AIRPLANES LTD - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
Form 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2002
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

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, ST. HELIER 1100 NORTH MARKET STREET,
JERSEY, JE4 8PX RODNEY SQUARE NORTH
CHANNEL ISLANDS WILMINGTON, DELAWARE 19890-0001
(011 44 1534 609 000) (1-302-651-1000)

(Addresses and telephone numbers, including area codes, of Registrants'
principal executive offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT
None

(Title of class)

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 or Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

2

PART I

ITEM 1. BUSINESS

INTRODUCTION

Airplanes Limited ("AIRPLANES LIMITED") is a limited liability company
formed under the laws of Jersey, Channel Islands. Airplanes U.S. Trust
("AIRPLANES TRUST") is a Delaware business trust. "AIRPLANES GROUP" refers to
Airplanes Limited and Airplanes Trust, and in this report, we use "WE," "US" and
"OUR" to refer to Airplanes Group and its subsidiaries and Airplanes Pass
Through Trust. We are in the business of leasing aircraft to aircraft operators
around the world. At March 31, 2002, we owned 186 aircraft (the "AIRCRAFT"), 180
of which were on lease to 64 lessees in 33 countries.

On March 28, 1996, we established eight separate pass through trusts to
issue and sell $4,048 million in aggregate principal amount of subclass A-1,
A-2, A-3, A-4 and A-5 and class B, C and D pass through certificates in an
underwritten offering. We used the proceeds from this offering, together with
the proceeds from the sale of the class E notes of Airplanes Limited and
Airplanes Trust to GPA Group plc (now known as debis AirFinance Ireland plc), to
acquire a portfolio of 229 aircraft from GPA Group and its subsidiaries. We use
the rental payments that we receive from leasing the aircraft to pay interest
and principal on this debt. On March 16, 1998, we established four additional
pass through trusts to issue and sell $2,437 million in aggregate principal
amount of subclass A-6, A-7 and A-8 and class B certificates in connection with
the refinancing of our subclass A-1, A-2 and A-3 and class B certificates. On
November 20, 1998, GE Capital acquired a majority of the class E notes from GPA
Group (then known as AerFi Group and now known as debis AirFinance Ireland) and
its subsidiaries. On that date, a subsidiary of AerFi Group also granted GE
Capital an option to acquire the residual interest in Airplanes Trust. See below
at "Airplanes Trust" for more information about the option. The subclass A-5
certificates were fully repaid as of May 15, 1998. We established a new pass
through trust on March 15, 2001 to issue and sell $750 million in aggregate
principal amount of subclass A-9 certificates which rank equally in right of
payment with our outstanding subclass A-6 and A-8 certificates. We used the
proceeds from this offering to refinance our subclass A-4 and A-7 certificates
and the corresponding subclass A-4 and A-7 notes.

AIRPLANES PASS THROUGH TRUST

"AIRPLANES PASS THROUGH TRUST" and the "TRUST" refer to all the pass
through trusts created under the Airplanes Pass Through Trust Agreement dated
March 28, 1996 (the "TRUST AGREEMENT") among Airplanes Limited, Airplanes Trust
and Bankers Trust Company (now known as Deutsche Bank Trust Company Americas),
as trustee (the "TRUSTEE"), except where it is clear that this term means only a
particular pass through trust. The certificates issued by each pass through
trust each represent a fractional undivided beneficial interest in two
corresponding classes or subclasses of notes issued and cross-guaranteed by
Airplanes Limited and Airplanes Trust pursuant to indentures dated as of March
28, 1996 (as amended or supplemented, the "INDENTURES") they entered into with
Bankers Trust Company (now known as Deutsche Bank Trust Company Americas), as
trustee (the "INDENTURE TRUSTEE"), and held by that trust. The two corresponding
classes of notes and guarantees held by each trust are the principal sources of
payment for the class or subclass of certificates issued by that trust.

AIRPLANES LIMITED

Airplanes Limited is a special purpose limited liability company formed on
November 3, 1995 under the laws of Jersey, Channel Islands. Its sole purposes
are to (a) acquire, own, manage, maintain, lease, re-lease, modify and sell
(subject to restrictions under its indenture) the aircraft, (b) finance and
refinance these activities, including guaranteeing the obligations of its
subsidiaries and of Airplanes Trust, (c) manage its interest rate and currency
risks, and (d) engage in other activities related to the aircraft and their
financing.

Airplanes Limited's principal assets are the intercompany loans it has
advanced to its subsidiaries and 95% of the capital stock of Airplanes Holdings
Limited. As of March 31, 2002, Airplanes Holdings owned a total of 172 aircraft
directly and through its aircraft-owning subsidiaries, and owned a number of
aircraft-leasing subsidiaries which lease aircraft from the aircraft-owning
subsidiaries and sublease them to lessees. The remaining 5% of the capital stock
of Airplanes Holdings is owned by GECAS. See below "Risk Factors -- Risks
3

Relating to Tax" for a discussion of the tax benefits of this 5% ownership by
GECAS and the risk of losing these benefits. Airplanes Limited has no ownership
or leasehold interests in any real property.

For information on the capital stock of Airplanes Limited, including a
discussion of annual dividends, see "Item 5. Market for Registrants' Common
Equity and Related Shareholder Matters."

Airplanes Limited is managed by a board of directors, which is currently
composed of five directors. See "Item 10. Directors And Executive Officers Of
The Registrants -- Directors and Controlling Trustees" for details on these
directors. Airplanes Limited does not have any employees or executive management
of its own and relies solely on service providers to service, lease and re-lease
aircraft and perform other executive and administrative responsibilities. For a
description of the services provided by the service providers, see "Item 10.
Directors and Executive Officers of the Registrants -- The Servicer" and "-- The
Administrative Agent and Cash Manager."

We have taken steps to structure Airplanes Limited and its acquisition of
the aircraft-owning and aircraft-leasing subsidiaries from GPA Group (now known
as debis AirFinance Ireland) in 1996 to ensure that its assets would not be
consolidated with the assets of debis AirFinance Ireland and would not otherwise
become available to its creditors in any bankruptcy or insolvency proceeding
involving debis AirFinance Ireland or any of its affiliates. For a description
of the risks if these steps are not effective, see below "Risk Factors -- Risks
Relating to Bankruptcy."

AIRPLANES TRUST

Airplanes Trust is a Delaware statutory business trust formed in November
1995. Its sole purposes are to (a) acquire, own, manage, maintain, lease,
re-lease, modify and sell (subject to restrictions under its indenture) the
aircraft, (b) finance and refinance these activities, including guaranteeing the
obligations of its subsidiaries and of Airplanes Limited, (c) manage its
interest rate and currency risks and (d) engage in other activities related to
the aircraft and their financing.

Airplanes Trust's principal assets are the intercompany loans it has
advanced to its subsidiaries and 100% of the capital stock of AeroUSA, which as
of March 31, 2002, owned 14 aircraft. The shares of AeroUSA and AeroUSA 3 are
held by separate voting trusts with First Security Bank of Utah, acting as
trustee, in order to satisfy the U.S. Federal Aviation Administration
regulations regarding the U.S. citizenship of the owners of U.S.-registered
aircraft. Airplanes Trust has no ownership or leasehold interests in any real
property.

debis AirFinance, Inc., a wholly-owned subsidiary of debis AirFinance
Ireland, holds the residual ownership interest in all of the property of
Airplanes Trust. In connection with the sale of the class E notes to GE Capital
by GPA Group (now known as debis AirFinance Ireland) and its subsidiaries in
1998, GPA, Inc. (now known as debis AirFinance, Inc.) granted an option to GE
Capital for it to purchase this residual ownership interest in Airplanes Trust
for $1.00. If GE Capital does not exercise this option before its expiry date,
which is 30 days after notice of the dissolution of the trust, the option will
become void. Upon repayment in full of all of the indebtedness of Airplanes
Trust and the dissolution of Airplanes Trust, legal title to the AeroUSA shares
and other property of Airplanes Trust will revert to debis AirFinance, Inc. or
GE Capital, if GE Capital has exercised its option.

Airplanes Trust has five controlling trustees, who are the same individuals
as those who currently serve as directors of Airplanes Limited, and a Delaware
trustee, Wilmington Trust Company. For information on its management, see "Item
10. Directors and Executive Officers of the Registrants." Airplanes Trust does
not have any employees or executive officers of its own and relies solely on
service providers to service, lease and re-lease the aircraft and perform other
executive and administrative responsibilities. For a description of these
services, see "Item 10. Directors and Executive Officers of the Registrants --
The Servicer" and "-- The Administrative Agent and Cash Manager."

We have taken steps to structure Airplanes Trust and its acquisition of the
aircraft-owning and aircraft-leasing subsidiaries from GPA Group (now known as
debis AirFinance Ireland) in 1996 to ensure that its assets would not be
consolidated with the assets of debis AirFinance Ireland and would not otherwise
become available to its creditors in any bankruptcy or insolvency proceeding
involving debis AirFinance Ireland or any of

4

its affiliates. For a description of the risks if these steps are not effective,
see below "Risk Factors -- Risks Relating to Bankruptcy."

