##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-18387
 Pegasus Aircraft Partners II, L.P.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    84-1111757(State of organization)
    
    (I.R.S. Employer
Identification No.)Four Embarcadero Center, 35thFloor
San Francisco, California
    
    94111(Address of principal
executive offices)
    
    (Zip Code)
 (415) 434-3900
   Units of Limited Partnership Interest
 o þ
 o þ
 þ o
 þ
  o o þ
 o þ
     1




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##### 



Pegasus Aircraft Partners II, L.P.
Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 2005
 Table of Contents
 PagePart IItem 1
    
    Business
    
    
    3Item 1A
    
    Risk Factors
    
    
    4Item 1B
    
    Unresolved Staff Comments
    
    
    4Item 2
    
    Properties
    
    
    4Item 3
    
    Legal Proceedings
    
    
    5Item 4
    
    Submission of Matters to a Vote of Unit Holders
    
    
    5Part IIItem 5
    
    Market for Registrants Common Partnership Capital and Related Unitholder Matters
    
    
    6Item 6
    
    Selected Financial Data
    
    
    7Item 7
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    10Item 8
    
    Financial Statements and Supplementary Data
    
    
    11Item 9
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    22Item 9A
    
    Controls and Procedures
    
    
    22Item 9B
    
    Other Information
    
    
    22Part IIIItem 10
    
    Directors and Executive Officers of the Registrant
    
    
    23Item 11
    
    Executive Compensation
    
    
    24Item 12
    
    Security Ownership of Certain Beneficial Owners and Management and Related Unit Holders Matters
    
    
    25Item 13
    
    Certain Relationships and Related Transactions
    
    
    26Item 14
    
    Principal Accounting Fees and Services
    
    
    27Part IVItem 15
    
    Exhibits, Financial Statement Schedules and Reports on Form 8-K
    
    
    28EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




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PART I
 
 ITEM 1. BUSINESS
 General
     Outlook for the Airline and Aircraft Leasing Industries
   Aircraft Portfolio
  Dec. 2005
    
    
    
    
    
    
    
    
    
    Cumu-
    
    Cumu-Owner-
    
    Acqui-
    
    Estimated
    
    Original
    
    Noise
    
    lative
    
    lativeCurrent
    
    Aircraft
    
    ship
    
    sition
    
    Realizable
    
    Delivery
    
    Abatement
    
    Flight
    
    FlightLessee
    
    Type
    
    Interest
    
    Costs(1)
    
    Value(2)
    
    Date
    
    Compliance
    
    Hours(3)
    
    Cycles(3)(dollar amounts in millions)Off-Lease (2)
    
    McDonnellDouglas DC-9-31
    
    
    100
    %
    
    $
    8.9
    
    
    $
    0.075
    
    
    
    1971
    
    
    Stage II
    
    
    69,350
    
    
    
    64,879Off Lease (2)
    
    Boeing 727-200Freighter
    
    
    100
    
    
    
    8.4
    
    
    
    0.1
    
    
    
    1973
    
    
    Stage III
    (3)
    
    75,396
    
    
    
    54,033
 3




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##### Table of Contents



Notes:
    
    
    (1
    )
    
    Acquisition costs do not include related acquisition fees paid to the General Partners. The Partnership owned in 2005 a McDonnell Douglas
DC-10-10 freighter, which was sold during 2005.(2
    )
    
    Aircraft off lease at December 31, 2005. The value shown
represents the book value of the aircraft and engines, which represents
estimated realizable values.(3
    )
    
    The number of cumulative flight cycles and cumulative flight
hours shown are as of December 31, 2005.(4
    )
    
    Federal Express hushkit installed.
  Competition
  
 ITEM 1A. RISK FACTORS
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  Employees
  
 ITEM 2. PROPERTIES
  4




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ITEM 3. LEGAL PROCEEDINGS
 .
 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF UNIT HOLDERS
  5




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PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON PARTNERSHIP CAPITAL AND RELATED
UNIT HOLDER MATTERS
    Amount ofDistributionPeriod
    
    Per Unit
    
    Record Date
    
    Payment Date1st Quarter 2005
    
    $
    0.20
    
    
    April 1, 2005 (1)
    
    April 28, 20052nd Quarter 2005
    
    $
    0.00
    
    
    
    
    None Paid3rd Quarter 2005
    
    $
    0.00
    
    
    
    
    None Paid4th Quarter 2005
    
    $
    0.15
    
    
    January 2, 2006 (2)
    
    January 17, 20061st Quarter 2004
    
    $
    0.00
    
    
    
    
    None Paid2nd Quarter 2004
    
    $
    0.00
    
    
    
    
    None Paid3rd Quarter 2004
    
    $
    0.00
    
    
    
    
    None Paid4th Quarter 2004
    
    $
    0.00
    
    
    
    
    None Paid
 
 (1)
    
    Distribution declared in first quarter for Unit holders as of April 1, 2005.(2)
    
    Distribution declared in fourth quarter for Unit holders as of January 2, 2006.  2005
    
    
    2004Limited Partners
    
    $
    2,539
    
    
    $
    0General Partners
    
    
    26
    
    
    
    0$
    2,565
    
    
    $
    0
   6




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
 
 As of December 31,or Year Ended December 31,2005
    
    2004
    
    2003
    
    2002
    
    2001(in thousands, except per unit amounts)Rental Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    3,370
    
    
    $
    7,357Net Income (Loss)
    
    
    283
    
    
    
    (341
    )
    
    
    (67
    )
    
    
    (25
    )
    
    
    (3,354
    )Net Income (Loss) per Limited
Partnership Unit
    
    
    0.04
    
    
    
    (0.05
    )
    
    
    (0.01
    )
    
    
    (0.00
    )
    
    
    (0.46
    )Distributions per Limited
Partnership Unit
    
    
    0.35
    
    
    
    0.00
    
    
    
    0.40
    
    
    
    1.50
    
    
    
    0.20Total Assets
    
    
    1,917
    
    
    
    3,115
    
    
    
    3,846
    
    
    
    6,853
    
    
    
    32,894Notes Payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,483Partners Capital
    
    
    369
    
    
    
    2,399
    
    
    
    2,740
    
    
    
    5,739
    
    
    
    16,756
 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Liquidity and Capital Resources
    7




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th
     Results of Operations
   2005 as compared to 2004
  8




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2004 as compared to 2003
      Inflation and Changing Prices
  9




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Risks and Uncertainties
  Sarbanes-Oxley Act
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  10




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ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 PEGASUS AIRCRAFT PARTNERS II, L.P.
 PageList of Financial StatementsReport of Independent Registered Public Accounting Firm
    
    
    12Balance Sheets  December 31, 2005 and 2004
    
    
    13Statements of Income (Loss) for the years ended
December 31, 2005, 2004, and 2003
    
    
    14Statements of Partners Capital for the years ended
December 31, 2005, 2004, and 2003
    
    
    15Statements of Cash Flows for the years ended
December 31, 2005, 2004, and 2003
    
    
    16Notes to Financial Statements
    
    
    17
  11




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
   
 12




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PEGASUS AIRCRAFT PARTNERS II, L.P.
 
