - affiliate................................... 10,739 4,812
Deferred rental income............................................ (79,898) 11,207
------------- -------------
Net cash (used in) provided by operating activities.......... (786,504) 1,773,893
------------- -------------
Cash flows provided by (used in) investing activities:
Investment in real estate venture................................. (1,800,000) -
Proceeds from equipment sale...................................... 846,495 -
------------- -------------
Net cash used in investing activities........................ (953,505) -
------------- -------------
Cash flows provided by (used in) financing activities:
Principal payments - notes payable................................ (670,155) (2,063,163)
Proceeds from notes payable Principal payments - notes payable.... 666,217
------------- -------------
Net cash used in financing activities........................ (3,938) (2,063,163)
------------- -------------
Net decrease in cash and cash equivalents.............................. (1,743,947) (289,270)
Cash and cash equivalents at beginning of period....................... 3,180,907 3,540,736
------------- --------------
Cash and cash equivalents at end of period............................. $ 1,436,960 $ 3,251,466
============= ==============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest............................ $ 281,724 $ 355,644
============= =============

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

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS

September 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 September 30, 2000 and December 31, 1999 and results of operations
for the three and nine month periods ended September 30, 2000 and 1999 have been
made and are reflected.

Note 2--Cash

At September 30, 2000, AIRFUND International Limited Partnership (the
"Partnership") had $1,320,604 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 $5,478,766, which include the
aircraft re-leases discussed in Note 4 herein, are due as follows:

For the year ending September 30,
2001...................... $1,890,375
2002...................... 1,364,256
2003...................... 1,331,699
2004...................... 892,436
----------
Total ............. $5,478,766
==========

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

Note 4--Equipment

The following is a summary of equipment owned by the Partnership at
September 30, 2000. Remaining Lease Term (Months), as used below, represents the
number of months remaining from September 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.

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

One McDonnell-Douglas MD-82 (Finnair)......... 10 $ 6,881,219
One McDonnell-Douglas MD-82 (Aero Mexico)..... 47 6,881,219
One Boeing 737-2H4 (Air Slovakia)............ 35 2,118,625
One Boeing 737-2H4............................ 0 2,118,624
-------------
Total equipment cost 17,999,687
Accumulated depreciation 7,266,175
-------------
Equipment, net of
accumulated depreciation $ 10,733,512
=============

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 $9,373,949 at September 30,
2000.

The Partnership entered into a three year re-lease agreement with Air
Slovakia for its proportionate interest in a Boeing 737-2H4 aircraft. Under the
terms of this agreement, the Partnership will receive rents of $1,139,513 over
the term of the lease. In addition, the Partnership entered into a four year
re-lease agreement with Aero-Mexico for its proportionate interest in a
McDonnell-Douglas MD-82 aircraft, effective September 2000. Under the terms of
this agreement, the Partnership will receive rents of $3,813,134 over the term
of the lease.

At September 30, 2000, one Boeing 737-2H4 jet aircraft was held for sale or
re-lease. The Partnership's interest in the Boeing 737 aircraft, formerly leased
to Southwest Airlines Inc., had an original cost of $2,118,624 and a net book
value of $679,782 at September 30, 2000. The aircraft was returned by the lessee
upon the lease term expiration in December 1999 and was remarketed in October
2000.

Note 5--Investment in Real Estate Venture

On March 8, 2000, the Partnership and 10 affiliated partnerships (the
"Exchange Partnerships") collectively loaned $32 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. In addition, certain affiliates of the General Partner made
loans to Echelon Residential Holdings in their individual capacities.

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

Note 5--Investment in Real Estate Venture (continued)

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.

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 accompanying financial statements as of and for the three
and nine months ended September 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 three and nine months ended September 30,
2000, the Partnership's share of losses is $29,183 and $40,723, respectively,
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
September 30, 2000 and for the period March 8, 2000 (commencement of operations)
through September 30, 2000 is as follows:

(Unaudited)
-------------
Total assets......... $ 63,457,759
Total liabilities.... $ 64,221,109
Total deficit........ $ (763,350)

Total revenues....... $ 1,565,618
Total expenses....... $ 5,109,324
Net loss............. $ (3,543,706)

AIRFUND INTERNATIONAL LIMITED PARTNERSHIP

NOTES TO THE FINANCIAL STATEMENTS--(Continued)

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 nine month periods ended
September 30, 2000 and 1999, which were paid or accrued by the Partnership to
EFG or its Affiliates, are as follows:

For the nine months ended
September 30,
2000 1999
---- ----

Equipment management fees................................ $ 48,741 $ 125,589
Administrative charges................................... 34,294 57,850
Reimbursable operating expenses due to third parties..... 1,158,514 142,638
------------ ----------
Total............................................... $ 1,241,549 $ 326,077
============ ==========

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 September 30, 2000, the Partnership was owed $37,702 by EFG for such funds
and the interest thereon. These funds were remitted to the Partnership in
October 2000.

Note 7--Notes Payable

Notes payable at September 30, 2000 consisted of installment notes payable
to banks of $3,246,175. The installment notes bear an interest rate of either
8.225% or a fluctuating interest rate based on LIBOR (approximately 6.62% at
September 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 matured in
August 2000. The General Partner is currently negotiating with the existing
lender to extend the term of this indebtedness and the Partnership is currently
paying interest-only on the outstanding debt amount. 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 and was re-leased in
September 2000. The carrying amount of notes payable approximates fair value at
September 30, 2000.

