AIRCRAFT LEASE AGREEMENT


                           Dated as of

                           May 30, 1997

                             between


         INTERLEASE AVIATION INVESTORS III (TACA), L.L.C.

                                as

                              Lessor

                               and


                     VANGUARD AIRLINES, INC.

                                as

                              Lessee


                in respect of Boeing 737 Aircraft

                       Serial Number 19708



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                              INDEX

SECTION                                                      PAGE



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     THIS AIRCRAFT LEASE AGREEMENT (this "Agreement") is made as
of the ____ day of May, 1997 between INTERLEASE AVIATION
INVESTORS III (TACA), L.L.C., a limited liability company
organized under the laws of the State of Iowa whose principal
office is at One Northfield Plaza, Suite 525, Northfield,
Illinois 60093, its successors and assigns ("Lessor"), and
VANGUARD AIRLINES, INC., a company incorporated under the laws of
the State of Delaware whose chief executive office is at 30 N.W.
Rome Circle, Mezzanine Level, Kansas City International Airport,
Kansas City, Missouri 64153 ("Lessee").

     WHEREAS, Lessor wishes to lease to Lessee, and Lessee is
willing to lease from Lessor, the Aircraft (as defined herein) on
the terms of this Agreement. 

     NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements of the parties herein set forth, Lessor
and Lessee agree as follows: 

1.   INTERPRETATION

     1.1  DEFINITIONS

     In this Agreement, the following terms have the meanings set
forth below:  

     Acceptance Location     San Jose, Costa Rica, or such other
                             location as Lessor and Lessee may
                             agree.

     Agreed Maintenance
     Performer               Lessee (up to and including B Check)
                             or any FAA approved maintenance
                             facility (for C Check and higher) or
                             any other person agreed to from time
                             to time in writing by Lessor (such
                             agreement not to be unreasonably
                             withheld).

     Agreed Maintenance 
     Program                 The Maintenance Program agreed to
                             from time to time in writing by
                             Lessor (such agreement not to be
                             unreasonably withheld).

     Agreed Value            $5,800,000 or, if higher, the
                             appraised value of the Aircraft most
                             recently determined by an appraiser
                             selected by Lessor in writing and
                             provided to Lessee from appraisers
                             experienced in valuing Boeing 737
                             aircraft.


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     Air Authority           The FAA.

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

     Aircraft Deposits       All amounts payable pursuant to
                             Section 5.1.

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

     Airframe                The Aircraft, excluding the Engines
                             and Aircraft Documents.

     APU                     The auxiliary power unit installed
                             on the Aircraft on the Delivery Date
                             and any replacement auxiliary power
                             unit installed in accordance with
                             this Agreement.

     Banks                   Such financial institution(s) which
                             from time to time finance(s) the
                             Aircraft for Lessor and/or for whose
                             benefit security over, or rights
                             relating to, the Aircraft and/or
                             this Agreement is granted by Lessor
                             or at its request.

     Boeing                  The Boeing Company, a Delaware
                             corporation with its principal
                             office in Seattle, Washington.

     Business Day            A day (other than a Saturday or
                             Sunday) on which business of the
                             nature required by this Agreement is
                             carried out in the State of Iowa or
                             where used in relation to payments
                             on which banks are open for banking
                             business in Cedar Rapids, Iowa and
                             Kansas City, Missouri.

     Certificated Air 
     Carrier                 Any corporation (except the United
                             States Government) domiciled in the
                             United States of America and holding


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                             a Certificate of Convenience and
                             Necessity issued under 49 U.S.C.
                             Section 41102 by the Department of
                             Transportation or any predecessor or
                             successor agency thereto and an Air
                             Carrier Certificate issued by the
                             FAA under 49 U.S.C. Section 44705,
                             or, in the event such Certificates
                             shall no longer be issued, any
                             corporation (except the United
                             States Government) domiciled in the
                             United States of America and legally
                             engaged in the business of
                             transporting for hire passengers or
                             cargo by air predominantly to, from
                             or between points within the United
                             States of America, and, in either
                             event, operating commercial jet
                             aircraft, which also is certificated
                             so as to fall within the purview of
                             Section 1110 of Title 11 of the
                             United States Code or any similar
                             statute.

     Cold Section 
     Refurbishment           The completion of the following
                             tasks with respect to an Engine:
                             completely unstack both high and low
                             compressors and accomplish complete
                             visual inspection; de-blade disks as
                             necessary; accomplish visual
                             inspections of all disks; measure to
                             assure all snap diameters on disks
                             are within limits; inspect blades
                             for proper chord dimensions and
                             cracking; repair or replace blades
                             below minimums; inspect and repair
                             stators as necessary; blade up disks
                             using new lock plates; assemble
                             compressor rotors; balance both
                             rotors; and install rotors in such
                             Engine. 

     Cycle                   One take-off and landing of the
                             Aircraft. 

     Damage Notification 
     Threshold               $200,000.

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


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     Delivery Date           The date on which the Aircraft is
                             tendered for delivery by Lessor in
                             the condition required by Section
                             4.2 and Schedule 1 in accordance
                             with this Agreement.

     Delivery Location       Kansas City, Missouri, or such other
                             location as the parties may agree.