 BALANCE SHEETS
 DECEMBER 31, 2005 AND 2004
 ASSETS
 2005
    
    
    2004(in thousands, except unit data)Cash and cash equivalents
    
    $
    1,417
    
    
    $
    2,725Deposit receivable
    
    
    300
    
    
    
    Aircraft held for sale, net
    
    
    175
    
    
    
    375Prepaid expenses
    
    
    25
    
    
    
    15Total Assets
    
    $
    1,917
    
    
    $
    3,115LIABILITIES AND PARTNERS CAPITALLIABILITIES:Accounts payable and accrued expenses
    
    $
    166
    
    
    $
    181Payable to affiliates
    
    
    282
    
    
    
    535Distribution payable
    
    
    1,100
    
    
    
    Total Liabilities
    
    
    1,548
    
    
    
    716COMMITMENTS AND CONTINGENCIESPARTNERS CAPITAL:General Partners
    
    
    253
    
    
    
    24Limited Partners (7,255,000 units issued and outstanding in 2005 and 2004)
    
    
    116
    
    
    
    2,375Total Partners Capital
    
    
    369
    
    
    
    2,399Total Liabilities and Partners Capital
    
    $
    1,917
    
    
    $
    3,115
  13




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PEGASUS AIRCRAFT PARTNERS II, L.P.
 
 STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
 FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003
 2005
    
    
    2004
    
    
    2003(in thousands, except unit data and per unit amounts)REVENUES:Gain on sale of aircraft
    
    $
    661
    
    
    $
    
    
    
    $
    Interest
    
    
    48
    
    
    
    28
    
    
    
    46Gain from aircraft  insurance settlement
    
    
    
    
    
    
    
    
    
    
    819Other income
    
    
    9
    
    
    
    2
    
    
    
    718
    
    
    
    30
    
    
    
    865EXPENSES:Write-down of aircraft
    
    
    
    
    
    
    
    
    
    
    515General and administrative
    
    
    309
    
    
    
    267
    
    
    
    266Direct lease
    
    
    126
    
    
    
    104
    
    
    
    151435
    
    
    
    371
    
    
    
    932NET AND COMPREHENSIVE INCOME (LOSS)
    
    $
    283
    
    
    $
    (341
    )
    
    $
    (67
    )NET INCOME (LOSS) ALLOCATED:To the General Partners
    
    $
    3
    
    
    $
    (3
    )
    
    $
    (1
    )To the Limited Partners
    
    
    280
    
    
    
    (338
    )
    
    
    (66
    )$
    283
    
    
    $
    (341
    )
    
    $
    (67
    )NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT
    
    $
    0.04
    
    
    $
    (0.05
    )
    
    $
    (0.01
    )WEIGHTED AVERAGE NUMBER OF LIMITED
PARTNERSHIP UNITS ISSUED AND OUTSTANDING
    
    
    7,255,000
    
    
    
    7,255,000
    
    
    
    7,255,000
  14




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PEGASUS AIRCRAFT PARTNERS II, L.P.
 
 STATEMENTS OF PARTNERS CAPITAL
 FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003
 General
    
    
    LimitedPartners
    
    
    Partners
    
    
    Total(dollar amounts in thousands)Balance, December 31, 2002
    
    $
    59
    
    
    $
    5,680
    
    
    $
    5,739Net loss
    
    
    (1
    )
    
    
    (66
    )
    
    
    (67
    )Distributions declared/paid to partners
    
    
    (31
    )
    
    
    (2,901
    )
    
    
    (2,932
    )Balance, December 31, 2003
    
    
    27
    
    
    
    2,713
    
    
    
    2,740Net loss
    
    
    (3
    )
    
    
    (338
    )
    
    
    (341
    )Balance, December 31, 2004
    
    
    24
    
    
    
    2,375
    
    
    
    2,399Net income
    
    
    3
    
    
    
    280
    
    
    
    283Capital contributions
    
    
    252
    
    
    
    
    
    
    
    252Distributions declared/paid to partners
    
    
    (26
    )
    
    
    (2,539
    )
    
    
    (2,565
    )Balance, December 31, 2005
    
    $
    253
    
    
    $
    116
    
    
    $
    369
  15




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PEGASUS AIRCRAFT PARTNERS II, L.P.
 
 STATEMENTS OF CASH FLOWS
 FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003
 2005
    
    
    2004
    
    
    2003(dollar amounts in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    283
    
    
    $
    (341
    )
    
    $
    (67
    )Adjustments to reconcile net income (loss) to net cash
used in operating activities:Gain on sale of aircraft
    
    
    (661
    )
    
    
    
    
    
    
    Gain from aircraft  insurance settlement
    
    
    
    
    
    
    
    
    
    
    (819
    )Write down of aircraft
    
    
    
    
    
    
    
    
    
    
    515Change in assets and liabilities:Rent and other receivables
    
    
    
    
    
    
    
    
    
    
    9Deposit receivable
    
    
    (300
    )
    
    
    
    
    
    
    Prepaid expense
    
    
    (10
    )
    
    
    10
    
    
    
    (1
    )Accounts payable and accrued expenses
    
    
    (15
    )
    
    
    49
    
    
    
    (8
    )Payable to affiliates
    
    
    (15
    )
    
    
    (439
    )
    
    
    Net cash used in operating activities
    
    
    (718
    )
    
    
    (721
    )
    
    
    (371
    )CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of aircraft
    
    
    861
    
    
    
    
    
    
    
    Proceeds from aircraft  insurance settlement
    
    
    
    
    
    
    
    
    
