1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

  X             Annual Report Pursuant to Section 13 or 15(d) of
-----                  the Securities Exchange Act of 1934

                 For the fiscal year ended December 31, 1998
                                           -----------------

                                      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: 0-16838
                                                 -------

                              JETSTREAM II, L.P.
                              ------------------
              Exact name of registrant as specified in its charter


           Delaware                                        84-1068932
           --------                                        ----------
State or other jurisdiction of                I.R.S. Employer Identification No.
incorporation or organization

Attn.:  Andre Anderson,
3 World Financial Center, 29th Floor, New York, New York      10285
--------------------------------------------------------      -----
Address of principal executive offices                      Zip code

Registrant's telephone number, including area code:  (212) 526-3183
                                                     --------------

Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----

Securities registered pursuant to Section 12(g) of the Act:

              LIMITED PARTNERSHIP DEPOSITARY UNITS (the "Units")
              LIMITED PARTNERSHIP INTERESTS (underlying the Units)
              ----------------------------------------------------
                                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 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
of Regulation S-K is not contained herein, and will not be contained, to the
best of the 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 ]

State the aggregate market value of the voting stock held by non-affiliates
of the registrant:  Not applicable

                      DOCUMENTS INCORPORATED BY REFERENCE:

Prospectus of the registrant dated November 10, 1987, as filed pursuant to rule
424(c) of the Securities Act of 1933, as amended, is incorporated by reference
in Parts I, II, III and IV of this Annual Report on Form 10-K.

Annual Report to Unitholders for the year ended December 31, 1998 (Portions of
Parts I, II, III & IV).
<PAGE>
2

                                     PART I

Item 1. Business

General
-------
JetStream II, L.P. (the "Partnership") is a limited partnership organized under
the laws of the State of Delaware on October 15, 1987. The general partners of
the Partnership (the "General Partners") are CIS Aircraft Partners, Inc., the
Managing General Partner ("CAP"), a Delaware corporation that is an affiliate of
Continental Information Systems Corporation, and Jet Aircraft Leasing Inc., the
Administrative General Partner, a Delaware corporation that is an affiliate of
Lehman Brothers Inc. ("Lehman") (See Item 10).

Although the Partnership was organized on October 15, 1987, the Partnership
conducted no activities and recognized no revenues, profits or losses prior to
January 14, 1988, at which time the Partnership commenced operations. During the
period between January 15, 1988 and February 25, 1988 the Partnership acquired
for cash nine used commercial aircraft (together, the "Aircraft"). As of
December 31, 1998, the Partnership had six of the nine original Aircraft
remaining in its portfolio. For a description of the investments in the
Aircraft, please refer to the Message to Investors and Note 4 to the Financial
Statements of the Partnership's Annual Report to Unitholders for the year ended
December 31, 1998, which is filed as an exhibit under Item 14 and incorporated
herein by reference.

On November 10, 1987, the Partnership commenced an offering (the "Offering") on
a "best efforts basis" of $96,750,000 of limited partnership depositary units
("Units"). The closing of the offering occurred on February 24, 1988, with a
total of 4,837,505 Units being sold at a price of $20.00 per Unit, for a total
of approximately $96,750,000. The net proceeds of the offering after payment of
offering and organization costs and acquisition fees aggregated $85,938,000.

Narrative Description of Business
---------------------------------
The Partnership is engaged in the business of managing a portfolio of used
commercial aircraft subject to triple net operating leases with commercial air
carriers. The Partnership is required to dissolve and distribute all of its
assets not later than December 31, 2027. The Partnership may reinvest the
proceeds of sales of Aircraft occurring prior to February 24, 1999; thereafter,
the net proceeds of sales of Aircraft will be distributed to the partners, after
deductions of amounts necessary for working capital and certain reserves.

The Partnership's investment objectives are to:

      (1) generate quarterly cash distributions to holders of Units (the
          "Unitholders"), substantially tax-sheltered during the initial years
          of the Partnership's operations, initially at a rate of approximately
          12%, subject to conditions stated in the prospectus pursuant to which
          the Units were offered and sold (the "Prospectus"), dated November 10,
          1987;

      (2) preserve and protect the value of the Partnership's assets.