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

     Engine                  Whether or not installed on the
                             Aircraft:

                             (a)   each engine of the manufacture
                                   and model specified in Part 1
                                   of Schedule 1 (each of which
                                   has 750 or more rated takeoff
                                   horsepower or the equivalent
                                   of such horsepower) which
                                   Lessor tenders to Lessee with
                                   the Aircraft on the Delivery
                                   Date, such engines being
                                   described as to serial numbers
                                   on the certificate of
                                   acceptance to be executed by
                                   Lessee upon delivery of the
                                   Aircraft; or

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

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

     Event of Default        An event or condition specified in
                             Section 13.1.

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


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

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

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

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

     Excusable Delay         With respect to delivery of the
                             Aircraft, delay or non-performance
                             due to or arising out of acts of God
                             or public enemy, civil war,
                             insurrection or riot, fire, flood,
                             explosion, earthquake, accident,
                             epidemic, quarantine restriction,
                             any act of government, governmental
                             priority, allocation, regulation or
                             order affecting directly or
                             indirectly, the Aircraft, any
                             vendor, Lessor or any materials or
                             facilities which are necessary for


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                             the delivery of the Aircraft in
                             accordance with, and in the
                             condition required by this
                             Agreement, strike or labor dispute
                             causing cessation, slowdown or
                             interruption of work which are
                             necessary for the delivery of the
                             Aircraft in accordance with, and in
                             the condition required by this
                             Agreement, inability after due and
                             timely diligence to procure
                             equipment, data or materials which
                             are necessary for the delivery of
                             the Aircraft in accordance with, and
                             in the condition required by this
                             Agreement from manufacturers,
                             suppliers, any existing owner,
                             seller or lessee in a timely manner,
                             damage to the Aircraft, destruction 
                             or loss of the Aircraft, or any
                             other cause to the extent that such
                             cause is beyond the control of
                             Lessor. 

     Expiration Date         Subject to Sections 4.5 and 4.6, the
                             day preceding the numerically corre-
                             sponding day 60 months after the
                             Delivery Date or, if earlier, the
                             date on which:

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

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

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

     Federal Aviation Act    49 U.S.C. Subtitle VII, as amended,
                             or any similar legislation of the
                             United States of America enacted in
                             substitution or replacement thereof.

     Financing Statements    Uniform Commercial Code Financing
                             Statements in respect of this
                             Agreement and the collateral
                             described therein prepared in a form
                             acceptable for filing with the


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                             applicable Government Entities in
                             the Habitual Base, the State in
                             which the chief executive office (as
                             that term is defined in Article 9 of
                             the Uniform Commercial Code as in
                             effect in the State of Missouri) and
                             such other jurisdiction as Lessor
                             shall reasonably require.

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

     Governing Law           The laws of the State of Iowa.

     Government Entity       Any of the following:

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

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

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

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

     Hot Section 
     Refurbishment           The complete visual inspection and
                             repair as necessary of the com-
                             bustion section of an Engine.  In
                             conducting such inspection and
                             repair, the engine shop must
                             completely unstack the high pressure
                             turbine and accomplish complete
                             visual inspection; de-blade disks as



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                             necessary; accomplish visual
                             inspections of all disks; measure to
                             assure all snap diameters on disks
                             are within limits; inspect blades
                             for proper chord dimensions and
                             cracking; repair or replace blades
                             below minimums; inspect and repair
                             stators as necessary; blade up disks
                             using new lock plates; assemble
                             compressor rotors, balance both
                             rotors; and install rotors in such
                             Engine. 

     Indemnitees             Each of Lessor, Banks, First
                             Security Bank, N.A., Amerilease
                             Equipment Corp. and TACA
                             International Airlines, Inc.,
                             including any of their respective
                             successors and assigns,
                             shareholders, subsidiaries,
                             affiliates, partners, contractors,
                             directors, officers, servants,
                             agents and employees.

     Landing Gear            The landing gear assembly of the
                             Aircraft excluding any rotable
                             components.

     Lessor Lien             Any of the following:

                             (a)   any security interest
                                   whatsoever from time to time
                                   created by or through Lessor
                                   in connection with the
                                   financing of the Aircraft;

                             (b)   any other security interest in
                                   respect of the Aircraft which
                                   results from acts of or claims
                                   against Lessor not related to
                                   the transactions contemplated
                                   by or permitted under this
                                   Agreement; and

                             (c)   liens in respect of the
                                   Aircraft for Lessor Taxes.

     Lessor Taxes            Taxes:

                             (a)   imposed as a result of
                                   activities of Lessor in the
                                   jurisdiction imposing the

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                                   liability unrelated to
                                   Lessor's dealings with Lessee
                                   with respect to the Aircraft
                                   or to the transactions contem-
                                   plated by this Agreement or
                                   the operation of the Aircraft
                                   by Lessee; or

                             (b)   imposed on or measured by the
                                   gross or net income, profits,
                                   capital or gains of Lessor by
                                   any Government Entity in the
                                   United States of America; or

                             (c)   imposed with respect to (i)
                                   any period prior to the
                                   Delivery Date, (ii) any event
                                   occurring prior to the
                                   Delivery Date (other than the
                                   execution of this Agreement),
                                   or (iii) any period commencing
                                   or event occurring after the
                                   Expiration Date; or

