<PAGE>
                                                                   Exhibit 10.60


                            AIRCRAFT LEASE AGREEMENT

                         Dated as of September 15, 1999

                                     Between

                           COMPASS CAPITAL CORPORATION
                                    As Lessor

                                     - and -

                              ALOHA AIRLINES, INC.
                                    As Lessee

                                  In respect of

                     Aircraft:                   Boeing 737-2T4
                     Serial No:                  23443
                     F.A.A. Registration Mark:   N807AL

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The rights of Lessor under this Aircraft Lease Agreement and in the Aircraft
covered hereby will be or have been assigned to, and are or will be subject to
a security interest in favor of The Provident Bank, as Lender and Secured Party
under that certain Loan and Security Agreement dated as of July 15, 1999, as
supplemented. To the extent, if any, that this Aircraft Lease Agreement
constitutes chattel paper (as such term is defined in the uniform commercial
code as in effect in any applicable jurisdiction), no security interest in this
Aircraft Lease Agreement may be created through this transfer of possession of
any counterpart other than the original counterpart which shall be identified
as the counterpart containing this receipt therefor executed by The Provident
Bank as Lender, on the signature page thereof

                        FELTMAN, KARESH, MAJOR & FARBMAN,
                          Limited Liability Partnership
                               Carnegie Hall Tower
                              152 West 57th Street
                            New York, New York 10019


<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

CLAUSE                                                       PAGE
------                                                       ----
<S>      <C>                                                 <C>
1.       INTERPRETATION                                      1
1.1      DEFINITIONS                                         1
1.2      CONSTRUCTION                                        10

2.       REPRESENTATIONS AND WARRANTIES                      11
2.1      Lessee's Representations and Warranties             12
2.2      Lessee's Further Representations and Warranties     13
2.3      Repetition                                          13
2.4      Lessor's Representations and Warranties             13

3.       CONDITIONS PRECEDENT                                14
3.1      Lessor's Conditions Precedent                       15
3.2      Further conditions precedent                        17
3.3      Waiver                                              17
3.4      Lessee's Conditions Precedent                       17

4.       COMMENCEMENT; TERM                                  17
4.1      Leasing                                             17
4.2      [Intentionally Omitted]                             17
4.3      [Intentionally Omitted]                             17
4.4      Licenses                                            17
4.5      [Intentionally Omitted]                             17
4.6      Indemnity                                           17
4.7      Early Termination Option                            18

5.       PAYMENTS                                            18
5.1      [Intentionally Omitted]                             18
5.2      Rental Periods                                      18
5.3      Rent                                                18
5.4      [Intentionally Omitted]                             19
5.5      Payments                                            19
5.6      Gross-up                                            19
5.7      Taxation                                            19
5.8      Value Added Tax                                     20
5.9      Information                                         20
5.10     Taxation of Indemnity Payments                      20
5.11     Default Interest                                    21
5.12     Contest                                             21
5.13     Absolute                                            21
5.14     Security                                            21

</TABLE>

<PAGE>

<TABLE>
<S>      <C>                                                 <C>
6.       MANUFACTURER'S WARRANTIES                           22
6.1      Assignment                                          22
6.2      Proceeds                                            22
6.3      Parts                                               22
6.4      Agreement                                           22

7.       LESSOR'S COVENANTS                                  23
7.1      Quiet Enjoyment                                     23
7.2      Lessor Obligations Following Expiry Date            23
7.3      Fixed Place of Business                             23

8.       LESSEE'S COVENANTS                                  23
8.1      Duration                                            23
8.2      Information                                         24
8.3      Lawful and Safe Operation                           25
8.4      Taxes and other Outgoings                           26
8.5      Sub-Leasing                                         26
8.6      Inspection                                          26
8.7      Ownership; Property Interests; Related Matters      27
8.8      General                                             27
8.9      Records                                             28
8.10     Protection                                          29
8.11     Maintenance and Repair                              29
8.12     Removal of Engine and Parts                         31
8.13     Installation of Engines and Parts                   32
8.14     Non-Installed Engines and Parts                     32
8.15     Pooling of Engines and Parts                        33
8.16     Equipment Changes                                   34
8.17     Title                                               34
8.18     Third Party                                         34

9.       INSURANCE                                           34
9.1      Insurances                                          35
9.2      Requirements                                        35
9.3      Change                                              36
9.4      Insurance Covenants                                 36
9.5      Failure to Insure                                   37
9.6      Continuing Indemnity                                37
9.7      Application of Insurance Proceeds                   37

10.      INDEMNIFICATION                                     37
10.1     General                                             38
10.2     Duration                                            38

11.      EVENTS OF LOSS                                      38
11.1     Events of Loss                                      39

</TABLE>

<PAGE>

<TABLE>
<S>      <C>                                                 <C>
11.2     Requisition                                         39

12.      RETURN OF AIRCRAFT                                  39
12.1     Return                                              39
12.2     Final Inspection                                    39
12.3     Non-Compliance                                      40
12.4     Redelivery                                          40
12.5     Acknowledgement                                     40
12.6     Maintenance Program                                 40
12.7     Fuel                                                40
12.8     [Intentionally Omitted]                             41

13.      DEFAULT                                             41
13.1     Events                                              41
13.2     Rights                                              42
13.3     Deregistration                                      44
13.4     Default Payments                                    44

14.      ASSIGNMENT                                          45

15.      ILLEGALITY                                          45

16.      MISCELLANEOUS                                       45
16.1     Waivers, Remedies Cumulative                        45
16.2     Delegation                                          45
16.3     Certificates                                        45
16.4     Appropriation                                       45
16.5     Currency Indemnity                                  45
16.6     Set-off                                             46
16.7     Severability                                        47
16.8     Remedy                                              47
16.9     Expenses                                            47
16.10    Time of Essence                                     48
16.11    Notices                                             48
16.12    Law and Jurisdiction                                49
16.13    Sole and Entire Agreement                           50
16.14    Indemnification                                     50
16.15    Counterparts                                        50
16.16    Language                                            50

17.      DISCLAIMERS AND WAIVERS                             50
17.1     Exclusion                                           51
17.2     Waiver                                              51
17.3     Confirmation                                        51

18.      SECTION 1110                                        51

</TABLE>
<PAGE>

SCHEDULE 1
PART 1 - DESCRIPTION OF AIRCRAFT
PART 2 - AIRCRAFT DOCUMENTS

SCHEDULE 2
[INTENTIONALLY OMITTED]

SCHEDULE 3
OPERATING CONDITION AT REDELIVERY

SCHEDULE 4
INSURANCE REQUIREMENTS

<PAGE>


THIS AIRCRAFT LEASE AGREEMENT is made as of 15th day of September, 1999 between

COMPASS CAPITAL CORPORATION, a corporation incorporated under the laws of the
State of California whose chief executive office is 750 Battery Street, Suite
430, San Francisco, California 94111 U.S.A. ("Lessor"); and

ALOHA AIRLINES, INC., a corporation incorporated under the laws of the State of
Delaware whose principal address is 371 Aokea Street, Honolulu, Hawaii 96819,
U.S.A. ("Lessee").

WHEREAS: Lessor wishes to lease to Lessee and Lessee is willing to lease from
Lessor the Aircraft on the terms of this Agreement.

IT IS AGREED as follows:

1.   INTERPRETATION

1.1  DEFINITIONS

In this Agreement the following terms shall have the following meanings:

Agreed Maintenance Performer  Lessee or such other person as shall be approved
                              from time to time in writing by Lessor (such
                              approval not to be unreasonably withheld).

Agreed Maintenance Program    such Program as shall be approved by the FAA and
                              agreed to from time to time in writing by
                              Lessor.

Agreed Value                  the amount set forth in Appendix A.

Air Authority                 the FAA.

Aircraft                      the aircraft described in Part 1 of Schedule 1,
                              (which term includes where the context admits a
                              separate reference to all Engines, Parts and
                              Aircraft Documents).

Aircraft Documents            the documents, data and records identified in
                              Part 2 of Schedule 1 and all additions,
                              renewals, revisions and replacements from time
                              to time made in accordance with this Agreement.

Airframe                      the Aircraft, excluding the Engines and Aircraft
                              Documents.

APU                           the auxiliary power unit installed on the
                              Aircraft on the


                                    -1-
<PAGE>

                              date on which the Aircraft was delivered
                              pursuant to the Prior Lease and any replacement
                              auxiliary power unit installed in accordance
                              with this Agreement.

Boeing                        The Boeing Company, a Delaware corporation with
                              its principal office in Seattle, State of
                              Washington, U.S.A.

Business Day                  a day (other than a Saturday or Sunday) on which
                              business of the nature required by this
                              Agreement is carried out in San Francisco,
                              California, Cincinnati, Ohio and the State of
                              Incorporation or where used in relation to
                              payments on which banks are open for business in
                              London, Hawaii, California and Ohio.

Certificated Air Carrier      shall mean any corporation (except the United
                              States Government) domiciled in the United
                              States of America and holding a Certificate of
                              Convenience and Necessity issued under Section
                              401 of the Federal Aviation Act by the
                              Department of Transportation or any predecessor
                              or successor agency thereto, or, in the event
                              such Certificates shall no longer be issued, any
                              corporation (except the United States
                              Government) domiciled in the United States of
                              America and legally engaged in the business of
                              transporting for hire passengers or cargo by air
                              predominantly to, from or between points within
                              the United States of America, and, in either
                              event, operating commercial jet aircraft, which
                              also is certificated so as to fall within the
                              purview of Section 1110 of Title 11 of the
                              United States Code or any analogous statute.

Commencement Date             September 15, 1999

Cycle                         one take-off and landing of the Aircraft.

Damage Notification
Threshold                     the amount set forth in Appendix A.

Default                       any Event of Default and any event or condition
                              which with the giving of notice or lapse of time
                              would constitute an Event of Default.

Dollars and $                 the lawful currency of the United States of
                              America.

Engine                        whether or not installed on the Aircraft:

                              (a) each engine of the manufacture and model


                                    -2-
<PAGE>

                              specified in Part 1 of Schedule 1 (each of which
                              has 750 or more rated takeoff horsepower or the
                              equivalent of such horsepower), such engines
                              being specified as to serial numbers on the Part
                              1 of Schedule 1; or

                              (b) any engine which has replaced that engine,
                              title to which has or should have, passed to
                              Lessor in accordance with this Agreement;

                              and in each case includes all modules and Parts
                              from time to time belonging to or installed in
                              that engine but excludes any properly replaced
                              engine title to which has, or should have,
                              passed to Lessee pursuant to this Agreement.

Event of Default              an event or condition specified in Clause 13.1.

Event of Loss                 with respect to the Aircraft (including for the
                              purposes of this definition the Airframe):

                              (a) the actual or constructive total loss of the
                              Aircraft (including any damage to the Aircraft
                              which results in an insurance settlement on the
                              basis of a total loss, or requisition for use or
                              hire which results in an insurance settlement on
                              the basis of a total loss); or

                              (b) it being destroyed, damaged beyond repair or
                              permanently rendered unfit for normal use for
                              any reason whatsoever; or

                              (c) the requisition of title, or other
                              compulsory acquisition, capture, seizure,
                              deprivation, confiscation or detention for any
                              reason of the Aircraft by the government of the
                              State of Registration or other competent
                              authority (whether de jure or de facto), but
                              excluding requisition for use or hire not
                              involving requisition of title; or

                              (d) the hi-jacking, theft, condemnation,
                              confiscation, seizure or requisition for use or
                              hire of the Aircraft which deprives any person
                              permitted by this Agreement to have possession
                              and/or use of the Aircraft of its possession
                              and/or use for more than 15 days.

Excusable Delay               with respect to delivery of the Aircraft, delay
                              or


                                    -3-
<PAGE>

                              non-performance due to or arising out of acts of
                              God or public enemy, civil war, insurrection or
                              riot, fire, flood, explosion, earthquake,
                              accident, epidemic, quarantine restriction, any
                              act of government, governmental priority,
                              allocation, regulation or order affecting
                              directly or indirectly, the Aircraft, any
                              manufacturer, Lessor or any materials or
                              facilities, strike or labor dispute causing
                              cessation, slowdown or interruption of work,
                              inability after due and timely diligence to
                              procure equipment, data or materials from
                              manufacturers, suppliers, any existing owner,
                              seller or lessee in a timely manner, damage,
                              destruction or loss, or any other cause to the
                              extent that such cause is beyond the control of
                              Lessor whether above mentioned or not and
                              whether or not similar to the foregoing.

Expiry Date                   6 September 2007 or if earlier the date on
                              which:

                              (a) the Aircraft has been redelivered in
                              accordance with this Agreement; or

                              (b) Lessor receives the Agreed Value following
                              an Event of Loss.

FAA                           the Federal Aviation Administration of the
                              United States of America and any successor
                              thereof.

Federal Aviation Act          United States Federal Aviation Act of 1958, as
                              amended, or any similar legislation of the
                              United States of America enacted in substitution
                              or replacement thereof

Financial Indebtedness        any indebtedness in respect of

                              (a) moneys borrowed or raised;

                              (b) any liability under any debenture, bond,
                              note, loan stock, acceptance, documentary credit
                              or other security;

                              (c) the acquisition cost of any asset to the
                              extent payable before or after the time of
                              acquisition or possession; or

                              (d) any guarantee, indemnity or similar
                              assurance


                                    -4-
<PAGE>

                              against financial loss of any person in respect
                              of the above.

Financing Statements          Uniform Commercial Code Financing Statements in
                              respect of this Agreement, the Mortgage and the
                              Security Agreement and the collateral described
                              therein prepared in a form acceptable for filing
                              with the applicable Government Entities in the
                              Habitual Base, the State in which Lessee's chief
                              executive office is located and such other
                              jurisdictions as Lessor shall reasonably
                              require.

First Termination Amount      the amount set forth in Appendix A.

Flight Hour                   each hour or part thereof (rounded up to two
                              decimal places) elapsing from the moment the
                              wheels of the Aircraft leave the ground on take
                              off until the wheels of the Aircraft next touch
                              the ground.

Governing Law                 the laws of the State of New York.

Government Entity             (a) any national government, political
                              subdivision thereof, or local jurisdiction
                              therein;

                              (b) any instrumentality, board, commission,
                              court, or agency of any thereof; however
                              constituted; and

                              (c) any association, organization, or
                              institution of which any of the above is a
                              member or to whose jurisdiction any thereof is
                              subject or in whose activities any of the above
                              is a participant.

Habitual Base                 the State of Hawaii or, subject to the prior
                              written consent of Lessor, any other state,
                              country or countries in which the Aircraft is
                              for the time being habitually based.

Indemnitees                   each of the Prior Interested Parties, Lessor and
                              Lender including any of their respective
                              successors and assigns, shareholders,
                              subsidiaries, affiliates, partners, contractors,
                              directors, officers, servants, agents and
                              employees.

Interim Period                the period specified in Section 5.2.


                                    -5-
<PAGE>

                               [Missing page 6]

<PAGE>

                               [Missing page 7]

<PAGE>

                              occurrence).

Mortgage                      the Loan and Security Agreement, dated as of
                              July 15, 1999 between Lessor as "Borrower" and
                              Lender as "Lender" and any supplements and
                              amendments thereto in respect of the Aircraft.

Other Leases                  (x) the Aircraft Lease Agreement made or to be
                              made between Lessor and Lessee with respect to
                              Boeing 737-200A Aircraft Serial Number 23443;
                              and (y) any other agreement (other than this
                              Agreement) made or to be made between Lessor (or
                              an affiliate or associate of Lessor) and Lessee
                              (or an affiliate or associate of Lessee).

Part                          whether or not installed on the Aircraft:

                              (a) any component, furnishing or equipment
                              (other than a complete Engine) furnished or
                              delivered with the Aircraft pursuant to the
                              Prior Lease and any replacement component,
                              furnishing or equipment installed in accordance
                              with this Agreement; and

                              (b) any other component, furnishing or equipment
                              (other than a complete Engine) title to which
                              has, or should have passed to Lessor pursuant to
                              this Agreement but excluding (i) any such items
                              title to which has, or should have, passed to
                              Lessee pursuant to this Agreement and (ii) any
                              Lessee Installed Seats.

Permitted Lien                (a) any lien for Taxes not assessed or, if
                              assessed, not yet due and payable, or being
                              contested in good faith by appropriate
                              proceedings;

                              (b) any lien of a repairer, mechanic, carrier,
                              hangarkeeper or other similar lien arising in
                              the ordinary course of business or by operation
                              of law in respect of obligations which are not
                              overdue or are being contested in good faith by
                              appropriate proceedings; but only if (in the
                              case of both (a) and (b) (i) adequate reserves
                              have been provided by Lessee for the payment of
                              the Taxes or obligations; and (ii) such
                              proceedings, or the continued existence of the
                              lien, do not give rise to any likelihood of the
                              sale, forfeiture or other loss of the Aircraft
                              or any interest therein or of criminal liability
                              on Lessor or


                                    -8-
<PAGE>

                              Lender; and

                              (c) any Lessor Lien.

Person                        shall mean and include any individual person,
                              corporation, partnership, firm, joint stock
                              company, joint venture, trust, estate,
                              unincorporated organization, association,
                              Governmental Entity, or organization or
                              association of which any of the above is a
                              member or a participant.

Prior Interested Parties      each of (i) AerFi Finance (Bermuda) No. 3
                              Limited (formerly known as GPA Finance (Bermuda)
                              No. 3 Limited), as prior, a prior owner and, to
                              the extent applicable, as prior lessor, (ii)
                              AerFi Group plc (formerly known as GPA Group
                              plc), as a prior owner and, to the extent
                              applicable, as prior lessor, (iii) AerFi
                              Corporation, as prior lessor and a prior owner
                              on the FAA Registry (iv) Wilmington Trust
                              Company, as prior trustee, (v) GE Capital
                              Aviation Services, Inc. and (vi) GE Capital
                              Aviation Services, Limited.

Prior Lease                   the Aircraft Lease Agreement, dated as of May
                              27, 1994, between Lessor and Lessee, as
                              supplemented, amended and assigned.

Redelivery Location           an airport within the United States of America
                              to be agreed between Lessor and Lessee.

Reference Banks               The Provident Bank.

Rent                          all amounts payable pursuant to Clause 5.3.

Rent Amount                   the amount set forth in Appendix A.

Rental Period                 each period ascertained in accordance with
                              Clause 5.2.

Rent Date                     the first day of each Rental Period.

Second Termination Amount     the amount set forth in Appendix A.

Security Interest             any mortgage, charge, pledge, lien, assignment,
                              hypothecation, right of set-off or any agreement
                              or arrangment having the effect of creating a
                              security interest other than a Permitted Lien,
                              or any agreement to


                                    -9-
<PAGE>


                              create the foregoing other than a Permitted
                              Lien.

State of Incorporation        the State of Delaware.

State of Registration         the United States of America.

Subsidiary                    (a) in relation to any reference to accounts,
                              any company whose accounts are consolidated with
                              the accounts of Lessee in accordance with
                              accounting principles generally accepted under
                              accounting standards of the State of
                              Incorporation;

                              (b) for any other purpose an entity from time to
                              time:

                              (i) of which another has direct or indirect
                              control or owns directly or indirectly more than
                              50 per cent of the voting share capital; or

                              (ii) which is a direct or indirect subsidiary of
                              another under the laws of the jurisdiction of
                              its incorporation.

