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

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2001

                           Commission File No. 1-9259


                 AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
             ______________________________________________________
             (Exact name of registrant as specified in its charter)


       California                                        94-3008908
_______________________                     ____________________________________
(State of Organization)                     (I.R.S. Employer Identification No.)


          555 California Street, Fourth Floor, San Francisco, CA 94104
          ____________________________________________________________
               (Address of principal executive offices) (Zip Code)


       Registrant's telephone number, including area code: (415) 765-1814


           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

         TITLE OF EACH CLASS:                        NAME OF EACH EXCHANGE
     Depositary Units Representing                   ON WHICH REGISTERED:
     Limited Partnership Interests                  New York Stock Exchange


        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES  X    NO
                                              ___      ___

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

         Aggregate market value of Depositary Units, held by non-affiliates of
the registrant as of the close of business at March 12, 2002 was $21,539,100.00.


<PAGE>


                               TABLE OF CONTENTS

                                                                            PAGE

                                     PART I

ITEM 1.   BUSINESS..........................................................  3

ITEM 2.   PROPERTIES........................................................ 14

ITEM 3.   LEGAL PROCEEDINGS................................................. 14

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............... 14

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS............................................... 15

ITEM 6.   SELECTED FINANCIAL DATA........................................... 18

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS............................... 19

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT
          MARKET RISK....................................................... 23

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................... 24

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE............................... 24

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................ 24

ITEM 11.  EXECUTIVE COMPENSATION............................................ 26

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.... 26

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 27

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
          FORM 8-K.......................................................... 29

SIGNATURES.................................................................. 33

INDEX TO EXHIBITS....................................................A-13, A-14


                                       2


<PAGE>


                 AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
                                    FORM 10-K


                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001


                                     PART I

ITEM 1.  BUSINESS

GENERAL

     Airlease  Ltd., A California  Limited  Partnership  (the  "Partnership"  or
"Airlease"),  was formed in 1986. The General  Partner of the  Partnership  (the
"General   Partner")  is  Airlease   Management   Services,   Inc.,  a  Delaware
corporation.  Until  October  31, 1996 the  General  Partner was a wholly  owned
subsidiary  of USL Capital  Corporation  ("USL  Capital"),  which in turn was an
indirect  subsidiary  of Ford Motor  Company.  On October 31, 1996, BA Leasing &
Capital Corporation ("BA Leasing & Capital"), a wholly owned indirect subsidiary
of BankAmerica Corporation,  purchased the stock of the General Partner from USL
Capital and the General Partner became a wholly owned subsidiary of BA Leasing &
Capital. On September 29, 1999, BA Leasing & Capital merged into Banc of America
Leasing and  Capital,  LLC, a Delaware  limited  liability  company  ("BALCAP").
BALCAP is also a wholly owned indirect subsidiary of BankAmerica Corporation.  A
total of 4,625,000 Depository Units representing  limited partnership  interests
("Units") in the Partnership are outstanding, of which 3,600,000 are held by the
public and 1,025,000 are owned by BALCAP and its subsidiaries.

     The Partnership  invests in commercial  aircraft and leases the aircraft to
others,  primarily  airlines,  pursuant to finance  (full  payout) or  operating
leases.

PRINCIPAL INVESTMENT OBJECTIVES

     The business of the  Partnership is to acquire and own,  either directly or
through  joint  ventures,  aircraft  and to lease  such  aircraft  primarily  to
airlines.  The  Partnership's  principal  investment  objectives are to generate
income for quarterly cash distributions to Unitholders and to own a portfolio of
leased  aircraft.  The  Partnership's  original intent was that until January 1,
2005,  it would use a  substantial  portion of the cash  derived  from the sale,
refinancing or other disposition of aircraft to purchase  additional aircraft if
attractive investment opportunities were available.


                                       3


<PAGE>


     As previously reported, as part of a plan to mitigate the adverse financial
effects  of changes  in tax law,  in 1997  Unitholders  authorized  the  General
Partner to decide not to make new aircraft  investments,  to sell  aircraft when
attractive  opportunities arise, to distribute the proceeds and to liquidate the
Partnership  when all assets are sold. The General Partner will consider whether
it is in  the  best  interest  of  Unitholders  to  cease  making  new  aircraft
investments  as  opportunities  arise,  in light of  market  conditions  and the
Partnership's  competitive position.  Based on its investment experience and its
knowledge of the market, the General Partner believes that attractive investment
opportunities  like those made by the  Partnership in the past probably will not
be available.  In the event that aircraft are sold and  appropriate  alternative
investments are not available,  the Partnership will distribute sale proceeds to
Unitholders  (after repaying debt and establishing  appropriate  reserves),  and
this would result in a further reduction of the Partnership's portfolio.

AIRCRAFT PORTFOLIO

     The Partnership's aircraft portfolio consists of narrow-body (single-aisle)
twin and tri-jet  commercial  aircraft  which were  acquired  as used  aircraft.
Although the  Partnership  is permitted to do so, the  Partnership  does not own
interests  in  aircraft  which  were  acquired  as new  aircraft;  nor  does the
Partnership own any wide-body aircraft, such as the Boeing 747 and MD-11, or any
turboprop or prop-fan powered aircraft.

     The following  table  describes  the  Partnership's  aircraft  portfolio at
December 31, 2001:

<TABLE>
<CAPTION>

__________________________________________________________________________________________________________________
                   Number &                                    Current      Purchase
                 type; year of    Ownership    Acquired by      lease       price (in      Type          Noise
Lessee              Delivery      Interest     Partnership    expiration    millions)    of lease    compliance(1)
__________________________________________________________________________________________________________________

<S>                   <C>            <C>           <C>           <C>          <C>         <C>           <C>
CSI                   2 MD-82        100%          1986          2006 (2)     $36.4       Direct        Stage III
Aviation               1981                                                               finance

FedEx             1 727-200FH        100%          1987          2006         $18.5(3)    Direct        Stage III
                      1979                                                                finance

Held for              3 MD-82        100%          1986           N/A         $54.6         N/A         Stage III
Sale or lease            1981(2)

<FN>

(1)      See "Government Regulation-Aircraft Noise" below, for a description of laws and regulations governing
         aircraft noise.

(2)      CSI has the right to terminate the leases on any date on which CSI's agreement with the United States
         Marshals Service terminates. Unless earlier terminated, the leases will expire in 2006.

(3)      The purchase price includes $6.9 million of conversion costs for the upgrade of the aircraft from a Stage
         II passenger to a Stage III freighter aircraft.

</FN>
</TABLE>


     At December 31, 2001,  the book value of aircraft by lessee as a percent of
total assets was


                                       4


<PAGE>


as follows:  FedEx, 13.2%; CSI, 27% and off-lease aircraft,  40.6%.  Revenues by
lessee as a percentage of total revenue for 2001 and 2000, respectively, were as
follows: US Airways, 55.4% and 76.8%;  TWA/American  Airlines,  17.2% and 17.4%;
CSI, 4.9% and 0%; and FedEx, 5.7% and 5.9%.

     At  December  31,  2001,  the  Partnership's  portfolio  consisted  of  six
Stage-III  commercial aircraft.  Two are leased to CSI Aviation Services,  Inc.,
one to FedEx, and three are being marketed for lease.

     In January  2001 TWA, a lessee of a seventh  aircraft in the  Partnership's
portfolio,  filed for bankruptcy.  In April 2001,  American  Airlines  assumed a
modified TWA lease and in December  2001  Airlease  sold the aircraft  under the
terms of a previously negotiated sale.

     In April 2001 US Airways,  at that time the lessee of five MD-82  aircraft,
notified  Airlease it would return these  aircraft at end of lease on October 1,
2001.  Two of  the  five  aircraft  were  subsequently  leased  to CSI  Aviation
Services,  Inc.  ("CSI") and the other three  aircraft  are being  marketed  for
lease.

     CSI operates the two aircraft it leases in charter  services for the United
States Marshals Service ("USMS"). CSI has the right to terminate its leases with
the Partnership on any date on which CSI's agreement with USMS  terminates.  The
initial  contract  between CSI and USMS expires in October 2002.  Unless earlier
terminated, the leases will expire on October 31, 2006.

     The Partnership  also leases a 727-200 FH aircraft to FedEx.  This lease is
scheduled to terminate in 2006.

     See  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
RESULTS OF OPERATIONS" for a further discussion of the Partnership's lessees.

     The  Partnership's  lessees have the  following  fair market value  renewal
options:  Fedex has the right to renew its lease for one  six-month  term at the
current rent payable under the lease,  and  thereafter  for four  successive one
year terms at a fair  market  value  rental,  and CSI has the right to renew its
leases from one to five years to coincide  with any renewal of its contract with
the USMS.

COMPETITIVE POSITION OF THE PARTNERSHIP

     The aircraft  leasing  industry  has become  increasingly  competitive.  In
making aircraft investments, leasing aircraft to lessees, and seeking purchasers
of aircraft,  the Partnership  competes with large leasing  companies,  aircraft
manufacturers,  airlines  and other  operators,  equipment  managers,  financial
institutions  and other  parties  engaged in  leasing,  managing,  marketing  or
remarketing  aircraft.  Affiliates of the General Partner are engaged in many of
these  businesses and may be deemed to be in competition  with the  Partnership.
There are many large


                                       5



<PAGE>


leasing companies which have the financial  strength to borrow at very low rates
and  to  obtain  significant  discounts  when  purchasing  large  quantities  of
aircraft. The lower capital and acquisition costs enjoyed by these large leasing
companies  permit them to offer airlines lower lease rates than smaller  leasing
companies  can offer.  The  Partnership  does not have the resources to purchase
newer  aircraft  or to  purchase  aircraft  at volume  discounts  and has only a
limited ability to use tax deferrals in its pricing.

     As previously reported to Unitholders,  the Partnership's access to capital
is limited. Since all Cash Available from Operations,  as defined in the Limited
Partnership Agreement,  is distributed,  there is no build up of equity capital,
and acquisitions  must be funded from proceeds  available when aircraft are sold
or from  debt.  Access to debt is limited  because  the  Partnership's  aircraft
leased under  long-term  leases are  generally  used to  collateralize  existing
borrowings.  In general,  the  Partnership's  pricing is  uncompetitive  for new
acquisitions because of its limited sources and high cost of capital.

     Because of these factors,  finding new aircraft investments like those made
by the Partnership in the past and that offer an appropriate balance of risk and
reward has been difficult.  During the past eight years the Partnership has made
only two aircraft  investments,  both of which were possible  because of special
circumstances.

     In 1996, 1997 and 2001, the Partnership  sold interests in nine aircraft (a
50%  interest in an aircraft  on lease to Finnair,  a one-third  interest in six
aircraft on lease to  Continental,  a 50% interest in one aircraft leased to Sun
Jet International,  Inc., and a 100% interest in an aircraft previously on lease
to TWA and American  Airlines).  See "Disposition of Aircraft"  below.  However,
because of the factors  described  above, the Partnership was unable to reinvest
the  proceeds in  aircraft  at an  acceptable  return,  and the General  Partner
determined  that the  best use of the net  proceeds  was to  distribute  them to
Unitholders.  These  sales  and  distributions  have  reduced  the  size  of the
Partnership's portfolio.

PARTICIPANTS IN LEASES

     USL Capital  originally  participated  equally with the  Partnership in the
aircraft on lease to FedEx and the aircraft sold in December 2001. In April 1993
the Partnership leased two aircraft (held jointly with USL Capital),  which were
previously off lease, to FedEx. In September 1993 the Partnership  exchanged its
50% interest in the two aircraft for a 100% interest in one aircraft and pledged
the aircraft and the lease as collateral to obtain funds to upgrade the aircraft
from a Stage II passenger  aircraft to a Stage III  freighter.  In January 1997,
the  Partnership  purchased  from USL Capital a 50%  interest in the aircraft at
that time on lease to TWA, and owned a 100% interest in that  aircraft  until it
was sold in December 2001.