                             (d)   penalties, surcharges, fines
                                   or interest which otherwise
                                   would not be Lessor Taxes but
                                   which are imposed as a direct
                                   result of (i) the failure of
                                   Lessor to timely and properly
                                   file a tax return or to pay
                                   any Taxes which are required
                                   to be filed or paid by Lessor;
                                   or (ii) the failure by Lessor
                                   to timely and properly furnish
                                   to Lessee any information,
                                   document or signature required
                                   by Lessee in order for Lessee
                                   to timely and properly file a
                                   tax return or to pay any Taxes
                                   on behalf of Lessor which
                                   Lessee is obligated to do
                                   hereunder; or

                             (e)   imposed by reason of the gross
                                   negligence or wilful
                                   misconduct of Lessor (or any
                                   assignee of Lessor);

                             (f)   imposed on Lessor as a direct
                                   result of an assignment or
                                   disposition by Lessor of the


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                                   Aircraft, any interest in or
                                   with respect to the Aircraft,
                                   or any interest in or with
                                   respect to this Agreement or
                                   the Rent; or 

                             (g)   any Taxes based or measured by
                                   any fees received by any
                                   Trustee holding title to the
                                   Aircraft on behalf of the
                                   Lessor; or

                             (h)   any Tax imposed on, resulting
                                   from, or which would not have
                                   occurred but for a Lessor
                                   Lien.

     Letter Agreement        Letter Agreement of even date
                             herewith between Lessor and Lessee
                             in respect of the Aircraft, the
                             terms of which constitute an
                             integral part of this Agreement.

     Maintenance Program     An FAA-approved maintenance program
                             for the Aircraft encompassing
                             scheduled maintenance (including
                             block maintenance), condition
                             monitored maintenance, and/or
                             on-condition maintenance of
                             Airframe, Engines and Parts,
                             including but not limited to,
                             servicing, testing, preventive
                             maintenance, repairs, structural
                             inspections, system checks,
                             overhauls, approved modifications,
                             service bulletins, engineering
                             orders, airworthiness directives,
                             corrosion control, inspections and
                             treatments.

     Maintenance Reserves    All amounts payable under
                             section 5.4(a).

     Major Checks            Any C-Check, multiple C-Check,
                             D-Check or annual heavy maintenance
                             visit or segment thereof suggested
                             for commercial aircraft of the same
                             model as the Aircraft by its
                             manufacturer (however denominated)
                             as set out in the Agreed Maintenance
                             Program.


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     Manufacturer            Boeing.

     Minimum Liability 
     Coverage                $400,000,000 on each occurrence.

     Other Agreements        Any agreement (other than this
                             Agreement) made or to be made
                             between Lessor (or an affiliate,
                             associate or subsidiary of Lessor)
                             and Lessee (or an affiliate,
                             associate or Subsidiary of Lessee),
                             including, but not limited to, that
                             certain Aircraft Lease Agreement
                             dated as of December 11, 1995
                             between Mimi Leasing Corp. and
                             Lessee.

     Part                    Whether or not installed on the
                             Aircraft:

                             (a)   any component, furnishing or
                                   equipment (other than a
                                   complete Engine) furnished
                                   with the Aircraft on the
                                   Delivery Date; and 

                             (b)   any other component,
                                   furnishing or equipment (other
                                   than a complete Engine) title
                                   to which has, or should have
                                   passed to Lessor pursuant to
                                   this Agreement;

                             but excludes any such items, title
                             to which has, or should have, passed
                             to Lessee pursuant to this
                             Agreement.

     Permitted Lien          The following, and only the
                             following:

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

                             (b)   any lien of a repairer,
                                   mechanic, carrier, hangar-
                                   keeper or other similar lien
                                   arising in the ordinary course
                                   of business or by operation of


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                                   law in respect of obligations
                                   which are not overdue or are
                                   being contested in good faith
                                   by appropriate proceedings;

                             but only if (in the case of both (a)
                             and (b)) (i) adequate reserves have
                             been provided by Lessee for the
                             payment of the Taxes or obligations;
                             and (ii) such proceedings, or the
                             continued existence of the lien, do
                             not give rise to any likelihood of
                             the sale, forfeiture or other loss
                             of the Aircraft or any interest
                             therein or of criminal liability on
                             Lessor or any Bank; and

                             (c)   any Lessor Lien.

     Person                  Any individual person, corporation,
                             partnership, limited liability
                             company or partnership, firm, joint
                             stock company, joint venture, trust,
                             estate, unincorporated organization,
                             association, Government Entity, or
                             organization or association of which
                             any of the above is a member or a
                             participant. 

     Prime Rate              The rate of interest most recently
                             announced by Lessor's Bank as its
                             prime rate, as in effect from time
                             to time.

     Redelivery Location     Kansas City, Missouri, or such other
                             location as the parties may agree.

     Rent                    All amounts payable pursuant to
                             section 5.3.

     Rental Period           Each period ascertained in
                             accordance with section 5.2.

     Rent Date               The first day of each Rental Period.

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

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                             create the foregoing other than a
                             Permitted Lien.

     State of Incorporation  The State of Delaware.

     State of Registration   The United States of America.