RISK FACTORS

The following summarizes various risks and uncertainties which may
materially affect the ability of Airplanes Limited and Airplanes Trust to pay
interest, principal or any premium on the notes and hence our ability to pay
interest, principal or any premium on our certificates in full at or before
their respective final maturity dates. These risks and uncertainties are not the
only ones relevant to the certificates, the notes and guarantees, the trust or
Airplanes Group.

This Form 10-K contains forward-looking statements that involve risks and
uncertainties. In most cases, you can identify these forward-looking statements
by terms such as "may," "should," "expect," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," "continue" or similar terms that relate to
the future or express uncertainty. Our actual results could differ materially
from those anticipated in these forward-looking statements. In evaluating these
statements, you should specifically consider various factors, including the
risks outlined below, that may impact our results of operations.

RISKS RELATING TO PAYMENT ON THE NOTES AND CERTIFICATES

REDUCED CASH FLOWS ADVERSELY AFFECT JUNIOR NOTEHOLDERS AND
CERTIFICATEHOLDERS.

Administrative and lease expenses and certain other payments in the
ordinary course of business are senior to the notes in priority of payment and
are therefore payable before any payments are made on the notes (and thus the
corresponding certificates).

Additionally, minimum principal amounts on the class A and class B notes
are payable before interest on the class C and class D notes, and principal
adjustment amount on the class A notes is payable before scheduled principal
payments on the class C and class D notes. Since the appraised value of our
aircraft has declined at a rate faster than that originally assumed in the base
case assumptions in our original prospectus dated March 28, 1996 (the "1996 BASE
CASE"), we have been required to pay principal adjustment amount on the class A
notes with a consequential deferral of scheduled principal payments on the class
C and class D notes.

To the extent that we have sufficient available funds, we are required to
pay a minimum principal amount on the class A notes in order to maintain certain
loan to initial appraised value ratios. We are currently ahead of the required
class A minimum principal payment schedule to the extent of $110 million because
the accelerated principal payments resulting from payment of class A principal
adjustment amounts have enabled us to maintain those loan to initial appraised
value ratios. Accordingly, no payments are currently due in respect of the
minimum principal amount on the class A notes. However, our overall cash
performance since September 11, 2001, has been significantly weaker than was
assumed in the base case assumptions in our offering memorandum dated March 15,
2001 (the "2001 BASE CASE"), the reasons for which are discussed in "Item 7 --
Management's Discussions and Analysis of Financial Condition and Results of
Operations." In light of our current and expected cash performance, we expect
that we will not be able to continue paying class A principal adjustment amount
in full and therefore, in time, we will no longer be ahead of the required class
A minimum principal payment schedule. We expect this to occur in the latter half
of 2003, when we will have to recommence payments of minimum principal on the
class A notes. Since minimum principal on the class A notes ranks ahead of
interest and minimum principal on the class B notes and interest on the class C
and class D notes in the order of priority, and, given our current expectations
as to our future performance, we believe that our cash flows may be inadequate
to pay interest and minimum principal on the class B notes and interest on the
class C and D notes in the latter half of 2003.

Our actual results may differ from our current expectations, as further
explained in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Recent Developments." However, such
differences as may arise are only likely to affect the timing of when we may
cease to pay interest and minimum principal on the class B notes and interest on
the class C and D notes.

5

In the event that cash flows are inadequate to pay interest and minimum
principal on the class B notes and interest on the class C and D notes, it is
likely to be a long period of time before we will be able to resume making any
payments on these notes. Further, in these circumstances, we may be unable to
repay in full principal on some or all of these classes of notes by their final
maturity date. The more junior the class of notes is in the order of priority,
the greater the risk that we may be unable to repay in full principal on that
class of notes by its final maturity date. In addition, to the extent that we do
resume making payments on these notes, payments will be made according to the
priority of payment, commencing with the then most senior class and only making
payments on more junior classes to the extent of available cash flows. A failure
to make payments on a class of notes will result in failure to make payments on
the corresponding class of certificates.

This vulnerability of the various classes of notes has been reflected in
actions taken by the rating agencies which reevaluated several structured
aircraft financings in the wake of the terrorist attacks in the United States on
September 11, 2001. On December 12, 2001, Moody's announced a downgrade of our
class C certificates from Baa2 to Ba3 and a downgrade of the class D
certificates from Ba2 to B2. On December 21, 2001, Fitch downgraded the class C
certificates from BBB to BB and the class D certificates from BB to B and left
our class A to D certificates on credit watch negative. On March 25, 2002,
Standard & Poor's downgraded our class C certificates from BBB to BB+ and our
class D certificates from BB to B-. Standard & Poor's affirmed the rating on the
class A and B certificates but left the class C and D certificates on credit
watch negative. Most recently on June 24, 2002, Fitch further downgraded the
class C certificates from BB to B+ and the class D certificates from B to CCC
and downgraded the class A certificates from AA to A+ and the class B
certificates from A to BBB+.Given the continuing difficulties in the aircraft
industry and their impact on the factors which determine our revenues, there can
be no assurance that the rating agencies will not further downgrade any class of
our certificates.

The ratings of the certificates address the likelihood of the timely
payment of interest and the ultimate payment of principal and premium, if any,
on the certificates. A rating is not a recommendation to buy, sell or hold
certificates because ratings do not comment as to market price or suitability
for a particular investor. A rating may be subject to revision, suspension or
withdrawal at any time by the assigning rating agency.

SUBORDINATION PROVISIONS RESTRICT THE RIGHTS OF JUNIOR NOTEHOLDERS AND
CERTIFICATE HOLDERS.

In general, the rights and remedies with respect to a note event of default
are exercisable only by the trustee of and the holders of the most senior class
of notes outstanding, and then only to the extent that there is an event of
default with respect to that senior class of notes. The class A notes are the
most senior class of notes currently outstanding. A failure to make a required
payment on a class of notes is a default only with respect to that class of
notes and the corresponding certificates. Accordingly, if an event of default
occurs with respect to a class of notes, the holders of that class of notes (and
thus, the corresponding certificates) will not be permitted to enforce their
rights until all amounts owing under any more senior class of notes outstanding
and certain other amounts have been paid in full.

CERTIFICATEHOLDERS HAVE NO SECURITY INTEREST IN THE AIRCRAFT OR THE LEASES TO
SECURE OUR REPAYMENT OF THE CERTIFICATES.

None of the certificateholders, the trustee or the security trustee has any
security interest, mortgage, charge or similar interest in any aircraft in our
portfolio or in the related leases. If the trust defaults on payments to
certificateholders on the certificates, neither certificateholders nor anybody
acting on their behalf can sell the aircraft or exercise other remedies with
respect to the aircraft or the leases to repay the principal and interest that
we owe them, which they would have been able to do if they had held a security
interest in the aircraft or the leases. Airplanes Limited and Airplanes Trust
have, however, pledged to the security trustee, as security for the notes and
their other obligations, one-third of the ordinary share capital of each of
AeroUSA, Airplanes Holdings and their subsidiaries, cash balances in the
accounts and investments made with our cash balances.

6

THE TRUST HAS LIMITED SOURCES OF INCOME FROM WHICH TO REPAY THE CERTIFICATES.

The trust is a pass through trust. The principal assets of the trust are
the notes and guarantees, and its only sources of payment on the certificates
are payments by Airplanes Limited and Airplanes Trust on those notes and
guarantees, including proceeds from any disposition of them. If Airplanes
Limited and Airplanes Trust do not make payments on the notes and guarantees to
the trust, the trust has no other funds to make payments to certificateholders
on the certificates. The certificates and notes are not guaranteed by the
trustee, the security trustee, the indenture trustee, the servicer, the
administrative agent, the cash manager or any of their affiliates, and
certificateholders cannot look to them or anyone else to repay them if we
default in payment on the certificates.

AIRPLANES LIMITED AND AIRPLANES TRUST HAVE LIMITED SOURCES OF INCOME FROM WHICH
TO REPAY THE NOTES AND GUARANTEES.

The principal assets of Airplanes Limited and Airplanes Trust are shares of
their direct subsidiaries and intercompany loans to their direct and indirect
subsidiaries. Airplanes Limited and Airplanes Trust do not directly own any of
the aircraft and are dependent on payments and distributions from their
subsidiaries for their cash flow. If their subsidiaries do not make principal or
interest payments to Airplanes Limited and Airplanes Trust on the intercompany
loans, or if their subsidiaries do not make any distributions to them, Airplanes
Limited and Airplanes Trust would have less cash available to make payments to
the trust on the notes or guarantees. Also, if withholding or other taxes are
imposed on payments or distributions to Airplanes Limited and Airplanes Trust,
or if other significant tax liabilities arise, Airplanes Limited and Airplanes
Trust would have less cash available to make payments to the trust. In these
circumstances, the trust would have less cash available to make payments to
certificateholders on the certificates.

AIRPLANES LIMITED AND AIRPLANES TRUST HAVE OTHER CLAIMS THAT RANK SENIOR OR
EQUAL TO THE NOTES AND GUARANTEES.

Airplanes Limited and Airplanes Trust have guaranteed a significant number
of their respective subsidiaries' obligations to lessees. Payments on these
guarantees will be treated as lease expenses and will rank ahead of other
payment obligations of Airplanes Limited and Airplanes Trust.