                                       6


<PAGE>


DESCRIPTION OF LEASES

     The  727-200FH  aircraft  on  lease  to  FedEx  is  leased  pursuant  to  a
full-payout  (direct  finance) lease, and the two MD-82 aircraft on lease to CSI
are leased pursuant to operating leases. The two MD-82 aircraft on lease to CSI,
together with the three off-lease aircraft, were previously leased to US Airways
pursuant to full-payout  leases. A sixth MD-82 aircraft was previously leased to
TWA pursuant to a full-payout  lease, and then to American  Airlines pursuant to
an operating lease, until the aircraft was sold in December 2001.

     Generally,  operating leases are for a shorter term than full-payout leases
and, therefore, it is necessary to remarket the aircraft in order to recover the
full  investment.  Full-payout  leases are generally for a longer term and hence
provide more predictable revenue than operating leases.

     All of the  Partnership's  leases are net leases,  which  provide  that the
lessee will bear the direct  operating  costs a0nd the risk of physical  loss of
the aircraft; pay sales, use or other similar taxes relating to the lease or use
of the aircraft; maintain the aircraft; indemnify the Partnership-lessor against
any liability  suffered by the  Partnership as the result of any act or omission
of the lessee or its agents;  maintain casualty  insurance in an amount equal to
the  specific  amount  set forth in the lease  (which  may be less than the fair
value of the aircraft);  and maintain liability insurance naming the Partnership
as an additional insured with a minimum coverage which the General Partner deems
appropriate.  In  general,  substantially  all  obligations  connected  with the
ownership  and  operation  of the leased  aircraft are assumed by the lessee and
minimal  obligations are imposed upon the  Partnership.  Default by a lessee may
cause  the  Partnership  to  incur  unanticipated   expenses.   See  "Government
Regulation" below.

     Certain provisions of the Partnership's  leases may not be enforceable upon
a  default  by  a  lessee  or  in  the  event  of  a  lessee's  bankruptcy.  The
enforceability  of leases  will be subject to  limitations  imposed by  Federal,
California, or other applicable state law and equitable principles.

     In  order  to  encourage  equipment  financing  to  certain  transportation
industries,   Federal   bankruptcy  laws  traditionally  have  afforded  special
treatment  to certain  lenders  or lessors  who have  provided  such  financing.
Section 1110 ("Section  1110") of the United States  Bankruptcy Code, as amended
(the  "Bankruptcy  Code"),  implements  this  policy by  creating a category  of
aircraft  lenders and lessors  whose rights to  repossession  are  substantially
improved.  If a transaction  is eligible  under  Section 1110,  the right of the
lender  or  lessor to take  possession  of the  equipment  upon  default  is not
affected by the automatic stay provisions of the Bankruptcy Code,  unless within
60 days after  commencement  of a bankruptcy  proceeding  the trustee  agrees to
perform  all  obligations  of the debtor  under the  agreement  or lease and all
defaults  (except those  relating to insolvency or insolvency  proceedings)  are
cured  within such  60-day  period or 30 days after the  default.  One court has
recently held that Section 1110 does not apply after the 60-day period, and thus
the automatic stay may apply after such 60-day period.

     On October 22, 1994, the President signed the Bankruptcy Reform Act of 1994
(the "Reform Act").  The Reform Act made several  changes to Section 1110,  such
that it now protects


                                       7


<PAGE>


all transactions  involving qualifying  equipment,  whether the transaction is a
lease, conditional sale, purchase money financing or customary refinancing.  For
equipment  first  placed in  service on or prior to the date of  enactment,  the
requirement that the lender provide purchase money financing continues to apply,
but  there is a "safe  harbor"  definition  for  leases,  so that  Section  1110
benefits  will be available to the lessor  without  regard to whether or not the
lease is ultimately determined to be a "true" lease. This safe harbor is not the
exclusive  test so that other leases which do not qualify under the safe harbor,
but which are true  leases,  will  continue  to be  covered as leases by Section
1110. The  Partnership  may not be entitled to the benefits of Section 1110 upon
insolvency of a lessee airline under all of its leases.

     In the past, the  Partnership had interests in aircraft leased to operators
based outside the United States. It is possible that the Partnership's  aircraft
could be leased or  subleased  to foreign  airlines.  Aircraft  on lease to such
foreign operators are not registered in the United States and it is not possible
to file liens on such foreign aircraft with the Federal Aviation  Administration
(the  "FAA").  Further,  in  the  event  of  a  lessee  default  or  bankruptcy,
repossession  and claims would be subject to laws other than those of the United
States.

AIRCRAFT REMARKETING

     On  termination  of a lease and return of the aircraft to the  Partnership,
the Partnership must remarket the aircraft to realize its full investment. Under
the Amended and Restated Agreement of Limited Partnership,  as amended ("Limited
Partnership  Agreement"),  the remarketing of aircraft may be through a lease or
sale. The terms and conditions of any such lease would be determined at the time
of the re-lease, and it is possible (although not anticipated at this time) that
the lease may not be a net lease.  The General  Partner will  evaluate the risks
associated  with leases which are not net leases prior to entering into any such
lease.  The General  Partner has not  established  any  standards for lessees to
which  it  will  lease  aircraft  and,  as a  result,  there  is  no  investment
restriction  prohibiting  the  Partnership  from doing business with any lessee,
including  "start-up"  airlines.  However,  the General Partner will analyze the
credit of a potential  lessee and evaluate the aircraft's  potential value prior
to entering into any lease.

DISPOSITION OF AIRCRAFT

     The Partnership's original intent was to dispose of all its aircraft by the
year 2011,  subject to prevailing market conditions and other factors.  However,
in 1997 unitholders  authorized the General Partner not to make new investments,
to sell aircraft when attractive opportunities arise, to distribute the proceeds
and to  liquidate  the  Partnership  when all  assets are sold.  See  "Principal
Investment Objectives" above.

     Underthe Limited  Partnership  Agreement,  aircraft may be sold at any time
whether or not the  aircraft  are  subject to leases if, in the  judgment of the
General Partner, it is in the best interest of the Partnership to do so.

     In March 1996, the Partnership  sold its 50% interest in one MD-82 on lease
to Finnair to


                                       8



<PAGE>


a third  party  for  approximately  $6.9  million,  resulting  in a net  gain of
approximately  $556,000.  The  Partnership  had  acquired  its  interest in this
aircraft in April 1992, for  approximately  $8.5 million.  A portion of the sale
proceeds were used to pay off the outstanding  balance under a non-recourse loan
which was  collateralized  by this aircraft and the balance,  after  retaining a
reserve for liquidity purposes, was distributed to Unitholders.

     The  Partnership  sold its  one-third  interest in six 737-200  aircraft on
lease to Continental  at lease  expiration on December 31, 1996, at a sale price
of approximately  $3.1 million,  resulting in a net gain of  approximately  $1.9
million.  The proceeds were  distributed  to Unitholders in the first quarter of
1997.

     On September 29, 1997 the Partnership sold its one-half  ownership interest
in a DC9-51 aircraft on lease to Sun Jet International,  Inc. The sale price was
$1.2  million,  resulting in a gain of $393,000 even though the lessee had filed
for  bankruptcy  in June 1997,  and had ceased  making  the rent  payments.  The
proceeds were distributed to Unitholders in the fourth quarter of 1997.

     In  December  2001  the  Partnership  sold its  100%  interest  in an MD-82
aircraft  previously  on  lease  to  American  Airlines,  at  a  sale  price  of
approximately $9 million, resulting in a net gain of approximately $965,000. The
proceeds were distributed to Unitholders in the first quarter of 2002.

     See "Competitive Position of the Partnership" above for a discussion of the
General Partner's  determination to distribute the proceeds of the sale of these
aircraft to Unitholders.

     The  Partnership is permitted to sell aircraft to affiliates of the General
Partner  at the  fair  market  value  of the  aircraft  at the  time  of sale as
established  by an  independent  appraisal.  The General  Partner will receive a
Disposition or Remarketing Fee for any such sale.

JOINT VENTURES/GENERAL ARRANGEMENTS

     Under the Limited  Partnership  Agreement,  the  Partnership may enter into
joint  ventures  with third  parties to acquire or own  aircraft.  No such joint
ventures  presently exist.  Generally,  each party to a joint venture is jointly
responsible for all debts and obligations incurred by the joint venture, and the
joint venture will be treated as a single entity by third parties. If party to a
joint  venture,   the  Partnership  may  become  liable  to  third  parties  for
obligations of the joint venture in excess of those contemplated by the terms of
the joint venture agreement. There can be no assurance that the Partnership will
be able to obtain control in any joint ventures, or that, even with such control
the Partnership  will not be adversely  affected by the decisions and actions of
the  co-venturers.  The  General  Partner  attempts  to  ensure  that  all  such
agreements  will be fair  and  reasonable  to the  Partnership,  although  joint
ventures with affiliates of the General Partner may involve potential  conflicts
of interest.


                                       9


<PAGE>


BORROWING POLICIES

     Under the Limited Partnership  Agreement,  the Partnership may borrow funds
or assume  financing in an aggregate amount equal to less than 50% of the higher
of the cost or fair market  value at the time of the  borrowing  of all aircraft
owned  by the  Partnership.  The  Partnership  may  exceed  such 50%  limit  for
short-term  borrowing  so long as the General  Partner  uses its best efforts to
comply with such 50% limit  within 120 days from the date such  indebtedness  is
incurred or if the borrowed  funds are necessary to prevent  foreclosure  on any
Partnership  asset.  There is no  limitation  on the  amount of such  short-term
indebtedness.  The General  Partner is authorized to borrow for working  capital
purposes and to make distributions. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Liquidity  and Capital Resources"
and Note 6 of Notes to Financial Statements.

MANAGEMENT OF AIRCRAFT PORTFOLIO

     Aircraft  management  services are provided by the General  Partner and its
affiliates.  The fees and expenses for these services are reviewed  annually and
are subject to approval by the Audit Committee of the Partnership. See Note 8 of
Notes to Financial Statements.

REGISTRATION OF AIRCRAFT; UNITED STATES PERSON

     Under the Federal  Aviation Act, as amended (the "FAA Act"),  the operation
of an aircraft not  registered  with the Federal  Aviation  Administration  (the
"FAA") in the United States is generally  unlawful.  Subject to certain  limited
exceptions,  an aircraft  may not be  registered  under the FAA Act unless it is
owned by a "citizen of the United  States" or a  "resident  alien" of the United
States.   In  order  to  attempt  to  ensure  compliance  with  the  citizenship
requirements of the FAA Act, the Limited Partnership Agreement requires that all
Unitholders (and all transferees of Units) be United States citizens or resident
aliens within the meaning of the FAA Act.


                                       10


<PAGE>


GOVERNMENT REGULATION

     GENERAL

     The  ownership  and operation of aircraft in the United States are strictly
regulated by the FAA, which imposes  certain minimum  restrictions  and economic
burdens upon the use, maintenance and ownership of aircraft. The FAA Act and FAA
regulations  contain strict  provisions  governing  various  aspects of aircraft
ownership  and  operation,  including  aircraft  inspection  and  certification,
maintenance,  equipment requirements,  general operating and flight rules, noise
levels,  certification  of  personnel  and  record  keeping in  connection  with
aircraft maintenance. FAA policy has given high priority to aviation safety, and
a  primary  objective  of FAA  regulations  is that an  aircraft  be  maintained
properly  during its service  life.  FAA  regulations  establish  standards  for
repairs,  periodic  overhauls  and  alterations  and  require  that the owner or
operator of an aircraft  establish  an  airworthiness  inspection  program to be
carried out by certified mechanics  qualified to perform aircraft repairs.  Each
aircraft in operation is required to have a Standard  Airworthiness  Certificate
issued by the FAA.