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

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

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

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

     Taxes                   Taxes, duties and the like of all
                             kinds and any other amount
                             corresponding to any taxation,
                             together with any penalties, fines,
                             surcharge or interest thereon, which
                             are imposed by any Government Entity
                             or other competent authority having
                             power to collect public charges.

     Term                    The period commencing on the
                             Delivery Date and ending on the
                             Expiration Date.

     1.2  CONSTRUCTION

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


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

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

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

                          (iv)     a law [A] includes any statute, decree,
     constitution, regulation, order, judgment or directive of
     any Government Entity; [B] includes any treaty, pact,
     compact or other agreement to which any Government Entity is
     a signatory or party; [C] includes any judicial or adminis-
     trative interpretation or application thereof and (4) is a
     reference to that provision as amended, substituted or
     re-enacted;

                           (v)     a Section or a Schedule is a reference
     to a section of or a schedule to this Agreement; and

          (b)  The headings in this Agreement are for convenience
only and shall not be considered part of any Section for purposes
of construing this Agreement.

2.   REPRESENTATIONS AND WARRANTIES

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

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

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

          (c)  Legal Validity.  This Agreement constitutes
Lessee's legal, valid and binding obligation, enforceable against
Lessee in accordance with its terms; 



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          (d)  No Conflicts, Etc.  The entry into and performance
by Lessee of, and the transactions contemplated by, this
Agreement do not and will not:

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

                          (ii)     conflict with any provisions of the
     organizational documents of Lessee, or

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

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

          (f)  No Immunity.

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

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

          (g)  Financial Statements.  The audited consolidated
financial statements of Lessee and its Subsidiaries most recently
delivered to Lessor:

                           (i)     have been prepared in accordance with
     United States generally accepted accounting principles
     applied consistently with the past practices of Lessee and
     its Subsidiaries; and

                          (ii)     fairly represent the consolidated
     financial condition of Lessee and its Subsidiaries as at the
     date thereof;

          (h)  Chief Executive Office.  Lessee's chief executive
office (as that term is defined in Article 9 of the Uniform
Commercial Code as in effect in the State of Missouri) is located 



<PAGE>


at 30 N.W. Rome Circle, Mezzanine Level, Kansas City
International Airport, Kansas City, Missouri 64153;

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

          (j)  Citizen of the United States.  Lessee is a
"citizen of the United States" as defined in 49 U.S.C.
Section 40102(15) of the Federal Aviation Act.

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

          (a)  No Default.

                           (1)     no Default has occurred and is continu-
     ing or might result from the entry into or performance of
     this Agreement; and

                          (ii)     except as disclosed to Lessor in
     writing:  

                         [A]  no other event has occurred and is
                    continuing which constitutes a material event
                    of default under any indenture, mortgage,
                    chattel mortgage, deed of trust, conditional
                    sales contract, lease, bank loan or credit
                    agreement or other material agreement which
                    is binding on Lessee or any assets of Lessee
                    as to which the other party has accelerated
                    the entire unpaid balance or commenced the
                    exercise of any remedy; and

                         [B]  Lessee is not insolvent, is not
                    failing to pay its debts in the ordinary
                    course of business as they mature and is not
                    deferring, postponing or extending the
                    payment of any material portion of its
                    liabilities beyond its customary payment
                    practices during the preceding 12 month
                    period.

          (b)  Registration.

                           (i)     except for the filing of this Agreement
     with the FAA and the Financing Statements and related
     documents with the appropriate Governmental Entity, it is
     not necessary under the laws of the State of Incorporation
     or the Habitual Base in order to ensure the validity,
     effectiveness and enforceability of this Agreement or to,



<PAGE>


     establish, perfect or protect the property rights of Lessor
     in the Aircraft or any Engine or Part that this Agreement or
     any other instrument relating thereto be filed, registered
     or recorded or that any other action be taken or if any such
     filings, registrations, recordings or other actions are
     necessary, the same have been effected or will have been
     effected on or before the Delivery Date; and

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

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

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

          (e)  Material Adverse Change.  There has been no
material adverse change in the consolidated financial condition
of Lessee and its Subsidiaries or the financial condition of
Lessee since the date of the most recent audited consolidated
financial statements provided to Lessor on or prior to the
Delivery Date;

          (f)  Taxes.  Lessee has delivered all necessary returns
and payments due to the tax authorities in the State of Incorpo-
ration and the Habitual Base and all other jurisdictions in which
Lessee is required to pay taxes and/or file tax returns or tax
reports, the failure of which is reasonably likely to result in
the creation or imposition of a Security Interest in the Aircraft
or otherwise might have a material adverse effect on Lessee's
ability to perform its obligations under this Agreement and on
its financial condition, and Lessee is not required by law to
deduct any Taxes from any payments under this Agreement;

          (g)  Information.  To Lessee's knowledge, the financial
and other information furnished by Lessee in connection with this
Agreement does not contain any untrue statement or omit to state



<PAGE>


facts, the omission of which makes the statement therein, in the
light of the circumstances under which they were made,
misleading, nor omits to disclose any material matter to Lessor
and all forecasts and opinions contained therein were honestly
made on reasonable grounds after due and careful inquiry by
Lessee;