CLAIMS ON OUR SUBSIDIARIES ARE EFFECTIVELY SENIOR TO THE CLAIMS OF
CERTIFICATEHOLDERS ON AIRPLANES LIMITED AND AIRPLANES TRUST, AND OUR
SUBSIDIARIES MAY HAVE MATERIAL CONTINGENT LIABILITIES UNKNOWN TO US.

Any claims on the subsidiaries of Airplanes Limited and Airplanes Trust are
effectively senior to the notes and guarantees because the subsidiaries would
generally have to make payments on those claims before making payments or
distributions to Airplanes Limited and Airplanes Trust. These claims include any
payment obligations to lessees and other contingent liabilities, such as
liabilities to third parties from operating and leasing the aircraft. There may
also be liabilities of this type that arose before we acquired our subsidiaries
from GPA Group (now known as debis AirFinance Ireland) in 1996 of which we are
not aware. If the subsidiaries are called upon to pay any of these contingent
liabilities, we would have less cash available to make payments to
certificateholders.

THE NOTES AND CERTIFICATES ARE SUBJECT TO EARLY REFINANCING OR REDEMPTION WHICH
MAY REDUCE THE YIELD ON CERTIFICATEHOLDERS' INVESTMENT IN THE CERTIFICATES.

The notes, and the corresponding certificates, may be refinanced or
redeemed at the applicable redemption price at our option on any payment date.
They may also be redeemed at par upon the occurrence of specified adverse tax
events affecting Airplanes Group. Available funds from the sale of aircraft and
other available collections will also be used to repay the certificates under
the priority of payments provided in the indentures. If any refinancing or early
redemption of the certificates occurs, the yield on certificateholders'
investment in the certificates could be adversely affected.

7

THERE IS NO PUBLIC MARKET FOR THE CERTIFICATES.

The certificates have a limited trading market which may harm
certificateholders' ability to sell them or depress the price at which
certificateholders sell them. The certificates are listed only on the Luxembourg
Stock Exchange. No one has an obligation to make a market in the certificates.
We do not intend to seek approval for quotation through any automated quotation
system. Future trading prices for the certificates depend on many factors,
including general economic conditions, our financial condition, performance and
prospects and the market's then current perception of the commercial aircraft
industry and the operating lease business generally.

RISKS RELATING TO AIRPLANES GROUP AND THIRD PARTIES

WE HAVE A HISTORY OF INCURRING NET LOSSES IN OUR OPERATIONS.

Airplanes Group has incurred net losses since its inception and expects to
continue to incur substantial and increasing net losses. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" for a further discussion of these net losses.

WE HAVE NO MANAGEMENT RESOURCES AND DEPEND ON SERVICE PROVIDERS TO OPERATE OUR
BUSINESS AND COLLECT OUR REVENUES.

We have no employees or executive management resources of our own and rely
solely on the servicer, administrative agent, cash manager and other service
providers for all aircraft servicing, leasing, re-leasing, sales and other
executive and administrative functions relating to our portfolio. If these
service providers do not perform their contractual obligations to us, our
operations and cash flow may suffer, thereby adversely affecting the timing of
payments on, and ultimate repayment of, the certificates. We may find it
difficult to recover damages for any of these third parties' poor performance
pursuant to their contracts and may not be able to terminate these contracts by
ourselves. In particular, our rights to terminate the servicing agreement are
very limited. We cannot guarantee that we will continue our arrangements with
the existing service providers or that they will continue their relationship
with us until the certificates are paid in full. If a service provider resigns
or if we terminate any service provider, we may be unable to find a suitable
replacement that we can engage on suitable terms, which would harm our
operations and impede our cash flow. The appointment of replacement service
providers may also cause the rating agencies to lower or withdraw the ratings on
the certificates. You should refer to "Item 10. Directors and Executive Officers
of the Registrants" for more detailed information on the responsibilities we
have delegated to the service providers.

THE SERVICER WILL NOT BE LIABLE TO US FOR LOSSES WE INCUR IN CONNECTION WITH ITS
PERFORMANCE OF THE SERVICES.

The servicer will not be liable to us for losses we incur in connection
with its performance of the services, except where a court has finally
adjudicated that the losses have been directly caused by the servicer's willful
misconduct or gross negligence. In addition, we have agreed to indemnify the
servicer on an after-tax basis for a broad range of losses in connection with
its performance of the services. Any such indemnification payments would rank
senior to payments on the notes and certificates, which would further reduce
funds available to make payments on the notes and certificates.

WE DEPEND ON SWAP COUNTERPARTIES IN MANAGING INTEREST RATE RISKS. IF OUR SWAP
COUNTERPARTIES DEFAULT, OR IF WE ARE UNABLE TO FIND SUITABLE SWAP
COUNTERPARTIES, THERE MAY BE A MISMATCH BETWEEN OUR FIXED AND FLOATING RATE
ASSETS AND LIABILITIES WHICH COULD REDUCE OUR CASH FLOW.

We manage interest rate risks arising from any mismatch between fixed and
floating rate lease rental payments and fixed and floating rate interest
obligations through swaps and other derivative instruments. This strategy for
managing interest rate risks is dependent upon our ability to enter into
interest rate swaps with eligible counterparties and on the counterparties
fulfilling their contractual obligations. If a counterparty defaults or if we
are unable to find eligible counterparties willing to enter into interest rate
swaps with us because of our financial condition, a mismatch between our fixed
and floating rate interest obligations and fixed and floating rate
8

lease receipts may arise, which could further harm our cash flow and adversely
affect our ability to make payments on the notes and certificates.

GECAS, THE SERVICER, MAY HAVE CONFLICTS OF INTEREST IN MANAGING OUR PORTFOLIO AS
A RESULT OF ITS OTHER AIRCRAFT MANAGEMENT ACTIVITIES.

In addition to acting as the servicer for Airplanes Group, GECAS manages a
large portfolio of aircraft owned by its affiliates, including the GE group of
companies, and third parties, including other securitization vehicles such as
Lease Investment Flight Trust and Aircraft Finance Trust. GECAS also arranges
aircraft or engine financings and other lease transactions and GE Capital, an
affiliate of GECAS, is the owner of the class E notes. GECAS may therefore face
conflicts of interest in managing and marketing our portfolio for re-lease or
sale. The aircraft it manages for itself or others may compete with our aircraft
when they are being marketed for re-lease or sale. These conflicts will arise as
decisions affecting some aircraft that GECAS is managing or that GECAS or one of
its affiliates owns may be adverse to other aircraft also managed by GECAS. The
servicing agreement provides that the standard of care applicable in cases where
such conflicts arise requires that GECAS not discriminate between aircraft on an
unreasonable basis. For a fuller description of the standard of care, see "Item
10. Directors and Executive Officers of the Registrants -- The Servicer -- The
Servicing Agreement." While GECAS has agreed to perform the services for us with
reasonable care and diligence at all times, GECAS may give preference to its
affiliates and other third parties under the terms of its other marketing and
servicing arrangements. In addition, GECAS is not obliged to inform us of any
conflicts of interest of which it is aware. If, as a result of a conflict of
interest, GECAS makes a decision potentially adverse to us, it could have a
material adverse effect on the servicing of our aircraft, which may cause
additional reduction in our cash flow, thereby potentially adversely affecting
the timing or amounts of payments on the notes and certificates. See "Item 10.
Directors and Executive Officers of the Registrants -- The Servicer" for more
information on the activities of the servicer.

THE ADMINISTRATIVE AGENT AND CASH MANAGER MAY HAVE CONFLICTS OF INTEREST BECAUSE
OF THEIR PARENT COMPANIES' OTHER AIRCRAFT MANAGEMENT ACTIVITIES AND OWNERSHIP
INTERESTS.

debis AirFinance B.V. and debis AirFinance Ireland, parent companies of the
administrative agent and the cash manager, manage a large portfolio of aircraft
owned by themselves, their affiliates and third parties. debis AirFinance
Ireland also acts as the servicer for AerCo Limited, a securitization vehicle
similar to Airplanes Group, and currently holds the class D-2, E-1 and E-2 notes
issued by AerCo. Subsidiaries of debis AirFinance Ireland also act as
administrative agent and cash manager for AerCo. As a result, the administrative
agent and the cash manager of Airplanes Group may from time to time have
conflicts of interest in performing their obligations to Airplanes Group. While
the roles of the administrative agent and the cash manager are more limited than
those of the servicer, any conflicts of interest that they cannot resolve could
have an adverse impact on Airplanes Group and on our ability to make payments on
the notes and certificates.

OUR LEGAL COUNSEL MAY HAVE CONFLICTS OF INTEREST IN NEGOTIATING SOME OF OUR
AGREEMENTS BECAUSE THEY ALSO REPRESENT PARTIES WITH WHICH WE DEAL.

Airplanes Group and debis AirFinance Ireland are represented by the same
Jersey, Irish and United States legal counsel, and we anticipate that this
multiple representation will continue. Our legal counsel may face conflicts of
interest when negotiating agreements between Airplanes Group and debis
AirFinance Ireland. If a significant dispute does arise in the future between
Airplanes Group and debis AirFinance Ireland or any of their respective
affiliates, we anticipate that we will retain separate counsel to represent us.