    
    819Proceeds from sale of aircraft  note collections
    
    
    
    
    
    
    
    
    
    
    1,361Net cash provided by investing activities
    
    
    861
    
    
    
    
    
    
    
    2,180CASH FLOWS FROM FINANCING ACTIVITIES:Cash distributions paid to partners
    
    
    (1,451
    )
    
    
    
    
    
    
    (2,932
    )Net cash used in financing activities
    
    
    (1,451
    )
    
    
    
    
    
    
    (2,932
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,308
    )
    
    
    (721
    )
    
    
    (1,123
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    2,725
    
    
    
    3,446
    
    
    
    4,569CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    1,417
    
    
    $
    2,725
    
    
    $
    3,446SCHEDULE OF NONCASH FINANCING ACTIVITIES:Conversion of payable to affiliates
to a capital contribution
    
    $
    238
    
    
    $
    
    
    
    $
    Distributions declared but unpaid
    
    
    1,100
    
    
    
    
    
    
    
    Capital contribution received from
General Partners allocated
share of distribution
    
    
    15
    
    
    
    
    
    
    $
    
  16




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##### Table of Contents



PEGASUS AIRCRAFT PARTNERS II, L.P.
 
 NOTES TO FINANCIAL STATEMENTS
 DECEMBER 31, 2005
 1. Significant Accounting Policies
 Basis of Presentation.
  Cash and Cash Equivalents.
 Aircraft and Depreciation.
 Income Taxes.
 Net Income or Loss Per Limited Partnership Unit.
 17




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2. Organization of the Partnership
     3. Partnership Allocations
   4. Aircraft
 Net Investment in Aircraft
  2005
    
    
    2004Aircraft held for sale, at cost
    
    $
    17,516
    
    
    $
    49,860Less: Accumulated depreciation
    
    
    (8,811
    )
    
    
    (26,237
    )Write-downs
    
    
    (8,530
    )
    
    
    (23,248
    )Aircraft, net
    
    $
    175
    
    
    $
    375
 DC-9 Aircraft .
 18




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##### Table of Contents



Boeing 727-200 Advanced Aircraft Freighter.
 DC-10-10 Freighter
 General.
 5. Deposit Receivable
  6. Transactions with Affiliates
  Management Fees.
 Incentive Management Fees.
 Re-lease Fee.
 19




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##### Table of Contents



Reimbursable Expenses.
 7. Reconciliation to Income Tax Method of Accounting
  2005
    
    
    2004
    
    
    2003Net income (loss) per financial statements
    
    $
    283
    
    
    $
    (341
    )
    
    $
    (67
    )Increase/(decrease) resulting from:Depreciation
    
    
    (1,276
    )
    
    
    (2,368
    )
    
    
    (2,607
    )Loss on sale of engines, casualty loss on aircraft
    
    
    (3,444
    )
    
    
    
    
    
    
    (146
    )Taxable loss per federal income tax return
    
    $
    (4,437
    )
    
    $
    (2,709
    )
    
    $
    (2,820
    )
  2005
    
    
    2004
    
    
    2003Total Partnership capital per financial statements
    
    $
    369
    
    
    $
    2,399
    
    
    $
    2,740Increase/(decrease) resulting from:Commission and expenses paid in connection with the
sale of limited partnership units
    
    
    16,295
    
    
    
    16,295
    
    
    
    16,295Allowance for impairment
    
    
    8,530
    
    
    
    23,248
    
    
    
    23,248Accumulated depreciation
    
    
    3,202
    
    
    
    (6,795
    )
    
    
    (4,427
    )Fixed assets
    
    
    (9,069
    )
    
    
    (9,069
    )
    
    
    (9,069
    )Other
    
    
    1
    
    
    
    
    
    
    
    1Tax bases of net assets
    
    $
    19,328
    
    
    $
    26,078
    
    
    $
    28,788
 8. Fair Value of Financial Instruments
   20




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Cash and cash equivalents and other receivables.
 Accounts payable and accrued expense and payable to affiliates.
 9. Selected Quarterly Financial Data (unaudited)
  2004
    
    Mar. 31
    
    Jun.30
    
    Sep.30
    
    Dec.31Total Revenues
    
    $
    7
    
    
    $
    5
    
    
    $
    7
    
    
    $
    11Net Loss
    
    $
    (73
    )
    
    $
    (82
    )
    
    $
    (89
    )
    
    $
    (97
    )Net Loss per General Partnership
    
    $
    (1
    )
    
    $
    (1
    )
    
    $
    (1
    )
    
    $
    Net Loss per Limited Partnership
    
    $
    (72
    )
    
    $
    (81
    )
    
    $
    (88
    )
    
    $
    (97
    )Net Loss per Limited Partnership Unit
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
 2005
    
    Mar. 31
    
    Jun.30
    
    Sep.30
    
    Dec.31Total Revenues
    
    $
    22
    
    
    $
    672
    
    
    $
    13
    
    
    $
    11Net Income/(Loss)
    
    $
    (99
    )
    
    $
    562
    *
    
    $
    (79
    )
    
    $
    (101
    )Net Income/(Loss) per General Partnership
    
    $
    (1
    )
    
    $
    6
    
    
    $
    (1
    )
    
    $
    (1
    )Net Income/(Loss) per Limited Partnership
    
    $
    (98
    )
    
    $
    556
    
    
    $
    (78
    )
    
    $
    (100
    )Net Income/(Loss) per
Limited Partnership Unit
    
    $
    (0.01
    )
    
    $
    0.08
    
    
    $
    (0.01
    )
    
    $
    (0.02
    )
 
 *
    
    Net income in the June 30, 2005 quarter resulted from a gain on sale of aircraft 10. Subsequent Events
      21




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
   
 ITEM 9B. OTHER INFORMATION
  22




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PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  Pegasus Aircraft Management Corporation
 Name
    
    Positions HeldRichard S. Wiley
    
    President and Chairman of the BoardCarol L. Chase
    
    Executive Vice President, General Counsel and SecretaryRichard M. Oster
    
    Senior Vice President, Chief Financial OfficerErvin Bach
    
    Senior Vice President, Technical
     23




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##### Table of Contents



Air Transport Leasing, Inc.
 Name
    
    Positions HeldClifford B. Wattley
    
    President and Director
   Section 16 (a) Beneficial Ownership Reporting Compliance
  Code of Ethics
  
 ITEM 11. EXECUTIVE COMPENSATION
  24




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ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED UNIT     HOLDER
MATTERS
 (a)
    
    As of the date hereof, no person is known by the Partnership to
be the beneficial owner of more than 5% of the Units of the Partnership. The
Partnership has no directors or officers, and neither of the General Partners of
the Partnership owns any Units. The Assignor Limited Partner for the
Partnership, Pegasus Assignor L.P.A., Inc. (an affiliate of the Managing General
Partner), owns 5 Units. Additionally, ATL Inc., an affiliate of the
Administrative General Partner owns approximately 112,916 units.
   