     MAINTENANCE

     The Partnership,  as the beneficial  owner of aircraft,  bears the ultimate
responsibility for compliance with certain federal regulations.  However,  under
all of the Partnership's  aircraft leases, the lessee has the primary obligation
to ensure that at all times the use,  operation,  maintenance  and repair of the
aircraft  are  in  compliance  with  all  applicable   governmental   rules  and
regulations  and that the  Partnership/lessor  is  indemnified  from loss by the
lessee for breach of any of these lessee responsibilities. Changes in government
regulations  after the  Partnership's  acquisition  of aircraft may increase the
cost  to,  and  other  burdens  on,  the  Partnership  of  complying  with  such
regulations.

     The General Partner  monitors the physical  condition of the  Partnership's
aircraft and  periodically  inspects  them to attempt to ensure that the lessees
comply with their  maintenance  and repair  obligations  under their  respective
leases.  Maintenance  is  further  regulated  by the  FAA  which  also  monitors
compliance.  At lease  termination,  the  lessees  are  required  to return  the
aircraft  in  airworthy  condition.  The  Partnership  may  incur  unanticipated
maintenance  expenses  if a  lessee  were  to  default  under  a  lease  and the
Partnership  were  to  take  possession  of the  leased  aircraft  without  such
maintenance  having been completed.  If the lessee  defaulting is in bankruptcy,
the  General  Partner  will file a proof of claim for the  required  maintenance
expenses in the lessee's bankruptcy proceedings and attempt to negotiate payment
and  reimbursement  of a portion of these  expenses.  The bankruptcy of a lessee
could adversely impact the Partnership's ability to recover maintenance expense.

     From time to time,  aircraft  manufacturers issue service bulletins and the
FAA issues  airworthiness  directives.  These  bulletins and directives  provide
instructions  to aircraft  operators  in the  maintenance  of  aircraft  and are
intended to prevent the  occurrence of accidents  arising


                                       11


<PAGE>


from flaws discovered during maintenance or as the result of aircraft incidents.
Compliance with airworthiness directives is mandatory.

     A formal  program to control  corrosion  in all aircraft is included in the
FAA mandatory requirements for maintenance for each type of aircraft.  These FAA
rules and proposed rules evidence the current  approach to aircraft  maintenance
developed by the  manufacturers  and supported by the FAA in conjunction with an
aircraft  industry  group.  The Partnership may be required to pay for these FAA
requirements  if a lessee  defaults  or if  necessary  to  re-lease  or sell the
aircraft.

     In January 1999 the FAA issued an airworthiness  directive  setting payload
weight  limitations  on the  Boeing  727  aircraft  which  were  converted  from
passenger to freight configuration.  The directive requires extensive structural
modifications to strengthen the aircraft's floor, if the aircraft is to continue
to operate under the existing  payload limits.  If these  modifications  are not
performed,  the  directive  sets  substantially  reduced  payload  limits.  This
airworthiness  directive  applies to the  aircraft on lease to FedEx.  Under the
lease covering this aircraft,  FedEx is required to take the steps  necessary to
comply with  airworthiness  directives  imposed during the lease term.  However,
airworthiness  directives  may  affect the  residual  value of the  aircraft  or
FedEx's decision to exercise fair market value renewal options under the lease.


     AIRCRAFT NOISE

     The FAA,  through  regulations,  has categorized  certain aircraft types as
Stage I, Stage II and Stage III  according  to the noise  level as  measured  at
three  designated  points.  Stage I aircraft  create the highest  measured noise
levels.  Stage I and Stage II  aircraft  are no longer  allowed to operate  from
civil airports in the United States.

     See "Aircraft  Portfolio"  above,  for a description  of the  Partnership's
aircraft  portfolio.   At  December  31,  2001,  all  of  the  aircraft  in  the
Partnership's portfolio were Stage III aircraft

ACQUISITION OF ADDITIONAL AIRCRAFT

     In 1997  Unitholders  authorized the General  Partner to decide not to make
new aircraft investments,  to sell aircraft when attractive opportunities arise,
to distribute the proceeds and to liquidate the Partnership  when all assets are
sold. See "Principal Investment Objectives" above.

     Not withstanding  the above, if the Partnership were to acquire  additional
aircraft,  it could do so in many  different  forms,  such as in  sale/leaseback
transactions,  by purchasing interests in existing leases from other lessors, by
making  loans  secured  by  aircraft  or by  acquiring  or  financing  leasehold
interests in aircraft.  The  Partnership  is permitted to acquire  aircraft from
affiliates  of the  General  Partner  subject  to  limitations  set forth in the
Limited Partnership Agreement.


                                       12


<PAGE>


     Prior to September 30, 1991, the General Partner and USL Capital  ("Related
Entities") were required to offer the Partnership a 50%  participation  interest
in  certain  aircraft  leasing  investments  made  by  Related  Entities.  After
September  30,  1991 and while  the  General  Partner  was an  affiliate  of USL
Capital,  the General Partner and USL Capital could,  but were not obligated to,
offer investment opportunities to the Partnership.  The Partnership was required
to accept suitable  opportunities  provided that the General Partner and Related
Entities made at least 20%  (including  their  investment  through  ownership of
Units  and the  General  Partner's  interest)  of the total  investment  made by
Related Entities and the Partnership in such transactions. In the event that the
Partnership  elected  not to make or to make  only a  portion  of an  investment
offered  to it by an  affiliate,  the  remaining  investment  could  be  made by
affiliates of the General Partner or third parties.

     The General Partner believes that since it is no longer affiliated with USL
Capital, the limitation as to making investments with Related Entities should no
longer apply and that the  Partnership  should be able to invest in any aircraft
leasing  transactions  deemed  suitable by the General  Partner.  In determining
whether an investment is suitable for the Partnership,  the General Partner will
consider the following  factors:  the expected cash flow from the investment and
whether existing Unitholders' investment will be diluted; the existing portfolio
of the  Partnership and the effect of the investment on the  diversification  of
the  Partnership's  assets;  the  amount  of  funds  available  to  finance  the
investment;  the ability of the Partnership to obtain  additional  funds through
debt  financing,  by issuing Units,  or otherwise;  the cost of such  additional
funds and the time needed to obtain such funds;  the amount of time available to
remove  contingencies  prior to making the investment;  projected Federal income
tax effect of the  investment;  projected  residual  value, if any; any legal or
regulatory  restrictions;  and other  factors  deemed  relevant  by the  General
Partner.

     The  General  Partner  and its  affiliates  are not  obligated  to make any
investment  opportunity  available  to the  Partnership,  and if any of them are
presented with a potential investment opportunity, it may be made by any of them
without being offered to the  Partnership.  In addition,  in  determining  which
entity  should  invest  in a  particular  transaction,  it  may be  possible  to
structure the transaction in various ways to make the  acquisition  more or less
suitable for the Partnership or for the General Partner or its affiliates.

FEDERAL INCOME TAXATION

     The Partnership is considered a publicly traded  partnership  ("PTP") under
the  Revenue  Act of 1987 with a special  tax  status,  whereby  it has not been
subject to federal  income  taxation.  This special tax status was  scheduled to
expire at the beginning of 1998. However, during 1997 federal and California tax
laws were  amended to provide  that PTPs may elect to  continue  to be  publicly
traded and retain their Partnership tax status if they pay a federal tax of 3.5%
and a  California  state  tax of 1% on  their  applicable  annual  gross  income
beginning  in January  1998.  The  Partnership  made an election to pay this tax
beginning in 1998.


                                       13


<PAGE>


EMPLOYEES

     The Partnership has no employees.  See "DIRECTORS AND EXECUTIVE OFFICERS OF
THE  REGISTRANT  - General"  below.  Employees  of the General  Partner  provide
services on behalf of the Partnership.

ITEM 2.  PROPERTIES

     The Partnership does not own any real property,  and shares office space in
the offices of BALCAP and its affiliates.

ITEM 3.  LEGAL PROCEEDINGS

     None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.




















                                       14


<PAGE>


                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

UNITS OUTSTANDING

     The Units are traded on the New York Stock  Exchange  under the symbol FLY.
As of February 12, 2002, there were 869 unitholders of record.

MARKET PRICE

     The following  chart sets forth the high and low closing  prices on the New
York Stock Exchange and the trading volume for each of the quarters in the years
ended December 31, 2001 and 2000.

                            Trading Volume
Quarter Ended               (in thousands)          Unit Prices (high-low)
-------------               --------------          ----------------------

March 31, 2001                   409                   $13.05   - $11.56
June 30, 2001                    630                   $11.89   - $8.75
September 30, 2001               573                   $10.35   - $4.26
December 31, 2001                640                   $8.85    - $5.30

March 31, 2000                   227                   $12      - $10.63
June 30, 2000                    239                   $12.25   - $10.56
September 30, 2000               230                   $13.13   - $11.56
December 31, 2000                291                   $12.50   - $11.56

DISTRIBUTIONS TO UNITHOLDERS

     CASH DISTRIBUTIONS

     The Partnership makes quarterly cash distributions to Unitholders which are
based on Cash Available from  Operations (as defined in the Limited  Partnership
Agreement)  and are partially tax sheltered.  From time to time the  Partnership
also has made cash  distributions  from Cash  Available from Sale or Refinancing
(as defined in the Limited Partnership Agreement.) Information on the tax status
of such  payments,  which is  necessary in the  preparation  of  individual  tax
returns, is prepared and mailed to Unitholders as quickly as practical after the
close of each year. The size of the Partnership's  portfolio and future aircraft
sales will affect distributions.


                                       15


<PAGE>


     Distributions declared during 2001 and 2000 were as follows:

     Record Date                 Payment Date                        Per Unit
     -----------                 ------------                        --------

     March 31, 2001              May 14, 2001                        38 cents
     June 29, 2001               August 15, 2001                     38 cents
     September 28, 2001          November 15, 2001                   30 cents
     December 31, 2001           February 15, 2002                   11 cents

     March 31, 2000              May 15, 2000                        45 cents
     June 30, 2000               August 15, 2000                     45 cents
     September 29, 2000          November 15, 2000                   45 cents
     December 29, 2000           February 15, 2001                   45 cents


     CASH AVAILABLE FROM OPERATIONS

     The Partnership  distributes all Cash Available from Operations (as defined
in the Limited  Partnership  Agreement).  The  Partnership is authorized to make
distributions   from  any  source,   including   reserves  and  borrowed  funds.
Distributions of Cash Available from Operations are allocated 99% to Unitholders
and 1% to the General Partner.  The Partnership makes distributions each year of
Cash Available from Operations generally on the fifteenth day of February,  May,
August and  November to  Unitholders  of record on the last  business day of the
calendar quarter preceding payment.

     CASH AVAILABLE FROM SALE OR REFINANCING

     The  Partnership's  original  intent was that Cash  Available  From Sale or
Refinancing (as defined in the Limited Partnership  Agreement) received prior to
January  1,  2005  would  be  retained  for use in the  Partnership's  business,
provided that if the General Partner did not believe that attractive  investment
opportunities  exist for the Partnership,  the Partnership could distribute Cash
Available from Sale or Refinancing.  Any Cash Available from Sale or Refinancing
received  after  January  1,  2005  was  not  to be  reinvested  but  was  to be
distributed.  However,  in 1997,  Unitholders  authorized the General Partner to
decide not to make new aircraft  investments,  to sell aircraft when  attractive
opportunities arise, to distribute the proceeds and to liquidate the Partnership
when all assets are sold. See  "BUSINESS--Principal  Investment Objectives." For
information  as to the sales giving rise to  distributions  from Cash  Available
from Sales or Refinancing, see "BUSINESS--Disposition of Aircraft."