9

RISKS RELATING TO THE AIRCRAFT

THE COMMERCIAL AIRCRAFT MARKET IS CYCLICAL. DECREASED DEMAND FOR OR EXCESS
SUPPLY OF AIRCRAFT CAN DEPRESS AIRCRAFT VALUES AND LEASE RATES, WHICH MAY CAUSE
US TO BE UNABLE TO RE-LEASE OR SELL AIRCRAFT ON FAVORABLE TERMS AND CAN DECREASE
CASH AVAILABLE TO MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

The market for commercial jet aircraft is cyclical and can produce sharp
increases or decreases in aircraft values and lease rates depending on the level
of supply or demand. During the past year, there was a general downturn in the
world economic climate, with a consequential negative impact on the commercial
aviation industry. The effects of this downturn were exacerbated by the
terrorist attacks of September 11, 2001 and the subsequent and continuing
political and economic fallout. This has resulted in a sharp increase in the
availability of aircraft for lease leading to significant overcapacity,
increased downtime, declines in lease rates, additional lease restructurings,
unanticipated redeliveries of aircraft with associated costs, and a fall in the
realizable value for aircraft (particularly older technology models) in open
market sales.

Airlines increasingly prefer jet aircraft to turboprop aircraft, and new
generation Stage 3 aircraft to older Stage 3 aircraft (which make up a
significant proportion of our portfolio), and so the markets for these types of
aircraft remain unfavorable in terms of both aircraft values and lease rates,
particularly following the events of September 11, 2001.

The conditions in the aircraft market depend upon, among other things, the
business cycle for the lessees and buyers, as well as general economic
conditions worldwide or in specific regions. The condition of the market at the
time when any of our aircraft are being marketed for re-lease or sale will
affect our ability to re-lease or sell those aircraft on satisfactory terms.
Unsatisfactory market conditions, such as those we are currently experiencing,
mean that the lease rates and, where applicable, sales proceeds that we obtain
are unfavorable and less than those assumed in the 2001 Base Case, resulting in
decreased cash flows available to make payments on the notes and certificates.

THE AIRCRAFT VALUES AND LEASE RATES FOR AIRCRAFT MAY FLUCTUATE SIGNIFICANTLY
BECAUSE OF FACTORS OUTSIDE OUR CONTROL AND AFFECT OUR CASH FLOW.

Decreases in aircraft values or lease rates may cause a decrease in our
cash flows. Depending on market conditions, we may be unable to re-lease or sell
aircraft on terms that will allow us to make payments on the notes and
certificates. Aircraft values and lease rates depend on various factors that are
outside our control, including:

- general economic conditions affecting lessee operations as discussed
above, including passenger demand and the cost of fuel and other
expenses;

- the supply of and demand for used aircraft;

- manufacturer production levels and prices for new aircraft;

- interest rates, currency exchange rates and credit availability;

- retirement and obsolescence of aircraft models;

- re-introduction into service of aircraft previously in storage;

- governmental regulations; and

- lack of capacity in the aircraft traffic control system.

Additional factors outside our control that may lead to sharp increases or
decreases in aircraft values or lease rates for specific aircraft include:

- manufacturer production levels and competition between aircraft
manufacturers, such as the current competition between The Boeing
Company and Airbus Industrie, which has led to an increased supply of
new aircraft at lower prices;
10

- manufacturers merging or leaving the aircraft industry, such as the
merger between Boeing and McDonnell Douglas and the bankruptcy of Fokker
N.V., which has led to the termination of production of MD and Fokker
aircraft and a resulting decrease in the values and lease rates for our
MD and Fokker aircraft;

- the maintenance and operating history of the aircraft;

- the number of operators using a particular type of aircraft (which may
be reduced by bankruptcy or industry consolidation) and the supply of
that type of aircraft;

- legal or regulatory requirements that prevent re-leasing or selling that
type of aircraft;

- the discovery of manufacturing defects in an aircraft model; and

- new regulatory requirements relating to an aircraft model.

THE CONCENTRATION OF AIRCRAFT TYPES IN OUR PORTFOLIO COULD MAGNIFY THE IMPACT OF
DECLINES IN LEASE RATES OR AIRCRAFT VALUES AND ADVERSELY AFFECT OUR CASH FLOW.

As of March 31, 2002, each of the B737-400, MD-83 and A320-200 models of
aircraft comprised more than 10% of our portfolio by appraised value as of
January 31, 2002 and, in addition, each of the B737-300, B737-500, B767-300ER,
DC8, MD-11 and F-100 models of aircraft comprised more than 5% of our portfolio
by appraised value as of January 31, 2002. Furthermore, at March 31, 2002,
widebody aircraft comprised more than 15%, and turboprop aircraft comprised more
than 5% of our portfolio by appraised value as of January 31, 2002. The
concentration on particular models or types of aircraft magnifies the adverse
impact to our cash flow of a decline in lease rates or aircraft values for these
models or types of aircraft and of specific governmental or technical
regulations imposed on those aircraft types. In this connection, we have seen
(x) decreasing popularity of the turboprop aircraft, the cessation of production
of MD-83s and MD-11s, the reduction in demand for B767s including in particular
B767s powered by Pratt & Whitney engines, and the bankruptcy of Fokker, (y)
noise regulations restricting the use of Stage 2 aircraft which, as of March 31,
2002, accounted for approximately 3% of our portfolio by appraised value as of
January 31, 2002, and (z) Airworthiness Directives ("ADS") with respect to the
MD-80s, MD-11s and B737s, all as described more fully below in "-- The Aircraft,
Related Leases and Collateral." These events have caused, and are likely to
continue to cause, our overall lease rates and the aircraft values to
significantly decrease and may cause us to incur significant costs which would
further reduce our cash flow.

THE ACTUAL MARKET VALUE OF THE AIRCRAFT MAY BE LESS THAN THE APPRAISED VALUE AND
PROCEEDS FROM DISPOSITIONS OF THE AIRCRAFT MAY BE INADEQUATE TO MAKE PAYMENTS ON
THE NOTES AND CERTIFICATES.

The appraised values of the aircraft are determined based on the assumption
that there is an "open, unrestricted stable market environment with a reasonable
balance of supply and demand" and take into account long-term trends, including
current expectations of particular models becoming obsolete more quickly, as a
result of airlines switching to different models or manufacturers ceasing
production, and expected declines in lease rates. Appraised values for an
aircraft do not necessarily reflect the market value for the aircraft at a
specific time and you should not rely on appraised values as an indication of
the price that we could obtain if we sold an aircraft. The aircraft market is
cyclical and there may be imbalances of supply and demand at any one time,
especially for specific aircraft types. At the high point in the industry cycle,
the current market value of some aircraft may be at or above their appraised
values while the current market value of others may be significantly less than
their appraised values. At a low point in the industry cycle such as we are
experiencing currently, the current market value of most aircraft types is
likely to be less, or in many cases, much less, than appraised values and
neither market value nor appraised value should be relied upon as a measure of
realizable value. If we sell an aircraft to repay the notes, the proceeds may be
significantly less than its appraised value. We may therefore have insufficient
cash to make payments on the notes to pass through to the certificateholders.
Market values may also be affected adversely by poor market lease rates for
aircraft at any given time.
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SOME OF OUR LESSEES MAY EXERCISE PURCHASE OPTIONS AT PRICES THAT ARE LESS THAN
THE PROPORTIONATE SHARE OF THE UNPAID PRINCIPAL OF THE NOTES AND CERTIFICATES
ALLOCABLE TO THE RELEVANT AIRCRAFT THEREBY REDUCING CASH AVAILABLE TO US TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

As of March 31, 2002, eight lessees had options to purchase a total of 19
aircraft, representing 4.79% of our portfolio by appraised value as of January
31, 2002. There is a risk that the purchase prices may be less than the
proportionate share of the unpaid principal of the notes and certificates
allocable to the aircraft being purchased. If those options are exercised, there
could be additional reductions in the amount, or a delay in the timing, of
payments on the notes and certificates.

WE MAY BE UNABLE TO REPOSSESS, RE-LEASE OR SELL THE AIRCRAFT IF THE LESSEES DO
NOT DISCHARGE LIENS ON THE AIRCRAFT, WHICH WOULD REDUCE CASH AVAILABLE TO US TO
MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

Liens which secure the payment of airport taxes, customs duties, air
navigation charges, landing charges, crew wages, repairer's charges or salvage
may attach to the aircraft in the normal course of operations. The sums which
these liens secure may be substantial and could exceed the value of the
aircraft. In some jurisdictions, a holder of aircraft liens may have the right
to detain, sell or cause the forfeiture of the aircraft. While our lessees are
generally required to discharge all liens arising during the term of their
leases, their failure to discharge any liens may impair our ability to
repossess, re-lease or sell the aircraft if the lessee defaults, which could
have an adverse effect on our cash flow.

OUR LESSEES MAY FAIL TO MAINTAIN REGISTRATION OF OUR AIRCRAFT, WHICH MAY AFFECT
THEIR ABILITY TO MAKE PAYMENTS TO US AND REDUCE OUR CASH AVAILABLE TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

All aircraft in operation must be duly registered with an appropriate
aviation authority. If any lessee fails to maintain a valid registration of an
aircraft, the lessee operator or, in some cases, the owner or lessor may be
subject to penalties which may result in a lien being placed on the aircraft.
Loss of registration could also have other adverse effects, including grounding
of the aircraft and loss of insurance, which may prevent the aircraft from
generating cash flow and have an adverse effect on our ability to make payments
on the notes and certificates.