  
  (b)
    
    The following table sets forth the number of Units beneficially
owned by directors of the General Partners and by all directors and officers of
such corporations as a group as of March 1, 2006.
 Amount and Natureof Beneficial
    
    PercentName
    
    Ownership
    
    of ClassManaging General Partner:Richard S. Wiley
    
    
    19,135
    
    
    
    *Carol L. Chase
    
    
    1,300
    
    
    
    *All directors and officers as a group
(4 persons)
    
    
    20,435
    
    
    
    *Administrative Managing Partner:None
 
 *
    
    Less than 1% of class. (c)
    
    The Partnership knows of no arrangements, the operation of the
terms of which may at a subsequent date result in a change in control of the
Partnership.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    Base Management Fee.
 Incentive Management Fee.
 Re-lease Fee.
 Reimbursable Expenses.
 Other.
 Partnership Interest.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    27




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PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
  1.
    
    Financial Statements: (Incorporated by reference to Item 8 of this
Report, Financial Statements and Supplementary Data).
   Exhibit No.
    
    Description3.1 (a)
    
    Amended and Restated Limited Partnership Agreement dated April 27, 1989, as
amended and restated July 11, 1989. Filed as Exhibit 3.1 to the Registrants Quarterly
Report on Form 10-Q for the quarter ended September 30, 1989.*(b)
    
    Amendment, dated as of December 26, 1990, to the Amended and Restated Limited
Partnership Agreement dated July 11, 1989. Filed as Exhibit 1 to the Registrants
Current Report on Form 8-K dated December 26, 1990.*(c)
    
    Amendment, dated as of March 31, 1992, to the Amended and Restated Limited
Partnership Agreement dated July 11, 1989. Filed as Exhibit 4 to the Registrants
Current Report on Form 8-K dated April 16, 1992.*10.1 (a)
    
    Agreement pursuant to Selection 168(f)(8) of the Internal Revenue Code of
1954, as amended, between Pacific Southwest Airlines and General Mills, Inc. Filed as
Exhibit 19.3(c) to the Quarterly Report on Form 10-Q for the quarter ended March 31,
1989 for Pegasus Aircraft Partners, L.P. (Commission File No. 33-22986).*(b)
    
    Participation Agreement, dated September 21, 1989, among Pegasus Aircraft
Partners, L.P., a Delaware limited partnership (Pegasus Aircraft Partners), First
Security Bank of Utah, National Association (the Owner Trustee), Concord Asset
Management, Inc., a Delaware corporation (CAMI), and the Registrant. Filed as Exhibit
19.2(e) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
September 30, 1989.*(c)
    
    Amended and Restated Reimbursement Agreement, dated September 21, 1989 between
Pegasus Aircraft Partners and CAMI. Filed as Exhibit 19.2(f) to the Registrants
Quarterly Report on Form 10-Q for the quarter ended September 30, 1989.*(d)
    
    Reimbursement Agreement, dated September 21, 1989, between the Registrant and
CAMI. Filed as Exhibit 19.2(g) to the Registrants Quarterly Report on Form 10-Q for
the quarter ended September 30, 1989.*(e)
    
    Amended and Restated Security Agreement, dated September 21, 1989 between
Pegasus Aircraft Partners and CAMI. Filed as Exhibit 19.2(h) to the Registrants
Quarterly Report on Form 10-Q for the quarter ended September 30, 1989.*(f)
    
    Security Agreement, dated September 21, 1989, between the Registrant and CAMI.
Filed as Exhibit 19.2(i) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 1989.*
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(g)
    
    Security Agreement, dated September 21, 1989, between the Registrant and
Pegasus Aircraft Partners. Filed as Exhibit 19.2(j) to the Registrants Quarterly
Report on Form 10-Q for the quarter ended September 30, 1989.*(h)
    
    Security Agreement, dated September 21, 1989, between Pegasus Aircraft Partners
and the Registrant. Filed as Exhibit 19.2(k) to the Registrants Quarterly Report on
Form 10-Q for the quarter ended September 30, 1989.*(i)
    
    Trust Agreement 814, dated as of March 10, 1989, among Pegasus Capital
Corporation, a California corporation (PCC) as Beneficiary, Pegasus Aircraft Partners
as Beneficiary, and the Owner Trustee. Filed as Exhibit 19.3(i) to the Quarterly Report
on Form 10-Q for the quarter ended March 31, 1989 for Pegasus Aircraft Partners, L.P.
(Commission File No. 33-22986).*(j)
    
    First Amendment to Trust Agreement 814, dated September 21, 1989, among Pegasus
Aircraft Partners as Beneficiary, the Registrant as Beneficiary, and the Owner Trustee.
Filed as Exhibit 19.2(m) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 1989.*(k)
    
    Amended and Restated Lease No. 1, dated October 14, 1988, between PS Group,
Inc. and USAir, Inc. Filed as Exhibit 10.2.9 to Form S-1 Registration Statement dated
July 3, 1989 (Commission File No. 33-28359).*(l)
    
    Assumption Agreement, dated March 22, 1989, among PCC, the Buyer, CAMI and
Pegasus Aircraft Partners. Filed as Exhibit No. 19.3(e) to the Quarterly Report on Form
10-Q for the quarter ended March 31, 1989 for Pegasus Aircraft Partners, L.P.
(Commission File No. 33-22986).*(m)
    
    Letter of Credit Agreement, dated as of April 30, 1992, between First Security
Bank of Utah as Owner Trustee and Philadelphia National Bank, Incorporated, as
CoreStates Bank, N.A. Filed as Exhibit 10.4(a) to the Registrants Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992.*(n)
    