Taxes                         taxes, duties and the like of all kinds and any
                              other amount corresponding to any taxation
                              together with any penalties, fines, surcharge or
                              interest thereon.

Term                          the period commencing on the Commencement Date
                              and ending on the Expiry Date.

Termination Payment           has the meaning assigned to such term in Clause
                              4.7 of this Agreement.


1.2  CONSTRUCTION

(a) In this Agreement, unless the contrary intention is stated, a reference to:

    (i) each of "Lessor" or "Lessee" or any other person includes without
    prejudice to the provisions of this Agreement any successor in title to it
    and any permitted assignee;

    (ii) words importing the plural shall include the singular and vice versa;

    (iii) any document shall include that document as amended, novated or
    supplemented;

    (iv) a law (1) includes any statute, decree, constitution, regulation,
    order, judgment or directive of any Government Entity; (2) includes any
    treaty, pact, compact or other agreement to


                                    -10-
<PAGE>

     which any Government Entity is a signatory or party; (3) includes any
     judicial or administrative interpretation or application thereof and (4) is
     a reference to that provision as amended, substituted or re-enacted; and

     (v) a Clause or a Schedule is a reference to a clause of or a schedule to
     this Agreement, and

(b)  The headings in this Agreement are to be ignored in construing this
Agreement.

2.  REPRESENTATIONS AND WARRANTIES

2.1  Lessee's Representations and Warranties: Lessee represents and warrants to
     Lessor that:--

(a)  Status: Lessee is a corporation duly incorporated and validly existing in
     good standing under the laws of the State of Incorporation and has the
     corporate power to own its assets and carry on its business as it is being
     conducted and is the holder of all necessary air transportation licenses
     required in connection therewith and with the use and operation of the
     Aircraft;

(b)  Power and Authority: Lessee has the corporate power to enter into and
     perform, and has taken all necessary corporate action to authorize
     the entry into, performance and delivery of, this Agreement and the
     transactions contemplated by this Agreement;

(c)  Legal Validity: This Agreement constitutes Lessee's legal, valid and
     binding obligations;

(d)  Non-conflict: The entry into and performance by Lessee of, and the
     transactions contemplated by, this Agreement do not and will not:

     (i) conflict with any laws binding on Lessee; or

     (ii) conflict with the constitutional documents of Lessee; or

     (iii) conflict with or result in default under any indenture, mortgage,
     chattel mortgage, deed of trust, conditional sales contract, lease, bank
     loan or credit agreement or other agreement which is binding upon Lessee or
     any of its assets nor result in the creation of any Security Interest over
     any of its assets;

(e)  Authorization: All authorizations, consents, registrations and
     notifications required in connection with the entry into, performance,
     validity and enforceability of, this Agreement and the transactions
     contemplated by this Agreement, have been (or will on or before the
     Commencement Date have been) obtained or effected (as appropriate) and are
     (or will on their being obtained or effected be) in full force and effect;

(f)  No Immunity:

     (i) Lessee is subject to civil commercial law with respect to its
     obligations under this Agreement; and


                                      -11-
<PAGE>


     (ii) neither Lessee nor any of its assets is entitled to any right of
     immunity and the entry into and performance of this Agreement by Lessee
     constitute private and commercial acts;

(g)  Accounts: the audited consolidated accounts of Aloha Airgroup, Inc.
     (Lessee's parent company) and its Subsidiaries most recently delivered to
     Lessor:--

     (i) have been prepared in accordance with accounting principles and
     practices generally accepted and consistently applied in the State of
     Incorporation; and

     (ii) fairly represent the consolidated financial condition of Aloha
     Airgroup, Inc. and its Subsidiaries as at the date to which they were drawn
     up;

(h)  Chief Executive Office: Lessee's chief executive office is located at the
     address stated in the Recitals to this Agreement;

(i)  Certificated Air Carrier: Lessee is a Certificated Air Carrier and Lessor,
     as lessor of the Aircraft to Lessee, is entitled to the benefits of Section
     1110 of Title 11 of the United States Code with respect to the Aircraft;
     and

(j)  Citizen of the United States: Lessee is a "citizen of the United States" as
     defined in Section 40102(a)(15) of Title 49 of the United States Code.

2.2  Lessee's Further Representations and Warranties: Lessee further represents
     and warrants to Lessor that:

(a)  No Default:

     (i) no Default has occurred and is continuing or might result from the
     entry into or performance of this Agreement; and

     (ii) no other event or condition has occurred and is continuing which
     constitutes (or with the giving of notice, lapse of time, determination of
     materiality or the fulfillment of any other applicable condition or any
     combination of the foregoing, might constitute) a material default under
     any material indenture, mortgage, chattel mortgage, deed of trust,
     conditional sales contract, lease, bank loan or credit agreement or other
     agreement which is binding on Lessee or any assets of Lessee;

(b)  Registration:

     (i) except for the filing of this Agreement with the FAA and the filing of
     the Financing Statements and related documents, it is not necessary or
     advisable under the laws of the State of Incorporation, the State of
     Registration or the Habitual Base in order to ensure the validity,
     effectiveness and enforceability of this Agreement or to establish, perfect
     or protect the property rights of Lessor in the Aircraft or any Engine or
     Part that this Agreement or any other instrument


                                      -12-
<PAGE>

     relating thereto be filed, registered or recorded or that any other action
     be taken or if any such filings, registrations, recordings or other actions
     are necessary or advisable, the same have been effected or will have been
     effected on or before the Commencement Date; and

     (ii) except for the filing of this Agreement with the FAA and the filing of
     the Financing Statements and related documents, under the laws of the State
     of Incorporation, the State of Registration and the Habitual Base the
     property rights of Lessor in the Aircraft, have been fully established,
     perfected and protected and this Agreement will have priority in all
     respects over the claims of all creditors of Lessee;

(c)  Litigation: no litigation, arbitration or administrative proceedings are
     pending or to Lessee's knowledge threatened against Lessee which, if
     adversely determined, would have a material adverse effect upon its
     financial condition or business or its ability to perform its obligations
     under this Agreement;

(d)  Pari Passu: the obligations of Lessee under this Agreement rank at least
     pari passu with all other present and contingent unsecured and
     unsubordinated obligations of Lessee, with the exception of such
     obligations as are mandatorily preferred by law and not by virtue of any
     contract;

(e)  Material Adverse Change: there has been no material adverse change in the
     consolidated financial condition of Aloha Airgroup, Inc. and its
     Subsidiaries or the financial condition of Lessee since the date to which
     the accounts most recently provided to Lessor on or prior to the
     Commencement Date were drawn up;

(f)  Taxes: Lessee has delivered all necessary returns and payments due to the
     tax authorities in the State of Incorporation, the State of Registration
     and the Habitual Base and all other jurisdictions in which Lessee is
     required to pay taxes and/or file tax returns or reports and Lessee is not
     required by law to deduct any Taxes from any payments under this Agreement;
     and

(g)  Information: the financial and other information furnished by Lessee in
     connection with this Agreement does not contain any untrue statement or
     omit to state facts, the omission of which makes the statements therein, in
     the light of the circumstances under which they were made, misleading, nor
     omits to disclose any material matter to Lessor and all forecasts and
     opinions contained therein were honestly made on reasonable grounds after
     due and careful enquiry by Lessee.

2.3  Repetition: The representations and warranties in Clause 2.1 and Clause 2.2
     will survive the execution of this Agreement. The representations and
     warranties contained in Clause 2.1 and Clause 2.2 will be deemed to be
     repeated by Lessee on the Commencement Date with reference to the facts and
     circumstances then existing. The representations and warranties contained
     in Clause 2.1 will be deemed to be repeated by Lessee on each Rent Date as
     if made with reference to the facts and circumstances then existing.

2.4  Lessor's Representations and Warranties: Lessor represents and warrants to
     Lessee that:


                                      -13-
<PAGE>

(a)  Status: Lessor is a corporation duly incorporated and validly existing in
     good standing under the laws of the State of California and has the
     corporate power to own its assets and carry on its business as it is now
     being conducted;

(b)  Power and authority: Lessor has the corporate power to enter into and
     perform, and has taken all necessary corporate action to authorize the
     entry into, performance and delivery of, this Agreement and the
     transactions contemplated by this Agreement;

(c)  Legal validity: This Agreement constitutes Lessor's legal, valid and
     binding obligation;

(d)  Non-conflict: The entry into and performance by Lessor of, and the
     transactions contemplated by, this Agreement do not and will not:

     (i) conflict with any laws binding on Lessor; or

     (ii) conflict with the constitutional documents of Lessor; or

     (iii)conflict with any document which is binding upon Lessor or any of its
     assets;

(e)  Authorization: So far as concerns the obligations of Lessor, all
     authorizations, consents, registrations and notifications required in
     connection with the entry into, performance, validity and enforceability
     of, and the transactions contemplated by, this Agreement by Lessor have
     been (or will on or before the Commencement Date have been) obtained or
     effected (as appropriate) and are (or will on their being obtained or
     effected be) in full force and effect;

(f) No immunity:

     (i) Lessor is subject to civil commercial law with respect to its
     obligations under this Agreement; and

     (ii) neither Lessor nor any of its assets is entitled to any right of
     immunity and the entry into and performance of this Agreement by Lessor
     constitute private and commercial acts; and

(g)  No Lessor Liens: Notwithstanding anything herein to the contrary, on the
     Commencement Date, there shall be no Lessor Liens on the Aircraft or facts
     and circumstances of which Lessor is aware and which might give rise to a
     Lessor Lien the existence of which would interfere with Lessee's rights
     under Clause 7.1.

3.   CONDITIONS PRECEDENT

3.1  Lessor's Conditions Precedent: Lessor's obligation to lease the Aircraft
     under this Agreement is subject to satisfaction of each of the following
     conditions:

(a)  receipt by Lessor from Lessee on or before the Commencement Date of the
     following satisfactory in form and substance to Lessor:



                                      -14-
<PAGE>

     (i) Constitutional Documents: a copy of the constitutional documents of
     Lessee;

     (ii) Resolutions: a copy of a resolution of the board of directors of
     Lessee approving the terms of, and the transactions contemplated by, this
     Agreement, resolving that it enter into this Agreement, and authorizing a
     specified person or persons to execute this Agreement and accept delivery
     of the Aircraft on its behalf;

     (iii) Opinion: an opinion in the form of Schedule 6 by independent legal
     counsel acceptable to Lessor in the State of Registration, the Habitual
     Base and the State of Incorporation;

     (iv) FAA Opinion: an opinion of Crowe & Dunleavy or other counsel
     acceptable to Lessor who are recognized specialists with regard to FAA
     registration matters in a form acceptable to Lessor as to the due filing
     for recordation of this Agreement;

     (v) Approvals: each approval, license and consent which may be required in
     relation to, or in connection with, the remittance to Lessor in Dollars of
     all amounts payable under this Agreement or the performance by Lessee of
     any of its obligations hereunder;

     (vi) Import: evidence that any required import license, and all customs
     formalities, relating to the import of the Aircraft into the Habitual Base
     have been obtained or complied with, and that the import of the Aircraft
     into the Habitual Base is exempt from;

     (vii) Licenses: copies of Lessee's Certificate of Convenience and
     Necessity, Radio License, FAR 121 Operator's Certificate and the U.S.
     Certificate of Airworthiness for the Aircraft;

     (viii) [Intentionally Omitted];

     (ix) Certificate: a certificate of a duly authorized officer of Lessee:

          (a) setting out a specimen of each signature referred to in
          Clause 3.1(a)(ii); and

          (b) certifying that each copy document specified in this Clause is
          correct, complete and in full force and effect;

     (x) Deregistration Power: an irrevocable power of attorney authorizing
     Lessor by or through its duly authorized officers or agents or such other
     person as Lessor may from time to time specify to do any thing or act or to
     give any consent or approval which may be required to obtain deregistration
     of the Aircraft and to export the Aircraft from the Habitual Base upon
     termination of the leasing of the Aircraft under this Agreement, duly
     notarized and legalized; and

     (xi) General: such other documents as Lessor may reasonably request;

(b)  the receipt by Lessor on or before the Commencement Date of:


                                      -15-
<PAGE>


     (i) Opinions: a signed original of each of the opinions referred to in
     Clauses 3.1(a)(iii) and (iv);

     (ii) Payments: subject to Clause 5.1, all sums due to Lessor under this
     Agreement on or before the Commencement Date;

     (iii) Insurance: certificates of insurance, an undertaking from Lessee's
     insurance broker and other evidence satisfactory to Lessor that Lessee is
     taking the required steps to ensure due compliance with the provisions of
     this Agreement as to Insurances with effect on and after the Commencement
     Date;

     (iv) Acknowledgement and Consent: an acknowledgement of and consent to the
     assignment of this Lease by Lessor to Lender as collateral security in form
     and substance satisfactory to Lender;

     (v) Accounts: the latest available accounts of Aloha Airgroup, Inc. as
     described in Clause 8.2(b)(i) and (ii);

     (vi) Documents: a list of the Aircraft Documents delivered with the
     Aircraft on the Commencement Date; and

     (vii) General: such other documents as Lessor may reasonably request;

(c)  receipt by Lessor of such information and documents relating to the
     proposed Maintenance Program as Lessor may require and Lessor having agreed
     the proposed Maintenance Program on or prior to the Commencement Date; and

(d)  evidence that on the Commencement Date the Aircraft and the Mortgage have
     been validly registered under the laws of the State of Registration, that
     the Financing Statements have been duly filed and that all filings,
     registrations, recordings and other actions have been or will be taken
     which are necessary or advisable to ensure the validity, effectiveness and
     enforceability of this Agreement and the Lease Assignment and to protect
     the property rights of Lessor and Lender in the Aircraft or any Part.

3.2  Further conditions precedent: The obligations of Lessor to deliver and
     lease the Aircraft under this Agreement are subject to the further
     conditions precedent that:

(a)  the representations and warranties of Lessee under Clauses 2.1 and 2.2 are
     correct and would be correct if repeated on delivery of the Aircraft under
     this Agreement; and

(b)  no Default has occurred and is continuing or might result from the leasing
     of the Aircraft to Lessee under this Agreement.

3.3  Waiver: The conditions specified in Clauses 3.1 and 3.2 are for the sole
     benefit of Lessor and may be waived or deferred in whole or in part and
     with or without conditions by Lessor. If any of


                                      -16-
<PAGE>

     those conditions are not satisfied or have not been waived on the
     Commencement Date and Lessor (in its absolute discretion) nonetheless
     agrees to deliver the Aircraft to Lessee, Lessee will ensure that those
     conditions are fulfilled within 15 days after the Commencement Date and
     Lessor may treat as an Event of Default the failure of Lessee to do so.

3.4  Lessee's Conditions Precedent: Lessee's obligation to lease the Aircraft
     under this Agreement is subject to receipt by Lessee from Lessor on or
     prior to the Commencement Date (unless waived) of

(a)  Constitutional Documents: a copy of Lessor's constitutional documents;

(b)  Resolutions: a copy of a resolution of the Board of Directors of Lessor
     approving, the terms of, and the transactions contemplated by, this
     Agreement resolving that it enter into this Agreement and authorizing a
     specified person or persons to execute this Agreement; and

(c)  Letter of Quiet Enjoyment: provided that Lessee shall have delivered to
     Lessor the Acknowledgement and Consent specified under 3.1(b)(iv) hereof,
     a letter of quiet enjoyment from Lessor and the Lender.

In addition to the foregoing, on the Commencement Date under Clause 2.4 shall be
correct.

4.   COMMENCEMENT; TERM

4.1  Leasing: Lessor will lease the Aircraft to Lessee and Lessee will take the
     Aircraft on lease in accordance with this Agreement for the duration of the
     Term. Lessee acknowledges that the Aircraft has been delivered to and
     accepted by Lessee as in conformance with all requirements of this Lease.
     Effective upon the Commencement Date, the Aircraft and every Part will be
     in every respect at the sole risk of Lessee, who will bear all risk of
     loss, theft, damage or destruction to the Aircraft from any cause
     whatsoever.

4.2  [Intentionally Omitted].

4.3  [Intentionally Omitted].

4.4  Licenses: Lessee will at its expense obtain all licenses, permits and
     approvals which may be necessary to export and/or transport the Aircraft
     from the Delivery Location. Lessor will furnish such data and information
     as may be reasonably requested by Lessee in connection with obtaining any
     such license, permit or approval.

4.5  [Intentionally Omitted].

4.6  Indemnity: Lessee will indemnify and hold harmless the Indemnities from and
     against all Claims (as defined in Clause 10) arising from death or injury
     to any observer of Lessee or any employee of Lessee in connection with any
     demonstration flight or inspection of the Aircraft by



                                      -17-
<PAGE>

     Lessee (except to the extent that such Claim arises out of the gross
     negligence or willful misconduct of Lessor).

4.7  Early Termination Option: Provided no Event of Default shall have occurred
     and be continuing, and subject as hereinafter provided, Lessee shall have
     the option (the "Early Termination Option") to terminate the Term on either
     6 September 2005 or 6 September 2006 (an "Early Termination Date"). The
     Early Termination Option may only be exercised by Lessee if (i) Lessee
     shall have given Lessor written irrevocable notice of Lessee's intention to
     exercise the Early Termination Option not later than 360 days before the
     Early Termination Date selected by Lessee and (ii) on or before the Early
     Termination Date selected by Lessee, Lessee pays to Lessor an amount equal
     to the First Termination Amount if the Early Termination Date is 6
     September 2005 or the Second Termination Amount if the Early Termination
     Date is 6 September 2006. Upon the exercise by Lessee of the Early
     Termination Option, the definition of "Expiry Date" currently stated in
     this Agreement shall be deemed to have been amended so as to refer to the
     Early Termination Date, and the Aircraft shall be redelivered to Lessor on
     that date in accordance with the terms and conditions of this Agreement
     (including without limitation Part B of Schedule 3 hereto).

5.   PAYMENTS

5.1  [Intentionally Omitted].

5.2  Rental Periods: The Term will be divided into Rental Periods. The first
     Rental Period (the "Interim Period") will commence on the Commencement Date
     and end on October 5, 1999, and each subsequent Rental Period will commence
     on the date succeeding the last day of the previous Rental Period. Each
     Rental Period will end on the date immediately preceding the numerically
     corresponding day in the next month except that:

(a)  if there is no such numerically corresponding day in that month, it will
     end on the last day of that month;

(b)  if a Rental Period would otherwise end after the Expiry Date, it will end
     on the Expiry Date.

     In addition to the foregoing, if a Rental Period begins on a non-Business
     Day, the Rent payable in respect of that Rental Period will be paid on the
     Business Day immediately succeeding the date on which that Rental Period
     commences.

5.3  Rent:

(a)  Time of Payment: Lessee will pay to Lessor or its order Rent in advance on
     each Rent Date. Payment must be initiated adequately in advance of the Rent
     Date to ensure that Lessor receives credit for the payment on the Rent
     Date.

(b)  Amount: The Rent payable in respect of all Rental Periods commencing on or
     after the Commencement Date will be equal to the Rent Amount, except that
     no Rent shall be due with


                                      -18-
<PAGE>

     respect to the Interim Period, which has been paid prior to the
     Commencement Date.

(c)  [Intentionally Omitted].

5.4  [Intentionally Omitted].