                                       16


<PAGE>


     TAX ALLOCATIONS

     Allocations for tax purposes of income,  gain,  loss deduction,  credit and
tax preference are made on a monthly basis to Unitholders who owned Units on the
first day of each month. Thus, for example,  if an aircraft were sold at a gain,
that gain would be allocated to Unitholders  who owned Units on the first day of
the  month  in which  the  sale  occurred.  If  proceeds  from  this  sale  were
distributed  to  Unitholders,  such proceeds would be distributed to Unitholders
who owned  Units on the record  date for such  distribution,  which,  because of
notice  requirements,  likely would not occur in the same month as the sale.  In
addition,  a Unitholder who transfers his or her Units after the commencement of
a quarter  but prior to the record  date for that  quarter  will be  allocated a
share of tax  items  for the  first  two  months  of that  quarter  without  any
corresponding  distribution  of Cash Available from  Operations for, among other
things, payment of any resulting tax.









                                       17


<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

     The  following  table sets  forth  selected  financial  data and other data
concerning the Partnership for each of the last five years:
<TABLE>
<CAPTION>

                                                              For years ended December 31,

(In thousands except per-unit amounts)             2001       2000         1999         1998        1997
----------------------------------------------    -------    -------      -------     -------     -------
<S>                                               <C>        <C>          <C>         <C>         <C>

OPERATING RESULTS

Lease and other income                            $ 5,102    $ 6,736      $ 7,614     $ 8,400     $ 9,210

Gain on disposition of aircraft                       965         --           --          --         393
                                                  -------    -------      -------  -----------    -------
Total revenues                                      6,067      6,736        7,614       8,400       9,603
                                                  -------    -------      -------  -----------    -------

Interest expense                                      550        909        1,270       1,704       2,028

Depreciation expense                                1,268         --           --          --         273

Other expenses                                      1,742      1,082        1,088       1,123       1,820

Tax on gross income                                   884        548          548         699           0
                                                  -------    -------      -------  -----------    -------
Total expenses                                      4,444      2,539        2,906       3,526       4,121
                                                  -------    -------      ------- -----------     -------
Net income                                        $ 1,623    $ 4,197      $ 4,708     $ 4,874     $ 5,482
                                                  -------    -------      ------- -----------     -------

Net income per unit(1)                            $  0.35    $  0.90      $  1.01     $  1.04     $  1.17

Cash distributions declared per unit(2)           $  2.67    $  1.80      $  1.64     $  1.64     $  2.02


FINANCIAL POSITION

Total assets                                      $52,529    $61,836      $67,787     $75,813     $82,859

Long-term obligations                              $3,389    $ 7,992      $10,092     $14,505     $19,115

Total partners' equity                            $40,285    $51,135      $55,347     $58,301     $61,089

Limited partners' equity per unit                 $  8.62    $ 10.95      $ 11.85     $ 12.48     $ 13.08

<FN>

(1) After allocation of the 1% General Partner's interest.

(2) Includes special cash distributions of $1.50 per unit in 2001, and $.22 per unit in 1997.

</FN>
</TABLE>


                                       18

<PAGE>


ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

     The Partnership has included in this annual report certain "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of  1995  concerning  the  Partnership's  business,   operations  and  financial
condition. The words or phrases "can be", "may affect", "may depend",  "expect",
"believe",  "anticipate",  "intend", "will",  "estimate",  "project" and similar
words and phrases are intended to identify such forward-looking statements. Such
forward-looking  statements  are subject to various  known and unknown risks and
uncertainties  and  the  Partnership   cautions  you  that  any  forward-looking
information  provided by or on behalf of the  Partnership  is not a guarantee of
future   performance.   Actual  results  could  differ   materially  from  those
anticipated in such forward-looking  statements due to a number of factors, some
of which are beyond the Partnership's control, in addition to those discussed in
the  Partnership's  public filings and press releases,  including (i) changes in
the aircraft or aircraft leasing market,  (ii) economic  downturn in the airline
industry, (iii) default by lessees under leases causing the Partnership to incur
uncontemplated  expenses or not to receive  rental income as and when  expected,
(iv) the impact of the events of September  11, 2001 on the aircraft or aircraft
leasing  market and on the airline  industry,  (v) changes in interest rates and
(vi)  legislative  or  regulatory  changes  that  adversely  affect the value of
aircraft. All such forward-looking statements are current only as of the date on
which  such  statements  were  made.  The  Partnership  does not  undertake  any
obligation to publicly update any forward-looking statement to reflect events or
circumstances  after the date on which any such  statement is made or to reflect
the occurrence of unanticipated events.

LIQUIDITY AND CAPITAL RESOURCES

     The Partnership  presently has one long-term debt facility. At December 31,
2001, the 7.4% non-recourse note  collateralized by one aircraft leased to FedEx
had an outstanding balance of $3.4 million. The facility matures in April 2006.

     A 9.35% non-recourse loan facility  collateralized by the aircraft that was
leased to TWA and  subsequently to American  Airlines was terminated in December
2001,  when the aircraft  was sold. A long-term  variable  rate  revolving  loan
facility  collateralized  by two  aircraft  on lease to US  Airways  expired  on
October 1, 2001, the end of the lease term.

     Long-term borrowings at December 31, 2001 represented 2.78% of the original
cost of the  aircraft  presently  owned by the  Partnership,  including  capital
expenditures for upgrades. The terms of the Limited Partnership Agreement permit
debt to be at a level not exceeding 50% of such cost.

     Total scheduled debt service in 2002 is $0.9 million.  Debt service will be
paid from the rental payments received under the FedEx lease.


                                       19


<PAGE>


     Net cash provided by operating  activities was $4.1 million for 1999,  $4.5
million for 2000,  and $2.7 million for 2001.  Aside from the cash flow activity
associated  with  taxes  payable,  the  net  cash  flow  provided  by  operating
activities showed a moderate decrease from 1999 to 2000. The decrease in 2001 as
compared  with 2000 was  primarily  due to  reduced  revenue  as a result of the
termination of the US Airways leases.

     Total debt service on the fixed loans as a percentage  of net cash provided
by  operating  activities  was  78%,  67%,  and 123% for  1999,  2000 and  2001,
respectively.  However,  cash  flow  from  operating  activities  does not fully
reflect cash receipts from lease  payments.  When the excess of rental  receipts
above finance lease income is added to cash flow from operating activities,  the
ratios become 26%, 29%, and 27%, respectively.

     Cash  distributions  paid by the  Partnership  were $7.7 million ($1.64 per
unit) in 1999,  $8.2 million  ($1.76 per unit) in 2000,  and $7.1 million ($1.51
per unit) in 2001. There were no special cash  distributions  paid in 1999, 2000
or 2001.  A special  cash  distribution  of $7.0  million  ($1.50  per unit) was
declared in December 2001, but will be paid in 2002.

     Pursuant to the Limited Partnership Agreement,  the Partnership distributes
all Cash  Available  from  Operations  net of expenses and reserves.  Since such
distributions were in excess of earnings, Partnership equity declined from $51.1
million at December 31, 2000 to $40.3 million at December 31, 2001,  and limited
partner  equity per unit declined from $10.95 to $8.62.  From a limited  partner
perspective, the portion of the distribution in excess of net income constitutes
a return of capital.  Total cash  distributions  declared since inception of the
Partnership have exceeded total net income by $10.16 per unit.

     At December 31,  2001,  the  Partnership  had cash on hand in the amount of
$1.9 million (net of amounts  payable to Unitholders  on February 15, 2002).  In
the event  that the  Partnership's  cash on hand is  significantly  reduced as a
result  of  unanticipated  expenses,  including  unanticipated  maintenance  and
refurbishing  expenses  with respect to the three MD-82  aircraft  currently off
lease, cash distributions to Unitholders may be reduced.

RESULTS OF OPERATIONS

2000 VS. 1999
     In 2000, all revenues were earned from aircraft  subject to finance leases.
The revenue  reduction  in 2000 as compared  with 1999 is  primarily  due to the
scheduled  decline in finance  lease income as the balances due from the lessees
declined.

2001 VS. 2000
     In 2001,  revenues were earned from seven  aircraft  subject to finance and
operating  leases and from the gain on sale of one  aircraft.  The lease revenue
reduction  in 2001 as compared  with 2000 is  primarily  due:  to the  scheduled
decline in finance  lease income as the balances due from the lessees  declined,
to the expiration of the lease with US Airways for five aircraft, three of


                                       20


<PAGE>


which remain off lease, and to the restructure of the TWA lease.

     In 2001, five MD-82 aircraft leased to US Airways  generated  $3,363,000 in
finance  lease income prior to lease  expiration.  Two of the five aircraft were
leased to CSI Aviation  Services,  Inc. ("CSI") in November 2001 under operating
leases,  which generated $296,000 in operating lease income. The remaining three
aircraft were being held for lease as of December 31, 2001.

     The finance  lease of one MD-82  aircraft  with TWA was assumed by American
Airlines in April of 2001, and was  reclassified as an operating lease. In 2001,
the finance lease generated  $293,000 in finance lease income, and the operating
lease generated  $750,000 in operating lease rental income (before  depreciation
expense).  In December of 2001, the aircraft was sold, generating a gain on sale
before remarketing fee of $965,000.

     The lease of one 727-200FH  aircraft to FedEx generated $346,000 in finance
lease income.

     For information  regarding the percentage of total  Partnership  assets and
revenues  represented  by  aircraft  owned and  leased by the  Partnership,  see
"BUSINESS - Aircraft Portfolio."

     Interest expense  decreased in 2001 by $359,000 as compared with 2000, as a
result of declining debt balances.

     Depreciation  expense of $1,268,000 in 2001 related to aircraft  subject to
operating  leases and to aircraft  available for lease. No depreciation  expense
was recorded in 2000 as the Partnership's portfolio did not include any aircraft
subject to operating lease or held for lease.

     Management fees and tax on gross income  increased in 2001 as compared with
the prior year as a result of the sale of the MD-82 aircraft.

     The increase in general and  administrative  expenses is  primarily  due to
aircraft  maintenance and refurbishing  expenses  incurred in the preparation of
two MD-82 aircraft for delivery to CSI.

     The  lease  with US  Airways  for five  MD-82  aircraft  was  scheduled  to
terminate  on October 1, 2001,  but remains in effect  pending  satisfaction  of
aircraft return conditions relating to aircraft  maintenance as specified in the
lease. Under the lease, US Airways is obligated to pay rent for each aircraft on
a prorated  basis until the  required  maintenance  has been  completed  and the
aircraft has been returned.  The lease requires the  maintenance to be completed
within 60 days of the expiration of the lease term.

     In November 2001 the Partnership  entered into an agreement with US Airways
with  respect to the two MD-82  aircraft now on lease to CSI,  providing  for US
Airways to pay  hold-over  rent and to pay for certain  agreed-upon  maintenance
work.  US  Airways  made a cash


                                       21



<PAGE>


payment  covering a portion of the rent and  maintenance  costs and delivered an
unsecured  note for the  remaining  amount.  See  Note 4 of  Notes to  Financial
Statements.

     The  Partnership  is currently in  negotiation  with US Airways  concerning
satisfaction  of aircraft  return  conditions and payment of hold-over rent with
respect to the remaining  three aircraft  leased by US Airways.  The Partnership
expects to enter into an agreement with US Airways with respect to these leases.
To date, the  Partnership has not taken legal action to enforce its rights under
the  leases  as  negotiations  concerning  the  specific  terms  of US  Airways'
obligations are ongoing.

     Any required  maintenance work with respect to the three aircraft currently
off lease that is not  performed  or paid for by US Airways,  together  with any
refurbishing  expenses incurred in preparation of these aircraft for delivery to
future lessees,  will result in additional  expenses to the Partnership.  Due to
the ongoing negotiations with US Airways, management cannot establish the amount
of such additional  expenses,  if any,  although such expenses,  if significant,
could have a material adverse effect on the Partnership's  results of operations
or financial condition and result in reduced cash distributions to Unitholders.