THE AVAILABILITY OF NEW, MORE TECHNOLOGICALLY ADVANCED AIRCRAFT MAY IMPAIR OUR
ABILITY TO RE-LEASE OR SELL AIRCRAFT AND REDUCE OUR CASH AVAILABLE TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

The availability of newer, more technologically advanced aircraft could
adversely affect our ability to re-lease or sell our aircraft because lessees
and buyers of used aircraft tend to favor these newer, more technologically
advanced models. Within the last year, particularly following the events of
September 11, 2001, demand for some older narrowbody Stage 3 aircraft, which
make up a significant proportion of our portfolio, has been adversely affected
by the availability of new generation narrowbody Stage 3 aircraft. Although this
risk is common to all aircraft lessors, it is particularly significant for us
because we have a comparatively older portfolio and will need to re-lease all of
our aircraft at least once before the final maturity date of the certificates.
Our ability to manage these technological risks through modifications to
aircraft and sales of aircraft is limited by the significant costs of
modifications and by the restrictions imposed on modifications to and sale of
aircraft under the indentures.

In addition, in light of the age of our fleet, should the current
oversupply of aircraft continue in the longer term, certain of our aircraft may
become obsolete earlier than the useful life expectancies assumed in the 2001
Base Case and/or we may be unable to realize the residual values assumed in the
2001 Base Case at the end of the useful lives of certain of our aircraft.

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INCREASED REGULATION OF THE AIRCRAFT INDUSTRY MAY CAUSE US TO INCUR MORE
EXPENSES OR MAY IMPAIR OUR ABILITY TO RE-LEASE OR SELL AIRCRAFT AND REDUCE OUR
CASH AVAILABLE TO MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

The aircraft industry is heavily regulated and aviation authorities may
adopt additional regulations in jurisdictions where our aircraft are registered
or operate. In particular, governmental regulations, especially in North America
and Europe, impose increasingly strict noise and emissions levels and enhanced
safety and security requirements for aircraft, such as fire safety insulation,
traffic collision avoidance systems and emergency locator transmitters. We may
have to incur significant costs in order to comply with additional regulations.
In addition, because our portfolio is composed of a significant number of older
aircraft and we have a heavy concentration of some types of aircraft,
increasingly stringent noise or emissions regulations that disproportionately
affect older aircraft or particular types of aircraft, such as the U.S. Federal
Aviation Administration ("FAA") fire safety regulations on MD-80 and MD-11
aircraft, could have a significant adverse impact on our results. We will incur
significant costs in order to comply with these regulations. For example, it
will cost an estimated $14.1 million to comply with the MD-11 and MD-80 fire
safety regulations, $3.4 million of which has been incurred in the year to March
31, 2002 in relation to seven aircraft. In addition, aircraft that fail to
comply with noise or emissions regulations could be prohibited from flying into
some jurisdictions, which will adversely affect their values and lease rates.

RISKS RELATING TO THE LEASES AND CASH FLOWS FROM LEASE PAYMENTS

THE RENTAL PAYMENTS AND SALE PROCEEDS FROM THE AIRCRAFT MAY NOT BE ADEQUATE TO
SUPPORT THE REQUIRED PAYMENTS ON THE NOTES AND CERTIFICATES.

Our primary sources of cash flow are payments under the leases and proceeds
from the sale of aircraft. This cash flow is affected by our ability to manage
maintenance and other costs, collect payments under the leases and maintain a
constant stream of cash flows by re-leasing aircraft upon lease expiration or
termination and by selling aircraft on favorable terms. It is also dependent on
factors outside our control, such as performance by the lessees and the service
providers, exercise by lessees of any purchase or early termination options, and
external economic factors such as those discussed above under "Risk Factors --
Risks Relating to the Aircraft." It is therefore possible that we may not have
enough funds from these rental payments and sale proceeds to make payments on
the notes and certificates.

The appraised value of our portfolio has declined at a rate greater than
that originally expected in our 1996 Base Case and our overall cash performance
has been weaker than was assumed in the 2001 Base Case. These factors, which
were exacerbated by the events of September 11, 2001 and the subsequent and
continuing political and economic fallout have led to the downgrading of the
class C and class D certificates. If these conditions continue, cash flow
available to make payments on the notes and certificates will be reduced with
the potential consequences described above under "-- Risks Relating to Payment
on the Notes and Certificates."

OUR OPERATIONAL AND FINANCIAL RESTRICTIONS MAY AFFECT OUR ABILITY TO COMPETE AND
MAINTAIN THE CASH FLOW TO REPAY THE NOTES AND CERTIFICATES.

The indentures and constitutive documents of Airplanes Limited and
Airplanes Trust impose restrictions on how we operate our business. These
restrictions may limit our ability to compete against other lessors who are not
subject to similar restrictions or who have greater financial resources than we
do. For example, we are not permitted to grant concessionary rental rates to
airlines in return for equity investments in the airlines. Additionally, we
cannot sell aircraft at prices below a specified target price except in limited
circumstances and in limited aggregate amounts, which may restrict our ability
to sell aircraft to generate cash flow. For example, the current market value of
our MD-11s is below the specified target sales price, which prevents us from
selling these aircraft in compliance with the indenture requirements. See "The
Aircraft, Related Leases and Collateral -- The Lessees -- Commercial
Opportunities for our MD-11 Aircraft" below for more information on our MD-11
aircraft. There are also restrictions on who we can lease our aircraft to and
limits on leasing to lessees in particular geographic regions. Many competing
aircraft lessors do not operate under similar restrictions or have a stronger
financial position or other strengths and therefore have a competitive advantage
over us when negotiating

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leases and sales. These restrictions could adversely affect the amount and
timing of cash flows and payments on the notes and certificates.

WE MAY NOT BE ABLE TO GENERATE SUFFICIENT FUNDS TO REPAY THE NOTES AND
CERTIFICATES IF WE CANNOT RE-LEASE AIRCRAFT QUICKLY AND ON FAVORABLE TERMS.

We may not be able to re-lease the aircraft upon expiration or termination
of the leases without incurring significant downtime. If we cannot quickly
re-lease the aircraft, or if we cannot obtain favorable rates and lease terms
for the aircraft, our cash flow could be negatively affected. Our ability to
re-lease aircraft at acceptable lease rates and terms may suffer because of a
number of factors, including:

- economic conditions affecting the airline industry;

- the supply of competing aircraft and demand for particular aircraft
types;

- increased bargaining power of lessees as they join global alliances with
other airlines;

- reduced number of potential lessees as airlines consolidate or file for
bankruptcy;

- competition from other lessors; and

- restrictions on our flexibility imposed by the indentures.

The events of September 11, 2001, together with a general downturn in
international economic conditions, have resulted in an oversupply of aircraft
available for lease, increased downtime and a decline in lease rates.

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The following table shows the number and type of aircraft as of March 31,
2002 that we must re-lease during the next five years. The table assumes that
(1) no lease terminates early, (2) there are no sales of aircraft and (3)
existing letters of intent will result in leases. Additional aircraft may need
to be re-leased if they become available through early terminations, if letters
of intent do not result in leases or if new leases are for short terms.

AIRPLANES GROUP EXPECTED LEASE PLACEMENT REQUIREMENT AS OF MARCH 31, 2002

Our longest lease is scheduled to expire in November 2012. Therefore we
will be required to re-lease all of our aircraft at least once before the final
maturity date for the certificates. We currently expect that the turboprop
aircraft, older widebody aircraft, Stage 2 aircraft and some older Stage 3
narrowbody aircraft will prove difficult to re-lease because of the factors
noted above. If we cannot on a timely basis re-lease the aircraft that are
coming off lease or can only re-lease them at lease rates lower than the lease
rates assumed in our 2001 Base Case, cash flow available to make payments on the
notes and certificates will be reduced with the potential consequences described
above under "-- Risks Relating to Payment on the Notes and Certificates." There
are currently 54 aircraft which are scheduled to come off lease within a year
from March 31, 2002. Our forecasts assume that future lease rates for many of
these aircraft will be lower than currently contracted rates.

WE MAY NOT BE ABLE TO OBTAIN REQUIRED LICENSES, CONSENTS AND APPROVALS, AND
CONSEQUENTLY OUR CASH FLOW MAY BE REDUCED.

A number of lessees require specific licenses, consents or approvals for
different aspects of the lease. These include consents from governmental or
regulatory authorities to make payments under the leases and to the import,
re-export or de-registration of the aircraft. If we cannot obtain the required
governmental licenses, consents and approvals, if these requirements are
increased by subsequent changes in applicable law or
15

administrative practice, or if the licenses, consents or approvals are
withdrawn, we may be unable to re-lease or sell our aircraft. In that case, our
cash flow would be further reduced thereby adversely affecting our ability to
make payments on the notes and certificates.

LESSEES MAY NOT PERFORM REQUIRED AIRCRAFT MAINTENANCE, CAUSING THE AIRCRAFT
VALUES AND LEASE RATES TO DECLINE AND THEREBY REDUCING OUR CASH FLOW.