The following table describes the Partnership's portfolio of Aircraft as of
December 31, 1998. This table provides certain operational statistics and
estimated market values for the Aircraft in the portfolio. The estimated market
values of the Aircraft are affected by, and subject to, future changes in a
variety of factors, including, but not limited to, the Aircraft's usage, age and
lease rate, the credit worthiness of the lessee, government maintenance and
noise regulations and the supply and demand of aircraft in the market place with
similar lift capacity. Reference is made to Item 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations of this Form 10-K, and
the Message to Investors and Note 4 to the Financial Statements of the
Partnership's Annual Report to Unitholders for the year ended December 31, 1998
for additional information on the lease terms for each Aircraft. Reference is
also made to the Message to Investors section of the Partnership's Annual Report
to Unitholders for the year ended December 31, 1998 for an overview of the
aircraft leasing industry.
<PAGE>
3
<TABLE>
<CAPTION>
                                                            Estimated                                 Cumulative   Cumulative
Aircraft Model                 Acquisition    Net Book       Market          Lease          Noise      Flight        Flight
Year Delivered     Lessee        Cost (1)     Value (2)     Value (3)    Expiration (4)  Compliance   Cycles (5)    Hours (5)
-----------------------------------------------------------------------------------------------------------------------------
<S>              <C>           <C>           <C>           <C>                 <C>          <C>           <C>          <C>   
B-727-200        Boeing        $ 5,451,231   $         0   $   905,800         10/31/99     Stage 3       46,500       69,460
  1969           Capital

DC-9-30          Northwest     $ 7,230,460   $   627,994   $ 2,455,150          1/31/07     Stage 3       66,210       63,490
  1968

DC-9-30          Northwest     $ 7,230,460   $   627,994   $ 2,455,150          1/31/07     Stage 2       62,180       66,670
  1970

DC-9-30          Northwest     $ 7,230,461   $   627,994   $ 2,485,150          4/21/07     Stage 3       77,600       75,010
  1970

B-737-200 ADV    Delta         $14,380,390   $ 1,252,760   $ 3,573,100          9/30/99     Stage 2       39,340       59,050
  1979

MD-80 Series     Continental   $27,313,020   $ 4,803,065   $14,222,000          3/15/00     Stage 3       18,280       37,640
  1986                         -----------   -----------   -----------

TOTALS                         $68,836,022   $ 7,939,807   $26,096,350
                               ===========   ===========   ===========

-----------------------------------------------------------------------------------------------------------------------------
<FN>
NOTES:

(1) Includes a 1.5% fee paid to the Managing General Partner at the acquisition
    of the Aircraft. Totals do not include aircraft which have been sold.

(2) As of December 31, 1998.

(3) Estimated market values for the Aircraft are based upon annual independent
    appraisals which are subject to a variety of assumptions. Additionally,
    there can be no assurance that the Partnership would receive an amount equal
    to the market value shown above upon the sale of any of the Aircraft.

(4) Lease expiration dates do not include renewal options.

(5) Data as of February 5, 1999.
</FN>
</TABLE>

Aging Aircraft Maintenance - The Federal Aviation Administration (the "FAA"),
acting on recommendations from industry trade groups, has adopted a series of
Airworthiness Directives ("AD's") for certain Boeing and McDonnell Douglas
aircraft models. AD's are mandates requiring the airline to perform a specific
maintenance task within a specified period of time. The FAA imposes strict
requirements governing aircraft inspection and certification, maintenance,
equipment requirements, corrosion control, noise levels and general operating
and flight rules. In addition to mandating more intensive inspections of certain
structural components, including the fuselage, wing and tail sections, certain
of these AD's mandate that structural modifications to certain aircraft be
completed within specified periods, generally not less than 48 months from the
effective date of the relevant AD. Aircraft are generally subject to these
structural modification requirements based on flight cycle, flight hour and
chronological age thresholds.

The Partnership's B-727-200 non-advanced aircraft, which is currently on-lease
to Boeing Capital Corp., is subject to AD's mandating structural modification.
AD's presently applicable to the Boeing aircraft owned by the Partnership
require extensive repetitive inspections of such aircraft. There can be no
assurance that such inspections will not lead to mandatory structural
modifications similar to those noted above.
<PAGE>
4

The Partnership's existing leases require the lessees to maintain the
Partnership's Aircraft in accordance with FAA approved maintenance programs
during the lease term. At the end of the leases, each lessee is required to
return the Aircraft in airworthy condition, including compliance with all AD's
for which action is mandated by the FAA during the lease term. Thus, certain of
the modifications required by the new AD's may not be effected by the
Partnership's lessees prior to the expiration of the current leases since, in
many cases, the relevant AD will not require action before the expiration of the
lease term.