IMPACT OF EVENTS OF SEPTEMBER 11, 2001

     On  September  11,  2001,  four  aircraft  operated by United  Airlines and
American  Airlines were hijacked and destroyed in terrorist  attacks against the
United   States.   Immediately   after  the   attacks,   the  Federal   Aviation
Administration  closed U.S.  airspace for several  days. In the months after the
attacks,  most  major  U.S.-based  have  announced  significant   reductions  in
worldwide  capacity,  and many have reduced or  announced  plans to reduce their
fleets.

     The Partnership  believes that the events of September 11, 2001 have had an
adverse  effect on the market for lease and sale of used  aircraft,  as airlines
are less  likely to renew or enter  into  leases  and may seek to sell  aircraft
surplus to meet their reduced  needs.  The reduced demand for aircraft is likely
to have an adverse  effect on the  Partnership's  ability to re-lease  its three
aircraft  currently off lease,  and to re-lease  other  aircraft as their leases
terminate.  The events of  September  11,  2001 may also  affect the  ability of
existing  lessees to meet their  obligations  to the  Partnership,  and may have
other adverse effects on the Partnership.

OUTLOOK

     The market  conditions for aircraft  leasing have declined  during 2001, in
particular  since  September  11,  2001,  as  there  has  been  a  reduction  in
air-traffic demand, causing the supply of aircraft to exceed demand. It has been
reported  that there are more than 90 MD-81/82  aircraft  available  for sale or
lease,  approximately 15% of the MD-80 aircraft listed in operation. While there
are signs of  increases in air traffic  from  September  2001 levels which could
lead to increased  demand (among U.S.  based  airlines a reported 34% decline in
year over year system-wide  traffic for the month of September 2001 has improved
to a 14% decline for the month of December  2001), it is widely believed that it
will take time before the industry recovers fully.


                                       22


<PAGE>


Consequently,  the Partnership is experiencing  significant competitive pressure
in marketing the three aircraft  currently off lease, and management is not able
to predict  when  these  aircraft  may be leased  again or the terms of any such
future leasing.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Partnership believes that as of December 31, 2001, it does not have any
material interest rate risk exposures.






























                                       23


<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  statements  and Notes to Financial  Statements  described in
Item 14(a) are set forth in Appendix A and are filed as part of this report.

ITEM  9. CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

GENERAL

     The Partnership has no directors or executive  officers.  Under the Limited
Partnership  Agreement,  the General Partner has full power and authority in the
management  and control of the business of the  Partnership,  subject to certain
provisions requiring the consent of the Limited Partners.

DIRECTORS AND EXECUTIVE OFFICERS

     Set forth below is certain  information  about the  directors and executive
officers of the General Partner as of February 28, 2002. As used below, "BALCAP"
refers  both to BALCAP  and to BA  Leasing & Capital  prior to its  merger  into
BALCAP in September 1999.

<TABLE>
<CAPTION>

                                POSITION WITH                          PRINCIPAL OCCUPATION AND
         NAME                  GENERAL PARTNER       AGE              EMPLOYMENT FOR LAST 5 YEARS
---------------------      ---------------------     ---    ------------------------------------------
<S>                        <C>                       <C>    <C>

David B. Gebler            Chairman of the           52     Mr.  Gebler is a Managing  Director  of Bank of America
                           Board, President,                National   Association   ("Bank  of  America")  and  of
                           Chief Executive                  BALCAP.   He  has  been  with  BALCAP  since  September
                           Officer and a                    1996.  From 1993 to  September  1996 he was Senior Vice
                           Director                         President   of  the   Transportation   and   Industrial
                                                            Financing business unit of USL Capital. Mr. Gebler has
                                                            since 1989 and a Director since 1990, and has been
                                                            Chairman and CEO since September 1996. Mr. Gebler holds
                                                            a bachelor degree in mathematics from Clarkson University
                                                            and graduate degrees in Engineering and Management from
                                                            the University of Michigan.

Richard V. Harris          Director                  53     Mr.  Harris  is  Managing  Director  and Head of Global
                                                            Leasing of Bank of America,  and Chairman and President
                                                            of BALCAP.  He was elected  President  and CEO in 1982,
                                                            adding  the title of  Chairman  in 1988.  He has been a
                                                            Director of the General  Partner  since  October  1996.
                                                            Other  assignments  at Bank of  America  have  included
                                                            responsibilities  for Project Finance and  Asset-Backed
                                                            Finance  along  with  Leasing.  Prior to  assuming  his
                                                            present   responsibilities,   Mr.   Harris   held  both
                                                            transactional  and  marketing  management  positions at
                                                            BankAmerica   Leasing.   Mr. Harris  holds  a  B.S.E.E.
                                                            degree in  Electrical  Engineering  from Brigham  Young


                                       24


<PAGE>

                                                            University  and a  Master  of  Business  Administration
                                                            degree also from BYU.


William A. Hasler          Director                  60     Mr. Hasler has been the Co-Chief  Executive  Officer of
                                                            Aphton  Corporation  ,  a  biopharmaceutical   company,
                                                            since July 1998 and a Director of the  General  Partner
                                                            since  1995.  From  August 1991 to June 1998 he was the
                                                            Dean of the Haas School of  Business at the  University
                                                            of  California  at Berkeley.  From 1984 to 1991, he was
                                                            vice  chairman  and  director of KPMG Peat  Marwick and
                                                            was   responsible   for   its   worldwide    consulting
                                                            business.  He is a member of the board of  governors of
                                                            The  Pacific  Stock   Exchange  and  of  the  board  of
                                                            directors of Selectron  Corp.,  Schwab  Funds,  Mission
                                                            West,   Tenera,   Walker   Interactive,    and   Aphton
                                                            Corporation.  He is a graduate  of Pomona  College  and
                                                            earned his MBA from Harvard .

Leonard Marks, Jr.         Director                  80     Mr.  Marks  retired  as  Executive  Vice  President  of
                                                            Castle & Cooke,  Inc. in 1985.  Prior to that time,  he
                                                            was also  President of the real estate and  diversified
                                                            activities  group of that  company.  Mr. Marks has been
                                                            a Director  of the  General  Partner  since  2001,  and
                                                            previously  was a Director to the General  Partner from
                                                            1986  to  1997.  For  many  years,   Mr. Marks  was  an
                                                            assistant  professor of Finance at the Harvard Business
                                                            School  and a  professor  of  Finance  at the  Stanford
                                                            Business  School.  He was  Assistant  Secretary  of the
                                                            United  States Air Force from 1964 to 1968.  Mr.  Marks
                                                            holds a Ph.D in Business  Administration  from  Harvard
                                                            University.

Richard P. Powers          Director                  61     Mr.  Powers  is  a  Financial  Consultant  and  Private
                                                            Investor.  Frorm 1996 to 2000 he was an Executive  Vice
                                                            President  of  Finance  and  Administration  of Eclipse
                                                            Surgical Technologies,  Inc., a medical device company,
                                                            since 1996 and a Director of the General  Partner since
                                                            1996.   From   1981  to  1994,   he  was  with   Syntex
                                                            Corporation,   a  pharmaceutical  company,  serving  as
                                                            Senior Vice  President and Chief  Financial  Officer of
                                                            that  company  from 1986 to 1994.  From 1994 to 1996 he
                                                            served as  consultant to various  companies,  including
                                                            advising   and   assisting   in  the  sale  of   Syntex
                                                            Corporation  to Roche  Corporation  in 1994. Mr. Powers
                                                            holds a Bachelor of Science  degree in Accounting  from
                                                            Canisius    College   and   a   Masters   in   Business
                                                            Administration from the University of Rochester.

K. Thomas Rose             Director                  56     Mr. Rose has been Managing  Director,  Credit of BALCAP
                                                            since  1992.  He has  been a  Director  of the  General
                                                            Partner  since  October  1996.  Prior  to  his  present
                                                            responsibilities,  Mr. Rose was with  Security  Pacific
                                                            Leasing  Corporation  as  Executive  Vice  President  -
                                                            Lease Services  since 1973.  Mr. Rose holds a B.A. from
                                                            California  State  University,  Fullerton  and a  Juris
                                                            Doctorate  degree from Golden Gate  University,  School
                                                            of Law.

Robert A. Keyes            Chief Financial           49     Mr.  Keyes has been  Senior Vice  President  and Senior
                           Officer and a                    Finance  Manager of BALCAP since December  2000.  Prior
                           Director                         to  assuming  his present  responsibilities  at BALCAP,
                                                            Mr. Keyes was with Citicorp Bankers Leasing as Vice
                                                            President and Head of Operations from 1997 to 2000. From
                                                            1990 to 1997 Mr. Keyes was with USL Capital Corporation
                                                            (former parent of the General Partner) as Vice President
                                                            and Corporate Controller. While at USL Capital, Mr.
                                                            Keyes served as Chief Financial Officer and as a Director
                                                            of the General Partner. From 1980 to 1990 Mr. Keyes held
                                                            various Finance positions with Wells Fargo Leasing
                                                            Corporation, including Senior Vice President and Chief
                                                            Financial Officer. Mr. Keyes holds a Bachelor of
                                                            Science degree in Economics from Bates College and a
                                                            Masters in Business Administration and Accounting from
                                                            Rutgers University.

</TABLE>

                                       25


<PAGE>


ITEM 11. EXECUTIVE COMPENSATION

     The Partnership  does not pay or employ directly any directors or officers.
Each of the  officers of the  General  Partner is also an officer or employee of
BALCAP  and  is  not  separately  compensated  by  the  General  Partner  or the
Partnership  for  services  on behalf of the  Partnership.  Thus,  there were no
deliberations  of the  General  Partner's  Board of  Directors  with  respect to
compensation of any officer or employee.

     The  Partnership  reimburses the General Partner for fees paid to Directors
of the General Partner who are not otherwise affiliated with the General Partner
or its affiliates.  In 2001, such unaffiliated directors were paid an annual fee
of $14,500 plus $500 for each meeting attended.

     The  Partnership  has not  established  any plans pursuant to which cash or
non-cash  compensation has been paid or distributed  during the last fiscal year
or is proposed to be paid or distributed in the future.  The Partnership has not
issued or established  any options or rights  relating to the acquisition of its
securities or any plans therefor.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

UNIT OWNERSHIP BY CERTAIN BENEFICIAL OWNERS

     As  of  February  28,  2002,  the  following  persons  were  known  to  the
Partnership  to  be  beneficial   owners  of  more  than  five  percent  of  the
Partnership's equity securities:

                  Name and Address       Amount and Nature of
Title of class    Of beneficial owner    Beneficial Ownership   Percent of Class
--------------    -------------------    --------------------   ----------------

Depositary Units  United States Airlease      231,250(1)                5%
                  Holding, Inc.
                  555 California Street
                  San Francisco, CA 94104

Depositary Units  BALCAP                      793,750(2) (3)         17.2%
                  555 California Street
                  San Francisco, CA 94104

__________________

(1)      United States Airlease Holding, Inc. ("Holding") reported that it had
         sole voting and dispositive power over these Units.

(2)      BALCAP owns all of the outstanding stock of Holding. Therefore, BALCAP
         may be deemed also to be the indirect beneficial owner of the Units
         owned by Holding. In addition, BALCAP owns all the outstanding


                                       26


<PAGE>

         stock of the General Partner. Therefore, BALCAP may be deemed to be the
         indirect  beneficial owner of the General  Partner's 1% General Partner
         interest.  BALCAP is a wholly owned indirect  subsidiary of BankAmerica
         Corporation.  Therefore,  BankAmerica  Corporation and each BankAmerica
         Corporation subsidiary which is the direct or indirect parent of BALCAP
         may also be deemed to be the indirect beneficial owner of all Units and
         of the General  Partner's 1% General  Partner  interest owned or deemed
         owned by BALCAP.

(3)      BALCAP reported that it had sole voting and dispositive power over
         these Units.