The standard of maintenance observed by our lessees and the condition of
the aircraft at the time of lease or sale may affect the aircraft values and
lease rates on our aircraft. If a lessee fails to perform required or
recommended maintenance on an aircraft during the term of the lease or does not
comply with all applicable governmental requirements, the aircraft could be
grounded and we may incur substantial costs to restore the aircraft to an
acceptable maintenance condition before its re-lease or sale. Also, an
increasing number of lessees with better credit no longer provide any cash
maintenance reserves. If the lessees do not perform their maintenance
obligations in any month, or if the maintenance costs for any month exceed the
maintenance payments made by the lessees or are more than our maintenance
reserves, we will have to fund these maintenance costs out of cash flow from the
leases for that month. As a result, our cash flow may be volatile from month to
month and it may harm our ability to make payments on the notes and certificates
after paying significant maintenance costs, especially as the aircraft age.

OUR AIRCRAFT INSURANCE MAY NOT BE AVAILABLE OR MAY NOT BE ADEQUATE TO COVER THE
LOSSES OR LIABILITIES WE INCUR, REDUCING CASH OTHERWISE AVAILABLE TO MAKE
PAYMENTS ON THE NOTES AND CERTIFICATES.

Our lessees are required under the leases to maintain property and
liability insurance covering their operation of the aircraft and to indemnify us
against any damages. Although we believe that this insurance will be adequate to
cover all likely claims, we cannot guarantee that losses and liabilities from
one or more aviation accidents and other catastrophic events will not exceed the
insurance coverage limits. If the proceeds of insurance held by the lessees or
contingent policies held by us do not cover the losses or liabilities we incur,
or if our lessees default in fulfilling their insurance or indemnification
obligations, we would have to cover these losses or liabilities which would
reduce cash flow available to make payments on the notes and certificates.

The effects of the events of September 11, 2001, have included, amongst
other things, increased insurance premiums required by the insurance markets. In
particular, airlines worldwide are currently experiencing difficulties in
maintaining war insurance cover and some other types of insurance cover in the
amounts required under their leases with us and other lessors. While these
insurance issues have been mitigated in certain jurisdictions by a number of
temporary government schemes, and the emergence of a limited available insurance
market, in the absence of longer term satisfactory solutions on this matter, it
may be necessary for certain aircraft to be grounded. This would likely reduce
our cash flows if, as a result, aircraft were returned early and/or we do not
receive rental payments from lessees which are affected by such developments.

OUR HEDGING POLICY MAY NOT ADEQUATELY MANAGE OUR INTEREST RATE RISKS, INCLUDING
THE ASSOCIATED LESSEE CREDIT RISKS, AND WE MAY NOT BE ABLE TO PURCHASE AN
ADEQUATE PORTFOLIO OF SWAPTIONS IF REQUIRED TO MITIGATE OUR INTEREST RATE RISKS,
INCLUDING THE ASSOCIATED LESSEE CREDIT RISKS. IN THIS CASE, THERE COULD BE A
MISMATCH BETWEEN OUR FIXED AND FLOATING RATE ASSETS AND LIABILITIES WHICH COULD
REDUCE OUR CASH FLOW.

We manage our interest rate risks, including the associated lessee credit
risks, through the use of swaps and, as necessary, swaptions which we enter into
with third parties. However, our hedging policy may not adequately manage these
risks. Following consultation with the rating agencies, it is not currently
proposed to purchase any further swaptions primarily due to the low interest
rate environment and our current cash flow performance. We may also have
insufficient cash flow available to purchase the total amount of any swaptions
required or, in light of our current financial condition and our current or
future ratings, we may be unable to find counterparties willing to enter into
swaps with us. If our hedging policy does not adequately manage our interest
rate risks, including the associated lessee credit risks, we cannot find
counterparties or we do not have sufficient cash flow to
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purchase the total amount of any swaptions required, a mismatch between our
fixed and floating rate interest obligations and fixed and floating rate lease
receipts may arise, which could harm our cash flow and adversely affect our
ability to make payments on the notes and certificates.

WITHHOLDING TAXES MAY BE IMPOSED ON LEASE RENTALS, INCREASING OUR COSTS AND
REDUCING OUR CASH FLOW.

We have tried to structure our leases so that either withholding taxes do
not apply to lease payments or, if withholding taxes do apply, the lessees are
obliged to pay corresponding additional amounts so that we always receive the
full lease payment. However, if withholding taxes must be paid and we cannot
recover additional amounts from the lessees, that would further reduce funds
available to make payments on the notes and certificates.

RISK OF LESSEE DEFAULT

LESSEES IN WEAK FINANCIAL CONDITION COULD FAIL TO MAKE LEASE PAYMENTS, CAUSING
OUR REVENUES TO FALL BELOW THE LEVEL REQUIRED TO MAKE PAYMENTS ON THE NOTES AND
CERTIFICATES.

There is a significant risk that lessees in weak financial condition may
default on their obligations under the leases. If lessees do not make rent and
maintenance payments or are significantly in arrears, we may have less cash flow
available to make payments on the notes and certificates. The ability of each
lessee to perform its obligations under its lease depends primarily on its
financial condition, which may be affected by many factors beyond its control,
including competition, fare levels, passenger demand, currency exchange rates,
operating costs (including fuel and labor costs), cost and availability of
financing, and environmental and other governmental regulation. Because a
substantial portion of business and, especially, leisure airline travel is
discretionary, the general economic conditions of the geographic regions where
our lessees operate also affects their ability to meet their lease obligations.
Since the majority of our leases require lease payments in U.S. dollars, any
weakness in the local currency in which a lessee operates against the U.S.
dollar could also adversely affect its ability to pay us.

The events of September 11, 2001, together with world economic conditions,
have resulted in a number of our lessees experiencing financial difficulties.
Two significant European carriers (Sabena and Swissair) have since filed for
bankruptcy and major European and American carriers have announced large losses.
We have agreed to rental holidays, rental restructurings, the early return of
aircraft and similar measures for a number of lessees. You should expect that
some of our current or future lessees will continue to be in a weak financial
position, and a sizeable proportion of our lessees will continue to be in
significant arrears on their rental or maintenance payments at any particular
time.

The current level of defaults and arrears may not be representative of
future defaults and arrears, and defaults and arrears may increase if the
airline industry faces continued difficulties. Some regions where our lessees
are based, such as Asia or Latin America, may be more susceptible than others to
economic downturns. See "-- The Aircraft, Related Leases and Collateral -- The
Lessees" below for a more detailed discussion of the regional concentrations of
our lessees and economic conditions which may impact their financial condition
and ability to perform their obligations to us. Whatever the cause, any
financial weakness on the part of our lessees may result in reduced cash flows
available to us to make payments on the notes and certificates.

WE MAY NOT BE ABLE TO TERMINATE LEASES OR REPOSSESS AIRCRAFT WHEN A LESSEE
DEFAULTS, CAUSING US TO INCUR UNEXPECTED REPOSSESSION COSTS THAT REDUCE OUR CASH
FLOW.

If there is an event of default under a lease, we have the right to
terminate the lease and repossess the aircraft. However, it may be difficult,
expensive and time-consuming for us to enforce our rights in some circumstances,
especially if the lessee contests the termination or is bankrupt or under court
protection. Delays resulting from proceedings to repossess an aircraft add to
the period when the aircraft is not generating cash flow for us. In addition, we
may incur significant costs in trying to repossess an aircraft and in performing
17

maintenance and other work necessary to make the aircraft available for re-lease
or sale, including retrieval or reconstruction of aircraft records. We may also
incur swap breakage costs. Our efforts to repossess an aircraft following a
lessee's default may also be limited by the laws of the local jurisdiction which
may delay or prevent repossession. If we do terminate a lease and repossess the
aircraft, we may be unable to re-lease the aircraft promptly and/or at a
satisfactory lease rate. All of this may adversely affect the cash flow
available to make payments on the notes and certificates.

RISKS RELATING TO TAX

OWNING THE CERTIFICATES MAY HAVE TAX CONSEQUENCES FOR CERTIFICATEHOLDERS AND MAY
REDUCE CERTIFICATEHOLDERS' INCOME.

Ownership of the certificates may subject certificateholders to withholding
of income taxes in the United States, Jersey or other jurisdictions in which
Airplanes Group, its aircraft-owning and aircraft-leasing subsidiaries and the
lessees are organized, reside or operate. The tax consequences of the purchase
of the certificates depend to some extent upon certificateholders' individual
circumstances.

PRE-1998 AEROUSA LOSSES MAY NOT BE AVAILABLE TO OFFSET FUTURE TAXABLE INCOME OF
AEROUSA, AS A RESULT OF WHICH AEROUSA MAY HAVE TO PAY ADDITIONAL U.S. FEDERAL
INCOME TAX AND HAVE LESS CASH FLOW TO PAY AIRPLANES TRUST WHICH WILL HAVE LESS
CASH TO MAKE PAYMENTS ON THE NOTES AND CERTIFICATES.