          (h)  Foreign Asset Control.  As of the date of this
Agreement, Lessee does not hold any contract or other obligation
to operate the Aircraft to any of the countries designated under
the United States Foreign Asset Control Regulations (31 C.F.R.
Parts 500-599), including, as of the date hereof, Cuba, Haiti,
Iraq, Libya, North Korea, the Federal Republic of Yugoslavia
(Serbia and Montenegro) and the Unita Rebels of Angola;

          (i)  ERISA.  Lessee is not engaged in any transaction
in connection with which it could be subjected to either a civil
penalty assessed pursuant to Section 502(c) of ERISA or any tax
imposed by Section 5975 of the Internal Revenue Code of 1986, as
amended; no material liability of the Pension Benefit Guaranty
Corporation has been or is expected by Lessee to be incurred with
respect to any employee pension benefit plan (as defined in
Section 3 of ERISA) maintained by Lessee; there has been no
reportable event (as defined in Section 4043(b) of ERISA) with
respect to any such employee pension benefit plan.  There is no
event of termination of any such employee pension benefit plan by
the Pension Benefit Guaranty Corporation; and no accumulated
funding deficiency (as defined in Section 302 of ERISA or Section
412 of the Internal Revenue Code), whether or not waived, exists
with respect to any such employee pension benefit plan; and

          (j)  Maintenance Program.  The Maintenance Program for
the Aircraft complies with all FAA requirements and is based on
the Boeing MPD.

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

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

          (a)  Status.  Lessor is a limited liability company
duly incorporated and validly existing under the laws of the
State of Iowa and has the power to own its assets and carry on
its business as it is now being conducted and is the holder of
all necessary air transportation licenses required in connection
with the ownership of the Aircraft;

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

          (c)  Legal Validity.  This Agreement constitutes
Lessor's legal, valid and binding obligation, enforceable
agreement Lessor in accordance with its terms;

          (d)  No Conflicts.  The entry into and performance by
Lessor of, and the transactions contemplated by, this Agreement
do not and will not: 

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

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

                         (iii)     conflict with or result in default under
     any indenture, mortgage, chattel mortgage, deed of trust,
     conditional sales contract, lease, bank loan or credit
     agreement or other agreement which is binding upon Lessor or
     any of its assets;

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

          (f)  No Immunity

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

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

          (g)  Citizen of the United States.  Lessor is a
"citizen of the United States" as defined in 49 U.S.C.
Section 40102(15) of the Federal Aviation Act; and

          (h)  Litigation.  No litigation, arbitration, adminis-
trative proceedings or investigation are pending or to Lessor's
knowledge threatened against Lessor which, if adversely


<PAGE>


determined, would have a material adverse effect upon its
financial condition or business or its ability to perform its
obligations under this Agreement.

3.   CONDITIONS PRECEDENT

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

          (a)  Receipt by Lessor from Lessee on the Delivery Date
of the following, reasonably satisfactory in form and substance
to Lessor:

                           (i)     Organizational Documents.  A copy of the
     organizational documents of Lessee, certified by the
     Secretary or an Assistant Secretary of Lessee;

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

                         (iii)     Opinion.  An opinion, dated the Delivery
     Date, by legal counsel for Lessee, as to such matters and in
     form and substance reasonably acceptable to Lessor; 

                          (iv)     FAA Opinion.  An opinion of counsel for
     Lessee, acceptable to Lessor, who are recognized specialists
     with regard to FAA matters, as to such FAA matters and in
     form and substance reasonably acceptable to Lessor; 

                           (v)     Approvals.  Each approval, license and
     consent which may be required in relation to the performance
     by Lessee of any of its obligations hereunder (including,
     without limitation, any consent to the export of the
     Aircraft from the Habitual Base upon the termination of the
     leasing of the Aircraft under this Agreement);

                          (vi)     Import.  Any required import license,
     and all customs formalities, relating to the import of the
     Aircraft into the Habitual Base have been obtained or
     complied with by Lessor, and that the import of the Aircraft
     into the Habitual Base is exempt from Taxes;

                         (vii)     Licenses.  Certified copies of Lessee's
     air transport license, air operator's certificates and all
     other licenses, certificates and permits required by Lessee

<PAGE>


     in relation to, or in connection with, the operation of the
     Aircraft;

                        (viii)     Process Agent.  A letter from the
     process agent appointed by Lessee in this Agreement
     accepting that appointment;

                        (ix)     Certificate.  A certificate of the
     Secretary or an Assistant Secretary of Lessee: 

                              (a)  Setting out a specimen of each
     signature referred to in Section 3.1(a)(ii); and

                              (b)  Certifying that each copy of a
     document specified in this Section is correct, complete and
     in full force and effect;

                           (x)     General.  Such other documents as Lessor
     may reasonably request;

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

                           (i)     Opinions.  A signed original of each of
     the opinions referred to in Sections 3.1(a)(iii) and (iv);

                          (ii)     Payments.  All sums due to Lessor under
     this Agreement on or before the Delivery Date, including,
     without limitation, the first payment of Rent;

                         (iii)     Insurance.  Certified copies of all
     policies of insurance, and other evidence satisfactory to
     Lessor that Lessee has complied with the provisions of this
     Agreement as to Insurance effective on and after the
     Delivery Date;

                          (iv)     Financial Statements.  The latest
     available financial statements of Lessee as described in
     Sections 8.2(b)(i) and (ii);

                           (v)     Documents.  A confirmation of receipt of
     the Aircraft Documents delivered with the Aircraft on the
     Delivery Date;

                          (vi)     General.  Such other documents as Lessor
     may reasonably request;

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

          (d)  Evidence that on the Delivery Date (i) the
Financing Statements have been duly filed and that all filings,
registrations, recordings and other actions have been or will be
taken which are necessary or advisable to ensure the validity,
effectiveness and enforceability of this Agreement and to protect
the property rights of Lessor in the Aircraft or any Part, and
(ii) a Lease Supplement, substantially in the form set forth in
Schedule 3, Part 1, hereof has been filed, along with this Lease,
with the FAA's aircraft registry in Oklahoma City, Oklahoma.