UNIT OWNERSHIP BY MANAGEMENT

     Set forth below is information regarding interests in the Partnership owned
by each director of and all directors and executive officers, as a group, of the
General  Partner.  Unless  otherwise  noted,  each  person  has sole  voting and
investment power over all units owned.

<TABLE>
<CAPTION>

                        Name of                      Amount and Nature of
 Title of Class      Beneficial Owner                Beneficial Ownership     Percent of Class
 --------------      ----------------                --------------------     ----------------
<S>                  <C>                                     <C>                          <C>

Depositary Units     David B. Gebler                       700(1)                    (2)
Depositary Units     William A. Hasler                   8,700                       (2)
Depositary Units     Leonard Marks Jr.                     750                       (2)

                     All directors and executive        10,150                       (2)
                     officers as a group

<FN>
__________________

(1)      Includes 200 Units held by Mr. Gebler as custodian for a minor child as
         to which Mr. Gebler has shared voting and dispositive power and as to
         which beneficial ownership is disclaimed.

(2)      Represents less than 1%.

</FN>
</TABLE>



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     For a discussion of certain fees,  expenses and reimbursements  payable and
paid to the General Partner and its affiliates by the Partnership, see Note 8 of
Notes to Financial  Statements.  From time to time, the Partnership has borrowed
funds from  BALCAP or BA  Leasing &  Capital,  including  advances  for  expense
payments.  All such  borrowings  were  unsecured and bore interest at a floating
rate not  exceeding  the prime rate.  At December 31, 2001  Airlease owed BALCAP
$323,702 for such borrowings.


                                       27


<PAGE>


     For a  discussion  of certain  terms of the Limited  Partnership  Agreement
regarding the Partnership's  participation in aircraft leasing  investments made
by USL Capital and its Related Entities, see "BUSINESS-Acquisition of Additional
Aircraft."  For a  discussion  of aircraft  formerly  held  jointly  between the
Partnership and USL Capital, see "BUSINESS- Participants in Leases."


























                                       28


<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

    (a)       The following  financial  statements of the  Partnership  are
              included in this report as Appendix A:
                                                                            PAGE

         Management's Responsibility for Financial Statements.........       A-1

         Report of Independent Auditors ..............................       A-2

         Financial Statements:

              Statements of Income for the Years Ended December 31, 2001,
              2000 and 1999 ..........................................       A-3

              Balance Sheets, as of December 31, 2001 and 2000........       A-4

              Statements of Cash Flows for the Years Ended December 31,
              2001, 2000 and 1999.....................................       A-5

              Statements of Changes in Partners' Equity for the Years Ended
              December 31, 2001, 2000 and 1999........................       A-6

         Notes to Financial Statements ...............................       A-6

         Financial statement schedules other than those listed above
         are omitted because the required information is included in
         the financial statements or the notes thereto or because of
         the absence of conditions under which they are required.

    (b)       The Partnership did not file any reports on Form 8-K during
              the last quarter of the fiscal year ended December 31, 2001.


                                       29


<PAGE>


    (c)       Exhibits required by Item 601 of Regulation S-K:

    EXHIBIT NO.       DESCRIPTION

         3.1(1)  Amended and Restated Agreement of Limited Partnership of
                 Partnership.

         3.2(1)  Form of Certificate for Limited Partnership Units of
                 Partnership.

         3.3(1)  Form of Depositary Agreement among Partnership, Chase-Mellon
                 Shareholder Services (formerly Manufacturers Hanover Trust
                 Company), the General Partner and Limited Partners and
                 Assignees holding Depositary Receipts.

         3.4(1)  Form of Depositary Receipt for Units of Limited Partners'
                 Interest in the Partnership

         3.5     Amendments to Amended and Restated Partnership Agreement.

         4.1(1)  Form of Application for Transfer of Depositary Unit.

        10.1(1)  Trust Agreement, together with Trust Agreement Supplement
                 No. 1-5, dated as of July 10, 1986, between the Registrant,
                 Meridian Trust Company and the General Partner.

        10.3(1)  Lease Agreement, together with Lease Supplement Nos. 1-5, dated
                 as of July 10, 1986, between Meridian Trust Company, not in its
                 individual capacity but solely as Trustee, and Pacific
                 Southwest Airlines.
__________________

(1)     Incorporated by reference to the Partnership's Registration Statement on
        Form S-1 (File No. 33-7985), as amended.


                                       30


<PAGE>


        10.44(2) Aircraft Lease Agreement dated as of April 15, 1993 between
                 Taurus Trust  Company,  Inc.  (formerly  Trust Company for USL,
                 Inc.)  as  Owner   Trustee,   Lessor,   and   Federal   Express
                 Corporation,  Lessee  with  respect to one (1)  Boeing  727-2D4
                 Aircraft,  U.S.  Registration No. 362PA (manufacture serial no.
                 21850).

        10.49(3) Assignment and Assumption Agreement dated as of January 31,
                 1997 between USL Capital Corporation and the Registrant.

        10.50(3) Lease, together with Lease Supplement No. 1, dated as of March
                 15, 1984 between  DC-9T-III,  Inc., as Lessor,  and Trans World
                 Airlines,  Inc.,  as Lessee,  with respect to one (1) McDonnell
                 Douglas  DC-9-82  Aircraft,  as amended by Amendment  Agreement
                 dated as of December 15, 1986.

        10.51(4) Loan agreement secured by two aircraft leased to US Airways
                 dated as of  December  22,  1997,  amended  and  restated as of
                 December 15, 1998, between Meridian Trust Company,  as Trustee,
                 as Borrower and Credit Lyonnais/PK AIRFINANCE, as Lender.

        10.52(5) Assignment, Assumption and Amendment Agreement dated April 9,
                 2001 among Trans World Airlines, Inc., American Airlines, Inc.,
                 the registrant and First Security Bank,  National  Association,
                 as Owner Trustee.

           10.53 Certificate of Redelivery and Agreement dated as of November
                 26, 2001,  2001 between First Union  National  Bank, not in its
                 individual  capacity  but  solely  as  Owner  Trustee,  and  US
                 Airways,  Inc.,  with  respect  to  one  MD-82  Aircraft,  U.S.
                 Registration No. 806USAirframe.

           10.54 Certificate of Redelivery and Agreement dated as of November
                 26, 2001,  2001 between First Union  National  Bank, not in its
                 individual  capacity  but  solely  as  Owner  Trustee,  and  US
                 Airways,  Inc.,  with  respect  to  one  MD-82  Aircraft,  U.S.
                 Registration No. 807USAirframe.

           10.55 Aircraft Lease Agreement dated as of November 21, 2001, between
                 First Union  National Bank (formerly  Meridian Trust  Company),
                 not in its individual capacity but solely as Owner Trustee, and
                 CSI  Aviation  Services,  Inc.,  Lessee with respect to one (1)
                 MD-82  Aircraft,  U.S.  Registration  No.  N806US  (manufacture
                 serial no. 48038).

           10.56 Aircraft Lease Agreement dated as of November 21, 2001, between
                 First Union  National Bank (formerly  Meridian Trust  Company),
                 not in its individual capacity but solely as Owner Trustee, and
                 CSI  Aviation  Services,  Inc.,  Lessee with respect to one (1)
                 MD-82  Aircraft,  U.S.  Registration  No.  N807US  (manufacture
                 serial no. 48039).
_________________

(2)      Incorporated by reference to the Partnership's Annual Report on Form
         10-K for the year ended December 31, 2000.


                                       31


<PAGE>

(3)      Incorporated by reference to the Partnership's Annual Report on Form
         10-K for the year ended December 31, 1996.

(4)      Incorporated by reference to the Partnership's Annual Report on Form
         10-K for the year ended December 31, 1998.

(5)      Incorporated by reference to the Partnership's Quarterly Report on Form
         10-Q for the quarterly period ended June 30, 2001.







































                                       32


<PAGE>


                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on March XX, 2002.

                                  AIRLEASE LTD., A CALIFORNIA LIMITED
                                  PARTNERSHIP
                                  (Registrant)

                                  By:     Airlease Management Services, Inc.,
                                          General Partner

                                  By:      /s/ DAVID B. GEBLER
                                          ______________________________________
                                          David B. Gebler
                                          Chairman, Chief Executive Officer and
                                          President

























                                       33


<PAGE>


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

For Airlease Management
Services, Inc. ("AMSI"), General Partner



 /s/ DAVID B. GEBLER                                           March XX, 2002
____________________________________________
David B. Gebler
Chairman, Chief Executive Officer, President
and Director of AMSI



 /s/ ROBERT A. KEYES                                           March XX, 2002
____________________________________________
Robert A. Keyes
Chief Financial Officer and Director of AMSI



 /s/ RICHARD V. HARRIS                                         March XX, 2002
____________________________________________
Richard V. Harris
Director of AMSI



 /s/ K. THOMAS ROSE                                            March XX, 2002
____________________________________________
K. Thomas Rose
Director of AMSI



The foregoing  constitute a majority of the members of the Board of Directors of
Airlease Management Services, Inc. (the General Partner).


                                       34


<PAGE>


MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

Airlease Management Services, Inc. ("AMSI"), the General Partner of the
Partnership is responsible for the preparation of the Partnership's financial
statements and the other financial information in this report. This
responsibility includes maintaining the integrity and objectivity of the
financial records and the presentation of the Partnership's financial statements
in accordance with accounting principles generally accepted in the United
States.

The General Partner maintains an internal control structure designed to provide,
among other things, reasonable assurance that Partnership records include the
transactions of its operations in all material respects and to provide
protection against significant misuse or loss of Partnership assets. The
internal control structure is supported by careful selection and training of
financial management personnel, by written procedures that communicate the
details of the control structure to the Partnership's activities, and by staff
of operating control specialists of Banc of America Leasing and Capital, LLC.,
which owns 100% of the stock of AMSI, who conduct reviews of adherence to the
Partnership's procedures and policies.

The Partnership's financial statements have been audited by Ernst & Young
L.L.P., independent auditors for the years ended December 31, 2001 and 2000.
Their audits were conducted in accordance with auditing standards generally
accepted in the United States, which included consideration of the General
Partner's internal control structure. The Report of Independent Auditors appears
on page A-2.

The board of directors of the General Partner, acting through its Audit
Committee composed solely of directors who are not employees of the General
Partner, is responsible for overseeing the General Partner's fulfillment of its
responsibilities in the preparation of the Partnership's financial statements
and the financial control of its operations. The independent auditors have full
and free access to the Audit Committee and meet with it to discuss their audit
work, the Partnership's internal controls, and financial reporting matters.


 /s/ DAVID B. GEBLER
____________________________________________
David B. Gebler
Chairman, Chief Executive Officer and President
Airlease Management Services, Inc.


 /s/ ROBERT A. KEYES
____________________________________________
Robert A. Keyes
Chief Financial Officer
Airlease Management Services, Inc.


                                      A-1


<PAGE>


REPORT OF INDEPENDENT AUDITORS

To the Partners of Airlease Ltd.,
A California Limited Partnership:

We have audited the accompanying balance sheets of Airlease Ltd. as of December
31, 2001 and 2000, and the related statements of income, changes in
Partners'equity, and cash flows for each of the three years in the period ended
December 31, 2001. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Airlease Ltd. at December 31,
2001 and 2000, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States.