AeroUSA had net operating loss carryforwards for U.S. federal income tax
purposes when GE Capital acquired all of the class E notes on November 20, 1998.
As a result of that acquisition, AeroUSA's pre-1998 net operating loss
carryforwards may only be utilized to offset up to $452,000 of taxable income
per year and possibly to offset certain "built in" gains (which existed at the
time of the acquisition) on aircraft sold prior to November 20, 2003. To the
extent that the pre-1998 net operating loss carryforwards are not available to
offset taxable income of AeroUSA in future years, AeroUSA will be required to
pay additional U.S. federal income tax which will reduce the amount available to
pay to Airplanes Trust and which will have a negative impact on the cash flow of
Airplanes Trust available to make payments on the notes and certificates.

AEROUSA MAY INCUR ADDITIONAL TAX LIABILITIES AS A RESULT OF FILING CONSOLIDATED
TAX RETURNS WITH GENERAL ELECTRIC COMPANY ("GE") OR DEBIS AIRFINANCE, INC. THERE
WILL BE A NEGATIVE IMPACT ON THE CASH FLOW OF AIRPLANES GROUP IF AEROUSA INCURS
ANY SUCH LIABILITIES.

AeroUSA and its wholly owned subsidiary, AeroUSA 3 Inc. (together, the
"AEROUSA GROUP"), filed U.S. federal consolidated tax returns and certain state
and local tax returns with GPA, Inc. (now known as debis AirFinance, Inc.) and
its subsidiaries (together, the "DEBIS AIRFINANCE U.S. TAX GROUP") through
November 20, 1998. Since November 20, 1998, the AeroUSA group has filed U.S.
federal consolidated tax returns and certain state and local tax returns with GE
and its subsidiaries (together, the "G.E. TAX GROUP"). As members of the
consolidated tax groups, the AeroUSA group is jointly and severally liable for
the applicable U.S. federal or state and local tax liabilities of the debis
AirFinance U.S. tax group for the period through November 20, 1998 and of the GE
U.S. tax group for the period since November 20, 1998. There are ongoing U.S.
federal, state and local tax audits with respect to taxes previously reported by
the debis AirFinance U.S. tax group.

GE, AeroUSA and Airplanes Trust have entered into a tax sharing agreement
pursuant to which GE has agreed to indemnify members of the AeroUSA group
against any U.S. federal, state or local tax liabilities of any member of the GE
U.S. tax group (other than an AeroUSA group member) which are imposed on the
AeroUSA group that are related to any tax period or portion of a tax period
beginning after November 20, 1998 and are tax liabilities that the AeroUSA group
would not have incurred if they were not members of the GE U.S. tax group.
Furthermore, under this tax sharing agreement, (1) AeroUSA has agreed to pay GE
(in cash if a payment is then due by the GE U.S. tax group to a tax authority,
otherwise in the form of subordinated non-interest bearing notes) its share of
tax liabilities based on the amount of tax liabilities that the AeroUSA group
would have incurred if it were not included in the GE U.S. tax group and (2) GE
has agreed to pay AeroUSA, at the time such tax savings

18

are realized, an amount equal to any tax savings by any member of the GE U.S.
tax group (other than a member of the AeroUSA group) for any tax period after
November 20, 1998 as a result of any tax asset generated by the AeroUSA group.
Similar provisions contained in a tax sharing agreement between GPA Group (now
known as debis AirFinance Ireland), GPA, Inc. (now known as debis AirFinance,
Inc.), AeroUSA and Airplanes Trust which terminated on November 20, 1998 remain
applicable in respect of tax periods ending on or before November 20, 1998.

The receipt by Airplanes Trust or AeroUSA of any amounts from GE, debis
AirFinance Ireland or debis AirFinance, Inc., as applicable, pursuant to the tax
sharing agreements will depend upon the financial condition and liquidity of GE,
debis AirFinance Ireland or debis AirFinance, Inc., as applicable, at the time
any claim is made. To the extent any tax claims are successfully made against
the AeroUSA group and those amounts are not indemnified by GE, debis AirFinance
Ireland or debis AirFinance, Inc. under the relevant tax sharing agreements,
those claims will have a negative impact on the cash flow available to Airplanes
Group to make payments on the notes and certificates. In addition, because the
notes and certificates are not secured directly or indirectly by the aircraft or
the leases, substantially all of the assets of the AeroUSA group, including the
aircraft, would be available for attachment and satisfaction of any of those
claims.

AIRPLANES LIMITED, AIRPLANES HOLDINGS AND AIRPLANES HOLDINGS' NON-U.S.
SUBSIDIARIES MAY BE SUBJECT TO U.S. FEDERAL INCOME TAX AS A RESULT OF ACTIONS OF
THE SERVICER OR ADMINISTRATIVE AGENT OR, IN THE CASE OF AIRPLANES HOLDINGS AND
ITS IRISH TAX RESIDENT AIRCRAFT OWNING SUBSIDIARIES, BECAUSE THEY MAY NOT
BENEFIT FROM THE U.S.-IRISH TAX TREATY, WHICH WOULD NEGATIVELY AFFECT THEIR CASH
FLOW.

Whether Airplanes Limited, Airplanes Holdings and Airplanes Holdings'
non-U.S. subsidiaries will be subject to U.S. federal income tax may depend on
the manner in which the activities of the servicer and administrative agent are
performed, and in the case of Airplanes Holdings and its Irish tax resident
aircraft owning subsidiaries, will depend on qualification for the benefits of
the income tax treaty between the United States and Ireland (the "TREATY").

Prior to GE Capital's acquisition of the class E notes, Airplanes Holdings
and its Irish tax resident aircraft owning subsidiaries qualified for treaty
benefits by virtue of a ruling obtained by AerFi Group (now known as debis
AirFinance Ireland) from the U.S. competent authority, which applied to AerFi
Group and its qualified affiliates. Following the acquisition of the class E
notes by GE Capital, Airplanes Holdings and its Irish tax resident aircraft
owning subsidiaries ceased to be affiliates of AerFi Group. Airplanes Holdings
applied for its own ruling on similar grounds to those on which the AerFi Group
ruling was based. On October 20, 2001, the ruling by the U.S. competent
authority was granted to Airplanes Holdings and its Irish tax resident aircraft
owning subsidiaries. There can be no assurance that the activities of the
servicer or the administrative agent will not subject Airplanes Limited,
Airplanes Holdings and Airplanes Holdings' non-U.S. subsidiaries to U.S. federal
income tax on some or all of their income in the future.

In the event that Airplanes Limited, Airplanes Holdings or Airplanes
Holdings' non-U.S. subsidiaries are subject to U.S. federal income tax on some
or all of their income, the cash flow available to make payments on the notes
and certificates would be reduced.

THE OPERATIONS OF AIRPLANES LIMITED, AIRPLANES TRUST AND AEROUSA MAY BECOME
SUBJECT TO IRISH CORPORATE TAXES WHICH WOULD REDUCE THEIR CASH FLOWS.

Airplanes Limited, Airplanes Trust and AeroUSA do not intend to be treated
as doing business in Ireland and, therefore, do not expect to be subject to
Irish corporate tax. However, if their operations differ from those intended,
they could become subject to Irish taxes.

19

WE WILL NOT PAY ANY ADDITIONAL AMOUNTS TO MAKE UP FOR ANY WITHHOLDING TAX THAT
MAY APPLY AND REDUCE THE AMOUNTS CERTIFICATEHOLDERS RECEIVE.

We will not make any additional payments to certificateholders for any
withholding or deduction required by applicable law on payments on either the
notes or the certificates. We will use reasonable efforts to avoid the
application of withholding taxes or other deductions. If withholding taxes
cannot be avoided, however, we may redeem the notes and certificates. If we do
not redeem them, we will reduce the net amount of interest that is passed
through to certificateholders by the amount of any withholding or deduction.

WE MAY LOSE IRISH CORPORATE TAX BENEFITS WHICH WOULD REDUCE OUR CASH FLOW AND
IMPAIR OUR ABILITY TO REPAY THE NOTES AND CERTIFICATES.

Airplanes Limited owns 95% of the capital stock of Airplanes Holdings and
GECAS owns the remaining 5%. The 5% shareholding by GECAS is intended to entitle
Airplanes Holdings and some of its Irish tax-resident subsidiaries to continue
to be eligible for a reduced rate of corporate tax and other corporate tax
benefits for Shannon, Ireland certified companies, including a preferential 10%
corporate tax rate. If GECAS reduces or relocates its operations for any reason
so that it fails to maintain, among other things, specified employment levels in
Ireland, or if GECAS resigns or its appointment is terminated in accordance with
the terms of the servicing agreement, then Airplanes Holdings and those other
companies (a) may become subject to Irish corporate taxation at general Irish
statutory rates, which are currently 20% for trading income, and are expected to
fall to 12.5% for 2003 and subsequent years, and (b) may lose the ability to
deduct interest payments to Airplanes Limited from their income in calculating
their liability to Irish tax. The loss of these tax benefits would likely have a
materially adverse effect on Airplanes Limited's ability to make payments on its
notes and guarantees.

Upon the scheduled termination of the preferential 10% tax rate on December
31, 2005, Airplanes Holdings and its Irish tax resident subsidiaries will become
subject to Irish corporate tax on their net trading income, which would include
leasing income, at a 12.5% tax rate as provided for in the Irish Finance Act of
1999. There can be no assurance that this tax rate will not be changed in the
future.