5.5  Payments: All payments by Lessee to Lessor under this Agreement will be
     made for value on the due date in Dollars and in immediately available
     funds by wire transfer to The Provident Bank, Cincinnati, Ohio, ABA No.
     042000424, Account No. 215-16510, Reference: Aloha Airlines N807AL, or to
     such other account in the United States as Lessor may advise Lessee in
     writing.

5.6  Gross-up:

(a)  All payments by Lessor under or in connection with this Agreement will be
     made without set-off counterclaim, free and clear of and without deduction
     for or on account of all Taxes (other than Lessor Taxes);

(b)  All Taxes (other than Lessor Taxes) in respect of payments under this
     Agreement shall be for the account of and will be paid by Lessee for its
     own account prior to the date on which penalties apply; if requested by
     Lessee, Lessor shall prepare and timely file all necessary tax returns and
     Lessee shall either furnish the funds to Lessor for Lessor to pay such
     Taxes or Lessee shall pay such Taxes for the account of Lessor;

(c)  If Lessee is compelled by law to make payment subject to any Tax (other
     than Lessor Taxes) and Lessor does not actually receive for its own benefit
     on the due date a net amount equal to the full amount provided for under
     this Agreement, Lessee will pay all necessary additional amounts to ensure
     receipt by Lessor of the full amount so provided for.

5.7  Taxation: Lessee will on demand pay and indemnify Lessor against all Taxes
     (other than Lessor Taxes) levied or imposed against or upon Lessor or
     Lessee and relating to or attributable to Lessee, this Agreement or the
     Aircraft directly or indirectly in connection with the importation,
     exportation, registration, ownership, leasing, sub-leasing, delivery,
     possession, use, operation, repair, maintenance, overhaul, transportation,
     landing, storage, presence or redelivery of the Aircraft or any part
     thereof or any rent, receipts, insurance proceeds, income or other amounts
     arising therefrom.

     If Lessor shall realize any Tax savings (by way of refund, deduction,
     credit or otherwise) in respect of any amount with respect to which Lessee
     has made an indemnity payment under this Agreement, and such Tax savings
     shall not have been taken into account previously in calculating any
     indemnity payment by Lessee, then Lessor shall, within 30 days after
     realizing such Tax savings, pay to Lessee the amount of such Tax savings
     (together with, in the case of a refund, any interest received thereon)
     plus the amount of any Tax savings realized by Lessor as a result of any
     such payment pursuant to this sentence, provided, however, that Lessor
     shall not be obligated to make any payment pursuant to this sentence to the
     extent that the amount of any Tax, savings for which such payment is to be
     made (other than Tax savings realized as a result of such



                                      -19-
<PAGE>

     payment) would exceed the aggregate amount of all prior payments made
     by Lessee to, on behalf of, or as indemnification of Lessor under this
     Agreement for Taxes less the amount of all prior payments pursuant to this
     sentence for such Tax savings. It is intended that Lessor shall retain a
     net tax benefit in respect of any amount with respect to which Lessee has
     made an indemnity payment under this Agreement only if Lessee shall first
     have been reimbursed for all payments made or withheld by it for Taxes
     under this Agreement.

5.8  Value Added Tax:

(a)  For the purposes of this sub-clause:

     (i) "VAT" means value added tax and any sales or turnover tax, imposition
     or levy of a like nature (other than Lessor Taxes);

     (ii) "supply" includes anything on which VAT is chargeable;

(b)  Lessee will pay to Lessor the amount of any VAT chargeable in respect of
     any supply for VAT purposes under this Agreement;

(c)  Each amount stated as payable by Lessee under this Agreement is exclusive
     of VAT (if any) and is accordingly to be construed as a reference to that
     amount plus any VAT in respect of it.

5.9  Information: If Lessee is required by any applicable law, or by any third
     party, to deliver any report or return in connection with any Taxes, Lessee
     will complete the same in a manner satisfactory to Lessor and in particular
     will state therein that Lessee is exclusively responsible for the use and
     operation of the Aircraft and for any Taxes arising therefrom, and Lessee
     will, on request supply a copy of the report or return to Lessor.

5.10 Taxation of Indemnity Payments:

(a)  If and to the extent that any sums payable to Lessor by Lessee under this
     Agreement by way of indemnity are insufficient, by reason of any Taxes
     (other than Lessor Taxes) payable in respect to those sums, for Lessor,
     except with respect to Lessor Taxes, to discharge the corresponding
     liability to the relevant third party (including any taxation authority),
     or to reimburse Lessor for the cost incurred by it to a third party
     (including any taxation authority) Lessee will pay to Lessor such sum as
     will after the tax liability has been fully satisfied leave Lessor with the
     same amount as it would have been entitled to receive in the absence of
     that liability together with interest on the amount of the deficit at the
     rate of interest stated in Clause 5.11 in respect of the period commencing
     on the date on which the payment of taxation is finally due until payment
     by Lessee (both before and after judgment);

(b)  If and to the extent that any sums constituting (directly or indirectly) an
     indemnity to Lessor but paid by Lessee to any person other than Lessor are
     treated as taxable in the hands of Lessor, Lessee will pay to Lessor such
     sum as will after the tax liability (except tax liability for Lessor Taxes)
     has been fully satisfied indemnify Lessor to the same extent as it would
     have been


                                      -20-
<PAGE>

     indemnified in the absence of such liability together with interest on the
     amount payable by Lessee under this sub-clause at the rate of interest
     stated in Clause 5.11 in respect of the period commencing on the date on
     which the payment of taxation is finally due until payment by Lessee (both
     before and after judgment).

5.11 Default Interest: If Lessee fails to pay any amount payable under this
     Agreement on the due date, Lessee will pay on demand from time to time to
     Lessor interest (both before and after judgment) on that amount, from the
     due date to the date of payment in full by Lessee to Lessor, at the rate
     calculated by Lessor to be one month Dollar LIBOR plus 300 basis points.
     All such interest will be compounded monthly and calculated on the basis of
     the actual number of days elapsed and a 360 day year.

5.12 Contest: If Lessee disputes the payment of any Taxes payable by Lessor for
     which Lessee is responsible under this Agreement, Lessor will take such
     action as Lessee may reasonably request at Lessee's expenses to contest
     that payment but will not be obliged to take any such action:

(a)  which Lessor considers in its reasonable discretion may prejudice it unless
     Lessee shall have provided security reasonably satisfactory to Lessor to
     cover the liability for Taxes and the expense of the contest; or

(b)  which Lessor reasonably considers does not have a reasonable prospect of
     success; or

(c)  for which Lessee has not made adequate provision to the reasonable
     satisfaction of Lessor in respect of the expense concerned.

5.13 Absolute: Lessee's obligations under this Agreement are absolute and
     unconditional irrespective of any contingency whatsoever including (but not
     limited to):

(a)  any right of set-off, counterclaim, recoupment, defense or other right
     which either party to this Agreement may have against the other;

(b)  any unavailability of the Aircraft for any reason, including, but not
     limited to, a requisition of the Aircraft or any prohibition or
     interruption of or interference with or other restriction against Lessee's
     use, operation or possession of the Aircraft;

(c)  any lack or invalidity of title or any other defect in title,
     airworthiness, merchantability, fitness for any purpose, condition, design,
     or operation of any kind or nature of the Aircraft for any particular use
     or trade, or for registration or documentation under the laws of any
     relevant jurisdiction, or any Event of Loss in respect of or any damage to
     the Aircraft;

(d)  any insolvency, bankruptcy, reorganization, arrangement, readjustment of
     debt, dissolution, liquidation or similar proceedings by or against Lessor
     or Lessee;

(e)  any invalidity or unenforceability or lack of due authorization of, or
     other defect in, this Agreement;


                                      -21-
<PAGE>

(f)  any other cause which but for this provision would or might otherwise have
     the effect of terminating or in any way affecting any obligation of Lessee
     under this Agreement.

     The provisions of this Clause 5.13 shall not limit Lessee's right to take
     such legal action as Lessee shall deem appropriate as a consequence of the
     breach by Lessor of its obligations to Lessee under this Agreement.

5.14 [Intentionally Omitted].

6.   MANUFACTURER'S WARRANTIES

6.1  Assignment: Notwithstanding this Agreement, Lessor will remain entitled to
     the benefit of each warranty, express or implied, with respect to the
     Aircraft, any Engine or Part so far as concerns any manufacturer, vendor,
     subcontractor or supplier. Except to the extent Lessor otherwise directs,
     Lessor hereby authorizes Lessee to pursue any claim thereunder in relation
     to defects affecting the Aircraft, any Engine or Part and, if Lessee
     decides to pursue such claim, Lessee agrees diligently to pursue any such
     claim which arises at its own cost. Lessee will use reasonable efforts to
     notify Lessor promptly upon becoming aware of any such claim.

6.2  Proceeds: Except to the extent Lessor otherwise agrees in a particular
     case, all proceeds of any such claim will be paid directly to Lessor but if
     and to the extent that such proceeds relate:

(a)  to defects affecting the Aircraft which Lessee has rectified; or

(b)  to compensation for loss of use of the Aircraft, an Engine or any Part
     during the Term; or

(c)  the costs incurred by Lessee in pursuing such claim; and

     provided no Default has occurred and is continuing the proceeds will be
     paid to Lessee by Lessor but in the case of (a) only on receipt of
     evidence satisfactory to Lessor that Lessee has rectified the relevant
     defect.

6.3  Parts: Except to the extent Lessor otherwise agrees in a particular case,
     Lessee will ensure that all engines, components, furnishings or equipment
     provided by the manufacturer, vendor, subcontractor or supplier in
     replacement of a defective Engine or Part pursuant to the terms of any
     warranty will be installed promptly by Lessee and that title thereto free
     of Security Interests vests in Lessor. On installation those items will be
     deemed to be an Engine or part as applicable.

6.4  Agreement: To the extent any warranties relating to the Aircraft are made
     available under an agreement between any manufacturer, vendor,
     subcontractor or supplier and Lessee, this Clause 6 is subject to that
     agreement. However Lessee will:

(a)  pay the proceeds of any claim thereunder to Lessor to be applied pursuant
     to Clause 6.2 and pending such payment will hold the claim and the proceeds
     in trust for Lessor;



                                      -22-
<PAGE>

(b)  take all such steps as are necessary at the end of the Term to ensure the
     benefit of any of those warranties which have vested in Lessee (to the
     extent that they are assignable) which have not expired are vested in
     Lessor.

7.   LESSOR'S COVENANTS

7.1  Quiet Enjoyment: Provided that no Default shall have occured and be
     continuing, Lessee shall quietly possess, use and enjoy the Aircraft and
     the rents, revenues, profits and income derived through Lessee's use and
     operation thereof without interference, hindrance or interruption by Lessor
     or any person or entity validly claiming by or through Lessor; provided
     that the exercise by Lessor of its rights under or in connection with this
     Agreement shall not constitute such an interference, hindrance or
     interruption.

7.2  Lessor Obligations Following Expiry Date: Within 5 Business Days of:

(a)  redelivery of the Aircraft to Lessor in accordance with and in the
     condition required by this Agreement; or

(b)  payment to Lessor of the Agreed Value following an Event of Loss after the
     Commencement Date;

     or in each case such later time as Lessor is satisfied Lessee has
     irrevocably paid to Lessor all amounts which may then be outstanding and
     payable under this Agreement, the Other Leases or under any other agreement
     between Lessor (or any affiliate or associate of Lessor) and Lessee, Lessor
     will pay to Lessee the amount of any Rent received in respect of any period
     falling after the date of redelivery of the Aircraft or payment of the
     Agreed Value, as the case may be.

7.3  Fixed Place of Business: During the Term, Lessor shall not establish a
     fixed place of business in the State of Hawaii without the prior written
     consent of Lessee (such consent not to be unreasonably withheld or delayed
     if such establishment will not have the effect of increasing Lessee's
     obligations under this Agreement or, if such establishment does so increase
     Lessee's obligations under this Agreement, if Lessor and Lessee shall have
     entered into alternative substitute arrangements having the same
     substantial effect as this Agreement but which avoid such increase in such
     obligations).

8.   LESSEE'S COVENANTS

8.1  Duration: The undertakings in this Clause and in Clause 12 will:

(A)  except as otherwise stated, be performed at the expense of Lessee; and

(b)  remain in force until redelivery of the Aircraft to Lessor in accordance
     with this Agreement and thereafter to the extent of any accrued rights of
     Lessor in relation to those undertakings.

8.2  Information: Lessee will:


                                      -23-
<PAGE>

(a)  notify Lessor forthwith of the occurrence of any Default or any other event
     which might adversely affect Lessee's ability to perform any of its
     obligations under this Agreement;

(b)  furnish to Lessor:

     (i) as soon as available but in any event not later than 60 days after the
     last day of each financial quarter of Aloha Airgroup, Inc. (Lessee's parent
     company), the consolidated management accounts of Aloha Airgroup, Inc.
     (comprising a balance sheet and profit and loss statement) prepared for the
     most recent previous financial quarter certified by Lessee's chief
     financial officer as being true and correct;

     (ii) as soon as available but not in any event later than 120 days after
     the last day of each financial year of Aloha Airgroup, Inc., its audited
     consolidated balance sheet as of such day and its audited consolidated
     profit and loss statement for the year ending on such day;

     (iii) at the same time as it is issued to the creditors of Lessee, a copy
     of each notice or circular issued to Lessee's creditors as a group; and

     (iv) on request from time to time such other information regarding Lessee
     and its business and affairs as Lessor may reasonably request;


(c)  upon request, keep Lessor informed as to current serial numbers of the
     Engines and any engine installed on the Aircraft;

(d)  promptly furnish to Lessor all information Lessor from time to time
     reasonably requests regarding the Aircraft, any Engine or any Part, its
     use, location and condition including, without limitation, the hours
     available on the Aircraft and any Engine until the next scheduled check,
     inspection, overhaul or shop visit, as the case may be;

(e)  on request, within 10 days after the end of any Rental Period furnish to
     Lessor, evidence satisfactory to Lessor of payment of all Taxes (other than
     Lessor Taxes) due during that or any previous Rental Period the non-payment
     of which could give rise to the imposition of a Security Interest on the
     Aircraft;

(f)  on request, furnish to Lessor evidence satisfactory to Lessor that all
     Taxes (other than Lessor Taxes) and charges incurred by Lessee with respect
     to the Aircraft, including without limitation all payments due to the
     relevant air traffic control authorities the non-payment of which could
     give rise to the imposition of a Security Interest on the Aircraft, have
     been paid and discharged in full;

(g)  provide Lessor with a monthly report on the Aircraft and each Engine in the
     form required from time to time by Lessor;

(h)  upon request, give Lessor written notice as to the time and location of all
     Major Checks; and


                                      -24-
<PAGE>

(i)  promptly notify Lessor of:

     (i) any loss, theft, damage or destruction to the Aircraft, any Engine or
     any Part, or any modification to the Aircraft if the potential cost may
     exceed the Damage Notification Threshold; and

     (ii) any claim or other occurrence likely to give rise to a claim under the
     insurances in excess of the Damage Notification Threshold and details of
     any negotiations with the insurance brokers over any such claim.

8.3  Lawful and Safe Operation: Lessee will:

(a)  comply with the law for the time being in force in any country or
     jurisdiction which may for the time being be applicable to the Aircraft
     (including, without limitation, FAR91.851 et seq (which FARs include the
     "non-addition rule")) or, so far as concerns the use and operation of the
     Aircraft, an owner or operator thereof;

(b)  not use the Aircraft in any manner contrary to any recommendation of the
     manufacturers of the Aircraft, any Engine or any Part or any recommendation
     or regulation of the Air Authority or for any purpose for which the
     Aircraft is not designed or reasonably suitable;

(c)  ensure that the crew and engineers employed by it in connection with the
     operation and maintenance of the Aircraft have the qualifications and hold
     the licenses required by the Air Authority and applicable law;

(d)  use the Aircraft solely in commercial or other operations for which Lessee
     is duly authorized by the Air Authority and applicable law;

(e)  not use the Aircraft for the carriage of:

     (i) whole animals living or dead except in the cargo compartments according
     to I.A.T.A. regulations, and except domestic, pet animals carried in a
     suitable container to prevent the escape of any liquid and to ensure the
     welfare of the animal;

     (ii) acids, toxic chemicals, other corrosive materials, explosives, nuclear
     fuels, nuclear wastes,or any nuclear assembles or components, except as
     permitted for passenger aircraft under the "Restriction of Goods" schedule
     issued by I.A.T.A. from time to time and provided that all the requirements
     for packaging or otherwise contained therein are fulfilled; or

     (iii)any other goods, materials or items of cargo which could reasonably be
     expected to cause damage to the Aircraft and which would not be adequately
     covered by the Insurances;

(f)  not utilize the Aircraft for purposes of training, qualifying or
     re-confirming the status of cockpit personnel except for the benefit of
     Lessee's cockpit personnel, and then only if the use of the


                                      -25-
<PAGE>

     Aircraft for such purpose is not disproportionate to the use for such
     purpose of other aircraft of the same type operated by Lessee;

(g)  not cause or permit the Aircraft to proceed to, or remain at, any location
     which is for the time being the subject of a prohibition order (or any
     similar order or directive) by:

     (i) any Government Entity of the State of Registration or the Habitual
     Base; or

     (ii) any Government Entity of the country in which such location is
     situated; or

     (iii) any Government Entity having jurisdiction over Lessor, Lender or the
     Aircraft; and

(h)  obtain and maintain in full force all certificates, licenses, permits and
     authorizations required for the use and operation of the Aircraft for the
     time being, and for the making of payments required by, and the compliance
     by Lessee with its other obligations under, This Agreement.

8.4  Taxes and other Outgoings: Lessee will promptly pay:

(a)  all license and registration fees, Taxes (other than Lessor Taxes) and
     other amounts (other than Lessor Taxes) of any nature imposed by any
     Government Entity with respect to the Aircraft, including without
     limitation the ownership, delivery, leasing, possession, use, operation,
     return, sale or other disposition of the Aircraft; and

(b)  all rent, fees, charges, Taxes (other than Lessor Taxes) and other amounts
     (other than Lessor Taxes) in respect of any premises where the Aircraft or
     any Part thereof is located from time to time;

     except to the extent that in the reasonable opinion of Lessor (which
     opinion shall not be unreasonably withheld) such payment is being contested
     in good faith by appropriate proceedings, in respect of which adequate
     reserves have been provided by Lessee and non-payment of which does not
     give rise to any material likelihood of the Aircraft or any interest
     therein being sold, forfeited or otherwise lost or of criminal liability on
     the part of Lessor or any of the Indemnitees.

8.5  Sub-Leasing: LESSEE WILL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR,
     SUB-LEASE OR PART WITH POSSESSION OF THE AIRCRAFT, THE ENGINES OR ANY PART
     EXCEPT THAT LESSEE MAY PART WITH POSSESSION (A) WITH RESPECT TO THE
     AIRCRAFT, THE ENGINES OR ANY PART TO THE RELEVANT MANUFACTURERS FOR TESTING
     OR SIMILAR PURPOSES OR TO THE AGREED MAINTENANCE PERFORMER FOR SERVICE,
     REPAIR, MAINTENANCE OR OVERHAUL, WORK, OR ALTERATIONS, MODIFICATIONS OR
     ADDITIONS TO THE EXTENT REQUIRED OR PERMITTED BY TIES AGREEMENT, AND (B)
     WITH RESPECT TO AN ENGINE OR PART, AS EXPRESSLY PERMITTED BY THIS
     AGREEMENT.