/s/ ERNST & YOUNG LLP.
_________________________
Ernst & Young LLP
San Francisco, California
February 8, 2002


                                      A-2


<PAGE>

<TABLE>
<CAPTION>


                 AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP

                              STATEMENTS OF INCOME


                                                                For the years ended
                                                                    December 31,
(In thousands except per unit amount)                    2001           2000           1999
___________________________________________________________________________________________
<S>                                                   <C>            <C>            <C>

REVENUES

Finance lease income                                  $ 4,002        $ 6,736        $ 7,614
Operating lease rentals                                 1,046              0              0
Gain on sale of equipment                                 965              0              0
Other income                                               54              0              0
                                                      _____________________________________
Total revenues                                          6,067          6,736          7,614
                                                      _____________________________________

EXPENSES

Interest                                                  550            909          1,270
Depreciation - aircraft                                 1,268              0              0
Management fee - general partner                          984            603            629
Investor reporting                                        365            316            339
General and administrative                                393            163            120
Tax on gross income                                       884            548            548
                                                      _____________________________________
Total expenses                                          4,444          2,539          2,906
                                                      _____________________________________
NET INCOME                                            $ 1,623        $ 4,197        $ 4,708
                                                      _____________________________________

 NET INCOME ALLOCATED TO:

GENERAL PARTNER                                       $    16        $    42        $    47
                                                      _____________________________________
Limited partners                                      $ 1,607        $ 4,155        $ 4,661
                                                      _____________________________________
NET INCOME PER LIMITED PARTNERSHIP UNIT               $  0.35        $  0.90        $  1.01
                                                      _____________________________________

<FN>

See notes to financial statements

</FN>
</TABLE>


                                      A-3


<PAGE>


                 AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP

                                 BALANCE SHEETS


                                                           As of December 31,
(IN THOUSANDS)                                         2001              2000
_____________________________________________________________________________

ASSETS

Cash and cash equivalent                           $  9,432          $     17
Finance leases - net                                  6,949            61,657
Operating leases - net                               14,218                 0
Aircraft held for lease                              21,326                 0
Notes receivable (interest and discount)                544                 0
Prepaid expenses and other assets                        60               162
                                                   __________________________
Total assets                                       $ 52,529          $ 61,836
                                                   ==========================



LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:

Distribution payable to partners                   $  7,521          $  2,102
Deferred income                                         509                 0
Accounts payable and accrued liabilities                602               468
Taxes payable                                           223               139
Long-term notes payable                               3,389             7,992
                                                   __________________________
Total liabilities                                    12,244            10,701
                                                   ==========================


COMMITMENTS AND CONTINGENCIES

PARTNERS' EQUITY:

Limited partners (4,625,000 units outstanding)       39,883            50,624
General partner                                         402               511
                                                   __________________________
Total partners' equity                               40,285            51,135
                                                   ==========================


TOTAL LIABILITIES AND PARTNERS' EQUITY             $ 52,529          $ 61,836
                                                   ==========================

See notes to financial statements

                                      A-4


<PAGE>

<TABLE>
<CAPTION>


                 AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS

                                                                                   For the years ended December 31,
(In thousands)                                                                  2001           2000           1999
____________________________________________________________________________________________________________________
<S>                                                                            <C>            <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                     $  1,623       $ 4,197       $  4,708
Adjustments to reconcile net income to net cash
     provided by operating activities:
      Increase in operating lease depreciation                                    1,268             0              0
      Increase in deferred income                                                   509             0              0
      Gain on sale of equipment                                                    (965)            0              0
      Increase in accounts payable and accrued liabilities                          134            39             36
      Decrease in prepaid expenses and other assets                                  94           114             85
      Increase/(decrease) in taxes payable                                           84           135           (695)
                                                                               _____________________________________
Net cash provided by operating activities                                         2,747         4,485          4,134
                                                                               _____________________________________


CASH FLOWS FROM INVESTING ACTIVITIES
Rental receipts in excess of earned finance and operating lease income            9,869         5,852          7,934
Proceeds from sale of equipment                                                   9,000             0              0
Increase in notes receivable                                                       (544)            0              0
                                                                               _____________________________________
Net cash provided by investing activities                                        18,325         5,852          7,934
                                                                               _____________________________________


CASH FLOWS FROM FINANCING ACTIVITIES
Revolving credit repayment-net                                                   (1,765)          (18)        (2,474)
Repayment of long-term notes payable                                             (2,838)       (2,082)        (1,939)
Distributions paid to partners                                                   (7,054)       (8,222)        (7,662)
                                                                               _____________________________________

Net cash used by financing activities                                           (11,657)      (10,322)       (12,075)
                                                                               _____________________________________


Increase/(decrease) in cash and cash equivalents                                  9,415            15             (7)
Cash at beginning of year                                                            17             2              9
                                                                               _____________________________________

Cash and cash equivalents at end of year                                       $  9,432       $    17            $ 2
                                                                               _____________________________________
Additional information:
     Cash paid for interest                                                    $    510          $ 858        $1,187
                                                                               _____________________________________

<FN>

See notes to financial statements

</FN>
</TABLE>

                                      A-5

<PAGE>

<TABLE>
<CAPTION>



                 AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP

                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY

                                      For the years ended December 31, 2000, 1999, and 1998

                                                General       Limited
(In thousands except per unit amounts)          Partner      Partners         Total
___________________________________________________________________________________________
<S>                                                <C>         <C>           <C>

Balance, December 31, 1998                         583         57,718        58,301
Net Income - 1999                                   47          4,661         4,708
Distributions to partners declared
     ($1.64 per limited partnership unit)          (77)        (7,585)       (7,662)
___________________________________________________________________________________________

Balance, December 31, 1999                         553         54,794        55,347
Net Income - 2000                                   42          4,155         4,197
Distributions to partners declared
     ($1.80 per limited partnership unit)          (84)        (8,325)       (8,409)
___________________________________________________________________________________________

Balance, December 31, 2000                         511         50,624        51,135
Net Income - 2001                                   16          1,607         1,623
Distributions to partners declared
     ($2.67 per limited partnership unit)         (125)       (12,348)      (12,474)
___________________________________________________________________________________________
BALANCE, DECEMBER 31, 2001                        $402        $39,883       $40,285
___________________________________________________________________________________________

<FN>

See notes to financial statements

</FN>
</TABLE>


                          NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION - Airlease
Ltd., A California Limited Partnership (the "partnership") engages in the
business of acquiring, either directly or through joint ventures, commercial jet
aircraft, spare or separate engines and related rotable parts ("aircraft") and
leasing such aircraft to domestic and foreign airlines and freight carriers. The
general partner is Airlease Management Services, Inc., a wholly owned subsidiary
of Banc of America Leasing and Capital, LLC. ("BALCAP"). BALCAP also holds
793,750 limited partnership units and United States Airlease Holding, Inc.
("Holding"), a wholly owned subsidiary of BALCAP, holds 231,250 limited
partnership units. An additional 3,600,000 units are publicly held.

BASIS OF PRESENTATION - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

CASH EQUIVALENTS - The Partnership considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.


                                      A-6



<PAGE>


FINANCE LEASES - Lease agreements, under which the partnership recovers
substantially all its investment from the minimum lease payments are accounted
for as finance leases. At lease commencement, the partnership records the lease
receivable, estimated residual value of the leased aircraft, and unearned lease
income. The original unearned income is equal to the receivable plus the
residual value less the cost of the aircraft (including the acquisition fee paid
to an affiliate of the general partner). The remaining unearned income is
recognized as revenue over the lease term so as to approximate a level rate of
return on the investment.

OPERATING LEASES - Leases that do not meet the criteria for finance leases are
accounted for as operating leases. The partnership's undivided interests in
aircraft subject to operating leases are recorded at carrying value of the
aircraft at lease inception. Aircraft are depreciated over the related lease
terms, generally five to nine years on a straight-line basis to an estimated
salvage value, or over their estimated useful lives for aircraft held for lease,
on a straight-line basis to an estimated salvage value.

NET INCOME PER LIMITED PARTNERSHIP UNIT is computed by dividing the net income
allocated to the Limited Partners by the weighted average units outstanding
(4,625,000).

LONG LIVED ASSETS - The Partnership accounts for its long-lived assets,
including Operating Leases and Aircraft Held for Lease, in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 121, "ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF." Consistent with SFAS No. 121, the Company identifies and records impairment
losses, as circumstances dictate, on long-lived assets used in operations when
events and circumstances indicate that assets might be impaired and undiscounted
cash flows estimated to be generated by those assets are less than the carrying
amounts of the assets. If these conditions are present, the impairment loss is
measured as the amount by which the carrying amount of the asset exceeds the
fair value. Fair value of an impaired asset is considered to be the amount at
which the asset could be bought or sold by willing parties.

RECENT ACCOUNTING PRONOUNCEMENTS - In August 2001, the Financial Accounting
Standards Board issued SFAS No 144 "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
LONG-LIVED ASSETS", which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets, including operating leases and
aircraft held for lease. SFAS 144 supersedes SFAS 121 and the accounting and
reporting provisions of APB Opinion No. 30, "REPORTING THE RESULTS OF OPERATIONS
REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS, AND EXTRAORDINARY,
UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS," for the disposal of
a segment of a business (as previously defined in that Opinion). SFAS 144 also
amends Accounting Research Bulletin No. 51, "CONSOLIDATED FINANCIAL STATEMENTS,"
to eliminate the exception to consolidation for a subsidiary for which control
is likely to be temporary. SFAS 144 is required to be applied starting with
fiscal years beginning after December 15, 2001, with certain early adoption
permitted. SFAS 144 retains the requirements of SFAS 121 whereby an impairment
loss is recognized in an amount equal to the difference between the carrying
value and the fair value if the carrying value of an asset is not recoverable
based on undiscounted future cash flows. The Company will be required to adopt
this statement no later than January 1, 2002 and


                                      A-7



<PAGE>

management  believes  that it will not alter the timing nor  magnitude of future
impairment  losses,  if any,  than  would be  recognized  under the pre SFAS 144
authoritative accounting literature.

2.    FINANCE LEASES

During 2001, the partnership owned seven aircraft, which were subject to finance
leases. Five of the aircraft were leased to US Airways, Inc. until the lease
expired October 1, 2001. In 2001, 2000, and 1999, leases with US Airways, Inc.
resulted in finance lease revenues of $3,363,000, $5,175,000, and $5,873,000,
respectively. After the return of the five aircraft, two were re-leased to a new
lessee (CSI) subject to two operating lease agreements. The remaining three
aircraft were being held for lease as of December 31, 2001.

The sixth aircraft was leased to Trans World Airlines (TWA) under a finance
lease expiring in 2002. In April 2001, the lease was restructured and
subsequently assumed by American Airlines, at which time it was reclassified as
an operating lease. In December 2001, the aircraft was sold for a gain of
$965,000. In 2001, 2000, and 1999 this lease generated finance lease income of
$293,000, $1,172,000, and $1,310,000, respectively.

The seventh aircraft is leased to Federal Express Corporation (FedEx) under a
13-year finance lease which expires in 2006. In 2001, 2000, and 1999 this lease
with FedEx resulted in finance lease income of $346,000, $389,000, and $431,000,
respectively. As of December 31, 2001, this lease was the only finance lease on
the Partnership's balance sheet.

The finance leases at December 31, 2001 and 2000, are summarized as follows (in
thousands):

                                                      2001               2000
                                                      ----               ----
Receivable in installments                          $5,893            $22,044
Residual valuation                                   2,000             45,500
Unearned lease income                                 (944)            (5,887)
                                                     -----            -------
NET INVESTMENT                                      $6,949            $61,657
                                                    ======            =======

Residual valuation, which is reviewed annually, represents the estimated amount
to be received from the disposition of aircraft after lease termination. If
necessary, residual adjustments are made which result in an immediate charge to
earnings and/or a reduction in earnings over the remaining term of the lease.

Finance lease receivables at December 31, 2001 are due in installments of
$1,310,000 in each year from 2002 through 2005, and $653,000 in 2006.

3.    OPERATING LEASES

During 2001, the Partnership had three aircraft that were subject to operating
lease treatment. As mentioned above, two aircraft were leased to CSI and
generated $296,000 in operating lease rental income in 2001.

The third aircraft was leased to American Airlines and generated $750,000 in
operating lease rental income during 2001. The aircraft was sold in December
2001.