RISKS RELATING TO BANKRUPTCY

OUR ASSETS MAY BE CONSOLIDATED WITH THOSE OF DEBIS AIRFINANCE IRELAND OR ITS
SUBSIDIARIES IF THEY BECOME BANKRUPT OR INSOLVENT, LEAVING FEWER ASSETS
AVAILABLE TO REPAY THE CERTIFICATES.

We have taken steps to structure Airplanes Group and our transactions,
especially the 1996 transaction whereby we acquired our portfolio of aircraft
from GPA Group (now known as debis AirFinance Ireland), to ensure that our
assets would not be consolidated with the assets of debis AirFinance Ireland and
would not become available to debis AirFinance Ireland's creditors in any
bankruptcy or insolvency proceeding involving debis AirFinance Ireland or any of
its affiliates. If debis AirFinance Ireland or any of its subsidiaries becomes
bankrupt or insolvent, there is a legal risk that a court or other authority
could decide that these steps were not effective to insulate our assets from
debis AirFinance Ireland's assets or that debis AirFinance Ireland's transfer of
aircraft to us in 1996 was improper. As a result, the aircraft and our other
assets could become available to repay debis AirFinance Ireland's creditors and
we could lose all of our rights in the aircraft and our other assets. If that
happens, we would have less cash flow available to make payments on the notes
and certificates.

20

THE AIRCRAFT, RELATED LEASES AND COLLATERAL

OVERVIEW

As of March 31, 2002, our portfolio comprised a total of 186 aircraft, of
which 180 aircraft were on lease to 64 lessees in 33 countries and 6 aircraft
were off-lease. At March 31, 2002, one of these off-lease aircraft was subject
to a letter of intent for lease. As of the date of this Form 10-K, the aircraft
subject to the letter of intent for lease had been delivered to the lessee, one
of the five unplaced off-lease aircraft had become subject to a lease contract
and been delivered to the lessee, one aircraft had become subject to a letter of
intent for lease, one aircraft had become subject to a letter of intent for
sale, one aircraft had been sold and one aircraft was available for marketing.
Since March 31, 2002, a further nine aircraft had become off-lease, of which two
have been sold, two were subject to letters of intent for lease and five were
available for marketing. As of March 31, 2002, the weighted average remaining
contracted lease term of our portfolio (by appraised value as of January 31,
2002 and without giving effect to purchase options or extension options) was 27
months. Our longest lease is scheduled to expire in November 2012. Therefore we
will be required to re-lease all of our aircraft at least once before the final
maturity date of the certificates. See "Risk Factors -- Risks Relating to the
Leases and Cash Flows for Lease Payments" for a description of the risks
certificateholders could face if aircraft are not re-leased.

APPRAISALS

Under the indentures, we are required, at least once each year and in any
case no later than March 1 of each year, to deliver to the indenture trustee
appraisals of the value of each of the aircraft in our portfolio from at least
three independent appraisers. This value (the "APPRAISED VALUE") for each
aircraft is the value for that aircraft at normal utilization rates in an open,
unrestricted and stable market, adjusted to take account of the reported
maintenance standard of that aircraft, except for the aircraft that are subject
to finance leases, which are valued at their lease receivable book values. The
appraisals are not based on physical inspection of the aircraft and do not take
into account the value of the leases, maintenance reserves or security deposits.

For the appraisals as of January 31, 2002, we obtained independent
appraisals from three independent appraisers and calculated the appraised value
of each aircraft by taking the average of the three appraisals. On this basis,
the average appraised value for our portfolio of 186 aircraft was approximately
$2,799.1 million as of January 31, 2002, as compared to $3,113.2 million for the
same 186 aircraft based on appraisals as of January 31, 2001.

The appraised value of each aircraft in our portfolio by each of the three
independent appraisers as of January 31, 2002 can be found in "Airplane Group
Portfolio Analysis" below. The aggregate appraised values calculated by each of
the three independent appraisers for our portfolio, calculated by adding up the
appraised value by that appraiser of each aircraft in our portfolio, are as
follows:

You should not rely on the appraised value as a measure of the realizable
value of any aircraft. See "Risk Factors -- Risks Relating to the Aircraft" for
a discussion of the risks associated with the appraised value.

PORTFOLIO INFORMATION

The tables set forth below summarize important information about our
portfolio. For a more detailed analysis of the aircraft, see "--Airplanes Group
Portfolio Analysis" below.

21

As of March 31, 2002, 96.81% of the aircraft in our portfolio by appraised
value as of January 31, 2002 held or were capable of holding a noise certificate
issued under Chapter 3 of Volume 1, Part II of Annex 16 of the Chicago
Convention or have been shown to comply with the Stage 3 noise levels set out in
Section 36.5 of Appendix C of Part 36 of the United States Federal Aviation
Regulations (assuming for this purpose that turboprop aircraft are Stage 3
aircraft). We refer to this as being "STAGE 3" compliant and call these aircraft
"STAGE 3 AIRCRAFT."

The remaining 3.19% of the aircraft by appraised value as of January 31,
2002 held or were capable of holding a noise certificate issued under Chapter 2
of the Chicago Convention or have been shown to comply with the Stage 2 noise
levels set out in Section 36.5 of Appendix C of Part 36 of the United States
Federal Aviation Regulations but do not comply with the requirements for a Stage
3 aircraft. We refer to this as being "STAGE 2" compliant and call these
aircraft "STAGE 2 AIRCRAFT." Most jurisdictions have adopted these U.S.
classifications, which consider Stage 2 aircraft that have been hushkitted to be
Stage 3 aircraft. For purposes of the table below, Stage 2 aircraft that have
been hushkitted are considered to be Stage 3 aircraft and referred to as "STAGE
3HK."

The following table lists the aircraft by type and number as of March 31,
2002 and the percentage of our portfolio they represent by appraised value as of
January 31, 2002. For the purpose of this table, turboprop aircraft are
considered to be Stage 3 aircraft.

22

The following table sets forth the exposure of our portfolio by lessee as
of March 31, 2002 according to the number of aircraft and the appraised value as
of January 31, 2002.

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

(1) Total number of lessees = 64

(2) A.I.L.L. is an indirect 100% subsidiary of Lan Chile.

(3) As of March 31, 2002, one of the six off-lease aircraft was subject to a
letter of intent for lease to a new lessee. As of the date of this Form
10-K, the aircraft subject to the letter of intent for lease had been
delivered to the lessee, one of the five unplaced off-lease aircraft had
become subject to a lease contract and had been delivered to the lessee,
one aircraft had become subject to a letter of intent for lease, one
aircraft had become subject to a letter of intent for sale, one aircraft
had been sold and one aircraft was available for marketing. Since March 31,
2002, a further nine aircraft had become off-lease, of which two have been
sold, two were subject to letters of intent for lease and five were
available for marketing.

23

The following table sets forth the exposure of our portfolio by country of
domicile of lessees as of March 31, 2002 according to the number of aircraft and
the appraised value of the portfolio as of January 31, 2002.

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

(1) Total number of countries = 33

(2) As of March 31, 2002, one of the six off-lease aircraft was subject to a
letter of intent for lease to a lessee in Iceland. As of the date of this
Form 10-K, the aircraft subject to the letter of intent for lease had been
delivered to the lessee, one of the five unplaced off-lease aircraft had
become subject to a lease contract and had been delivered to the lessee in
Turkey, one aircraft had become subject to a letter of intent for lease to
a lessee in Cyprus, one aircraft had become subject to a letter of intent
for sale, one aircraft had been sold and one aircraft was available for
marketing. Since March 31, 2002, a further nine aircraft had become
off-lease, of which two have been sold, two were subject to letters of
intent for lease and five were available for marketing.

24

The following table sets forth the exposure of our portfolio by regions in
which lessees are domiciled as of March 31, 2002 according to the number of
aircraft and the appraised value of our portfolio as of January 31, 2002.

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

(1) As of March 31, 2002, one of the six off-lease aircraft was subject to a
letter of intent for lease to a lessee in Europe. As of the date of this
Form 10-K, the aircraft subject to the letter of intent for lease had been
delivered to the lessee, one of the five unplaced off-lease aircraft had
become subject to a lease contract and had been delivered to the lessee in
Europe, one aircraft had become subject to a letter of intent for lease to
a lessee in Europe, one aircraft had become subject to a letter of intent
for sale, one aircraft had been sold and one aircraft was available for
marketing. Since March 31, 2002, a further nine aircraft had become
off-lease, of which two had been sold, two were subject to letters of
intent for lease and five were available for marketing.

The following table sets forth the exposure of the portfolio by year of
aircraft manufacture or conversion to freighter as of March 31, 2002 according
to the number of aircraft and the appraised value of the aircraft as of January
31, 2002. See note 2 to "Airplanes Group Portfolio Analysis" below for the
original manufacture dates for the aircraft that were converted into freighters.

25

The following table sets forth the exposure of the portfolio by seat
category as of March 31, 2002 according to the number of aircraft and the
appraised value of the portfolio as of January 31, 2002.

26

AIRPLANES GROUP PORTFOLIO ANALYSIS
AT MARCH 31, 2002