     Lessor shall not seek to charge Lessee any fee which is in addition to the
     actual


                                      -26-
<PAGE>


     Lessor in connection with the granting of such consent or in connection
     with the fulfillment of any conditions which might be attached thereto as a
     condition precedent to the grant thereof

8.6  Inspection:

(a)  Lessor, the Lender and any Person designated by Lessor or the Lender may at
     any time visit, inspect and survey the Aircraft, any Engine or any Part and
     for such purpose may, subject to any applicable Aviation Authority
     regulation, travel on the flight deck as observer. Lessee shall give Lessor
     and the Lender at least 15 days prior written notice of the date and
     location of each Major Check. At each Major Check, including the "C" check
     performed immediately before the redelivery of the Aircraft, Lessor, the
     Lender and any Person designated by Lessor or the Lender shall be entitled
     to be present at and to observe any areas of the Aircraft opened during
     such Major Check; and

(b)  Lessor will:

     (i) have no duty or liability to make or arising out of such and visit,
     inspection or survey; and

     (ii) so long as no Default has occurred and is continuing, not exercise
     such right other than on reasonable notice and so as not to disrupt
     unreasonably the commercial operations of Lessee.

8.7  Ownership; Property Interests; Related Matters: Lessee will:

(a)  not do or knowingly permit to be done or omit or knowingly permit to be
     omitted to be done or any act or thing which might reasonably be expected
     to jeopardize the rights of Lessor as lessor and holder of title to the
     Aircraft or the rights of the Lender as mortgagee, secured party and
     assignee of this Agreement and as assignee of the insurances or the
     validity, enforceability or priority of the Mortgage;

(b)  on all occasions when the ownership of the Aircraft, any Engine or any Part
     is relevant, make clear to third parties that title is held by Lessor;

(c)  not at any time (i) represent or hold out Lessor or Lender as carrying
     goods or passengers on the Aircraft or as being in any way connected or
     associated with any operation or carriage (whether for hireor reward or
     gratuitously) which may be undertaken by Lessee or (ii) pledge the
     credit of Lessor or Lender;

(d)  ensure that there is always affixed, and not removed or in any way
     obscured, a fireproof plate (having dimensions of not less than 10 cm. x 7
     cm.) in a reasonably prominent position in the cockpit of the Aircraft
     adjacent to the certificate of airworthiness and on each Engine stating:

     "Title to this Aircraft/Engine is held by Compass Capital Corporation; and
     is subject to a security interest held by The Provident Bank. The Aircraft
     is leased to Aloha Airlines, Inc. and may not be operated by any other
     person without the prior written consent of Compass Capital



                                      -27-
<PAGE>

     Corporation and the Provident Bank.";

(e)  not create or permit to exist any Security Interest upon the Aircraft, any
     Engine or any Part;

(f)  not do or permit to be done anything which may reasonably be expected to
     expose the Aircraft, any Engine or any Part to penalty, forfeiture,
     impounding, detention, appropriation, damage or destruction and without
     prejudice to the foregoing, if any such penalty forfeiture, impounding,
     detention or appropriation, damage or destruction occurs, give Lessor
     notice and use best endeavors to procure the immediate release of the
     Aircraft, any Engine or the Part, as the case may be;

(g)  not abandon the Aircraft, the Engine or any Part;

(h)  pay and discharge or cause to be paid and discharged when due and payable
     or make adequate provision by way of security or otherwise for all debts,
     damages, claims and liabilities which have given or might give rise to a
     Security Interest over or affecting the Aircraft, any Engine or any Part;
     and

(i)  not attempt, or hold itself out as having any power, to sell, lease or
     otherwise dispose of the Aircraft, any Engine or any Part.

8.8  General: Lessee will:

(a)  not make any substantial change in the nature of the business in which it
     is engaged, will preserve its corporate existence, and will conduct its
     business in an orderly and efficient manner and will maintain its rights,
     privileges, licenses and franchises material thereto or material to
     performing its obligations under this Agreement;

(b)  ensure that no change will occur in the Habitual Base of the Aircraft
     without the prior written consent of the Lessor;

(c)  not, without giving Lessor 30 days prior notice (in accordance with this
     Agreement), change its chief executive office from the address stated in
     the Recitals to this Agreement;

(d)  remain a Certificated Air Carrier and maintain, without limitation, its
     status so as to fall within the purview of Section 1110 of Title 11 of
     the United States Code or any analogous Statute; and

(e)  remain a "citizen of the United States" as defined in Section 40102(a)(15)
     of Title 49 of the United States Code.

8.9  Records: Lessee will:

(a)  cause accurate, complete and current records of all flights made by, and
     all maintenance carried out on, the Aircraft (including in relation to each
     Engine and Part subsequently installed, before the installation) to be
     kept; keep the records in such manner as the Air Authority may from time



                                      -28-
<PAGE>

     to time require. During the Term, all records must be maintained in
     English. The records will form part of the Aircraft Documents; and

(b)  procure access to a revision service in respect of, and will maintain with
     appropriate revisions in English, all Aircraft Documents, records, logs,
     and other materials required by applicable laws and best practice of major
     international air transport operators in respect of the Aircraft.

8.10 Protection: Lessee will:

(a)  cooperate with Lessor in connection with the maintenance of the
     registration of the Aircraft with the Air Authority in the name of Lessor
     and reflecting the respective interests of Lender and not do or suffer to
     be done anything which might adversely affect that registration;

(b)  do all acts and things (including, without limitation, making any filing or
     registration with the Air Authority or any other Government Entity) and
     execute and deliver, notarize, file, register and record all documents
     (including, without limitation, any amendment of this Agreement) as may be
     required by Lessor:

     (i) following any change or proposed change in the ownership, lien in
     favour of Lender or financing of the Aircraft; or

     (ii) following any modification of the Aircraft, any Engine or any Part or
     the permanent replacement of any Engine or Part in accordance with this
     Agreement, so as to ensure that the rights of Lessor as lessor of and
     holder of title to the Aircraft and under this Agreement and the rights
     of Lender under the Mortgage and the Lease assignment in respect thereof
     apply with the same effect as before; or

     (iii) to establish, maintain, preserve, perfect and protect the rights of
     Lessor as lessor of and holder of title to the Aircraft and under this
     Agreement and the interest of Lender under the Mortgage and under the Lease
     Assignment.

8.11 Maintenance and Repair: Lessee will:

(a)  keep the Aircraft airworthy in all respects and in good repair and
     condition in accordance with normal airline practice;

(b)  not change the intervals of the Agreed Maintenance Program or the schedule
     of the Agreed Maintenance Program without the written consent of Lessor
     (such consent not to be unreasonably withheld);

(c)  maintain the Aircraft in accordance with the Agreed Maintenance Program
     through the Agreed Maintenance Performer and perform (at the respective
     intervals provided in the Agreed Maintenance Program) all Major Checks;

(d)  maintain the Aircraft in accordance with FAA Federal Air Regulations Part
     121 and any other


                                      -29-
<PAGE>

     rules and regulations of the FAA as may be applicable to passenger category
     aircraft and in at least the same manner and with at least the same care,
     including, without limitation, maintenance scheduling, modification status
     and technical condition, as is the case with respect to similar aircraft
     owned or otherwise operated by Lessee and as if Lessee were to retain the
     Aircraft in its fleet and continue to operate the Aircraft after the Expiry
     Date and including, without limitation, all maintenance to the Airframe,
     any Engine or any Part required to maintain all warranties, performance
     guarantees or service life policies in full force and effect;

(e)  comply with all mandatory inspection and modification requirements,
     airworthiness directives and similar requirements applicable to the
     Aircraft, any Engine or Part having a compliance date during the Term or
     within 180 days after the Expiry Date and which are required by the FAA;

     If any of the foregoing (each a "Relevant Item") is issued by the FAA,
     Lessor shall, if Lessee shall have performed modification or terminating
     action with regard to the same or shall have caused such modification or
     terminating action with regard to the same to be performed, in respect of
     any individual item of the same, on receipt by Lessor of evidence of
     payment and completion of the Relevant Item, reimburse Lessee with an
     amount equal to the solution to the following formulas:

     (C-$50,000) X (1-(RT/60))

     Where:

     C = the total cost of the Relevant Item;

     RT = the number of months remaining in the Term when the Relevant Item is
     completed; and

     60 = the assumed 5 year useful life of the Relevant Item;

     provided, however, Lessor's obligation to reimburse Lessee pursuant to this
     Clause 8.11(e) shall not exceed $100,000 in the aggregate.

(f)  comply with all applicable laws and the regulations of the Air Authority
     and other aviation authorities with jurisdiction over Lessee or the
     Aircraft, any Engine or Part regardless of upon whom such requirements are
     imposed and which related to the maintenance, condition, use or operation
     of the Aircraft or require any modification or alteration to the Aircraft,
     any Engine or Part;

(g)  maintain in good standing a current certificate of airworthiness (in the
     appropriate category for the nature of the operations of the Aircraft) for
     the Aircraft issued by the Air Authority except where the Aircraft is
     undergoing maintenance, modification or repair required or permitted by
     this Agreement and will from time to time provide to Lessor a copy on
     request;

(h)  if required by the Air Authority, maintain a current certification as to
     maintenance issued by or on behalf of the Air Authority in respect of the
     Aircraft and will from time to time provide to


                                      -30-
<PAGE>

     Lessor a copy on request; and

(i)  procure promptly the replacement of any Engine or Part which has become
     time, cycle or calendar expired, lost, stolen, seized, confiscated,
     destroyed, damaged beyond repair, unserviceable or permanently rendered
     unfit for use, with an engine or part complying with the conditions set out
     in Clause 8.13(a).

8.12 Removal of Engine and Parts: Lessee will ensure that no Engine or Part
     installed on the Aircraft is at any time removed from the Aircraft other
     than:

(a)  if replaced as expressly permitted by this Agreement; or

(b)  if the removal is of an obsolete item and is in accordance with the Agreed
     Maintenance Program; or

(c)  (i) during the course of maintaining, servicing, repairing, overhauling or
     testing that Engine or the Aircraft, as the case may be; or

     (ii) as part of a normal engine or part rotation Program; or

     (iii) for the purpose of making such modifications to the Engine or the
          Aircraft, as the case may be, as are permitted under this Agreement;

     and then in each case only if it is reinstalled or replaced by an engine or
     part complying with Clause 8.13(a) as soon as practicable and in any event
     no later than the Expiry Date.

8.13 Installation of Engines and Parts: Lessee will:

(a)  ensure that, except as permitted by this Agreement, no engine or part is
     installed on the Aircraft unless:

     (i) in the case of an engine, it (x) is an engine of the same model as, or
     an improved or advanced version of the Engine it replaces; (y) is in the
     same or better operating condition, has substantially similar hours
     available until the next scheduled checks, inspections, overhauls and shop
     visits (provided, however, that, on the Expiry Date, Lessee may make the
     financial adjustments referred to in Clause 12.8 in lieu of complying with
     this sub-paragraph (y)); and (z) has the same or greater value and utility
     as the replaced Engine;

     (ii) in the case of a part, it is in as good operating condition, has
     substantially similar hours available until the next scheduled checks,
     inspections, overhauls and shop visits, is of the same or a more advanced
     make and model and is of the same interchangeable modification status as
     the replaced Part;

     (iii) in each case, it has become and remains the property of Lessor free
     from Security interests and on installation of the Aircraft will without
     further act be subject to this Agreement


                                      -31-
<PAGE>

     and the Mortgage;

     (iv) in each case, Lessee has full details as to its source and maintenance
     records; and

     (v) Lessee complies with all applicable provisions of the Mortgage;

(b)  If no Default has occurred which is continuing, be entitled to install any
     engine or part on the Aircraft by way of replacement notwithstanding Clause
     8.13(a) if:

     (i) there is not available to Lessee at the time and in the place that that
     engine or part is required to be installed on the Aircraft, a replacement
     engine or, as the case may be, part complying with the requirements of
     Clause 8.13(a);

     (ii) it would result in an unreasonable disruption of the operation of the
     Aircraft and/or the business of Lessee to ground the Aircraft until an
     engine or part, as the case may be, complying with Clause 8.13(a) becomes
     available for installation on the Aircraft; and

     (iii)as soon as practicable after installation of the same on the Aircraft
     but, in any event, no later than the Expiry Date, Lessee removes any such
     engine or part and replaces it with the Engine or Part replaced by it or by
     an engine or part, as the case may be, complying with Clause 8.13(a).

     Where, pursuant to this sub-clause (b), an engine or part is installed on
     the Aircraft, Lessor shall not be entitled to any ownership or Security
     Interest in such engine or part.

(c)  If no Default has occurred which is continuing, the Lessee will be entitled
     to install Lessee Installed Seats on the Airframe by way of replacement
     notwithstanding Clause 8.13(a)(iii) so long as:

(i)  the terms of any lease, conditional sale agreement or security agreement,
     as the case may be, covering such Lessee Installed Seats will not have the
     effect of prejudicing the title and interest of the Lessor in and to the
     Aircraft (including its Engines and Parts) or the interest of the Lender in
     respect thereof under the Mortgage;

(ii) the secured party, lessor or conditional vendor, as the case may be, of
     such Lessee Installed Seats has confirmed and acknowledged in writing
     (which such confirmation and acknowledgment may be contained in the lease,
     conditional sale agreement or security agreement) to the Lessor and the
     Lender, in form and substance satisfactory to the Lessor, that it will
     recognize the respective rights, title and interest of the Lessor and the
     Lender in and to the Aircraft (including its Engines and Parts) and that it
     will not seek to exercise any rights whatever in relation thereto; and

(iii) before the Expiry Date the Lessee removes the Lessee Installed Seats and
      replaces them with the seats owned by them or by other seats, in either
      case complying with Clause 8.13(a).


                                      -32-
<PAGE>

8.14 Non-Installed Engines and Parts: Lessee will:

(a)  ensure that any Engine or Part which is not installed on the Aircraft (or
     any other aircraft as permitted by this Agreement) is, except as expressly
     permitted by this Agreement, properly and safely stored, and kept free from
     Security Interests;

(b)  on request notify Lessor if any Engine has been removed from the Aircraft
     and, from time to time, on request procure that any person to whom
     possession of an Engine is given acknowledges in writing to Lessor, in form
     and substance satisfactory to Lessor, that it will respect the interests of
     Lessor as lessor and Lender as mortgagee and secured party and will not
     seek to exercise any rights whatsoever in relation to it;

(c)  (notwithstanding the foregoing provisions of this sub-clause), be
     permitted, if no Default has occurred and is continuing, to install any
     Engine or Part on an aircraft, or in the case of a Part, an engine:

     (i) owned and operated by Lessee free from Security Interests; or

     (ii) leased or hired to Lessee pursuant to a lease or conditional sale
     agreement on a long-term basis and on terms whereby Lessee has full
     operational control of that aircraft or engine; or

     (iii) acquired by Lessee and/or financed or refinanced, and operated by
     Lessee, on terms that ownership of that aircraft or engine, as the case may
     be, pursuant to a lease or conditional sale agreement, or a Security
     Interest therein, is vested in or held by any other person;

provided that in the case of (ii) and (iii):

     (1) the terms of any such lease conditional sale agreement or Security
     Interest will not have the effect of prejudicing the interests of Lender as
     mortgagee and secured party or Lessor as holder of title and lessor of that
     Engine or Part and lessor of that Engine or Part or the interests of Lender
     in respect thereof under the Lease Assignment; and

     (2) if requested by Lessor, the lessor under such lease, the seller under
     such conditional sale agreement or the holder of such Security Interest
     as the case may be, has confirmed and acknowledged in writing to Lessor,
     in form and substance satisfactory to Lessor, that it will respect the
     interest of Lessor as owner and lessor and Lender as mortgagee and
     secured party of that Engine or Part and that it will not seek to
     exercise any rights whatsoever in relation thereto.

8.15 Pooling of Engines and Parts: Lessee will not enter into nor permit any
     pooling agreement or arrangement in respect of an Engine or Part without
     the prior written consent of Lessor.

8.16 Equipment Changes:


                                      -33-
<PAGE>

(a)  Lessee will not make any modification or addition to the Aircraft (each an
     "Equipment Change"), except for an Equipment Change which:

     (i) is expressly permitted by this Agreement, or

     (ii) which does not diminish the value, utility, condition, or
     airworthiness of the Aircraft;

(b)  So long as a Default has not occurred and is continuing, Lessee may remove
     any Equipment Change if it can be removed from the Aircraft without
     diminishing or impairing the value, utility, condition or airworthiness of
     the Aircraft.

8.17 Title:

(a)  Except as provided in Part 1 of Schedule 1 with respect to Windshear, TCAS
     and 11 Parameter FDR equipment, title to all Engines and Parts installed on
     the Aircraft whether by way of replacement, as the result of an Equipment
     Change or otherwise (except those installed pursuant to Clause 8.13(b) or
     8.13(c)) will on installation, without further act, vest in Lessor subject
     to this Agreement and the Mortgage free and clear of all Security
     Interests. Lessee will at its own expense take all such steps and execute,
     and procure the execution of, all such instruments as Lessor may require
     and which are necessary to ensure that title so passes to Lessor according
     to all applicable laws. At any time when requested by Lessor, Lessee will
     provide evidence to Lessor's satisfaction (including the provision, if
     required, to Lessor of one or more legal opinions) that title has so passed
     to Lessor;

(b)  Lessor may require Lessee to remove any Equipment Change and to restore the
     Aircraft to its condition prior to that Equipment Change;

(c)  Except as referred to in Clause 8.17(b) any Engine or Part (other than the
     Windshear, TCAS and I I Parameter FDR equipment referred to in Part 1 of
     Schedule 1) at any time removed from the Aircraft will remain the property
     of Lessor until replacement has been made in accordance with this Agreement
     and until title in that replacement has passed, according to applicable
     laws, to Lessor subject to this Agreement, and the Mortgage free of all
     Security Interests whereupon title to the Engine or Part; will, provided no
     Default has occurred and is continuing, pass to Lessee (in connection with
     which Lessor shall execute such documents as Lessee shall reasonably
     request and at Lessee's cost which are necessary to convey such title to
     Lessee).

8.18 Third Party: Lessee will procure that no person (other than Lessor or
     Lender) will act in any manner inconsistent with its obligations under this
     Agreement and that all persons will comply with those obligations as if
     references to "Lessee" included a separate reference to those persons.

9.   INSURANCE

9.1  Insurances: Lessee will maintain in full force during the Term insurances
     in respect of the Aircraft in form and substance satisfactory to Lessor
     (the "Insurances" which expression includes, where the context so admits,
     any relevant re-insurance(s)) through such brokers and


                                      -34-
<PAGE>

     with such insurers and having such deductibles and being subject to such
     exclusions as may be approved by Lessor. The Insurances will be effected
     either:

(a)  on a direct basis with insurers of recognized standing who normally
     participate in aviation insurances in the leading international insurance
     markets and led by reputable underwriter(s) approved by Lessor; or

(b)  with a single insurer or group of insurers approved by Lessor who does not
     retain the risk but effects substantial reinsurance with reinsurers in the
     leading international insurance markets and through brokers each of
     recognized standing and acceptable to Lessor for a percentage acceptable to
     Lessor of all risks insured (the "Reinsurances").