                                      A-8


<PAGE>


The operating leases at December 31, 2001 and 2000 are summarized as follows (in
thousands):

                                      2001
                                    -------

Leased aircraft (at cost)           $14,560
Accumulated depreciation               (342)
                                    --------
NET INVESTMENT                      $14,218

There were no operating leases in 2000.

4.    NOTES RECEIVABLE

In November 2001, the Partnership accepted a note receivable of $606,231 in
exchange for past due rent obligations owed to the Partnership. The note accrues
interest at a rate of 7% and provides for twelve equal monthly payments
beginning in January 2003. The note was recorded at fair market value determined
by discounting the future cash flows. Rental income associated with this note
was deferred and will be recognized as the note is repaid.



5.    AIRCRAFT HELD FOR LEASE

In October 2001, US Airways, Inc. returned five aircraft that had been on lease
under a finance lease to the Partnership. Since their return from US Airways,
two of these aircraft were re-leased under two operating lease agreements to
another lessee prior to December 31, 2001, and are included in the Operating
Leases-net in the accompanying balance sheet as of December 31, 2001. The other
three aircraft had not been re-leased by the Partnership as of December 31, 2001
and the Partnership is in the process of marketing them for re-lease. These
aircraft are classified as held for lease at December 31, 2001. The aircraft are
being depreciated while held in inventory.

Each of the aircraft returned by US Airways, Inc. was recorded as of October 1,
2001, at its carrying amount under the terminated US Airways lease of $7,280,000
as this was less than the estimated fair value. Fair value was estimated based
primarily on discounted cash flows assuming the aircraft would be re-leased. For
the two aircraft, which had been re-leased, cash flows were based on the rents
specified in the new lease plus an anticipated cash receipt from the ultimate
sale of the aircraft. Cash flow estimates for the aircraft held for lease were
based on estimated rents and residual values including an assumption as to the
re-lease period. Other factors considered in estimating fair value were
published valuations prepared by independent appraisal sources.

Since the events of September 11, 2001, sale and leasing activity for this type
of aircraft has been very limited. If the Partnership is unable to lease the
aircraft held for lease and is required to sell the aircraft in the near term,
the amounts actually realized could differ materially from estimated fair value
as calculated using the assumptions described in the preceding paragraph. In
reporting periods subsequent to December 31, 2001, these aircraft will be
assessed for impairment under FAS 144, when indicators of impairment are
identified.


                                      A-9


<PAGE>


6.    LONG-TERM NOTES PAYABLE

As of December 31, 2001 and 2000 long-term notes payable included the following:


               A 7.4% non-recourse loan facility collateralized by the aircraft
               leased to FedEx, due in semi-annual installments of $451,000
               through April 2006. At December 31, 2001 and 2000, $3,389,000 and
               $4,001,000, were outstanding, respectively.

               A 9.35% non-recourse loan facility collateralized by the aircraft
               that was leased to TWA and subsequently, American Airlines. In
               December 2001 the aircraft was sold and the loan balance of
               $565,000 was paid off.

               A $7.5 million three-year revolving loan facility was obtained in
               February 1998. The facility was collateralized by two aircraft on
               lease to US Airways, Inc. The facility expired on September 30,
               2001.

Based upon amounts outstanding at December 31, 2001, the minimum future
principal payments on the outstanding fixed-rate long-term note payable are due
as follows (in thousands):

             2002                                     $  659
             2003                                        710
             2004                                        764
             2005                                        822
             2006                                        434
                                                      ------
             Total Long Term Debt                     $3,389
                                                      ------


7.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents carrying amounts and fair values of the
partnership's financial instruments at December 31, 2001 and 2000. The fair
value of a financial instrument is defined as the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than
in a forced or liquidation sale.

<TABLE>
<CAPTION>


                                            2001                   2001               2000                    2000
(In thousands)                        Carrying Amount           Fair Value       Carrying Amount           Fair Value
                                      ---------------           ----------       ---------------           ----------

<S>                                       <C>                    <C>                    <C>                 <C>

Long-term debt (Note 6)                   $3,389                 $3,543                 $7,992              $7,983

</TABLE>


The carrying amounts presented in the table are included in the balance sheet
under the indicated captions.


                                      A-10


<PAGE>


Long-term debt is estimated by discounting the future cash flows using rates
that are assumed would be charged to the partnership for debt with similar terms
and remaining maturities.

8.    TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES

In accordance with the Agreement of Limited Partnership, the general partner and
its affiliates receive expense reimbursement, fees and other compensation for
services provided to the partnership.

Amounts earned by the general partner and affiliates for the years ended
December 31, 2001, 2000, and 1999, were as follows (in thousands):

                                      2001               2000             1999
                                      ----               ----             ----
Management fees                       $481               $551             $577
Disposition and remarketing fees       503                 52               52
Reimbursement of other costs            79                 79               79
Reimbursement of interest costs         10                  8                7
                                    ------               ----             ----
TOTAL                               $1,073               $690             $715
                                    ======               ====             ====

The general partner was allocated its 1% share of the partnership net income and
cash distributions. Holding and BALCAP, each a limited partner and an affiliate
of the general partner, were also allocated their share of income and cash
distributions.

9.    FEDERAL INCOME TAX STATUS

The Partnership is considered a publicly traded partnership ("PTP") under the
Revenue Act of 1987. Under that Act, the partnership was not subject to federal
income tax as a partnership until 1998. Effective January 1, 1998, PTP's were
required to choose to retain PTP status and be subjected to federal income tax
as a corporation or to delist their units thereby removing themselves from the
scope of the PTP rules. Faced with these alternatives, the Partnership initially
recommended that its units be delisted.

In August and October 1997, respectively, federal and California tax laws were
amended to provide PTP's a third alternative. Under these amended laws, PTP's
are allowed to continue to be publicly traded during 1998 and subsequent years
without becoming subject to corporate income tax if they elect to pay a 3.5%
federal tax and a 1% California tax on their applicable gross income.

The board of directors of the General Partner unanimously concluded, after
authorization from the unitholders and consideration of a number of factors,
including the 1997 tax law changes and the benefits of liquidity, that is was in
the best interests of the unitholders for the partnership to remain publicly
traded at that time. Accordingly, in January 1998, the partnership made an
election to pay the annual gross income tax at the partnership level.


                                      A-11


<PAGE>


10.   RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING (UNAUDITED)

The aircraft on lease to US Airways, Inc. were purchased subject to a tax
benefit transfer lease ("TBT") which provided for the transfer of Federal income
tax ownership of these aircraft to a tax lessor until 1991. The transfer was
accomplished by the sale, for tax purposes only, of the aircraft to the tax
lessor for cash and a note and a leaseback of the aircraft for rental payments
which equalled the payments on the note. The rental payments resulted in tax
deductions and the interest was included in taxable income. In 1991, the TBT
lease agreement terminated and the tax attributes transferred under the TBT
lease reverted to the partnership.

The difference between the method of accounting for income tax reporting and the
method of accounting used in the accompanying financial statements are as
follows (in thousands except per unit amounts):

<TABLE>
<CAPTION>

                                                                                    2001          2000            1999
                                                                                    ----          ----            ----
<S>                                                                               <C>          <C>             <C>

Net income per financial statements:                                              $1,623       $ 4,197         $ 4,708
Increases/(decreases) resulting from:
        3.5% Gross Income Tax - non deductible                                       721           544             544
        Gain on sale of equipment                                                  6,487             0               0
      Lease rents earned less finance lease income                                 7,114         8,810           7,934
        Operating lease finance book depreciation                                  1,268             0               0
                                                                                 -------       -------         -------
Depreciation and amortization                                                       (628)       (1,840)         (2,605)
                                                                                 -------       -------         -------
Income per income tax method                                                      16,586        11,711          10,581
Allocable to general partner                                                        (165)         (117)           (106)
                                                                                 -------       -------         -------

TAXABLE INCOME ALLOCABLE TO LIMITED PARTNERS                                     $16,421       $11,594         $10,475

Taxable income per limited partnership unit after giving effect to taxable
income allocable to general partner (amount based on a unit
owned from October 10, 1986)                                                     $  3.55       $  2.51         $  2.26
Partners' equity per financial statements                                        $40,285       $51,135         $55,347
        Gain on sale of equipment                                                  6,487             0               0
        Operating lease depreciation                                               1,268             0               0
Cumulative increases resulting from:
      Lease rents less earned finance lease income                                71,325        64,211          55,401
      Deferred underwriting discounts and commissions,
      and organization costs                                                       5,361         5,361           5,361

Accumulated depreciation and amortization                                        (54,279)      (66,125)        (64,285)
TBT interest income less TBT rental expense                                      (54,030)      (54,030)        (54,030)
                                                                                 -------       -------         -------

PARTNERS' EQUITY PER INCOME TAX METHOD                                           $16,417       $   552        $(2,206)

</TABLE>


                                      A-12


<PAGE>


11. SELECTED QUARTERLY FINANCIAL DATA

The following is a summary of the quarterly results of operations for the years
ended December 31, 2001 and 2000 (in thousands, except per unit amounts):

<TABLE>
<CAPTION>


2001                                                         MARCH 31           JUNE 30        SEPT. 30              DEC. 31
----                                                         --------           -------        --------              -------
<S>                                                            <C>               <C>             <C>                  <C>

Total Revenues                                                 $1,550            $1,490          $1,428               $1,599
Net Income/(Loss)                                               $ 923             $ 746           $ 735                $(781)
Net Income/(Loss) Per Limited Partnership Unit                  $0.20             $0.16           $0.16               $(0.17)
Unit Trading Data:
Unit Prices (high-low) on NYSE                          $13.05-$11.56      $11.89-$8.75   $10.35-$4.266         $8.85-$5.306
Unit Trading Volumes on NYSE                                      409               630             573                  640

2000                                                         MARCH 31           JUNE 30        SEPT. 30             DEC. 31
----                                                         --------           -------        --------             -------

Total Revenues                                                 $1,771            $1,712          $1,657               $1,596
Net Income                                                     $1,097            $1,066          $1,035               $1,002
Net Income Per Limited Partnership Unit                         $0.23             $0.23           $0.22                $0.21
Unit Trading Data:
Unit Prices (high-low) on NYSE                             $12-$10.63     $12.25-$10.56   13.13-$11.566       $12.50 -$11.56
Unit Trading Volumes on NYSE                                      227               239             230                  291

</TABLE>


                                      A-13


<PAGE>



                                INDEX TO EXHIBITS

EXHIBIT NO.     DESCRIPTION

      3.5       Amendments to Amended and Restated Partnership Agreement.

    10.53       Certificate of Redelivery and Agreement dated as of November 26,
                2001, 2001 between First Union National Bank, not in its
                individual capacity but solely as Owner Trustee, and US Airways,
                Inc., with respect to one MD-82 Aircraft, U.S. Registration No.
                806USAirframe.

    10.54       Certificate of Redelivery and Agreement dated as of November 26,
                2001, 2001 between First Union National Bank, not in its
                individual capacity but solely as Owner Trustee, and US Airways,
                Inc., with respect to one MD-82 Aircraft, U.S. Registration No.
                807USAirframe.

    10.55       Aircraft Lease Agreement dated as of November 21, 2001, between
                First Union National Bank (formerly Meridian Trust Company), not
                in its individual capacity but solely as Owner Trustee, and CSI
                Aviation Services, Inc., Lessee with respect to one (1) MD-82
                Aircraft, U.S. Registration No. N806US (manufacture serial no.
                48038).

    10.56       Aircraft Lease Agreement dated as of November 21, 2001, between
                First Union National Bank (formerly Meridian Trust Company), not
                in its individual capacity but solely as Owner Trustee, and CSI
                Aviation Services, Inc., Lessee with respect to one (1) MD-82
                Aircraft, U.S. Registration No. N807US (manufacture serial no.
                48039).


                                      A-14