    Assumption Agreement, dated April 30, 1992, among Pegasus Aircraft Partners,
L.P. and Pegasus Aircraft Partners II, L.P. as Obligors and Philadelphia National Bank,
Incorporated, as CoreStates Bank, N.A. Filed as Exhibit 10.4(b) to the Registrants
Quarterly Report on Form 10-Q for the quarter ended June 30, 1992.*(o)
    
    Security Agreement and Assignment of Lease, dated as of April 30, 1992, between
First Security Bank of Utah, National Association as Owner Trustee and Philadelphia
National Bank, Incorporated, as CoreStates Bank, N.A. Filed as Exhibit 10.4(c) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1992.*(p)
    
    Assignment of Collateral, dated as of April 30, 1992, between Pegasus Aircraft
Partners II, L.P. and Philadelphia National Bank, Incorporated, as CoreStates Bank,
N.A. Filed as Exhibit 10.4(d) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992.*10.2 (a)
    
    Trust Agreement 047, dated as of April 12, 1989, between PCC as
Beneficiary, and First Security Bank of Utah, National Association as Owner Trustee.
Filed as Exhibit 19.3(b) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 1989.*(b)
    
    Lease Agreement 047, dated as of April 12, 1989, between Owner Trustee and
Continental Airlines, Inc. Filed as Exhibit 19.3(c) to the Registrants Quarterly
Report on Form 10-Q for the quarter ended September 30, 1989.*
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(c)
    
    Amendment No. 1 to Lease Agreement 047, dated September 21, 1989. Filed as
Exhibit 10.3(f) to the Registrants Annual Report on Form 10-K for the year ended
December 31, 1989.*(d)
    
    Stipulation and Order, dated June 19, 1991, among Continental Airlines, Inc.,
New York Airlines, Inc., Bay Air Lease I, Cirrus Capital Corporation of Florida, Bay
Air Lease III, Meridian Trust Company, as Owner Trustee, IAL Aircraft Acquisitions,
Inc., Pegasus Aircraft Partners II, L.P., Pegasus Capital Corporation, IAL Aviation
Resources, Inc., Aircraft Leasing, Inc., Pegasus Aircraft Partners, L.P., Gilman
Financial Services, Inc. and First Security Bank of Utah, as Owner Trustee concerning
various aircraft and aircraft engines. Filed as Exhibit 19.1(a) to the Registrants
Quarterly Report on Form 10-Q for the quarter ended June 30, 1991.*(e)
    
    Agreed Order, dated July 3, 1991, in connection with approval of Stipulation
and Order, dated June 19, 1991, among Continental Airlines, Inc., New York Airlines,
Inc., Bay Air Lease I, Cirrus Capital Corporation of Florida, Bay Air Lease III,
Meridian Trust Company, as Owner Trustee, IAL Aircraft Acquisitions, Inc., Pegasus
Aircraft Partners II, L.P., Pegasus Capital Corporation, IAL Aviation Resources, Inc.,
Aircraft Leasing, Inc., Pegasus Aircraft Partners, L.P., Gilman Financial Services,
Inc. and First Security Bank of Utah, as Owner Trustee concerning various aircraft and
aircraft engines. Filed as Exhibit 19.1(b) to the Registrants Quarterly Report on Form
10-Q for the quarter ended June 30, 1991.*(f)
    
    Supplemental Stipulation and Order, dated December 30, 1992, among Continental
Airlines, Inc., Bay Air Lease I, Cirrus Capital Corporation of Florida, Bay Air Lease
III, Aviation Assets I, Aviation Assets II, Aviation Assets III, Aviation Assets IV,
IAL Aircraft Acquisitions, Inc., Pegasus Aircraft Partners II, L.P., Pegasus Capital
Corporation, IAL Aviation Resources, Inc., Pegasus Aircraft Partners, L.P., Gilman
Financial Services, and First Security Bank of Utah, as Owner Trustee concerning
various aircraft and aircraft engines. Filed as Exhibit 10.2(f) to the Registrants
Annual Report on Form 10-K for the year ended December 31, 1992.*(g)
    
    Amendment No. 2 to Lease Agreement 047 between First Security Bank of Utah,
N.A. as Lesser and Continental Micronesia as Lessee dated March 15, 1995.10.3 (a)
    
    Trust Agreement 32719 between the Registrant and First Security Bank of
Utah, National Association as Owner Trustee. Filed as Exhibit 19.4(c) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 1989.*(b)
    
    Aircraft Lease Agreement, dated as of February 15, 1993, between First Security
Bank of Utah, National Association as Owner Trustee and KIWI International Air Lines,
Inc. Filed as Exhibit 10.1(a) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993.*(c)
    
    Lease Supplement No. 1, dated March 5, 1993, between First Security Bank of
Utah, National Association as Owner Trustee and KIWI International Air Lines, Inc.
Filed as Exhibit 10.1(b) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993.*(d)
    
    Amendment No. 1 dated March 15, 1995 to the lease between First Security Bank
of Utah National Association as Trustee (Lessor) and Kiwi International Air Lines Inc.
with respect to a certain 727 Aircraft, US Registration N32719.*10.4 (a)
    
    Trust Agreement 909, dated as of May 25, 1989, between PCC as Beneficiary
and First Security Bank of Utah, National Association as Owner Trustee. Filed as
Exhibit 10.5(b) to the Registrants Annual Report on Form 10-K for the year ended
December 31, 1989.*(b)
    
    Lease Agreement, dated as of October 1, 1983, between DC-9T-II as Lessor and
Trans World Airlines, Inc. (TWA) as Lessee. Filed as Exhibit 10.2.8 to Form S-1
Registration Statement dated July 3, 1989 (Commission File No. 33-28359).*
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(c)
    
    Lease Supplement No. 1 dated, October 13, 1983, between TWA and DC-9T-II. Filed
with Lease Agreement as Exhibit 10.2.8 to Form S-1 Registration Statement dated July 3,
1989 (Commission File No. 33-28359).*(d)
    
    Amendment No. 1, dated as of May 1, 1991, to Lease dated as of October 1, 1983,
each between First Security Bank of Utah, National Association as Owner Trustee and
Lessor and Trans World Airlines, Inc. as Lessee. Filed as Exhibit 19.1(a) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1991.*(e)
    
    Provisional Amendment, dated as of March 31, 1993, between First Security Bank
of Utah, National Association as Owner Trustee and Trans World Airlines, Inc. Filed as
Exhibit 10.3(a) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993.*(f)
    