In negotiating future leases or in selling aircraft now owned by the
Partnership, the Partnership may be required to bear some or all of the costs of
compliance with future AD's or AD's that have been issued but which did not
mandate action during the previous lessee's lease term or in respect of which
the previous lessee failed to comply. The aggregate effect on the Partnership of
compliance with these standards is not determinable at this time and will depend
upon a variety of factors, including, but not limited to, the state of the
commercial aircraft market, the extent of the AD, the availability of capable
repair facilities and the effect, if any, that such compliance may have on the
service lives of the affected aircraft. As described above, the cost to the
Partnership of such compliance may be reduced to the extent that current or
future lessees of the Partnership's Aircraft effect such modifications under the
terms of the current or future operating leases.

Aircraft Noise - Beginning in 1985, the FAA and various airport industry task
forces released reports suggesting various alternatives for reducing the number
of Stage 2 aircraft operating in the United States, including a proposed
requirement to bring all aircraft operating in the United States into compliance
with Stage 3 requirements in the 1990s or shortly thereafter. The FAA has
categorized aircraft types according to engine noise decibel levels. Stage 1
aircraft, which have the highest noise level, are no longer allowed to operate
from civil airports in the United States. Stage 2 aircraft meet current FAA
requirements. Stage 3 aircraft are the most quiet and will be the future
standard of all aircraft.

Effective November 6, 1990, Congress passed the Airport Noise and Capacity Act
of 1990 (the "Act") which required the development of a National Noise Policy.
On September 25, 1991, final regulations (the "Regulations") were announced and
became effective immediately. The Regulations provide, among other things,
phase-out and non-addition rules under which the number of Stage 2 aircraft
operated by domestic carriers were limited to 75% of 1990 base levels by the end
of 1994, with further reductions to 50% of 1990 base levels by the end of 1996,
25% of 1990 base levels by the end of 1998 and ultimately to 0% by December 31,
1999.

Several modification programs to hushkit or re-engine an aircraft to meet Stage
3 requirements have been announced, including programs for the B-727 series, the
B-737 and the DC-9 series. Hushkitting is a procedure for retrofitting existing
engines to comply with Stage 3 requirements. Re-engining is the replacement of
existing engines with technologically-advanced engines complying with Stage 3
requirements. The decision whether to hushkit or re-engine an aircraft will
depend upon a variety of factors, including, without limitation, the
differential effects of the two approaches on the operating costs of the
aircraft, the relative costs and feasibility of the two approaches and the
General Partners' assessment of the remaining useful life and fair market value
of the aircraft. Where available, hushkits currently can cost up to $3.0 million
per aircraft while the costs of re-engining programs are significantly higher.
No assurances are possible in respect to the actual cost which the Partnership
would be required to pay in order to effect a hushkit or re-engining
modification as now available or as may be developed in the future.

Four of the aircraft owned by the Partnership are Stage 3, the remaining two are
Stage 2 aircraft. Northwest has hushkitted two of its three DC-9-30s and is
required to hushkit the third prior to December 1999. Northwest has agreed to
fund the cost of the hushkitting and, in turn, will be entitled to 50% of the
proceeds from the eventual sale of the aircraft. The Partnership is in
discussions with Delta Airlines to hushkit the 737-200 on lease to Delta prior
to year end in connection with a lease extension. By year-end 1999 we anticipate
that all of the Partnership's aircraft will be Stage 3.
<PAGE>
5

In addition to FAA activity in noise abatement, other countries have adopted or
are considering adopting noise compliance standards which would have a similar
effect of reducing the ability of an airline to operate Stage 2 aircraft in such
jurisdictions. In 1989, the European Economic Community adopted a non-addition
rule which directed each member country to pass the necessary legislation to
prohibit airlines from adding Stage 2 aircraft to their fleets after November 1,
1990. The rule has specific exceptions for leased aircraft and does allow the
continued use of Stage 2 aircraft which are in operation in EEC countries before
November 1, 1990. The Partnership does not currently have any aircraft on lease
to airlines outside the United States. EEC regulations currently proposed would
require aircraft hushkitted to comply with Stage 3 requirements to register
prior to April 1999.

Competition
-----------
The aircraft leasing industry is competitive and the success of any lessor is
largely dependent upon the nature of the aircraft within its portfolio. The
Partnership competes with aircraft manufacturers, distributors, airlines,
leasing companies, financial institutions and other parties engaged in leasing,
managing, and marketing aircraft. Such competitors may lease or sell aircraft at
lower rates or prices than the Partnership and provide benefits, such as direct
maintenance crews, and support services which the Partnership cannot provide.
Competition may include certain affiliates of the General Partners.