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

          (a)  The representations and warranties of Lessee under
Sections 2.1 and 2.2 are correct and remain correct on the
Delivery Date as if remade on delivery of the Aircraft under this
Agreement; and

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

     3.3  Lessee's Conditions Precedent.  Lessee's obligation
lease the Aircraft from Lessor under this Agreement is subject to
the receipt by lessee from Lessor on the Delivery Date of the
following, reasonably satisfactory in form and substance to
Lessee:

          (a)  Organizational Documents.  A copy of the
organizational documents of Lessor, certified by the Secretary or
an Assistant Secretary of Lessor;

          (b)  Resolutions.  A copy of resolutions of managers of
Lessor, approving the terms of, and the transactions contemplated
by, this Agreement, resolving that it enter into this Agreement,
and authorizing a specified person or persons to execute this
Agreement on its behalf;

          (c)  Opinion.  A signed original of an opinion, dated
the Delivery Date, by independent legal counsel for Lessor, as to
the matters referred to in Sections 2.4(a), (b), (c), (e), (f),
(g) and, to the best knowledge of such counsel, (d) and (h), in
form and substance reasonably acceptable to Lessee;

          (d)  Approvals.  Each approval, license and consent
which may be required in relation to the performance by Lessor of
any of its obligations hereunder, if any;

          (e)  Certificate.  A certificate of a Manager of
Lessor:

                           (i)     Setting out a specimen of each signature
     referred to in Section 3.3(b); and

                          (ii)     Certifying that each copy of a document
     specified in this Section is correct, complete and in full
     force and effect;

          (f)  Valid Registration.  Evidence that on the Delivery
date the Aircraft has been validly registered under the laws of
the State of Registration; and

          (g)  Officer's Certificate.  A certificate of an
officer of Lessor, certifying that:

                           (i)     The representations and warranties of
                                   Lessor under Section 2.4 are correct and
                                   remain correct on delivery of the
                                   Aircraft under this Agreement; and

                          (ii)     No Default has occurred and is
                                   continuing or might result from the
                                   leasing of the Aircraft by Lessor under
                                   this Agreement.

     3.4  Waiver.  The conditions specified in Sections 3.1, 3.2
and 3.3 are for the sole benefit of Lessor or Lessee, as the case
may be, and may be waived in whole or in part and with or without
conditions by Lessor or Lessee, as the case may be.  If any of
those conditions are not satisfied on the Delivery Date and
Lessor (in its absolute discretion) nonetheless agrees to deliver
the Aircraft to Lessee, or Lessee (in its absolute discretion)
nonetheless agrees to accept the Aircraft, Lessor or Lessee, as
the case may be, will ensure that those conditions are satisfied
within fifteen (15) days after the Delivery Date and Lessor or
Lessee may treat as an Event of Default the failure of Lessee or
Lessor to do so. 

4.    COMMENCEMENT

     4.1  Leasing.  Lessor will lease the Aircraft to Lessee, and
Lessee will lease the Aircraft from Lessor, in accordance with
this Agreement for the duration of the Term.  Lessor will tender
the Aircraft in the condition required under Schedule 1 for
acceptance on or about May __, 1997 or such other day as may be
agreed.  

     4.2  Acceptance and Delivery.  

          (a)  On or about May __, 1997 Lessor shall give Lessee
written notice that the Aircraft is available for inspection at
the Acceptance Location.  Within three (3) Business Days
thereafter, Lessee will inspect the Aircraft at such location. 


<PAGE>


Lessee's inspection shall be long enough to permit Lessee to:
(i) inspect the Aircraft Documents; (ii) inspect the Aircraft;
and (c) inspect the Engines, including without limitation, to
review the complete boroscope inspection conducted by Lessor in
connection with the purchase by Lessor of the Aircraft, and, at
Lessor's expense, engine condition runs; provided, however, that
such inspection will not exceed three (3) consecutive days.  Such
inspection shall also include a demonstration flight, at Lessor's
cost and expense, of up to two (2) hours in duration in
accordance with Boeing standard flight operation check
procedures, during which Lessee shall be entitled to have up to
four (4) representatives on board the Aircraft.  Lessor will
maintain all insurance and assume full responsibility for loss or
damage during such demonstration flight (unless such loss or
damage is caused by the willful misconduct or gross negligence of
Lessee or its representatives), and Lessor's pilot shall be the
pilot-in-command for such flight, unless otherwise agreed by
Lessor and Lessee.  Except as otherwise provided herein, all
other costs and expenses associated with Lessee's inspection will
be the responsibility of Lessee.  