    Amendment No. 2, dated as of April 15, 1993, between First Security Bank of
Utah, National Association as Owner Trustee and Trans World Airlines, Inc. Filed as
Exhibit 10.3(b) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993.*(g)
    
    Agreed Order, dated April 14, 1993, approving lease amendments among Trans
World Airlines, Inc., Pegasus Aircraft Partners, L.P., Registrant and Pegasus Capital
Corporation relating to leases of certain aircraft. Filed as Exhibit 10.3(c) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1993.*(h)
    
    Amendment No. 3 dated January 16, 1995 between First Security Trust of Utah as
Lessor Owner Trustee and TWA as lessee with respect to the lease of one Lockheed L-1011
aircraft, U.S. Registration No. N41016.*(i)
    
    Amendment No. 3 dated as of January 16, 1995 between Meridian Trust Company as
Lessor Owner Trustee and TWA as lessee with respect to the lease of one McDonnell
Douglas MD-82 aircraft, U.S. Registration No. 909TW.*10.5 (a)
    
    Lease Agreement, dated as of December 30, 1981, between First Security Bank
of Utah, National Association as Lessor and TWA as Lessee. Filed as Exhibit 10.2.3 to
Form S-1 Registration Statement dated July 3, 1989 (Commission File No. 33-28359).*(b)
    
    Trust Agreement, dated as of December 30, 1981, between BWL as Owner
Participant and First Security Bank of Utah, National Association as Owner Trustee.
Filed as Exhibit 10.6(h) to the Registrants Annual Report on Form 10-K for the year
ended December 31, 1989.*(c)
    
    Amendment No. 1, dated as of May 1, 1991, to Lease dated as of December 30,
1981, each between First Security Bank of Utah, National Association as Owner Trustee
and Lessor and Trans World Airlines, Inc. as Lessee. Filed as Exhibit 19.1(a) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1991.*(d)
    
    Provisional Amendment, dated as of March 31, 1993, between First Security Bank
of Utah, National Association as Owner Trustee and Trans World Airlines, Inc. Filed as
Exhibit 10.4(a) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993.*(e)
    
    Amendment No. 2, dated as of April 15, 1993, between First Security Bank of
Utah, National Association as Owner Trustee and Trans World Airlines, Inc. Filed as
Exhibit 10.4(b) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
March 31, 1993.*(f)
    
    Agreed Order, dated April 14, 1993, approving lease amendments among Trans
World Airlines, Inc., Pegasus Aircraft Partners, L.P., Registrant and Pegasus Capital
Corporation relating to leases of certain aircraft. Filed as Exhibit 10.4(c) to the Registrants
Quarterly Report on Form 10-Q for the quarter ended March 31, 1993.*
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10.6 (a)
    
    Trust Agreement 935, dated as of April 2, 1990, between Registrant as
Beneficiary and First Security Bank of Utah, National Association, as Owner Trustee.
Filed as Exhibit 19.1(b) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended March 31, 1990.*(b)
    
    Aircraft Lease Agreement, dated as of June 1, 1992, between First Security Bank
of Utah, National Association as Owner Trustee and Lessor and Aerovias de Mexico, S.A.
de C.V. as Lessee, pertaining to one McDonnell Douglas DC-9-31 aircraft, U.S.
Registration No. N935ML. Filed as Exhibit 10.1(a) to the Registrants Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992.*(c)
    
    Estoppel and Acceptance Certificate, dated July 1, 1992, executed by Aerovias
de Mexico, S.A. de C.V. as Lessee under Aircraft Lease Agreement, dated as of June 1,
1992, between Aerovias de Mexico, S.A. de C.V. and First Security Bank of Utah,
National Association as Owner Trustee and Lessor, pertaining to one McDonnell Douglas
DC-9-31 aircraft, U.S. Registration No. N935ML. Filed as Exhibit 10.1(b) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1992.*10.7 (a)
    
    Trust Agreement 936, dated as of May 9, 1990, between Registrant as
Beneficiary and First Security Bank of Utah, National Association, as Owner Trustee.
Filed as Exhibit 19.1(b) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 1990.*(b)
    
    Aircraft Lease Agreement, dated as of June 1, 1992, between First Security Bank
of Utah, National Association as Owner Trustee and Lessor and Aerovias de Mexico, S.A.
de C.V. as Lessee, pertaining to one McDonnell Douglas DC-9-31 aircraft, U.S.
Registration No. N936ML. Filed as Exhibit 10.2(a) to the Registrants Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992.*(c)
    
    Estoppel and Acceptance Certificate, dated July 20, 1992, executed by Aerovias
de Mexico, S.A. de C.V. as Lessee under Aircraft Lease Agreement, dated as of June 1,
1992, between Aerovias de Mexico, S.A. de C.V. and First Security Bank of Utah,
National Association as Owner Trustee and Lessor, pertaining to one McDonnell Douglas
DC-9-31 aircraft, U.S. Registration No. N936ML. Filed as Exhibit 10.2(b) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1992.*10.7 (d)
    
    Standstill Agreement dated December 13, 1994, between Aerovias de Mexico SA
de CV and First Security Bank of Utah National Association as Owner Trustee of two
DC-9-31 Aircraft, US Registration N936ML and N937ML.10.7 (e)
    
    Standstill Extension and Amendment dated as of February 28, 1995 between
Aerovias de Mexico SA de CV and First Security Bank of Utah National Association as
Owner Trustee of two DC-9-31 Aircraft, US Registration N936ML and N937ML.10.8 (a)
    
    Trust Agreement 16982, dated as of August 22, 1990, between Registrant as
Beneficiary and First Security Bank of Utah, National Association as Owner Trustee.
Filed as Exhibit 19.1(b) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990.*(b)
    
    Lease Agreement 212, dated as of December 15, 1988, between Wilmington Trust
Company as Owner Trustee and Lessor and Continental Airlines, Inc. as Lessee. Filed as
Exhibit 10.2.5 to Form S-1 Registration Statement dated July 3, 1989, (Commission File
No. 33-28359).*(c)
    
    Amendment No. 1, dated as of May 26, 1989, to Lease Agreement 212, between
Wilmington Trust Company as Owner Trustee and Lessor and Continental Airlines, Inc. as
Lessee. Filed as Exhibit 10.2.5 to Form S-1 Registration Statement dated July 3, 1989,
(Commission File No. 33-28359).*
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(d)
    