Since the Partnership's Aircraft are subject to operating leases, the
Partnership will be required to re-lease or sell such Aircraft after the
expiration of the current lease terms. The General Partners' ability to renew
leases or to sell the Aircraft owned by the Partnership is dependent upon among
other factors: (a) general economic conditions and economic conditions affecting
the airline industry in particular; (b) the current operating profile of the
aircraft, encompassing the age of the aircraft and the number of hours and
cycles flown and compliance with all issued AD's as well as the general
maintenance conditions of the aircraft; (c) the current fleet plans of the major
end-users of the aircraft type; (d) any costs required to refurbish aircraft and
to reconfigure aircraft to comply with all issued AD's and to conform with
similar aircraft within a potential lessee's fleet; (e) any cost required to
conform the aircraft to future Stage 3 noise restrictions; (f) the availability
to the lessee or potential lessee of other similar aircraft from the
Partnership's competition; and (g) the ability of the Managing General Partner
to effectively market the aircraft. It is possible that any future lease
renewals might be at lower lease rates than the Partnership currently receives,
adversely impacting revenue.

Employees
---------
The Partnership has no employees. The officers, directors and employees of the
General Partners and their affiliates perform services on behalf of the
Partnership. The General Partners are entitled to certain fees and reimbursement
of certain out-of-pocket expenses incurred in connection with the performance of
these management services. Reference is made to Note 6 to the Financial
Statements of the Partnership's Annual Report to Unitholders for the year ended
December 31, 1998, for a discussion of the fees and reimbursable expenses paid
to the General Partners and their affiliates.


Item 2. Properties

Incorporated by reference to the Message to Investors and Note 4 to the
Financial Statements of the Partnership's Annual Report to Unitholders for the
year ended December 31, 1998.


Item 3. Legal Proceedings

There are no material pending legal proceedings to which the General Partners or
the Partnership is a party or to which its assets are subject.


Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of security holders, through the solicitation
of proxies or otherwise, during the fourth quarter of 1998.
<PAGE>
6

                                     PART II

Item 5. Market for Partnership's Limited Partnership
        Interest and Related Security Holder Matters

The Units represent the economic rights attributable to limited partnership
interests in the Partnership.

There is no established public trading market for the purchase and sale of
Units. As of December 31, 1998, the number of Unitholders was 6,816.

Per Unit cash distributions paid to the Limited Partners for the two years ended
December 31, 1998 are presented in the table below.

<TABLE>
<CAPTION>
                   First     Second     Third    Fourth
                 Quarter    Quarter   Quarter   Quarter      Total
           -------------------------------------------------------
           <S>     <C>       <C>        <C>       <C>       <C>   
           1997    $.263     $ .217     $.220     $.230     $ .930
           1998    $.210     $ .219     $.221     $.222     $ .872
           -------------------------------------------------------
</TABLE>

Future cash distributions will be determined on a quarterly basis after an
evaluation of the Partnership's current and expected financial position.


Item 6. Selected Financial Data

<TABLE>
<CAPTION>
                                           1998          1997          1996          1995          1994
-------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>           <C>           <C>           <C>        
Rental Revenues                     $ 4,920,000   $ 4,795,000   $ 4,770,000   $ 4,927,500   $ 5,417,086
Total Expenses                        3,740,075     3,720,073     4,594,089     5,688,047     6,182,152
Net Income (Loss)                     1,285,470     1,196,140       485,267       608,971      (575,105)
Net Income (Loss) per
  Limited Partnership Unit(1)               .26           .24           .10           .12         (0.12)
Total Assets                          9,766,676    12,814,880    16,175,937    23,457,938    27,689,193
Partners' Capital                     8,248,904    11,219,359    14,589,989    22,036,571    26,013,542
Net Cash Provided by
  Operating Activities                4,255,925     4,444,031     5,293,635     4,560,125     6,612,975
Cash Distributions per Unit(1)(2)           .87           .93          1.63           .94          1.00
-------------------------------------------------------------------------------------------------------

<FN>
    (1) 4,837,505 units outstanding
    (2) Distribution amounts are reflected in the year for which they are
        declared. The Partnership's fourth quarter cash distribution is usually
        paid in late January or early February of the following year.
</FN>
</TABLE>


Item 7. Management's Discussion and Analysis of Financial
        Condition and Results of Operations

Liquidity and Capital Resources
As of December 31, 1998, all six of the Partnership's aircraft were
on-lease.  There were three aircraft on-lease to Northwest Airlines, Inc.
("Northwest"), one aircraft on-lease to Boeing Capital Corporation ("BCC"),
one aircraft on-lease to Delta Air Lines, Inc. ("Delta"), and one aircraft
on-lease to Continental Airlines, Inc. ("Continental").