All of the Partnership's debt matures during the year ending September 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 nine months ended September 30, 2000 compared to the three and nine
months ended September 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 September 30, 2000, the
Partnership owned a proportionate interest in four aircraft, three of which are
currently on lease. The aircraft off lease and the three remaining aircraft,
upon expiration of their respective lease agreements, 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 nine months ended September 30, 2000, the Partnership
recognized lease revenue of $352,390 and $974,825, respectively, compared to
$840,415 and $2,511,783, 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 (one of which was sold in July 2000) and a McDonnell-Douglas MD-82
aircraft. See below for a detailed discussion of variances in lease revenue
between the respective periods. The amount of lease revenue in the near term
will increase due to the re-lease of the McDonnell-Douglas MD-82 aircraft and
one of the Boeing 737-2H4 aircraft in September 2000. Subsequently, the
Partnership's lease revenue is expected to decline due to primary and renewal
lease term expirations and aircraft sales.

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 lease terms related to the three Boeing 737-2H4 aircraft, in which the
Partnership held a proportionate interest, expired on December 31, 1999, and the
aircraft were stored pending their remarketing. In July 2000, one of the Boeing
737-2H4 aircraft was sold resulting in $846,495 of proceeds and a net gain, for
financial statement purposes, of $142,721 for the Partnership's proportional
interest in the aircraft. In September 2000, one of the Boeing 737-2H4 aircraft
was re-leased, with a lease term expiring in September 2003. Under the terms of
this re-lease agreement, the Partnership will receive rents of approximately
$1,139,513 over the term of the lease. The remaining Boeing 737-2H4 aircraft was
remarketed in October 2000. The Partnership recognized lease revenue of $27,131
and $937,656, respectively, related to these three aircraft during the nine
months ended September 30, 2000 and 1999.

The lease term associated with the second McDonnell-Douglas MD-82 aircraft,
in which the Partnership holds an ownership interest, expired in January 2000.
The aircraft was re-leased in September 2000, with a lease term expiring in
September 2004. Under the terms of this re-lease agreement, the Partnership will
receive rents of approximately $3,813,134 over the term of the lease. This
aircraft generated lease revenue to the Partnership of $158,515 and $788,527,
respectively, during the nine months ended September 30, 2000 and 1999.

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 gain or loss reported in the financial
statements is not necessarily indicative of the total residual value the
Partnership achieved from leasing the aircraft.

Interest income for the three and nine months ended September 30, 2000 was
$28,723 and $83,132, respectively, compared to $41,056 and $ 117,173 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 nine months ended September 30, 2000, the Partnership
incurred interest expense of $84,081 and $263,084, respectively, compared to
$89,587 and $325,739 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 $17,619 and $48,741 for the three and nine month
periods ended September 30, 2000, respectively, compared to $42,021 and
$125,589, respectively, for the same periods in 1999. Management fees are based
on 5% of gross lease revenue.

Operating expenses were $968,723 and $1,192,808, respectively, for the
three and nine months ended September 30, 2000 compared to $48,349 and $200,488,
respectively, for the same periods in 1999. The primary reason for the increase
in operating expenses from 1999 to 2000 is storage and remarketing costs
associated with the Partnership's off-lease aircraft and approximately $664,000
accrued for the Partnership's proportionate share of the cost of a required D-
check on the McDonnell-Douglas MD-82 aircraft leased to Finnair OY. In addition,
2000 operating expenses include approximately $40,000 of costs incurred in
connection with the Class Action Lawsuit discussed in Note 7 to the financial
statements presented in the Partnership's 1999 Annual Report. 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 $240,321 and $768,946, respectively, for the three
and nine months ended September 30, 2000, compared to $515,286 and $1,537,495
for the same periods in 1999.

For the three and nine months ended September 30, 2000, the Partnership's
share of losses in Echelon Residential Holdings is $29,183 and $40,723,
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 $786,504 and a net cash inflow of $1,773,893 for
the nine months ended September 30, 2000 and 1999, respectively. In the near
term, lease revenue is expected to increase due to the re-leases of aircraft
discussed above. Subsequently, aircraft remarketing activities will cause a
decline in the Partnership's lease revenue and corresponding sources of
operating cash. 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.

Cash realized for asset disposal transactions is reported under investing
activities on the accompanying Statement of Cash Flows. For the nine months
ended September 30, 2000, the Partnership realized $846,495 in equipment sales
proceeds. No assets sales occurred during in the same period in 1999. Future
cash inflows of cash from aircraft disposals will vary in timing and amount and
will be influenced by many factors including, but not limited to, the frequency
and timing of lease expirations, the type of aircraft being sold, their
condition and age, and future market conditions.

At September 30, 2000, the Partnership was due aggregate future minimum
lease payments of $5,478,766 from contractual lease agreements, a portion of
which will be used to amortize the principal balance of notes payable of
$3,246,175. (See Notes 3 and 7 to the financial statements herein.) 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. 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 matured in August 2000. The General Partner is currently
negotiating with the existing lender to extend the term of this indebtedness and
the Partnership is currently paying interest-only on the outstanding debt
amount. The aircraft was returned in January 2000 upon its lease term expiration
and was re-leased in September 2000. See discussion above.

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 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. In addition, certain affiliates of the General Partner made
loans to Echelon Residential Holdings in their individual capacities.

As discussed in Note 5 to the Partnership's financial statements herein,
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.

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 September 30, 2000, the Partnership had ownership interests in four
commercial jet aircraft. Two 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. In September 2000 and October 2000, the aircraft were re-leased
and remarketed, respectively, to users outside of the United States. The
remaining two aircraft in the Partnership's portfolio have lease agreements that
expire in April 2001 and September 2004, respectively.

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 September 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: November 14, 2000