    Stipulation and Order, dated June 19, 1991, among Continental Airlines, Inc.,
New York Airlines, Inc., Bay Air Lease I, Cirrus Capital Corporation of Florida, Bay
Air Lease III, Meridian Trust Company, as Owner Trustee, IAL Aircraft Acquisitions,
Inc., Pegasus Aircraft Partners II, L.P., Pegasus Capital Corporation, IAL Aviation
Resources, Inc., Aircraft Leasing, Inc., Pegasus Aircraft Partners, L.P., Gilman
Financial Services, Inc. and First Security Bank of Utah, as Owner Trustee concerning
various aircraft and aircraft engines. Filed as Exhibit 19.1(a) to the Registrants
Quarterly Report on Form 10-Q for the quarter ended June 30, 1991.*(e)
    
    Agreed Order, dated July 3, 1991, in connection with approval of Stipulation
and Order, dated June 19, 1991, among Continental Airlines, Inc., New York Airlines,
Inc., Bay Air Lease I, Cirrus Capital Corporation of Florida, Bay Air Lease III,
Meridian Trust Company, as Owner Trustee, IAL Aircraft Acquisitions, Inc., Pegasus
Aircraft Partners II, L.P., Pegasus Capital Corporation, IAL Aviation Resources, Inc.,
Aircraft Leasing, Inc., Pegasus Aircraft Partners, L.P., Gilman Financial Services,
Inc. and First Security Bank of Utah, as Owner Trustee concerning various aircraft and
aircraft engines. Filed as Exhibit 19.1(b) to the Registrants Quarterly Report on
Form 10-Q for the quarter ended June 30, 1991.*(f)
    
    Supplemental Stipulation and Order, dated December 30, 1992, among Continental
Airlines, Inc., Bay Air Lease I, Cirrus Capital Corporation of Florida, Bay Air Lease
III, Aviation Assets I, Aviation Assets II, Aviation Assets III, Aviation Assets IV,
IAL Aircraft Acquisitions, Inc., Pegasus Aircraft Partners II, L.P., Pegasus Capital
Corporation, IAL Aviation Resources, Inc., Pegasus Aircraft Partners, L.P., Gilman
Financial Services, and First Security Bank of Utah, as Owner Trustee concerning
various aircraft and aircraft engines. Filed as Exhibit 10.8(f) to the Registrants
Annual Report on Form 10-K for the year ended December 31, 1992.*(g)
    
    Lease Termination Agreement dated November 15, 1995 between and among
Continental Airlines, Inc., First Security Bank of Utah, N.A., Pegasus Aircraft
Management, Inc. and Air Transport Leasing, Inc.(h)
    
    Supplement to Lease Termination Agreement between and among Continental
Airlines, Inc., First Security Bank of Utah, N.A., Pegasus Aircraft Management, Inc.
and Air Transport Leasing, Inc.10.9
    
    Prospectus of Registrant, dated as of July 11, 1989. Filed as Exhibit 2 of the
Registrants Form 8-K filed for the Event occurring on September 20, 1989.*10.10 (a)
    
    Loan Agreement, dated June 10, 1992, between Pegasus Aircraft Partners II,
L.P. and Philadelphia National Bank, Incorporated, as CoreStates Bank, N.A. Filed as
Exhibit 10.3(a) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992.*(b)
    
    Promissory Note, dated June 10, 1992, made by Pegasus Aircraft Partners II,
L.P. in favor of Philadelphia National Bank, Incorporated, as CoreStates Bank, N.A.
Filed as Exhibit 10.3(b) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992.*(c)
    
    Assignment of Collateral, dated as of June 10, 1992, between Pegasus Aircraft
Partners II, L.P. and Philadelphia National Bank, Incorporated, as CoreStates Bank,
N.A. Filed as Exhibit 10.3(c) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992.*(d)
    
    Security Agreement and Assignment of Lease, dated as of June 10, 1992, between
First Security Bank of Utah, National Association as Owner Trustee and Philadelphia
National Bank, Incorporated, as CoreStates Bank, N.A. Filed as Exhibit 10.3(d) to the
Registrants Quarterly Report on Form 10-Q for the quarter ended June 30, 1992.*
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10.11 (a)
    
    Secured Loan Agreement, dated September 10, 1992, among Greyhound Financial
Corporation, as Lender and First Security Bank of Utah, National Association as Owner
Trustee under (i) Trust Agreement 935, dated as of April 2, 1990, between First
Security Bank of Utah, National Association and Pegasus Aircraft Partners II, L.P.,
(ii) Trust Agreement 936, dated as of May 9, 1990, between First Security Bank of Utah,
National Association and Pegasus Aircraft Partners II, L.P., and (iii) Trust Agreement
909, dated as of May 25, 1989, between First Security Bank of Utah, National
Association and Pegasus Aircraft Partners II, L.P. as Co-Borrowers. Filed as Exhibit
10.1(a) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
September 30, 1992.*(b)
    
    Promissory Note, dated September 10, 1992, made by First Security Bank of Utah,
National Association as Owner Trustee under (i) Trust Agreement 935, dated as of April
2, 1990, between First Security Bank of Utah, National Association and Pegasus Aircraft
Partners II, L.P., (ii) Trust Agreement 936, dated as of May 9, 1990, between First
Security Bank of Utah, National Association and Pegasus Aircraft Partners II, L.P., and
(iii) Trust Agreement 909, dated as of May 25, 1989, between First Security Bank of
Utah, National Association and Pegasus Aircraft Partners II, L.P. in favor of Greyhound
Financial Corporation. Filed as Exhibit 10.1(b) to the Registrants Quarterly Report on
Form 10-Q for the quarter ended September 30, 1992.*(c)
    
    Beneficial Interest Security Agreement, dated as of September 10, 1992, between
Pegasus Aircraft Partners II, L.P. and Greyhound Financial Corporation. Filed as
Exhibit 10.1(c) to the Registrants Quarterly Report on Form 10-Q for the quarter ended
September 30, 1992.*(d)
    