The leases for the Partnership's three DC-9-30 aircraft expire in January 2007
(two aircraft) and April 2007 (one aircraft). Northwest pays the Partnership a
monthly lease rate of $35,000 per aircraft. As part of the August 1996 agreement
to extend these leases, Northwest agreed to hushkit each aircraft prior to
December 31, 1999. In exchange for funding the cost of the hushkits, Northwest
will be entitled to 50% of the proceeds from the sale of the aircraft. The
General Partners believe that the lease extensions and hushkitting of the
engines will, in all likelihood, increase the value of the aircraft and will
present the Partnership with more viable sales opportunities for the aircraft in
the future.

The primary term of the lease for the Partnership's B-727-200 aircraft expires
on October 31, 1999. BCC subleases the aircraft to SportHawk International, Inc.
BCC pays the Partnership a monthly lease rate of $45,000. At the end of the
lease term, BCC has the option to purchase the aircraft for $1,000,000.
<PAGE>
7

The lease with Delta for the Partnership's 737-200 advanced aircraft expires in
September 1999. In accordance with the terms of the lease agreement, Delta pays
the Partnership a monthly lease rate of $80,000.

The lease with Continental for the Partnership's MD-80 Series aircraft was
originally scheduled to expire in March 1998. Continental extended its lease to
March 1999 and in October 1998, exercised its second option to renew this lease
through March 2000, with the remaining terms of the lease unchanged. Continental
makes monthly lease payments to the Partnership of $180,000.

At December 31, 1998, the Partnership had unrestricted cash and cash equivalents
of $1,781,869, compared to $1,810,843 at December 31, 1997. The slight decrease
is primarily attributable to a decrease in net cash provided by operating
activities, reflecting the reclassification of the restricted cash balance
during 1997. The restricted cash was required pursuant to the lease with
Continental for the Partnership's MD-80 Series aircraft, but is no longer
required due to the completion of all maintenance requirements permitted under
the lease agreement. The decrease in cash was also attributable to distributions
to the limited partners which slightly exceeded cash flow from operations during
1998.

Accounts payable and accrued expenses totaled $280,044 at December 31, 1998
compared with $328,819 at December 31, 1997. The decrease primarily reflects
differences in the timing of payment of postage and professional fees between
the two periods.

During the year ended December 31, 1998, the Partnership paid cash distributions
to the Unitholders for the period from October 1, 1997 to December 31, 1997 and
for the first three quarters of 1998, in the amounts of $1,102,236 and
$3,139,810, respectively, which represent approximately $.23 and approximately
$.65 per Unit, respectively. At December 31, 1998, the Partnership had a
distribution payable to Unitholders of $1,073,551, or approximately $.22 per
Unit. This amount reflects the 1998 fourth quarter cash distribution to
Unitholders which was funded primarily from cash flow from operations and was
subsequently paid on March 4, 1999. Future cash distributions will be determined
on a quarterly basis after an evaluation of the Partnership's current and
expected financial position.

Market Risk
Interest rate risk comprises the Partnership's principal market risk exposure.
The Partnership has no long-term debt and its aircraft are unencumbered by debt.
Accordingly, the Partnership's interest risk exposure is primarily limited to
interest earned on the Partnership's cash and cash equivalents, which are
invested at short-term rates. Such risk is not considered material to the
Partnership's operations.

Year 2000 Initiatives
The Year 2000 compliance issue concerns the ability of computerized information
systems to accurately calculate, store or use a date after 1999. This could
result in computer system failures or miscalculations causing disruptions of
operations. The Year 2000 issue affects almost all companies and organizations.

As the owner and lessor of commercial aircraft, the Partnership's most
significant Year 2000 issues relate to systems concerns with respect to the
airworthiness of the aircraft. It is the responsibility of the lessees to comply
with any Airworthiness Directives or other manufacturer recommended maintenance
necessary to meet Year 2000 requirements, and the costs of such maintenance, if
any, are to be borne by the lessee. Non-compliance by the lessee could impact
its ability to operate the aircraft, and could affect its ability to meet the
terms of its lease. The Partnership's lessees also face the potential risk of
non-compliance by the air traffic control systems in the areas in which the
aircraft operate. A disruption in any of the air traffic control systems could
cause disruption to the lessee's operations, which may adversely affect their
ability to generate revenue and meet the terms of their leases. The Partnership
is unable to assess the likelihood or the potential cost to the Partnership of
such disruption.