          (b)  The Aircraft will be tendered for delivery to
Lessee in the condition described in Schedule 1 at the Acceptance
Location; provided, however, that Lessor and Lessee may agree
that the demonstration flight shall terminate at Kansas City,
Missouri, in which event the Acceptance Location shall also be
the Delivery Location.  Lessee will effect acceptance of the
Aircraft, if delivered in the condition described in Schedule 1,
by execution and delivery of a Certificate of Acceptance in the
form of Schedule 2, upon the conclusion of Lessee's inspection. 
In the event that the Aircraft is not in the condition specified
in Schedule 1 to this Agreement, Lessee will notify Lessor in
writing of those defects or deficiencies which cause the Aircraft
not to meet the delivery conditions set forth in Schedule 1, in
which event, Lessor shall, at its cost and expense, promptly
correct such defects or deficiencies and cause the Aircraft to
meet the delivery conditions set forth in Schedule 1 to this
Lease Agreement.  If Lessor fails to cure such defects or
deficiencies and cause the Aircraft to meet the delivery
conditions set forth in Schedule 1 to this Lease, on or before
________________, 1997 (other than by reason of a Default by
Lessee), Lessee may terminate this Agreement, and Lessor will
promptly refund to Lessee the amount of any Aircraft Deposits
paid under this Agreement.

          (c)  Unless otherwise agreed pursuant to Subsection (b)
above, after acceptance by Lessee, the Aircraft will be delivered
to Lessee at the Delivery Location or such other location as may
be agreed by Lessor and Lessee in the same condition as the
Aircraft was in when accepted by Lessee, except for ferry time. 
In the event the Aircraft is not in the same condition as the
Aircraft was in when accepted by Lessee, except ferry time,


<PAGE>


Lessee will notify Lessor in writing of any defects and
deficiencies which cause the Aircraft not to be in the same
condition as when the Aircraft was accepted, and Lessor shall at
its sole cost and expense promptly correct such defects and
deficiencies.  Lessor will acknowledge delivery of the Aircraft
in the required condition by execution and delivery to Lessor of
an Acknowledgement of Delivery in the form of Schedule 6.

          (d)  After delivery, the Aircraft and every Part will
be in every respect at the sole risk of Lessee, who will bear all
risk of loss, theft, damage or destruction to the Aircraft from
any cause whatsoever.

     4.3  Delayed Delivery.  If, as a result of any Excusable
Delay, Lessor delays in the tender for acceptance of, or fails to
tender for acceptance, the Aircraft under this Agreement: 

                           (i)     Lessor will not be responsible for any
     losses, including loss of profit, costs or expenses arising
     from or in connection with the delay or failure suffered or
     incurred by Lessee;

                          (ii)     Lessee will not be entitled to terminate
     this Agreement or to reject the Aircraft when tendered for
     acceptance by Lessor in the condition required by the terms
     of this Agreement, on the grounds of any such delay, unless
     such delay or failure continues after ______________, 1997
     or unless mutually agreed by Lessor and Lessee; and

                         (iii)     upon any such termination, neither
     Lessor nor Lessee will have any further obligation to the
     other under this Agreement other than as expressly set out
     in this Agreement, except that Lessor will refund to Lessee
     the amount of any Aircraft Deposits paid under this
     Agreement. 

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

     4.5  Extension Option.  Provided (x) no Default shall have
occurred and is continuing; and (y) there shall have been no
material adverse change in Lessee's financial condition since the
Delivery Date, Lessee shall have option (the "Extension Option")
to extend the Term for two (2) additional 12 month periods
commencing with the Expiration Date provided for in this
Agreement.  The Extension Options shall be exercised, if at all,
by Lessee giving Lessor not less than one hundred eighty (180)
days' prior written notice of Lessee's intention to exercise such


<PAGE>


Extension Option which notice, once given, shall be irrevocable.
Upon Lessee providing such notice, (xx) the Term shall be
extended for an additional twelve (12) month period and the terms
and conditions of this Agreement shall continue to apply during
such period of extension; and (yy) the definition of Expiration
Date shall be deemed amended accordingly (subject always to
Section 4.6, if applicable). 

     4.6  C Check Option. Provided that (x) no Default shall have
occurred and is continuing; and (y) there shall have been no
material adverse change in Lessee's financial condition since the
Delivery Date, Lessee shall have the option (the "C Check
Option") to extend the Term for up to 2 months provided that such
extension of the Term is required by Lessee so as to enable
Lessee to perform the C Check required by paragraph 1 (e) of
Schedule 3 at the time at which such check would otherwise fall
to be performed pursuant to the Agreed Maintenance Program in the
absence of the requirement contained in such section.  The
C Check Option shall be exercised, if at all, by Lessee deliver-
ing an irrevocable written notice (a "C Check Notice") to Lessor
not later than one hundred eighty (180) days prior to the New
Expiration Date (as defined below) proposed by Lessee which
notice shall state whether Lessee desires to extend the Term and
the proposed date of performance and completion of the
aforementioned C Check.  Upon the receipt by Lessor of the C
Check Notice, (xx) Lessee shall be obliged to lease the Aircraft
from Lessor until the date (the "New Expiration Date") of
completion of the aforementioned C Check in accordance with the
terms and conditions of this Agreement; and (yy) the definition
of "Expiration Date" shall be deemed to have been amended so as
to refer to the New Expiration Date and the Aircraft shall be
redelivered to Lessor on that date (or, as may be applicable, any
other date contemplated by such definition) in accordance with
the terms and conditions of this Agreement.