9.2  Requirements: Lessor's current requirements as to required Insurances are
     as specified in this Clause and in Schedule 4. Lessor may from time to time
     stipulate other requirements for the Insurances so that the scope and level
     of cover is maintained in line with best industry practice and the
     interests of Lessor and each of the Indemnitees are protected; provided,
     however, that this Clause of itself will not permit Lessor to increase the
     levels of coverage required under this Agreement (but without prejudice to
     any other provisions of this Agreement).

9.3  Change: If at any time and on reasonable grounds Lessor wishes to revoke
     its approval of any insurer, reinsurer, insurance or reinsurance, Lessor
     and/or its brokers will consult with Lessee and Lessee's brokers (as for
     the time being approved by Lessor) regarding whether that approval should
     be revoked to protect the interests of the parties insured. If, following
     the consultation, Lessor considers that any change should be made, Lessee
     will then arrange or procure the arrangement of alternative cover
     satisfactory to Lessor.

9.4 Insurance Covenants: Lessee will:

(a)  ensure that all legal requirements as to insurance of the Aircraft, any
     Engine or any Part which may from time to time be imposed by the laws of
     the State of Registration or any state to, from or over which the Aircraft
     may be flown, in so far as they affect or concern the operation of the
     Aircraft, are complied with and in particular those requirements compliance
     with which is necessary to ensure that (i) the Aircraft is not in danger of
     detention or forfeiture, (ii) the insurances remain valid and in full force
     and effect, and (iii) the interests of the Indemnitees in the Insurances
     and the Aircraft or any Part are not thereby prejudiced;

(b)  not use, cause or permit the Aircraft, any Engine or any Part to be used
     for any purpose or in any manner not covered by the Insurances or outside
     any geographical limit imposed by the Insurances;

(c)  comply with the terms and conditions of each policy of the Insurances and
     not do, consent or agree to any act or omission which:

     (i) invalidates or may invalidate the Insurances; or


                                      -35-


<PAGE>

     (ii) renders or may render void or voidable the whole or any part of any of
     the Insurances; or

     (iii) brings any particular liability within the scope of an exclusion or
     exception to the Insurances;

(d)  not take out without the prior written approval of Lessor any insurance or
     reinsurance in respect of the Aircraft other than those required under this
     Agreement unless relating solely to hull total loss, business interruption,
     profit commission and deductible risk. Notwithstanding the foregoing,
     Lessee may, at its own cost, increase the Agreed Value over the value
     currently provided for in this Agreement;

(e)  commence renewal procedures at least 30 days prior to expiry of any of the
     Insurances and provide to Lessor:

     (i) if requested by Lessor, a written statement status report of renewal
     negotiation 14 days prior to each expiry date.

     (ii) confirmation of completion of renewal prior to each expiry date;

     (iii) certificates of insurance (and whether appropriate certificates of
     reinsurance), and broker's (and any reinsurance brokers') letter of
     undertaking in a form acceptable to Lessor in English, detailing the
     coverage and confirming the insurers' (and any reinsurers') agreement to
     the specified insurance requirements of this Agreement within 7 days after
     each renewal date;

(f)  on request, and if a Default shall have occurred, provide to Lessor copies
     of documents evidencing the Insurances;

(g)  on request, and if a Default shall have occurred, provide to Lessor
     evidence that the Insurance premiums have been paid;

(h)  not make any modification or alteration to the insurances material and
     adverse to the interests of any of the Indemnitees;

(i)  be responsible for any deductible under the Insurances; and

(j)  provide any other insurance and reinsurance related information, or
     assistance, in respect of the Insurances as Lessor may reasonably require.

9.5  Failure to Insure : If Lessee fails to maintain the Insurances in
     compliance with this Agreement, each of the Indemnitees will be entitled
     but not bound, (without prejudice to any other rights of Lessor under this
     Agreement):

(a)  to pay the premiums due or to effect and maintain insurances satisfactory
     to it or otherwise remedy Lessee's failure in such manner (including,
     without limitation to effect and maintain an "owner's interest" policy) as
     it considers appropriate. Any sums so expended by it will become


                                      -36-
<PAGE>

     immediately due and payable by Lessee to Lessor together with interest
     thereon at the rate specified in Clause 5.11, from the date of expenditure
     by it up to the date of reimbursement by Lessee;

(b)  At any time while such failure is continuing to require the Aircraft to
     remain at any airport or to proceed to and remain at any airport designated
     by it until the failure is remedied to its satisfaction.

9.6  Continuing Indemnity : Lessor may require Lessee to effect and to maintain
     product liability insurance after the Expiry Date with respect to its
     liability under the Indemnification in Clause 10 for such period as Lessor
     may reasonably require (but in any event not more than 3 years) which
     provides for each Indemnitee to be named as additional insured. Lessee's
     obligation in this Clause shall not be affected by Lessee ceasing to be
     lessee of the Aircraft and/or any of the Indemnitees ceasing to have any
     interest in respect of the Aircraft.

9.7  Application of Insurance Proceeds :

     As between Lessor and Lessee:

(a)  all insurance payments received as a result of an Event of Loss occurring
     during the Tenn will be paid to Lessor or as it may direct and Lessor or
     its designee who received such payment will pay the balance of those
     amounts to Lessee after deduction of all amounts which may be or are
     payable by Lessee to Lessor under this Agreement (including under Clause
     11.1(b));

(b)  all insurance proceeds of any property, damage or loss to the Aircraft, any
     Engine or any Part occurring during the Term not constituting an Event of
     Loss and in excess of the Damage Notification Threshold will be paid to
     Lessor or as it may direct and applied to payment (or to reimburse Lessee)
     for repairs or replacement property upon Lessor being satisfied that the
     repairs or replacement have been effected in accordance with this
     Agreement. Insurance proceeds in amounts below the Damage Notification
     Threshold may be paid by the insurer directly to Lessee;

(c)  all insurance proceeds in respect of third party liability will, except to
     the extent paid by the Insurers to the relevant third party, be paid to
     Lessor or as it may direct to be paid directly in satisfaction of the
     relevant liability or to Lessee in reimbursement of any payment so made;

(d)  notwithstanding Clauses 9.7(a), (b) or (c), if at the time of the payment
     of any such insurance proceeds a Default has occurred and is continuing all
     such proceeds will be paid to or retained by Lessor or Lessor's designee to
     be applied toward payment of any amounts which may be or are payable by
     Lessee in such order as Lessor or Lessor's designee sees fit or as Lessor
     may elect.

10.  INDEMNIFICATION

10.1 General : Lessee agrees to assume liability for, defend, indemnify and hold
     harmless the Indemnitees on an after tax basis from and against any and all
     claims, proceedings, losses, liabilities, damages (whether direct,
     indirect, special, incidental or consequential), suits,


                                      -37-
<PAGE>

     judgments, costs, expenses (including, without limitation, legal fees and
     expenses), penalties (whether civil or criminal) or fines (each a "Claim")
     (regardless of when the same is made or incurred, whether on or after July
     15, 1999, during or after the Term):

(a)  which may at any time be suffered or incurred directly or indirectly as a
     result of or in any manner connected with the possession, delivery,
     performance, management, ownership, registration, control, maintenance,
     condition, service, repair, overhaul, leasing, use, operation or return of
     the Aircraft, any Engine or Part (either in the air or on the ground)
     whether or not the Claim may be attributable to any defect in the Aircraft,
     any Engine or any Part or to its design, testing or use or otherwise, and
     regardless of when the same arises or whether it arises out of or is
     attributable to any act or omission, negligent or otherwise, of any
     Indemnitee;

(b)  which arise out of any act or omission which invalidates or which renders
     voidable any of the Insurances;

(c)  which may at any time be suffered or incurred as a consequence of any
     design, article or material in the Aircraft, any Engine or any Part or its
     operation or use constituting an infringement of patent, copyright,
     trademark, design or other proprietary right or a breach of any obligation
     of confidentiality owed to any person;

(d)  which results from Lessee's breach of any of its representations or
     warranties or any other event of Default under this Agreement;

     but excluding any Claim in relation in a particular Indemnitee (x) to the
     extent that that Claim is covered pursuant to another indemnity provision
     of this Agreement or (y) to the extent it arises as a result of the gross
     negligence or willful misconduct of that Indemnitee, Lessor Taxes or a
     Lessor Lien or (z) to the extent it arises out of facts and circumstances
     occurring prior to July 15, 1999 or after the expiry of the Term where such
     facts and circumstances do not result from acts or omissions of Lessee.

10.2 Duration : the Indemnification contained in this Agreement will continue in
     full force after the Expiry Date.

11.  EVENTS OF LOSS

11.1 Events of Loss :

(a)  Pre-delivery: If an Event of Loss occurs prior to delivery of the Aircraft
     to Lessee this Agreement will immediately terminate and except as expressly
     stated in this Agreement neither party will have any further obligation or
     liability under this Agreement other than pursuant to Clause 16.9 except
     that Lessor will rebate to Lessee the amount of any aircraft commitment fee
     paid under this Agreement.

(b)  Post-delivery: If an Event of Loss occurs after delivery of the Aircraft to
     Lessee, Lessee will pay the Agreed Value to Lessor or as it may direct on
     or prior to the earlier of (i) 21 Business Days


                                      -38-
<PAGE>

     after the Event of Loss and (ii) the date of receipt of insurance proceeds
     in respect of that Event of Loss. Subject to the rights of any insurers and
     reinsurers or other third party, upon irrevocable payment in full to Lessor
     or its designee of that amount and all other amounts which may be or become
     payable to Lessor under this Agreement, Lessor will without recourse or
     warranty (except as to Lessor's Liens) and without further act, cause to
     have transferred to Lessee all of Lessor's rights to any Engines and Parts
     not installed when the Event of Loss occurred, all on an AS-IS-WHERE-IS
     basis, and will at Lessee's expense, cause Lessor to execute and deliver
     such bills of sale and other documents and instruments as Lessee may
     reasonably request to evidence (on the public record or otherwise) the
     transfer and the vesting of Lessor's rights in such Engines and Parts in
     Lessee, free and clear of all rights of Lessor and Lessor Liens.

11.2 Requisition : During any requisition for use or hire of the Aircraft, any
     Engine or Part which does not constitute an Event of Loss:

(a)  the Rent and other charges payable under this Agreement will not be
     suspended or abated either in whole or in part, and Lessee will not be
     released from any of its other obligations under the Agreement (other than
     operational obligations with which Lessee is unable to comply solely by
     virtue of the requisition);

(b)  so long as no Default has occurred and is continuing, Lessee will be
     entitled to any hire paid by the requisitioning authority in respect of the
     Term. Lessee will, as soon as practicable after the end of any such
     requisition, cause the Aircraft to be put into the condition required by
     this Agreement. Lessor will be entitled to all compensation payable by the
     requisitioning authority in respect of any change in the structure, state
     or condition of the Aircraft arising during the period of requisition, and
     Lessor will apply such compensation in reimbursing Lessee for the cost of
     complying with its obligations under this Agreement in respect of any such
     change, but so that, if any Default has occurred and its continuing, Lessor
     may apply the compensation or hire in or towards settlement of any amounts
     owing by Lessee under this Agreement.

12.  RETURN OF AIRCRAFT

12.1 Return : On the Expiry Date or termination of the leasing of the Aircraft
     under this Agreement Lessee will unless an Event of Loss has occurred, at
     its expense, redelivery the Aircraft and Aircraft Documents to Lessor at
     the Redelivery Location or such other airport as is mutually acceptable to
     the parties hereto, in a condition complying with Schedule 3, free and
     clear of all Security interests and Permitted Liens (other than Lessor
     Liens) and in a condition qualifying for immediate certification of
     airworthiness by the FAA or as otherwise agreed by Lessor and Lessee, and
     thereupon cause the Aircraft to be deregistered by the Air Authority.

12.2 Final Inspection : immediately prior to redelivery of the Aircraft, Lessee
     will make the Aircraft available to Lessor and Lender for inspection
     ("Final Inspection") in order to verify that the condition of the Aircraft
     complies with this Agreement. The Final Inspection will be long enough to
     permit Lessor to:

(a)  inspect the Aircraft Documents;


                                      -39-
<PAGE>

(b)  inspect the Aircraft and uninstalled Parts;

(c)  inspect the Engines, including without limitation (i) a borescope
     inspection of (A) the low pressure and high pressure compressors and (B)
     turbine area and (ii) engine condition runs; and

(d)  observe a 2 hour demonstration flight (with Lessor's representatives as
     on-board observers).

     Lessor will indemnify and hold harmless Lessee from and against all Claims
     (as defined in Clause 10) arising from death or injury to any observer of
     Lessor or any employee of Lessor in connection with any demonstration
     flight or inspection of the Aircraft by Lessor (except to the extent that
     such Claim arises out of the gross negligence or willful misconduct of
     Lessee).

12.3 Non-Compliance : To the extent that, at the time of Final Inspection, the
     condition of the Aircraft does not comply with this Agreement, Lessee will
     at Lessor's option:

(a)  immediately rectify the non-compliance and to the extent the non-compliance
     extends beyond the Expiry Date, the Tenn will be automatically extended and
     this Agreement will remain in force until the non-compliance has been
     rectified; or

(b)  redeliver the Aircraft to Lessor and indemnify Lessor, and provide to
     Lessor's satisfaction cash as security for that indemnity, against the cost
     of putting the Aircraft into the condition required by this Agreement.

12.4 Redelivery : Upon redelivery Lessee will provide to Lessor all documents
     necessary to export the Aircraft from the Habitual Base (including, without
     limitation, a valid and subsisting export license for the Aircraft) and
     required in relation to the deregistration of the Aircraft with the Air
     Authority.

12.5 Acknowledgement: Provided Lessee has complied with its obligations under
     this Agreement, following redelivery of the Aircraft by Lessee to Lessor at
     the Redelivery Location, Lessor will deliver to Lessee an acknowledgement
     confirming that Lessee has redelivered the Aircraft to Lessor in accordance
     with this Agreement.

12.6 Maintenance Program :

(a)  Prior to the Expiry Date and upon Lessor's request, Lessee will provide
     Lessor or its agent reasonable access to the Agreed Maintenance Program and
     the Aircraft Documents in order to facilitate the Aircraft's integration
     into any subsequent operator's fleet;

(b)  Lessee will, if requested by Lessor to do so, upon return of the Aircraft
     deliver to Lessor a certified true current and complete copy of the Agreed
     Maintenance Program. Lessor agrees that it will not disclose the contents
     of the Agreed Maintenance Program to any person or entity except to the
     extent necessary to monitor Lessee's compliance with this Agreement and/or
     to bridge the maintenance Program for the Aircraft from the Agreed
     Maintenance Program to


                                      -40-
<PAGE>

     another Program after the Expiry Date.

12.7 Fuel : Upon redelivery of the Aircraft to Lessor, an adjustment will be
     made in respect of fuel on board on delivery of the Aircraft pursuant to
     the Prior Lease and fuel on board at redelivery at the price then
     prevailing at the Redelivery Location.

12.8 [Intentionally Omitted].

13.  DEFAULT

13.1 Events : Each of the following events or conditions will constitute an
     Event of Default and a repudiation of this Agreement by Lessee (whether any
     such event or condition is voluntary or involuntary or occurs by operation
     of law or pursuant to or in compliance with any judgment, decree or other
     of any court or any order, rule or regulation of any Government Entity):

(a)  Non-payment: Lessee fails to make any payment under this Agreement on the
     due date and such failure continues for 5 days; or

(b)  Insurance: Lessee fails to comply any provision on of Clause 9 or any
     insurance required to be maintained under this Agreement is cancelled or
     terminated or notice of cancellation is given in respect of any such
     insurance; or

(c)  Breach: Lessee fails to comply with any other material provision of this
     Agreement and, if such failure is in the reasonable opinion of Lessor
     capable of remedy, the failure continues for 15 days after notice from
     Lessor to Lessee; or

(d)  Representation: any material representation or warranty made (or deemed to
     be repeated) by Lessee in or pursuant to this Agreement or in any document
     or certificate or statement is or proves to have been incorrect in any
     material respect when made or deemed to be repeated; or

(e)  Cross Default:

     (i) any Financial Indebtedness of Lessee or any of its Subsidiaries which
     is in excess of $500,000 is not paid when due (but such amounts will not be
     considered to be due if they are being contested in good faith by Lessee
     and the circumstances contemplated in (i) and (ii) in the definition of
     Permitted Lien exist in respect of such amounts); or

     (ii) any such Financial Indebtedness becomes due or capable of being
     declared due prior to the date when it would otherwise have become due; or

     (iii) the security for any such Financial Indebtedness becomes enforceable;
     or

     (iv) any event of default or termination event, howsoever described, occurs
     under the Other Leases or any lease, hire purchase, conditional sale or
     credit sale agreement of Lessee or any of its Subsidiaries; or


                                      -41-
<PAGE>

(f)  Approvals: any consent, authorization, license, certificate or approval of
     or registration with or declaration to any Government Entity in connection
     with this Agreement (including, without limitation):

     (i) any authorization required by Lessee to obtain and transfer freely
     Dollars (or any other relevant currency) out of any relevant country; or

     (ii) required by Lessee to authorize, or in connection with, the execution,
     delivery, validity, enforceability or admissibility in evidence of this
     Agreement or the performance by Lessee of its obligations under this
     Agreement; or

     (iii) the registration of the Aircraft (to the extent that the events
     listed below are caused by acts or omissions of Lessee); or

     (iv) any airline license or air transport license including, without
     limitation, authority to operate the Aircraft under Part 121 of the Federal
     Aviation Regulations and a Certificate of Convenience and Necessity issued
     under Section 401 of the Federal Aviation Act;

     is modified in a manner unacceptable to Lessor or is withheld, or is
     revoked, suspended, cancelled, withdrawn, terminated or not renewed, or
     otherwise ceases to be in full force; or

(g)  Bankruptcy, etc:

     (i) Lessee or any Subsidiary consents to the appointment of a custodian,
     receiver, or liquidator of itself or all or any material part of Lessee's
     property or Lessee's consolidated property, or Lessee or any Subsidiary
     admits in writing its inability to, or is unable to, or does not, pay its
     debts generally as they come due, or makes a general assignment for the
     benefit of creditors, or Lessee or any Subsidiary files a voluntary
     petition in bankruptcy or a voluntary petition seeking reorganization in a
     proceeding under bankruptcy or insolvency laws (as now or hereafter in
     effect), or an answer admitting the material allegations of a petition
     filed against Lessee or any Subsidiary in any such proceeding, or Lessee or
     any Subsidiary by voluntary petition, answer or consent seeks relief under
     the provisions of any other bankruptcy, insolvency or other similar law
     providing for the reorganization or winding-up of corporations, or provides
     for an agreement, composition, extension or adjustment with its creditors,
     or any corporate action (including, without limitation, any board of
     directors or shareholder action) is taken by Lessee or any Subsidiary in
     furtherance of any of the foregoing, whether or not the same is fully
     effected or accomplished; or

     (ii) An order, judgment or decree is entered by any court appointing,
     without the consent of Lesseeor any Subsidiary, a custodian, receiver, or
     liquidator of Lessee or any Subsidiary, or of all or any material part of
     Lessee's property or Lessee's consolidated property is sequestered, and any
     such order, judgment or decree of appointment or sequestration remains in
     effect, undismissed, unstayed or unvacated for a period of 30 days after
     the date of entry thereof or at any time an order for relief is granted; or


                                      -42-
<PAGE>

     (iii) An involuntary petition against Lessee or any Subsidiary in a
     proceeding under the United States Federal Bankruptcy laws or other
     insolvency laws (as now or hereafter in effect) is filed and is not
     withdrawn or dismissed within 30 days thereafter or at any time an order
     for relief isgranted in such proceeding, or if, under the provisions of any
     law providing for reorganization or winding-up of corporations which may
     apply to Lessee or any Subsidiary, any court of competent jurisdiction
     assumes jurisdiction over, or custody or control of, Lessee or any
     Subsidiary or of all or any material part of Lessee's property, or Lessee's
     consolidated property and such jurisdiction, custody or control remains in
     effect, unrelinquished, unstayed or unterminated for a period of 30 days or
     at any time an order for relief is granted in such proceeding; or

(h)  Unlawful: it becomes unlawful for Lessee to perform any of its obligations
     under this Agreement or this Agreement becomes wholly or partly invalid or
     unenforceable; or

(i)  Suspension of Business: Lessee or any of its Subsidiaries suspends or
     ceases or threatens to suspend or cease to carry on all or a substantial
     part of its business as a Certificated Air Carrier; or

(j)  Disposal: Lessee or any of its Subsidiaries disposes, conveys or transfers
     or threatens to dispose, convey or transfer of all or a material part of
     its assets, liquidates or dissolves or consolidates or merges with any
     other Person whether by one or a series of transactions, related or not,
     other than for the purpose of a reorganization of the terms of which have
     received the previous consent in writing of Lessor (provided that such
     consent shall not be required where the resulting entity has a net worth
     equal to or greater than that of Lessee prior to such reorganization); or

(k)  Rights: the existence, validity, enforceability or priority of the rights
     of Lessor as lessor in respect of the Aircraft, or the rights of Lender as
     mortgagee and secured party or ;as assignee of this Agreement are
     challenged by Lessee or any other person claiming by or through Lessee; or

(l)  Change of Ownership: any single person, or group of persons acquire control
     of Lessee without the previous consent in writing of Lessor; or

(m)  Delivery: Lessee fails to accept delivery of the Aircraft when validly
     tendered pursuant to this Agreement by Lessor; or

(n)  Adverse Change: any event or series of events occurs which, in the
     reasonable opinion of Lessor might have a material adverse effect on the
     ability of Lessee to comply with its obligations under this Agreement.