Other potential Year 2000 issues relate primarily to outside vendors which
provide the Partnership's administrative services including accounting, tax
preparation and transfer agent services. Such services are reliant on computer
systems, software products and equipment which may or may not be Year 2000
compliant. It is anticipated that the cost of vendor compliance with Year 2000
problems will be borne primarily by vendors. Although it is not possible at
present to give an estimate of the cost of this work to the Partnership, the
General Partner does not expect such costs to have a material adverse impact on
the Partnership's long term results of operations.
<PAGE>
8

Results of Operations
Substantially all of the Partnership's revenue during 1998 was generated from
the leasing of the Partnership's Aircraft to commercial air carriers under
triple net operating leases. The majority of the balance of the Partnership's
1998 revenue consisted of interest income.

1998 compared to 1997
---------------------
For the twelve months ended December 31, 1998, the Partnership reported net
income of $1,285,470 compared to $1,196,140 in 1997. The increase is primarily
attributable to an increase in rental income, offset partly by a slight increase
in management fees and general and administrative expenses.

Rental income totaled $4,920,000 for the year ended December 31, 1998 compared
with $4,795,000 in 1997. The increase is primarily a result of a higher lease
rate paid for the 727-200 non-advanced aircraft in comparison to 1997.

Interest income totaled $97,191 for the year ended December 31, 1998, compared
with $111,683 for the year ended December 31, 1997. The decrease is primarily
attributable to a decrease in the Partnership's average cash balances during
1998.

Management fees totaled $444,005 for the year ended December 31, 1998 compared
to $432,958 in 1997. The increase primarily reflects an increase in release fees
and lease revenues upon which management fees are based.

General and administrative expenses totaled $275,515 for the year ended December
31, 1998, compared with $267,887 for the year ended December 31, 1997. The
slight increase is primarily attributable to higher administrative expenses
during 1998, which were partly offset by reductions in postage, legal and other
professional fees.

1997 compared to 1996
---------------------
For the twelve months ended December 31, 1997, the Partnership reported net
income of $1,196,140, compared to $485,267 for the corresponding period in 1996.
The increase is primarily attributable to a decrease in depreciation expense
recorded by the Partnership as a result of the extended depreciable life of the
three DC-9-30 aircraft on-lease to Northwest.

Rental income totaled $4,795,000 for the year ended December 31, 1997 compared
with $4,770,000 in 1996. The slight increase is attributable to the increase in
lease rate on the Partnership's B-727-200 aircraft under the new lease with BCC
which commenced November 1, 1997.

The decrease in depreciation expense recorded by the Partnership is the result
of the lease agreement with Northwest, which extended the depreciable life of
the three DC-9-30 aircraft on-lease to Northwest for a period of ten years.

Interest income totaled $111,683 for the year ended December 31, 1997 compared
with $263,533 in 1996. The decrease is attributable to a decrease in the
Partnership's invested cash balance during 1997.

General and administrative expenses totaled $267,887 for the year ended December
31, 1997, compared with $184,047 for the year ended December 31, 1996. During
the 1997 period, certain expenses incurred by an unaffiliated third party
service provider in servicing the Partnership, which were voluntarily absorbed
by affiliates of Jet Aircraft Leasing Inc. in prior periods, were reimbursable
to Jet Aircraft Leasing Inc. and its affiliates. The increase was also due to
legal and consulting fees related to the aircraft currently on lease to
Northwest and BCC.


Item 8. Financial Statements and Supplementary Data

Incorporated by reference to the Partnership's Annual Report to Unitholders for
the year ended December 31, 1998.


Item 9. Changes in and Disagreements with Accountants
        on Accounting and Financial Disclosure

None.
<PAGE>
9

                                    PART III

Item 10. Directors and Executive Officers of the Partnership

The Partnership has no officers or directors. The General Partners jointly
manage and control the affairs of the Partnership and have general
responsibility and authority in all matters affecting its business. Information
concerning the directors and executive officers of the General Partners are as
follows:

       Jet Aircraft Leasing Inc.
       -------------------------

       Name                      Office
       ----                      ------
       Rocco F. Andriola         Director
       Michael T. Marron         Director, President and Chief Financial Officer
       William T. McDermott      Vice President

Certain officers and directors of Jet Aircraft Leasing, Inc. are now serving (or
in the past have served) as officers or directors of entities which act as
general partners of a number of limited partnerships which have sought
protection under the provisions of the Federal Bankruptcy Code. Those
partnerships sought the protection of the bankruptcy laws to protect the
partnerships' assets from loss through foreclosure.