    Continuing Guaranty and Subordination Agreement, dated September 10, 1992,
between Greyhound Financial Corporation and First Security Bank of Utah, National
Association as Owner Trustee under (i) Trust Agreement 935, dated as of April 2, 1990,
between First Security Bank of Utah, National Association and Pegasus Aircraft Partners
II, L.P., (ii) Trust Agreement 936, dated as of May 9, 1990, between First Security
Bank of Utah, National Association and Pegasus Aircraft Partners II, L.P., and (iii)
Trust Agreement 909, dated as of May 25, 1989, between First Security Bank of Utah,
National Association and Pegasus Aircraft Partners II, L.P. Filed as Exhibit 10.1(d) to
the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30,
1992.*(e)
    
    Negative Pledge Agreement, dated as of September 10, 1992, by and among
Greyhound Financial Corporation and First Security Bank of Utah, National Association
as Owner Trustee under (i) Trust Agreement 935, dated as of April 2, 1990, between
First Security Bank of Utah, National Association and Pegasus Aircraft Partners II,
L.P., (ii) Trust Agreement 936, dated as of May 9, 1990, between First Security Bank of
Utah, National Association and Pegasus Aircraft Partners II, L.P., (iii) Trust
Agreement 909, dated as of May 25, 1989, between First Security Bank of Utah, National
Association and Pegasus Aircraft Partners II, L.P., and (iv) Trust Agreement 16982
between First Security Bank of Utah, National Association and Pegasus Aircraft Partners
II, L.P. Filed as Exhibit 10.1(e) to the Registrants Quarterly Report on Form 10-Q for
the quarter ended September 30, 1992.*(f)
    
    First Priority Aircraft Chattel Mortgage and Security Agreement, dated
September 10, 1992, between First Security Bank of Utah, National Association as Owner
Trustee under Trust Agreement 935, dated as of April 2, 1990, between First Security
Bank of Utah, National Association and Pegasus Aircraft Partners II, L.P., as
Mortgagor, and Greyhound Financial Corporation, as Mortgagee. Filed as Exhibit 10.1(f)
to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30,
1992.*(g)
    
    First Priority Aircraft Chattel Mortgage and Security Agreement, dated
September 10, 1992, between First Security Bank of Utah, National Association as Owner
Trustee under Trust Agreement 936, dated as of May 9, 1990, between First Security Bank of Utah,
National Association and Pegasus Aircraft Partners II, L.P., as Mortgagor,
and Greyhound Financial Corporation, as Mortgagee. Filed as Exhibit 10.1(g)
to the Registrants Quarterly Report on Form 10-Q for the quarter ended
September 30, 1992.*
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(h)
    
    First Priority Aircraft Chattel Mortgage and Security Agreement, dated
September 10, 1992, between First Security Bank of Utah, National Association as Owner
Trustee under Trust Agreement 909, dated as of May 25, 1989, between First Security
Bank of Utah, National Association and Pegasus Aircraft Partners II, L.P., as
Mortgagor, and Greyhound Financial Corporation, as Mortgagee. Filed as Exhibit 10.1(h)
to the Registrants Quarterly Report on Form 10-Q for the quarter ended September 30,
1992.*10.12 (a)
    
    Trust Agreement 357, dated as of February 15, 1993, between Registrant and First
Security Bank of Utah, National Association as Owner Trustee. Filed as Exhibit 10.2(a)
to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31,
1993.*(b)
    
    Aircraft Lease Agreement, dated as of March 15, 1993, between First Security
Bank of Utah, National Association as Owner Trustee and KIWI International Air Lines,
Inc. Filed as Exhibit 10.2(b) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended March 31, 1993.*(c)
    
    Lease Supplement No. 1, dated May 24, 1993, between First Security Bank of
Utah, National Association as Owner Trustee and KIWI International Air Lines, Inc.
Filed as Exhibit 10.1(a) to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993.*(d)
    
    Amendment No. 1 dated March 15, 1995 to the lease between First Security Bank
of Utah National Association as Trustee (Lessor) and Kiwi International Air Lines Inc.
with respect to a certain 727 Aircraft, US Registration N357KP.*10.13
(a)
    
    Aircraft lease of 727-200 Advanced Aircraft N16784 (formerly N516PE) as of
September 25, 1984 by Seventh HFC Leasing Corporation as Lessor and People Express
Airlines, Inc. as Lessee.(b)
    
    Amendment No. 1 to lease of 727-200 Advanced Aircraft N16784 dated November 15,
1995 between Continental Airlines, Inc. as Lessee and First Security Bank of Utah as
Owner Trustee of a trust in which Pegasus Aircraft Partners II, L.P. is the sole
beneficiary.10.14 (a)
    
    Aircraft lease of 727-200 advanced Aircraft N77780 (formerly N512PE) as of
August 23, 1984 by Mellon Financial Services Corporation #3 as Lessor and People
Express as Lessee.(b)
    
    Amendment No. 1 to lease of 727-200 Advanced Aircraft N77780 dated November 21,
1995 between Continental Airlines, Inc. as Lessee and First Security Bank of Utah as
Owner Trustee of a trust in which Pegasus Aircraft Partners II, L.P. is the sole
beneficiary.10.15 (a)
    
    Promissory note issued in favor of Pegasus Aircraft Partners II, L.P. with face
amount of $307,166 dated March 16, 1996 from Kiwi International Airlines Inc.10.16 (a)
    
    Loan and Security Agreement dated December 23, 1996 between Provident Bank, N.A.
and First Security Bank as Owner Trustee.11
    
    Partnership Policy for Requests for Partner Lists.
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##### Table of Contents



31.1
    
    Rule 13a-14(a)/15d-14(a) Certification.31.2
    
    Rule 13a-14(a)/15d-14(a) Certification.32.1
    
    Section 1350 Certification.32.2
    
    Section 1350 Certification.
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##### Table of Contents



SIGNATURES
  March 16, 2006
 Pegasus Aircraft Partners II, L.P.(Registrant)By:
    
    Air Transport Leasing, Inc.

Administrative General PartnerBy:
    
    /s/ Clifford B. Wattley

Clifford B. Wattley
President, Director, Chief Financial and Accounting OfficerBy:
    
    Pegasus Aircraft Management Corporation
Managing General PartnerBy:
    
    /s/ Richard S. Wiley

Richard S. Wiley
President and Chairman of the Board
  Signature
    
    Title/s/ Richard S. Wiley
    
    President and Chairman of the Board ofRichard S. Wiley
    
    Pegasus Aircraft Management Corporation/s/ Clifford B. Wattley
    
    President, Director, Chief Financial andClifford B. Wattley
    
    Accounting Officer of Air Transport Leasing, Inc.
 37