13.2 Rights : If an Event of Default occurs, Lessor may at its option (and
     without prejudice to any of its other rights under this Agreement), at any
     time thereafter (without notice to Lessee except as required under
     applicable law):

(a)  accept such repudiation and by notice to Lessee and with immediate effect
     terminate the letting


                                      -43-
<PAGE>

     of the Aircraft (but without prejudice to the continuing obligations of
     Lessee under this Agreement), whereupon all rights of Lessee under this
     Agreement shall cease; and/or

(b)  proceed by appropriate court action or actions to enforce performance of
     this Agreement or to recover damages for the breach of this Agreement;
     and/or

(c)  either:

     (i) take possession of the Aircraft, for which purpose Lessor may enter any
     premises belonging to or in the occupation of or under the control of
     Lessee where the Aircraft may be located,or cause the Aircraft to be
     redelivered to Lessor at Shannon International Airport, Co. Clare, Ireland
     (or such other location as Lessor may require), and Lessor is hereby
     irrevocably by way of security for Lessee's obligations under this
     Agreement appointed attorney for Lessee in causing the redelivery or in
     directing the pilots of Lessee or other pilots to fly the Aircraft to
     that airport and will have all the powers and authorizations necessary
     for taking that action; or

     (ii) by serving notice require Lessee to redeliver the Aircraft to Lessor
     at Shannon International Airport, Ireland (or such other location as Lessor
     may require).

13.3 Deregistration : If an Event of Default occurs, Lessor may sell or
     otherwise deal with the Aircraft free and clear of any leasehold or other
     interest of Lessee as if this Agreement had never been made and Lessee will
     at the request of Lessor take all steps necessary to effect (if applicable)
     deregistration of the Aircraft and its export from the country where the
     Aircraft is for the time being situated and any other steps necessary to
     enable the Aircraft to be redelivered to Lessor in accordance with this
     Agreement; Lessee hereby irrevocably and by way of security for its
     obligations under this Agreement appoints (which appointment is coupled
     with an interest) Lessor as its attorney to execute and deliver any
     documentation and to do any act or thing required in connection with the
     foregoing.

13.4 Default Payments : if:

(a)  Default occurs; or

(b)  the Aircraft is not delivered on the proposed Commencement Date by reason
     of failure of Lessee to satisfy any conditions to that delivery;

     at Lessor's election, the present value of all Rent due and payable under
     this Agreement after the date of the Default shall immediately become due
     and payable (such amounts to be discounted to the then present value at the
     rate of 8.5% per annum) as liquidated damages for the loss of a bargain and
     not as a penalty. In addition, Lessee will indemnify Lessor on demand
     against any loss (including loss of profit), damages, expense, cost or
     liability which Lessor may sustain or incur directly or indirectly as a
     result including but not limited to:--

     (i) any loss of profit suffered by Lessor because of Lessor's inability to
     place the Aircraft on lease with another lessee on terms as favorable to
     Lessor as this Agreement or because whatever


                                      -44-
<PAGE>

     use, if any, to which Lessor is able to put the Aircraft upon its return to
     Lessor, or the funds arising upon a sale or other disposal of the Aircraft,
     is not as profitable to Lessor as this Agreement;

     (ii) any amount of principal, interest, fees or other sums whatsoever paid
     or payable on account of funds borrowed in order to carry any unpaid
     amount;

     (iii) any loss, premium, penalty or expense which may be incurred in
     repaying funds raised to finance the Aircraft or in unwinding any swap,
     forward interest rate agreement or other financial instrument relating in
     whole or in part to Lessor's financing of the Aircraft; and

     (iv) any loss cost expense or liability sustained or incurred or by Lessor
     owing to Lessee's failure to redeliver the Aircraft on the date, at the
     place and in the condition required by this Agreement.

14.  ASSIGNMENT

14.1 LESSEE WILL NOT ASSIGN, TRANSFER (VOLUNTARILY OR INVOLUNTARILY BY OPERATION
     OF LAW OR OTHERWISE) OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST
     OVER, ANY OF ITS RIGHTS UNDER THIS AGREEMENT.

14.2 Subject to Clause 14.4 Lessor may assign, novate or transfer all or any of
     its rights under this Agreement and in the Aircraft provided that Lessor
     will in the case of an assignment, novation or transfer other than by way
     of security have no further obligation under this Agreement following the
     assignment, novation or transfer of all its rights under this Agreement but
     notwithstanding that assignment, novation or transfer will remain entitled
     to the benefit of each indemnity and the liability insurances effected
     under this Agreement. Lessee will comply with all reasonable requests of
     Lessor, its successors and assigns in respect of any such assignment.
     Lessor will promptly notify Lessee of any assignment, novation or transfer.

14.3 If Lessor desires to effect any assignment, novation or transfer of its
     rights and obligations under this Agreement, Lessee agrees to cooperate and
     take all such steps as Lessor may reasonably request to give the assignee,
     novatee or transferee the benefir of this Agreement (including as to the
     execution of novation agreements, lease amendment agreements and
     acknowledgements of assignment).

14.4 Any assignment, novation or transfer by Lessor shall be at Lessor's cost
     and shall not result in any increase in Lessee's obligations hereunder in
     excess of those which would exist in the absence of such assignment,
     novation or transfer. In addition, such assignment, novation or transfer
     shall be to a Person having a net worth of at least $6,400,000.

15.  ILLEGALITY

     If it is or becomes unlawful in any jurisdiction for Lessor to give effect
     to any of Lessor's obligations as contemplated by this Agreement or to
     continue this Agreement Lessor may by


                                      -45-
<PAGE>

     notice in writing to Lessee terminate the leasing of the Aircraft under
     this Agreement and Lessee will forthwith redeliver the Aircraft to Lessor
     in accordance with Clause 12. Without prejudice to the foregoing Lessor
     will consult in good faith with Lessee as to any steps which may be taken
     to restructure the transaction to avoid that unlawfulness but will be under
     no obligation to take any such steps.

16.  MISCELLANEOUS

16.1 Waivers, Remedies Cumulative : The rights of Lessor under this Agreement:

(a)  may be exercised as often as necessary;

(b)  are cumulative and not exclusive of its rights under any law; and

(c)  may be waived only in writing and specifically.

Delay in exercising or non-exercise of any such right is not a waiver of that
right.

16.2 Delegation : Lessor may delegate to any person or persons all or any of the
     trusts, powers or discretions vested in it by these presents and any such
     delegation may be made upon such terms and conditions and subject to such
     regulations (including power to sub-delegate) as Lessor in its absolute
     discretion thinks fit.

16.3 Certificates : Save where expressly provided in this Agreement, any
     certificate or determination by Lessor as to any rate of interest or as to
     any other amount payable under this Agreement will, in the absence of
     manifest error, be conclusive and binding on Lessee.

16.4 Appropriation : If any sum paid or recovered in respect of the liabilities
     of Lessee under this Agreement is less than the amount then due, Lessor may
     apply that sum to amounts due under this Agreement in such proportions and
     order and generally in such manner as Lessor may determine at its sole
     discretion.

16.5 Currency Indemnity :

(a)  If Lessor receives an amount in respect of Lessee's liability under this
     Agreement or if such liability is converted into a claim, proof, judgment
     or order in a currency other than the currency (the "contractual currency")
     in which the amount is expressed to be payable under this Agreement:

     (i) Lessee will indemnify Lessor as an independent obligation against any
     loss arising out of or as a result of such conversion;

     (ii) If the amount received by Lessor, when converted into the contractual
     currency (at the market rate at which Lessor is able on the date of receipt
     by Lessor (or on the next date thereafter on which under normal banking
     practice Lessor is able to convert the amount received into the


                                      -46-
<PAGE>

     contractual currency) to purchase the contractual currency in London or at
     its option New York with that other currency) is less than the amount owed
     in the contractual currency, Lessee will, forthwith on demand, pay to
     Lessor an amount in the contractual currency equal to the deficit; and

     (iii) Lessee will pay to Lessor on demand any exchange costs and Taxes
     payable in connection with the conversion;

(b)  Lessee waives any right it may have in any jurisdiction to pay any amount
     under this Agreement in a currency other than that in which it is expressed
     to be payable.

16.6 Set-off : Lessor may set off any matured obligation owed by Lessee under
     this Agreement, the Other Leases or under any other agreement between
     Lessor (or any affiliate or associate of Lessor) and Lessee (to the extent
     beneficially owned by Lessor) against any obligation (whether or not
     matured) owed by Lessor to Lessee, regardless of the place of payment or
     currency. If the obligations are in different currencies, Lessor may
     convert either obligation at the market rate of exchange available in
     London or at its option New York for the purpose of the set-off. If an
     obligation is un ascertained or un liquidated, Lessor may in good faith
     estimate that obligation and set off in respect of the estimate, subject to
     the relevant party accounting to the other when the obligation is
     ascertained or liquidated. Lessor will not be obliged to pay any amounts to
     Lessee under this Agreement so long as any sums which are then due from
     Lessee under this Agreement, the Other Leases or under any other agreement
     between Lessor (or any affiliate or associate of Lessor) and Lessee remain
     unpaid and any such amounts which would otherwise be due will fall due only
     if and when Lessee has paid all such sums except to the extent Lessor
     otherwise agrees or sets off such amounts against such payment pursuant to
     the foregoing.

16.7 SeverabiIity : If a provision of this Agreement is or becomes illegal,
     invalid or unenforceable in any jurisdiction, that will not affect:

(a)  the legality, validity or enforceability in that jurisdiction of any other
     provision of this Agreement; or

(b)  the legality, validity or enforceability in any other jurisdiction of that
     or any other provision of this Agreement.

16.8 Remedy : If Lessee fails to comply with any provision of this Agreement,
     Lessor may, without being in any way obliged to do so or responsible for so
     doing and without prejudice to the ability of Lessor to treat the
     non-compliance as a Default or an Event of Default, effect compliance on
     behalf of Lessee, whereupon Lessee shall become liable to pay immediately
     any sums expended by Lessor together with all costs and expenses (including
     legal costs) in connection therewith.

     In the event that Lessee obtains a judgment against Lessor, Lessee shall be
     entitled to receive all costs and expenses (including legal costs) in
     connection therewith.

16.9 Expenses : Whether or not the Aircraft is accepted by Lessee pursuant to
     this Agreement, if


                                      -47-
<PAGE>

     Lessor shall have tendered the Aircraft to Lessee pursuant to this
     Agreement, Lessee will pay to Lessor on demand:

(a)  all expenses associated with perfecting this Agreement in the State of
     Registration, the Habitual Base and other states having regard to the
     operation of the Aircraft (including, but not limited to, the provision of
     legal opinions (unless otherwise agreed between Lessor and Lessee) stamp
     duties, translations and registrations, whether required by Lessor or
     Lessee); and

(b)  upon the occurrence of a Default, all expenses (including legal, survey and
     other costs) payable or incurred by Lessor in contemplation of, or
     otherwise in connection with, the enforcement of or preservation of any of
     Lessor's rights under this Agreement, or in respect of the repossession of
     the Aircraft.

     Lessor shall bear the cost of importing the Aircraft into the United States
     of America.

     All expenses payable pursuant to this Clause 16.9 will be paid in the
     currency in which they are incurred by Lessor.

16.10 Time of Essence : The time stipulated in this Agreement for all payments
      payable by Lessee to Lessor and for the performance of Lessee's other
      obligations under this Agreement will be of the essence of this Agreement.

16.11 Notices : All notices under, or in connection with, this Agreement will,
      unless otherwise stated, be given in writing by letter, telex, facsimile
      or SITA. Any such notice is deemed effectively to be given as follows:

      (i) if by letter, when delivered;

      (ii) if by telex, when dispatched, but only if, at the time of
      transmission, the correct answerback appears at the start and at the end
      of the sender's copy of the notice; and

      (iii) if by facsimile or SITA, when transmitted and full transmission has
      been separately notified by telephone by the transmitting party. The
      address, telex numbers, SITA, facsimile and telephone numbers of Lessee
      and Lessor are as follows:

      Lessee:                          371 Aokea Street,
                                       Honolulu,
                                       Hawaii 96819,
                                       U.S.A.
                                       Attn:         Chief Financial Officer
                                       SITA:         HNLGOAQ
                                       Facsimile:    808-839-6447
                                       Telephone:    808-836-4241

      Lessor:                          750 Battery Street


                                      -48-
<PAGE>

                                       Suite 430
                                       San Francisco, California 94111
                                       Attn:         Mark S. Maymar
                                       Executive Vice President
                                       Facsimile:    415-392-9142
                                       Telephone:    415-392-4900

16.12 Law and Jurisdiction :

(a)   THIS AGREEMENT IN ALL RESPECTS IS GOVERNED BY THE GOVERNING LAW;

(b)   For the benefit of Lessor, Lessee agrees that the courts of the State of
      New York are to have nonexclusive jurisdiction to settle any disputes in
      connection with this Agreement and submits itself and its property to the
      nonexclusive jurisdiction of the courts of the State of New York in
      connection with this Agreement;

(c)   Without prejudice to any other mode of service, Lessee:

      (i) appoints CT Corporation, New York as its agent for service of process
      relating to any proceedings before the New York courts in connection with
      this Agreement and agrees to maintain the process agent in New York
      notified to Lessor;

      (ii) agrees that failure by a process agent to notify Lessee of the
      process shall not invalidate the proceedings concerned; and

      (iii) consents to the service of process relating to any such proceedings
      by prepaid posting of a copyof the process to Lessee's agent at the
      address identified in sub-paragraph (i) above;

(d)   Lessee:

      (i) waives objection to the courts of the State of New York on grounds of
      inconvenient forum or otherwise as regards proceedings in connection with
      this Agreement;

      (ii) agrees that a judgment or order of a court of the State of New York
      in connection with this Agreement is conclusive and binding on it and may
      be enforced against it in the courts of any other jurisdiction;

(e)   Nothing in this Clause limits the right of Lessor to bring proceedings
      against Lessee in connection with this Agreement:

      (i) in any other court of competent jurisdiction; or

      (ii) concurrently in more than one jurisdiction;

(f)   Lessee irrevocably and unconditionally:


                                      -49-
<PAGE>

      (i) agrees that if Lessor brings legal proceedings against it or its
      assets in relation to this Agreement no immunity from such legal
      proceedings (which will be deemed to include without limitation, suit,
      attachment prior to judgment, other attachment, the obtaining of judgment,
      execution or other enforcement) will be claimed by or on behalf of itself
      or with respect to its assets;

      (ii) waives any such right of immunity which it or its assets now has or
      may in the future acquire;

      (iii)consents generally in respect of any such proceedings to the giving
      of any relief or the issue ofany process in connection with such
      proceedings including, without limitation, the making, enforcement or
      execution against any property whatsoever (irrespective of its use or
      intended use) of any order or judgment which may be made or given in such
      proceedings.

16.13 Sole and Entire Agreement : This Agreement is the sole and entire
      agreement between Lessor and Lessee in relation to the leasing of the
      Aircraft, and supersedes all previous agreements in relation to that
      leasing.

16.14 Indemnification : All rights expressed to be granted to each Indemnitee
      under this Agreement (other than Lessor) are given to Lessor on behalf of
      that Indemnitee.

16-15 Counterparts : This Agreement may be executed in counterparts each of
      which will constitute one and the same document.

16-16 Language : All notices to be given under this Agreement will be in
      English. All documents delivered to Lessor pursuant to this Agreement will
      be in English, or if not in English, will be accompanied by a certified
      English translation. If there is any inconsistency between the English
      version of this Agreement and any version in any other language, the
      English version will prevail.

17.   DISCLAIMERS AND WAIVERS

17.1  Exclusion : THE AIRCRAFT IS DELIVERED "AS IS, WHERE IS" AND LESSEE AGREES
      AND ACKNOWLEDGES THAT, SAVE AS EXPRESSLY STATED IN THIS AGREEMENT, LESSOR
      WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND WILL NOT BE
      DEEMED TO HAVE MADE OR GIVEN, ANY WARRANTIES OR REPRESENTATIONS, EXPRESS
      OR IMPLIED, WITH RESPECT TO THE AIRCRAFT, INCLUDING BUT NOT LIMITED TO:

(a)   THE DESCRIPTION, AIRWORTHINESS, MERCHANTABILITY, FITNESS FOR ANY
      PARTICULAR USE OR PURPOSE, VALUE, CONDITION, OR DESIGN, OF THE AIRCRAFT OR
      ANY PART; OR

(b)   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT, WHETHER OR


                                      -50-
<PAGE>

      NOT ARISING FROM LESSOR'S NEGLIGENCE, ACTUAL OR IMPUTED OR

(c)   ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO
      THE AIRCRAFT, FOR ANY LIABILITY OF LESSEE TO ANY THIRD PARTY, OR FOR ANY
      OTHER DIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

17.2  Waiver : LESSEE HEREBY WAIVES, AS BE BETWEEN ITSELF AND THE LESSOR, ALL
      ITS RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR
      IMPLIED, ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER
      AND WHENEVER ARISING AT ANY TIME IN RESPECT OF OR OUT OF THE OPERATION
      OR PERFORMANCE OF THE AIRCRAFT OR THIS AGREEMENT EXCEPT TO THE EXTENT
      ARISING UNDER CLAUSE 2.4.