Rocco F. Andriola, 40, is a Managing Director of Lehman Brothers in its
Diversified Asset Group and has held such position since October 1996. Since
joining Lehman in 1986, Mr. Andriola has been involved in a wide range of
restructuring and asset management activities involving real estate and other
direct investment transactions. From June 1991 through September 1996, Mr.
Andriola held the position of Senior Vice President in Lehman's Diversified
Asset Group. From June 1989 through May 1991, Mr. Andriola held the position of
First Vice President in Lehman's Capital Preservation and Restructuring Group.
From 1986 to 1989, Mr. Andriola served as a Vice President in the Corporate
Transactions Group of Shearson Lehman Brothers' office of the general counsel.
Prior to joining Lehman, Mr. Andriola practiced corporate and securities law at
Donovan Leisure Newton & Irvine in New York. Mr. Andriola received a B.A. from
Fordham University, a J.D. from New York University School of Law, and an LL.M
in Corporate Law from New York University's Graduate School of Law.

Michael T. Marron, 35, is a Vice President of Lehman Brothers and has been a
member of the Diversified Asset Group since 1990 where he has actively managed
and restructured a diverse portfolio of syndicated limited partnerships. Prior
to joining Lehman Brothers, Mr. Marron was associated with Peat Marwick Mitchell
& Co. serving in both its audit and tax divisions from 1985 to 1989. Mr. Marron
received his B.S. degree from the State University of New York at Albany and an
MBA from Columbia University.

William T. McDermott, 35, is a Vice President of Lehman Brothers and has been a
member of the Diversified Asset Group since 1998. Mr. McDermott joined Lehman
Brothers in 1993 and held various positions within the firm before joining the
Diversified Asset Group. Prior to joining Lehman Brothers, Mr. McDermott was a
financial analyst with Cantor Fitzgerald Inc. from 1991 - 1993 and was
associated with Arthur Andersen & Co. serving in both its audit and bankruptcy
consulting divisions from 1985 to 1991. Mr. McDermott received his B.B.A. degree
from the University of Notre Dame and is a Certified Public Accountant.

       CIS Aircraft Partners, Inc.
       ---------------------------

       Name                       Office
       ----                       ------
       Thomas J. Prinzing         Director and President
       Robin A. Konicek           Vice President

As reported on the Partnership's Current Report on Form 8-K, dated February 28,
1989, on Friday, January 13, 1989, Continental Information Systems Corporation,
and certain of its subsidiaries, including CIS Corporation, filed voluntary
petitions for reorganization under Chapter 11 of the Federal Bankruptcy Code. As
described below, various directors and executive officers of CAP hold similar
positions for Continental Information Systems Corporation, CIS Corporation and
such subsidiaries.
<PAGE>
10

On November 29, 1994, the Bankruptcy Court for the Southern District of New York
confirmed the Trustee's Proposed Joint Plan of Reorganization. The approved Plan
became effective on December 21, 1994. As a result of the reorganization, the
Directors and Officers of CAP resigned from and took on various directorships
for Continental Information Systems Corporation, CIS Corporation and their
subsidiaries.

Thomas J. Prinzing, 53, is President of CIS Aircraft Partners, Inc. since
1991.  Mr. Prinzing, a Certified Public Accountant, received a Bachelor of
Commerce degree from the University of Windsor.

Robin A. Konicek, 42, is a Vice President of CIS Aircraft Partners, Inc. and is
responsible for domestic and international aircraft marketing. She has been
active in the financing, trading and management of aircraft since 1982. Prior to
joining CIS in 1986, Ms. Konicek was a Vice President of Crocker Bank Airlines
and Aerospace Group, with major responsibility for developing the U.S. market.
She holds an A.B. from Stanford University and an M.B.A. from the University of
California, Los Angeles.


Item 11. Executive Compensation

No compensation was paid by the Partnership to the officers and directors of the
General Partners. See Item 13 below for a description of the compensation and
fees paid to the General Partners and their affiliates by the Partnership.


Item 12. Security Ownership of Certain Beneficial Owners and Management

(a)  Security ownership of certain beneficial owners  As of the date hereof, no
     person is known by the Partnership to be the beneficial owner of more than
     five percent of the Units of the Partnership.

(b)  Security ownership of management  The Partnership has no directors or
     officers, and neither of the General Partners of the Partnership owns any
     Units. The Assignor Limited Partners for the Partnership, CIS Assignor
     L.P.A., Inc. (an affiliate of CAP), owns 5 Units.

     None of the directors or officers of the General Partners owned any Units
     as of December 31, 1998.

(c)  Changes in Control  Other than as described herein, the Partnership knows
     of no arrangements, the operation of the terms of which may at a subsequent
     date result in a change in control of the Partnership.


Item 13. Certain Relationships and Related Transactions

The General Partners and their affiliates received or will receive certain types
of compensation, fees, or other distributions in connection with the operation
of the Partnership.  The fees and compensation were not determined by, and may
not necessarily reflect, arm's length negotiations.  None of the officers and
directors of the General Partners received any compensation from the
Partnership.  During 1998 and 1997, certain administrative expenses incurred in
servicing the Partnership, which were voluntarily absorbed by affiliates of Jet
Aircraft Leasing Inc. in prior periods, were reimbursable to Jet Aircraft
Leasing Inc. and its affiliates.  For additional information on fees paid to the
General Partners and affiliates, reference is made to Note 6 of the Notes to the
Financial Statements in the Partnership's Annual Report to Unitholders for the
year ended December 31, 1998.
<PAGE>
11

                                     PART IV


Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K


(a)  1.  Financial Statements:

                                                                           Page
                                                                          Number
                                                                          ------

         Balance Sheets - December 31, 1998 and 1997........................(1)

         Statements of Partners' Capital (Deficit) -
         For the years ended December 31, 1998, 1997 and 1996...............(1)

         Statements of Operations -
         For the years ended December 31, 1998, 1997 and 1996...............(1)

         Statements of Cash Flows -
         For the years ended December 31, 1998, 1997 and 1996...............(1)

         Notes to Financial Statements......................................(1)

         Report of Independent Public Accountants...........................(1)

         (1)  Incorporated by reference to the Partnership's Annual Report to
              Unitholders for the year ended December 31, 1998.

     2.  Financial Statement Schedules:

         No schedules are presented because the information is not applicable or
         is included in the Financial Statements or the notes thereto.

     3.  Exhibits:

         (3)  Articles of Incorporation and bylaws (Incorporated by reference
              to the Partnership's Prospectus filed with the Commission on
              April 17, 1987.)

         (4)  Depositary Agreement (Incorporated by reference to Exhibit 4.5 to
              the Partnership's Registration Statement on Form S-1 filed with
              the Commission on April 17, 1987.)

         (10) Escrow Agreement (Incorporated by reference to Exhibit 10.12 to
              the Partnership's Registration Statement on Form S-1 filed with
              the Commission on April 17, 1987.)

         (13) Annual Report to Unitholders for the year ended December 31,
              1998.

         (27) Financial Data Schedule

(b)  The Partnership filed no current reports on Form 8-K during the fourth
     quarter of the period covered on this Report.
<PAGE>
12

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.



                               JETSTREAM II, L.P.

                               BY:  Jet Aircraft Leasing Inc.
                                    Administrative General Partner


Date:  March 29, 1999               BY:    /s/Michael T. Marron
                                           --------------------
                                    Name:  Michael T. Marron
                                    Title: Director, President and
                                           Chief Financial Officer



                               BY:  CIS Aircraft Partners, Inc.
                                    Managing General Partner


Date:  March 29, 1999               BY:    /s/Thomas J. Prinzing
                                           ---------------------
                                    Name:  Thomas J. Prinzing
                                    Title: Director and President
<PAGE>
13

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.



                               BY:  CIS Aircraft Partners, Inc.
                                    A General Partner


Date:  March 29, 1999               BY:    /s/Thomas J. Prinzing
                                           ---------------------
                                    Name:  Thomas J. Prinzing
                                    Title: Director and President


Date:  March 29, 1999               BY:    /s/Robin A. Konicek
                                           -------------------
                                    Name:  Robin A. Konicek
                                    Title: Vice President
<PAGE>
14

                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.



                               JET AIRCRAFT LEASING INC.
                               A General Partner


Date:  March 29, 1999          BY:    /s/Rocco F. Andriola
                                      --------------------
                               Name:  Rocco F. Andriola
                               Title: Director


Date:  March 29, 1999          BY:    /s/Michael T. Marron
                                      --------------------
                               Name:  Michael T. Marron
                               Title: Director, President and
                                      Chief Financial Officer


Date:  March 29, 1999          BY:    /s/William T. McDermott
                                      -----------------------
                               Name:  William T. McDermott
                               Title: Vice President