17.3  Confirmation : LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF
      THIS CLAUSE AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS HAVE BEEN
      CALCULATED BASED ON ITS PROVISIONS.

18.   SECTION 1110

18.1  Section 1110 : Lessee acknowledges that Lessor would not have entered
      into this Agreement unless it had available to it the benefits of a lessor
      under Section 1110 of Title 11 of the United States code. Lessee
      covenants and agrees with Lessor that to better ensure the availability of
      such benefits, Lessee shall support any motion, petition or application
      filed by Lessor with any bankruptcy court having jurisdiction over Lessee,
      whereby Lessor seeks recovery of possession of the Aircraft under said
      Section 1110 and shall not in any way oppose such action by Lessor unless
      Lessee shall have complied with the requirements of said Section 1110 to
      be fulfilled in order to entitle Lessee to continued use and possession of
      the Aircraft hereunder. In the event said Section 1110 is amended, or if
      it is repealed and another statute is enacted in lieu thereof, Lessor and
      Lessee agree to amend this Agreement and take such other action not
      inconsistent with this Agreement as Lessor reasonably deems necessary so
      as to afford to Lessor the rights and benefits as such amended or
      substituted statute confers upon owners and lessors of aircraft similarly
      situated to Lessor.

18.2  The Lessor and the Lessee intend that this Agreement constitute a "true
      lease" and a lease for all United States federal income tax purposes. The
      Lessor and the Lessee further intend and agree that the Lessor shall be
      entitled to the full benefits afforded lessors of aircraft under 11
      U.S.C. Section 1110, as amended.


                                      -51-
<PAGE>

IN WITNESS WHEREOF Lessor and Lessee have executed this Aircraft Lease Agreement
as of the date shown at the beginning of this Agreement.

WITNESS                           SIGNED on behalf of:
                                  CONTASS CAPITAL CORPORATION

                                  By:  /s/ [ILLEGIBLE]
--------------------------------       ---------------------------------------
                                  Name:     [ILLEGIBLE]
                                  Title:    [ILLEGIBLE]

WITNESS                           SIGNED on behalf of:
                                  ALOHA AIRLINES, INC.

                                  By:  /s/ Brenda F. Cutwright
--------------------------------       ---------------------------------------
                                  Name:  BRENDA F. CUTWRIGHT
                                  Title: SR. VICE PRESIDENT FINANCE &
                                               PLANNING AND CFO

                                  By:    /s/ James M. King
                                         -------------------------------------
                                  Name:  JAMES M. KING
                                  Title: VICE PRESIDENT PLANNING & DEVELOPMENT

         The undersigned acknowledges receipt of this original counterpart of
the foregoing Aircraft Lease Agreement on this ___ day of _________ 1999 and
consents to the terms hereof

                             THE PROVIDENT BANK

                             By:   /s/ authorized signatory
                                   -------------------------------------
                             Name:
                             Title:




                                      -52-
<PAGE>

                          Appendix A to Lease Agreement

ADDITIONAL DEFINITIONS

In addition to the definitions set forth in Clause 1.1, the following
expressions shall, unless the context otherwise requires, have the following
respective meanings in this Agreement:

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]


                                      -53-
<PAGE>
                                   SCHEDULE 1

                                     PART I

                             DESCRIPTION OF AIRCRAFT

AIRCRAFT
--------

MANUFACTURER:             Boeing

MODEL:                    737-2T4

SERIAL NUMBER:            23443

DATE OF MANUFACTURE:      September, 1985

U.S. REGISTRATION NO.:    N807AL


ENGINES
-------

ENGINE TYPE AND NUMBER:   Pratt & Whitney JT8D-I7A

SERIAL NOS.:              707352 and 665322

(Each of which has 750 or more rated takeoff horsepower or the equivalent of
such horsepower)


DELIVERY CONDITION OF AIRCRAFT
------------------------------

On the Commencement Date, the Aircraft shall be deemed to be delivered to
Lessee in the same condition as redelivered pursuant to the Prior Lease and,
consequently, for the purposes of delivery under this Agreement Lessee
acknowledges its satisfaction with the condition of the Aircraft. Except as
provided in Part B of Schedule 3, TCAS, Windshear and 11 Parameter FDR
equipment installed on the Aircraft shall remain property of the Lessee.


                                      -54-
<PAGE>

                                   SCHEDULE 1

                                     PART 2

                               AIRCRAFT DOCUMENTS

Such documents as shall be agreed between Lessor and Lessee prior to the
Commencement Date.


                                      -55-
<PAGE>


                                   SCHEDULE 2
                             [Intentionally Omitted]


                                      -56-
<PAGE>

                                   SCHEDULE 3

                        OPERATING CONDITION AT REDELIVERY

PART A. CONDITIONS APPLICABLE TO ANY REDELIVERY

On the Expiry Date the Aircraft, subject to fair wear and tear generally
(notwithstanding anything contained in this Agreement to the contrary), will
be in the condition set out below.

1.   General Conditions

The Aircraft will:-

(a)  be clean by airline standards;

(b)  have installed the full complement of engines and other equipment parts and
     accessories and loose equipment as is normally installed in the
     Aircraft, be in Lessee's standard configuration with respect to LOPA and
     the installed seats and be in a condition suitable for immediate
     operation in commercial service by any other Certificated Air Carrier,
     subject to the special exemptions permitted Lessee regarding compliance
     with the Airport Noise and Capacity Act of 1990, as amended, and the
     regulations promulgated by the FAA thereunder;

(c)  have in existence a valid certificate of airworthiness issued by the FAA in
     accordance with FAR part 21 (or if required by the Lessor, a valid export
     certificate of airworthiness) with respect to the Aircraft issued by the
     Aviation Authority;

(d)  comply with the manufacturer's original specification and be in either the
     same configuration as at delivery or in the configuration operated by
     Lessee immediately prior to redelivery, as Lessor may elect by written
     notice to Lessee given 120 days before the Expiry Date; provided otherwise
     as, that if Lessor fails to give such written notice to Lessee 120 days
     before the Expiry Date, Lessee shall be permitted to redeliver the Aircraft
     in the configuration operated by Lessee immediately prior to redelivery;

(e)  have undergone, immediately prior to redelivery, the next "C" check due in
     accordance with the Agreed Maintenance Program, including all structural
     inspections and sampling to be performed under the Agreed Maintenance
     Program at the time of such "C" check, including corresponding lower checks
     ("A" and "B" or equivalent) and any other maintenance and inspections tasks
     that are a part of such checks, all in accordance with the Boeing MPD;

(f)  have had accomplished all outstanding airworthiness directives and
     mandatory orders affecting that model of Aircraft issued by the FAA which,
     if the Aircraft were registered with the FAA, would have to be complied
     with during the Term or within 180 days after the Expiry Date;

(g)  have installed all applicable vendor's and manufacturer's service bulletin
     kits received free of charge by the Lessee that are appropriate for the
     Aircraft and to the extent not installed, those kits will be


                                      -57-
<PAGE>

     furnished free of charge to Lessor;

(h)  be painted in Lessee's external colors but with logos removed; and

(i)  have all signs and decals clean, secure and legible.

2.   COMPONENTS

(a)  Each life-limited component (other than the APU) shall have not less than
     the number of Flight Hours of life as were remaining thereon to the next
     scheduled removal as on the date on which the Aircraft was delivered
     pursuant to the Prior Lease, in accordance with the Ageed Maintenance
     Program;

(b)  Each calendar-limited component will have not less than 12 months life
     remaining to the next scheduled removal in accordance with the Agreed
     Maintenance Program (provided that, if the calendar limit for any such
     component is less than 12 months, such component shall have such less
     number of months so remaining);

(c)  Each "on-condition" and "condition monitored" component will be
     serviceable; and

(c)  The APU will be in serviceable condition such condition to be verified by a
     borescope inspection and "health check" under full load conditions.

3.   ENGINES

     Each engine will be installed on the Aircraft and if not the engines
     installed on the date on which the Aircraft was delivered pursuant to the
     Prior Lease the will be accompanied -by all documentation Lessor may
     require to evidence that title thereto is properly vested in Lessor and
     will:

(a)  be serviceable with not less than 3,000 Cycles remaining to the next
     limiter; and

(b)  be in a condition which can operate at required take off power at sea level
     at a temperature of 34NC.

4.   FUSELAGE, WINDOWS AND DOORS

(a)  The fuselage will be free of major dents and abrasions, scab patches and
     loose or pulled or missing rivets;

(b)  Windows will be free of delamination, blemishes, crazing and will be
     properly sealed; and

(c)  Doors will be free moving, correctly rigged and fitted with serviceable
     seals.


                                      -58-
<PAGE>

5.   WINGS AND EMPENNAGE

(a)  Leading edges will be free from damage;

(b)  Control surfaces will be waxed and polished;

(c)  Unpainted cowlings and fairings will be polished; and

(d)  Wings will be free of fuel leaks.

6.   INTERIOR

(a)  Ceilings, sidewalls and bulk panels will be clean and free of stains

(b)  Carpets and seat covers will be in good condition, clean and free of stains
     and meet FAR fire resistance regulations;

(c)  Seats will be serviceable, in good condition and repaired as necessary; and

(d)  Emergency equipment having a calendar life will have a minimum of 1 year or
     100% of its total approved life, whichever is less, remaining.

7.   COCKPIT

(a)  Fairing panels shall be free of stains and cracks, will be clean,
     secure and repainted as necessary;

(b)  Floor coverings will be clean and effectively sealed.

(c)  Seat covers will be in good condition, clean and free of stains and will
     conform to FAR fire resistance regulations; and

(d)  Seats will be serviceable, in good condition and will be repainted as
     necessary.

8.   CARGO COMPARTMENTS

(a)  Panels will be in good condition; and

(b)  Nets will be in good condition.

9.   LANDING GEAR

The landing gear and wheel wells will be clean, free of leaks and repaired as
necessary.


                                      -59-
<PAGE>

10.  CORROSION

(a)  The Aircraft will have been inspected and treated with respect to corrosion
     as defined in the Agreed Maintenance Program;

(b)  The entire fuselage will be substantially free from corrosion and will be
     adequately treated and an approved corrosion prevention Program will be in
     operation; and

(c)  Fuel tanks will be free from contamination and corrosion and a tank
     treatment Program will be in operation.

PART B.  ADDITIONAL CONDITIONS APPLICABLE UPON EARLY TERMINATION

Upon redelivery of the Aircraft upon early termination of the Lease in
accordance with Section 4.7 thereof, the Aircraft will be returned (1) in
accordance with Part A of this Schedule 3 and (2) all TCAS, Windshear and 11
Parameter FDR equipment shall be installed and functional subject to fair wear
and tear generally and shall become property of the Lessor.


                                      -60-
<PAGE>


                                   SCHEDULE 4

                             INSURANCE REQUIREMENTS

The Insurances required to be maintained are as follows:

(a)  HULL ALL RISKS of Loss or Damage whilst flying and on the ground with
     respect to the Aircraft on an "agreed value basis" for the Agreed Value and
     with a deductible not exceeding $500,000 or such other amount agreed by
     Lessor and Lender from time to time (provided that, in the event that
     Lessee increases its general deductible amount applicable to its aircraft
     fleet to an amount which is greater than $500,000, the deductible amount
     under this Agreement may, with poor written notice to Lessor, be increased
     by Lessee to an amount equal to the lesser of (x) such greater amount; and
     (y) $750,000;

(b)  HULL WAR AND ALLIED PERILS, being such war risks excluded from the Hull All
     Risks Policy to the fullest extent available from the leading international
     insurance markets, including confiscation and requisition by the State of
     Registration, for the Agreed Value;

(c)  ALL RISKS (INCLUDING WAR AND ALLIED RISK except when on the ground or in
     transit other than by air) property insurance on all Engines and Parts when
     not installed on the Aircraft on an "agreed value" basis for their full
     replacement value including engine test and running risks;

(d)  AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, CARGO AND MAIL
     AND AIRLINE GENERAL THIRD PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a
     Combined Single Limit (Bodily Injury/Property Damage) of an amount not less
     than the Minimum Liability Coverage for the time being any one occurrence
     (but in respect of products and personal injury liability, this limit may
     be an aggregate limit for any and all losses occurring during the currency
     of the policy); War and Allied Risks are also to be covered under the
     Policy to the fullest extent available from the leading international
     insurance markets;

(e)  All required hull and spares insurance (as specified above), so far as it
     relates to the Aircraft will:

     (i) name Lessor, Lender (so long as the Mortgage remains in effect with
     respect to the Aircraft), their respective successors and assigns as
     additional assureds for their respective rights and interests, warranted,
     each as to itself only, no operational interest;

     (ii) provide that any loss will be settled with Lessor and Lessee, subject
     to final prior approval of Lender (so long as the Mortgage remains in
     effect with respect to the Aircraft) and will be payable in Dollars to
     Lender (so long as the Mortgage remains in effect With respect to the
     Aircraft) or Lessor If the Mortgage is no longer in effect with respect to
     the Aircraft), for the account of all interests except where such loss does
     not exceed the Damage Notification Threshold, and Lender (so long as the
     Mortgage remains in effect with respect to the Aircraft) has not notified
     the insurers to the contrary, in which case the loss will be settled with
     and paid to Lessee;

     (iii) include a notice and/or acknowledgement of assignment (relating to
     the assignment of


                                      -61-
<PAGE>

     Lessor's interest in the insurances to Lender) in a form acceptable to
     Lessor and Lender;

     (iv) if separate Hull "all risks" and "war risks" insurances are arranged,
     include a 50/50 provision in accordance with market practice (AVS103 is
     the current market language); and

     (v) confirm that the insurers are not entitled to replace the Aircraft in
     the event of an insured Event of Loss.

(f)  All required liability insurances specified in Clause I (d) above will:

     (i) name Lessor and each of the Indemnitees and their respective successors
     and assigns and their respective shareholders, subsidiaries, directors,
     officers, agents, employees and indemnitees as additional insureds for
     their respective rights and interests, warranted, each as to itself only,
     no operational interest;

     (ii) include a Severability of Interest Clause which provides that the
     insurance, except for limits of liability, will operate to give each
     assured the same protection as if there was a separate policy to be issued
     to each assured;

     (iii) contain a provision confirming that the policy is primary without
     right of contribution and the liability of the insurers will not be
     affected by any other insurance of which Lessor or any of the Indemnitees
     or Lessee have the benefit so as to reduce the amount payable to the
     additional insureds under such policies;


                                      -62-
<PAGE>

(c)  All Insurances will:

(i)  be in accordance with normal industry practice of persons operating similar
     aircraft in similar circumstances;

(ii) provide cover denominated in Dollars and any other currencies which Lessor
     may reasonably require in relation to liability insurance;

(iii)operate on a worldwide basis subject to such limitations and exclusions as
     Lessor may agree;

(iv) acknowledge the insurer is aware (and has seen a copy) of this Agreement
     and that the Aircraft is owned by the Lessor and is subject to Mortgage (so
     long as the Mortgage remains in effect with respect to the Aircraft);

(v)  provide that, in relation to the interests of each of the additional
     assureds, the Insurances will not be invalidated by any act or omission by
     Lessee, or any other person other than the respective additional assured
     seeking protection and shall insure the interests of each of the additional
     assureds regardless of any breach or violation by Lessee, or any other
     person other than the respective additional assured seeking protection of
     any warranty, declaration or condition, contained in such Insurances;

(vi) provide that the insurers will hold harmless and waive any rights of
     recourse and/or subrogation against the additional assureds;

(vii) provide that the additional assureds will have no obligation or
     responsibility for the payment of any premiums due (but reserve the right
     to pay the same should any of them elect so to do) and that the insurers
     will not exercise any right of offset or counter-claim in respect of any
     premium due against the respective interests of the additional assureds
     other than outstanding premiums relating to the Aircraft, any Engine or
     Part the subject of the relevant claim;

(viii)provide that the Insurances will continue unaltered for the benefit of the
     additional assureds for at least 30 days after written notice by registered
     mail or facsimile of any cancellation, change, event of non-payment of
     premium or installment thereof has been sent to Lessor and to each
     Indemnitee, except in the case of war risks for which 7 days (or such
     lesser period as is or may be customarily available in respect of war risks
     or allied perils) will be given, or in the case of war between the 5 great
     powers or nuclear peril for which termination is automatic;

(ix) if reinsurance is a requirement of this Agreement such reinsurance will (i)
     be on the same terms as the original insurances and will include the
     provisions of this Schedule, (ii) provide that notwithstanding any
     bankruptcy, insolvency, liquidation, dissolution or similar proceedings of
     or affecting the reinsured that the reinsurers' liability will be to make
     such payments as would have fallen due under the relevant policy of
     reinsurance if the reinsured had (immediately before such bankruptcy,
     insolvency, liquidation, dissolution or similar proceedings) discharged its
     obligations in full under the original insurance policies in respect of
     which the then relevant policy of reinsurance has been effected; and (iii)
     contain a "cut-through" clause in the following form (or otherwise,


                                      -63-
<PAGE>

     satisfactory to Lessor): "The Reinsurer and the Reinsured hereby mutually
     agree that in the event of any claim arising under the reinsurances in
     respect of a total loss or other claim where as provided by the Aircraft
     Lease Agreement dated 0 and made between Compass Capital Corporation and
     Aloha Airlines, Inc. such claim is to be paid to the person named as sole
     loss payee under the primary insurances, the Reinsurers will in lieu of
     payment to the Reinsured, its successors in interest and assigns pay to the
     person named as sole loss payee under the primary insurances effected by
     the Reinsured that portion of any loss due for which the Reinsurers would
     have otherwise be liable to pay the Reinsured (subject to proof of loss),
     it being understood and agreed that any such payment by the Reinsurers will
     (to the extent of such payment) fully discharge and release the reinsurers
     from any and all further liability in connection therewith"; subject to
     such provisions not contravening any of the State of Incorporation;

(x)  contain a provision entitling Lessor, Lender (so long as the Mortgage
     remains in effect with respect to the Aircraft) or any insured party to
     initiate a claim under any policy in the event of the refusal or failure of
     Lessee to do so;

(xi) accept and insure the indemnity provisions of this Agreement.


                                      -64-

<PAGE>

                            AMENDMENT NO. I (N807AL)
                                       to
                            Aircraft Lease Agreement
                                 - relating to -
                             Boeing 737-2T4 Aircraft
                         Manufacturers Serial No: 23443
                          U.S. REGISTRATION MARK N807AL



                         ------------------------------
                             DATED as of May 1, 2000
                         ------------------------------


                           COMPASS CAPITAL CORPORATION

                                    (LESSOR)

                                     - and -

                              ALOHA AIRLINES, INC.

                                    (Lessee)

THIS AMENDNENT No. I HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT,
IF ANY, THAT THE AIRCRAFT LEASE AGREEMENT CONSTITUTES "CHATTEL PAPER" (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THE AIRCRAFT LEASE AGREEMENT MAY BE
CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPARTS OTHER THAN THE
ORIGINAL COUNTERPART OF THE AIRCRAFT LEASE AGREEMENT AND OF ALL AMENDMENTS
THERETO AND OF COUNTERPART No. 1 OF THIS AMENDMENT No. 1. THIS IS COUNTERPART
NO. 2


<PAGE>


                                                       RECORDED
                                             FEDERAL AVIATION ADMINISTRATION

                                        Date      7-21-00         Time  11:06 ?

                                        Conveyance Number        JJ 336 ?

                                        By           [Illegible]

                            AMENDMENT NO. I (N807AL)

           This AMENDMENT NO. I (N807AL), dated as of May 1, 2000 (this
 "Amendment"), is between COMPASS CAPITAL CORPORATION, a California corporation
 (the "Lessor"), and ALOHA AIRLINES, INC., a Delaware corporation, as lessee
 ("Lessee").

 RECITALS:

 (1) Lessor and Lessee have entered into an Aircraft Lease Agreement dated
 September 15, 1999 (as supplemented and assigned and as fully described on the
 attached Schedule I (the "Lease Agreement")). The Lease Agreement has been
 filed with the FAA as set forth on the attached Schedule 1.

 (2) The Lease Agreement relates to one Boeing Model 737-2T4 aircraft bearing
 manufacturer's serial no.. 23443 and U.S. registration mark N807AL, including
 two Pratt & Whitney Model JT8D-9A engines bearing manufacturer's serial nos.
 707352 and 665322, each having 750 or more rated takeoff horsepower or the
 equivalent thereof (the "Aircraft").

 (3) NOW THEREFORE, in consideration of the foregoing and for other good and
 valuable consideration whose receipt and sufficiency are acknowledged, Lessor
 and Lessee agree as follows:

 1.        DEFINITIONS. Capitalized terms used and not defined in
 this Amendment have the meanings ascribed to such terms in the Lease Agreement.

 2.        AMENDMENTS TO THE LEASE AGREEMENT. Lessor and Lessee agree that the
 Lease Agreement shall be amended as follows:

           (a) In the definition of "Other Leases" in Clause 1.1 of the Lease
 Agreement, the reference to "Serial Number 23443" is amended to be "Serial
 Number 23445".

           (b) In the definition of "Prior Lease" in Clause 1. 1 of the Lease
 Agreement, the reference to "dated as of May 27, 1994" is amended to be "dated
 as of April 29, 1994."

 (c)       On Schedule 1 to the Lease, the reference to "JT8D-17A"
 is amended to be "JT8D-9A."

 3.        ASSIGNMENT.   This Amendment shall be binding upon and
 inure to the benefit of each of the Lessee and Lessor and their respective
 successors and permitted assigns.

 4.        MISCELLANEOUS.

           (a) Except as specifically amended by this Amendment, the Lease
 Agreement shall remain in full force and effect in accordance with its terms.


<PAGE>


           (b)  THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
 ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
 EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK BY
 RESIDENTS OF SUCH STATE.

           (c) The provisions of this Amendment are severable, and if any clause
 or provision shall be held invalid or unenforceable in whole or in part in any
 jurisdiction, then such invalidity or unenforceability shall affect only such
 clause, provision or part in such jurisdiction and shall not in any manner
 affect such clause, provision or part in any other jurisdiction or any other
 clause or provision in this Amendment in any jurisdiction.

           (d) This Amendment may be signed in any number of counterparts with
 the same effect as if all parties to this Amendment signed the same
 counterpart.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

                            [Missing signature page]

<PAGE>

                            AMENDMENT NO. 2 (N807AL)
                                       to
                            Aircraft Lease Agreement
                                 - relating to -
                             Boeing 737-2T4 Aircraft
                         Manufacturers Serial No: 23443
                          U.S. REGISTRATION MARK N807AL



                         ------------------------------
                           DATED as of October 1, 2001
                         ------------------------------


                           COMPASS CAPITAL CORPORATION

                                    (LESSOR)

                                     - and -

                              ALOHA AIRLINES, INC.

                                    (Lessee)

THIS AMENDMENT No. 2 HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. TO THE EXTENT,
IF ANY, THAT THE AIRCRAFT LEASE AGREEMENT CONSTITUTES "CHATTEL PAPER" (AS SUCH
TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THE AIRCRAFT LEASE AGREEMENT MAY BE
CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPARTS OTHER THAN THE
ORIGINAL COUNTERPART OF THE AIRCRAFT LEASE AGREEMENT AND OF ALL AMENDMENTS
THERETO AND OF COUNTERPART No. 1 OF THIS AMENDMENT No. 2. THIS IS COUNTERPART
No. 2.


<PAGE>



                                                       RECORDED
                                             FEDERAL AVIATION ADMINISTRATION

                                        Date      11-5-01         Time  1:03 am

                                        Conveyance Number     HH 030288

                                        By           SHEILA HIGGINS

                            AMENDMENT NO. 2 (N807AL)

           This AMENDMENT NO. 2 (N807AL), dated as of October 1, 2001 (this
"Amendment"), is between COMPASS CAPITAL CORPORATION, a California corporation
(the "Lessor"), and ALOHA AIRLINES, INC., a Delaware corporation, as lessee
("Lessee").

RECITALS:

(1) Lessor and Lessee have entered into an Aircraft Lease Agreement dated
September 15, 1999 (as supplemented and assigned and amended and as fully
described on the attached Schedule I (the "Lease Agreement")). The Lease
Agreement has been filed with the FAA as set forth on the attached Schedule 1.

(2) The Lease Agreement relates to one Boeing Model 737-2T4 aircraft bearing
manufacturer's serial no. 23443 and U.S. registration mark N807AL, including
two Pratt & Whitney Model JT8D-9A engines bearing manufacturer's serial nos.
707352 and 665322, each having 750 or more rated takeoff horsepower or the
equivalent thereof (the "Aircraft").

(3) NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration whose receipt and sufficiency are acknowledged, Lessor
and Lessee agree as follows:

1.        DEFINITIONS. Capitalized terms used and not defined in this Amendment
have the meanings ascribed to such terms in the Lease Agreement.

2.        AMENDMENTS TO THE LEASE AGREEMENT. Lessor and Lessee agree that the
Lease Agreement is hereby amended as follows:

           (a) In the definition of "Expiry Date" in Clause 1.1 of the Lease
Agreement, the reference to "6 September 2007" is amended to be "6 November
2007".

           (b) Appendix A to the Lease Agreement is deleted in its entirety and
a new Appendix A in the form of Attachment 1 to this Amendment is substituted
therefor.

3.        ASSIGNMENT. This Amendment shall be binding upon and inure to the
benefit of each of the Lessee and Lessor and their respective successors and
permitted assigns.

4.        MISCELLANEOUS.

           (a) Except as specifically amended by this Amendment, the Lease
Agreement shall remain in full force and effect in accordance with its terms.

<PAGE>


           (b) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED IN AND
TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK BY RESIDENTS OF SUCH
STATE.

           (c) The provisions of this Amendment are severable, and if any clause
or provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause, provision or part in such jurisdiction and shall not in any manner
affect such clause, provision or part in any other jurisdiction or any other
clause or provision in this Amendment in any jurisdiction.

           (d) This Amendment may be signed in any number of counterparts with
the same effect as if all parties to this Amendment signed the same
counterpart.

                            [SIGNATURE PAGE FOLLOWS]


<PAGE>


           IN WITNESS WHEREOF, Lessor and Lessee have caused this Amendment to
be duly executed by their duly authorized officers as of the day and year first
above written.

                                             COMPASS CAPITAL CORPORATION, as
                                                  Lessor

                                             By:      /s/ Mark S. Maymar
                                                 -----------------------------
                                             Name:       MARK S. MAYMAR
                                             Title:  Executive Vice President



                                             ALOHA AIRLINES, INC., as Lessee

                                             By:
                                                 -----------------------------
                                             Name:
                                             Title:


                                             By:
                                                 -----------------------------
                                             Name:
                                             Title:


<PAGE>


           IN WITNESS WHEREOF, Lessor and Lessee have caused this Amendment to
be duly executed by their duly authorized officers as of the day and year first
above written.


                                             COMPASS CAPITAL CORPORATION, as
                                                  Lessor


                                             By:
                                                 -----------------------------
                                             Name:
                                             Title:



                                             ALOHA AIRLINES, INC., as Lessee


                                             By:       /s/ Glen R. Zander
                                                 -----------------------------
                                             Name:       GLEN R. ZANDER
                                             Title:      President & CEO



                                             By:     /s/ Brenda F. Cutwright
                                                 -----------------------------
                                             Name:      BRENDA F. CUTWRIGHT
                                             Title:  Exec. Vice President & CEO


<PAGE>


                                                                      Schedule l

                         DESCRIPTION OF LEASE AGREEMENT

           Aircraft Lease Agreement dated as of September 15, 1999, between
Compass Capital Corporation as lessor and Aloha Airlines, Inc. as lessee,
recorded by the Federal Aviation Administration on October 26, 1999, as
Conveyance No. Q63209, as amended by Amendment No. 1 (N807AL) dated as of May 1,
2000, recorded on July 21, 2000, as Conveyance No. JJ33660.


<PAGE>

                                           Attachment 1 to Lease Amendment No. 2

                          Appendix A to Lease Agreement

[This Appendix has been omitted as confidential information, and is separately
filed with the Commission.]

<PAGE>

                                   SCHEDULE 1

                            AIRCRAFT LOOSE EQUIPMENT

<Table>
<Caption>
QTY         ITEM DESCRIPTION
<C>         <S>
3           Crew Oxygen Mask

2           Smoke Goggles

1           Crew Head Set

2           Coffee Cup Holders

1           AFM

2           Crew Life Vest

1           Observers Life Vest

2           Hand Microphones

2           Crew Flashlights

1           Crew Fire Extinguisher

1           Crew Fire AX

1           Spare Filament Holder

1           PBE in cockpit

1           Alternate Extension handle in Cockpit

1           Overhead Emergency Light in Cockpit

1           Galley Service Cart with trays

3           Galley Food Tray Boxes

2           Galley Hot Jugs

1           PBE in forward galley storage compartment

1           Fire Extinguisher in forward galley storage compartment
</Table>


                                      C-3
<PAGE>

<Table>
<C>         <S>
3           Seat Belt Extensions in pouch in forward galley storage compartment

2           Passenger O2 Bottles in forward galley storage compartment

5           Cabin Seat Tables

1           Life Vest under forward F/A seat

1           Flashlight under F/A seat

1           First Aid Kit in forward galley storage compartment

1           Medical Kit in forward galley storage compartment

1           PBE on aft bulkhead

2           Fire Extinguishers on aft bulkhead

2           Propeller Restraints

2           Engine Plug

2           Static Port Covers

1 set       Wheel Covers

1           Windshield Cover

2           Pitot Tube Covers

1 set       Landing Gear Safety Pins

2           Engine Exhaust Covers
</Table>


                                      C-4

<PAGE>

                                   SCHEDULE 2

                                  DISCREPANCIES

1.   Wardrobe interior panels do not latch properly and aft lower access panel
     needs securing.

2.   Flight Attendant control panel face plate cracked.

3.   Tray tables cracked at seats 4A, 6D & 6E.

4.   Both wing emergency exit window interior trim panels need repair.

5.   Several interior side wall panels have minor nicks and gouges.

6.   Heads-up display fairing installed in the cockpit.

7.   Heads-up display fairing cracked.

8.   Plastic trim panel above captain's windshield cracked.

9.   Trim panel around alternate gear extension handle cracked.

10.  Observer's shoulder harness frayed.

11.  Left horizontal de-ice boot has nine (9) patches.

12.  Right propeller ice shield needs repair.

13.  Main wheels and brakes have less than 50% wear remaining.

14.  Bottom edges of left and right fingernail assemblies are uneven.


                                       C-5

<PAGE>

                                   SCHEDULE 3

             TIME CONTROLLED / LIFE LIMITED PARTS STATUS AT DELIVERY

    AIRCRAFT:  TOTAL TIME 32,169  TOTAL CYCLES 43,888  DATE 17 FEBRUARY 2000

<Table>
<Caption>
                                                                    TIME SINCE
NOMENCLATURE                POSITION           SERIAL NUMBER        OVERHAUL/INSTALLATION
--------------------------------------------------------------------------------------------
<S>                         <C>                <C>                  <C>
Cockpit Voice recorder      only               11109                      due
Flight Data Recorder        only               unk                        on condition
Air Cycle Machine           only               unk                        on condition
Starter/Generator           left               97099                       814 hr
Starter/Generator           right              229                        1117 hr
A/C Generator               left               209                        2215 hr
A/C Generator               right              197                        2149 hr
ELT                         only               405545                     due
Fire Bottle Disc. Cart.     F#1                970328                     1065 da
Fire Bottle Disc. Cart.     F#2                9703281                    1065 da
Fire Bottle Disc. Cart.     A#1                9703256                    1096 da
Fire Bottle Disc. Cart.     A#2                9703257                    1096 da
Fire Bottle, HST            fwd                1915OD1                    1033 da
Fire Bottle, HST            aft                14618D1                    1033 da
Crew O2 Bottle, HST         only               418582                      700 da
Transponder                 left               6898                        357 da
Transponder                 right              6278                        357 da
Propeller                   left               850910 Hub s/n 545          661 hrs
Blade, Prop.                #1                 854110                    5,504 hrs
Blade, Prop.                #2                 860037-7                    661 hrs
Blade, Prop.                #3                 852624                        1 hrs
</Table>


                                      C-6

<PAGE>
<Table>
<S>                         <C>                <C>                  <C>
Blade, Prop.                #4                 851485                      6707 hrs
Propeller Actuator          left               460                         5296 hrs
Propeller Control Unit      left               851134                      3227 hrs
Propeller                   right              850911 Hub s/n 1267        5,151 hrs
Blade, Prop.                #1                 887189-7                   5,151 hrs
Blade, Prop.                #2                 849987                     5,151 hrs
Blade, Prop.                #3                 850646                     5,316 hrs
Blade, Prop.                #4                 852785                     5,151 hrs
Propeller Actuator          right              890502                     1,773 hrs
Propeller Control Unit      right              891216                     2,525 hrs
Engine                      left               120077                      On Cond.
Impeller, LP                left               5C111                      19,495 cy
Impeller, HP                left               6C984                      24,905 cy
Cover, HP Front             left               A00041B1C                       1 cy
Cover, HP Rear              left               A0004RTL                        1 cy
Disc, HP                    left               A00040CR                        1 cy
Disc, LP                    left               40BO60                      6,238 cy
Disc, PT-1                  left               9X184                      24,872 cy
Disc, PT-2                  left               31Al77                     24,872 cy
Seal, Air Interstage        left               58BO33                          1 cy
Blades, HP                  left               various                     6,238 cy
Engine                      right              120096                      On Cond.
Impeller, HP                right              2E801                      18,611 cy
Impeller, LP                right              2F514                       9,476 cy
Cover, HP Front             right              96A129                      9,476 cy
Cover, HP Rear              right              95A274                      9,476 cy
Disc, HP                    right              94A120                      9,476 cy
Disc, LP                    right              40B604                      3,442 cy
</Table>


                                      C-7

<PAGE>
<Table>
<S>                         <C>                <C>                  <C>
Disc, PT-1                  right              26B499                      3,442 cy
Disc, PT-2                  right              40B952                      3,442 cy
Seal, Air Interstage        right              11B661                      9,476 cy
Blades, HP                  right              various                     3,442 cy
Ground Prox. Warning        only               1921                        2,580 hrs
Air Data Computer           left               88042640                      550 da
Air Data Computer           right              88112997                      489 da
Altimiter                   pilot                                          On Cond.
Altimeter                   co-pilot                                       On Cond.
Altimeter                   standby            8371                       602 da
Yolk Assembly, MLG          left               DCL105-85            OH 4,468 cy / LL 41,863 cy
Yolk Assembly, MLG          right              DCL119-86            OH    17 cy / LL 35,958 cy
Drag Strut, MLG             left               DCL122               OH     4 cy / LL 42,243 cy
Drag Strut, MLG             right              DCL227-87            OH 9,807 cy / LL 35,201 cy
Shock Strut, MLG            left               DCL224-87            OH 6,393 cy / LL*
Piston, MLG Shock Strut     left               0296WH               OH 6,393 cy / *36,026 cy
Cylinder, MLG Shock St.     left               DCL829               OH 6,393 cy / *6,393 cy
Link, MLG Up. Torque        left               DCL758               OH 6,393 cy / LL 16,076 cy
Link, MLG Lo. Torque        left               DCL621               OH 6,393 cy / LL 27,447 cy
Shock Strut, MLG            right              DCL399-89            OH     4 cy / LL*
Piston, MLG Shock Strut     right              DCL1025              OH     4 cy / *4 cy
Cylinder, MLG Shock St.     right              DCL474               OH     4 cy / *24,992 cy
Link, MLG Up. Torque        right              073                  OH     4 cy / LL 43,243 cy
Link, MLG Lo. Torque        right              DCL400               OH     4 cy / LL 23,731 cy
Pin, Strut to Yolk, MLG     left               DCL224-87                        / LL 6.393 cy
Pin, Strut to Yolk, MLG     right              DCL399-89                        / LL     4 cy
Stabilizer Stay, MLG        left               DCL240-87            OH 9,807 cy / LL 35,880 cy
Stabilizer Stay, MLG        right              DCL138-86            OH 4,468 cy / LL 38,331 cy
</Table>


                                      C-8

<PAGE>
<Table>
<S>                         <C>                <C>                  <C>
Drag Strut, NLG             only               DCL238-89            OH 4,468 cy / LL 29,890 cy
Shock Strut, NLG            only               DCL336-91            OH 2,988 cy / LL 22,627 cy
Cylinder, NLG Outer         only               DCL309               OH 2,988 cy / LL 25,197 cy
Cylinder, NLG Inner         only               DCL803WHM            OH 2,988 cy / LL 2,988 cy
Axel, NLG                   only               CH020                OH 2,988 cy / LL 43,888 cy
Trailing Arm, NLG           only               DCL186               OH 2,988 cy / LL 25,197 cy
Actuator, Steering, NLG     only               DCL-599-97           On Cond.    / LL 3,901 cy
Trunnion Plates, NLG        left & right       NSN                  On Cond     / LL 43,888 cy
Trunnion Cap, NLG           left & right       NSN                  On Cond.    / LL 43,888 cy
</Table>


                                      C-9

<PAGE>


                                    EXHIBIT D

                     SCHEDULE OF MANUALS/MAINTENANCE RECORDS

<Table>
<Caption>
                           DESCRIPTION                                         QUANTITY
---------------------------------------------------------------------------------------
<S>                                                                            <C>
Aircraft Journey and Maintenance Log Books                                     Numerous
Aircraft Technical Log Book, Record of Installations and Modifications         1
Engine Log Book for each Engine                                                1
Propeller Log Book for each Propeller                                          1
Component Serialization Record                                                 1
Aircraft Technical Log for Airframe                                            1
FAA Approved Flight Manual (FAA 102)                                           1
Weight & Balance Manual                                                        1
Customized Chapters Maintenance Manual                                         1
Customized Wiring Diagram Manual                                               1
Airworthiness Directive Records for Airframe, Engines and Propellers           Numerous
STC Record File                                                                1
Serviceable Tags for Time Controlled and Life Limited Parts                    1 Box
Serviceable Tags for On Condition Components                                   1 Box
Structural Deviation Inspection Requirements Log                               1
Electrical Load Analysis File                                                  1
Engineering Orders                                                             Numerous
Engineering Authorizations                                                     Numerous
Previous Maintenance Checks Accomplished, A1-A10, C-1 - C-6, 40K               1 ea
Computer Runs for Current status of Inspections, time controlled and LLP's     Numerous
Current Weight & Balance File                                                  1 ea
</Table>


                                       D-1