5.   PAYMENTS

     5.1  Aircraft Deposit.  In order to faithfully secure its
obligations hereunder, Lessee shall pay to Lessor an Aircraft
Deposit in the amount set forth in paragraph 1 of the Letter
Agreement in accordance with the schedule set forth in that
paragraph.  Unless this Lease Agreement shall have been earlier
terminated pursuant to Section 13.2, and provided that no Default
shall have occurred and be continuing, the Aircraft Deposit shall
be returned by Lessor to Lessee on (i) the Expiration Date, (ii)
prior to the Expiration Date if this Lease Agreement is
terminated by reason of Lessor's breach of its covenant in
Section 7.1 or (iii) as provided in Section 7.3(b)(ii) in
connection with an Event of Loss.  The Aircraft Deposit shall
also be refunded to Lessee in whole, without set off, in
accordance with the terms of Sections 4.2(b) and/or 4.3(ii) and
(iii).



<PAGE>


     5.2  Rental Periods.  The Term will be divided into Rental
Periods.  The first Rental Period will commence on the Delivery
Date and end on the last day of the calendar month during which
the Delivery Date occurs, with the Rent for such first Rental
Period and the last Rental Period to be prorated on a daily basis
to reflect the actual number of days in such initial and last
Rental Periods.  The second and each subsequent Rental Period
will commence on the first day of each month next following the
last day of the previous Rental Period.  Each Rental Period will
end on the last day of each month, except that if the last Rental
Period would otherwise overrun the Expiration Date, it will end
on the Expiration Date.

     5.3  Rent.  Lessee will pay to Lessor or its order on each
Rent Date, Rent, in advance, in immediately available funds in
the amount set forth in paragraph 2 of Letter Agreement.  Payment
must be initiated adequately in advance of the Rent Date to
ensure that Lessor receives immediately available funds on the
Rent Date.  If a Rental Period begins on a non-Business Day, the
Rent payable in respect of that Rental Period shall be paid on
the Business Day immediately preceding the date on which such
Rental Period commences.

     5.4  Maintenance Reserves.

          (a)  Amount. Lessee will also pay to Lessor Maintenance
Reserves in relation to each Rental Period (including without
limitation the last Rental Period of the Term) on the 10th day of
the month following the end of the preceding Rental Period as
follows: 

                           (i)     in respect of the Airframe, the amount
     set forth in paragraph 3(i) of Letter Agreement in respect
     of each Flight Hour or Cycle, whichever is higher, operated
     by the Aircraft during that Rental Period ("Airframe
     Maintenance Reserves"); 

                          (ii)     in respect of each Engine, the amount
     set forth in paragraph 3(ii) of Letter Agreement in respect
     of each Flight Hour or Cycle, whichever is higher, operated
     by that Engine during that Rental Period ("Engine
     Refurbishment Maintenance Reserves"); 

                         (iii)     in respect of the APU, the amount set
     forth in paragraph 3(iii) of Letter Agreement in respect of
     each Flight Hour or Cycle, whichever is higher, operated by
     that APU during that Rental Period ("APU Refurbishment
     Maintenance Reserves"); and

                          (iv)     in respect of each Landing Gear, the
     amount set forth in paragraph 3(iv) of Letter Agreement in
     respect of each Flight Hour or Cycle, whichever is higher,



<PAGE>


     operated by that Landing Gear during that Rental Period
     ("Landing Gear Maintenance Reserves").

          (b)  Adjustment.  Commencing on the first anniversary
of the Delivery Date, the rate of Maintenance Reserves may be
adjusted upwards annually by Lessor at a percentage rate per
annum not to exceed the percentage increase in the Consumer Price
Index for the Kansas City, Missouri Metropolitan Area since the
Delivery Date or the date of the last price adjustment under this
provision, if later.  In addition, but not limiting the
foregoing, Lessee acknowledges that the rates of Maintenance
Reserves currently provided for in this Agreement are based upon
the assumption the Agreed Maintenance Program for the Aircraft
during the Term will be the same as that in effect on the
Delivery Date.  In the event that such assumption proves to be
incorrect at any time during the Term, Lessor and Lessee agree
that Lessor shall have the right, upon written notice to Lessee,
to adjust the rate of Maintenance Reserves so as to reasonably
account for the incorrectness of such assumption.  In the event
that the Agreed Maintenance Program changes during the Term (any
such change to be in accordance with the relevant terms and
conditions of this Agreement), Lessor shall make the
aforementioned adjustment in the manner which Lessor determines,
in its reasonable discretion, is necessary to maintain the rates
of Maintenance Reserves at levels which accurately reflect the
costs associated with obtaining the maintenance services referred
to in Section 7.2 at prevailing industry rates.  Each such notice
shall specify the revised rate of Maintenance Reserves and the
effective date of such revision.  Lessee agrees to advise Lessor,
in writing, of any circumstances or events which would result in
the foregoing assumption becoming incorrect at any time during
the Term.

     5.5  Payments.  All payments by Lessee to Lessor under this
Agreement will be made on the due date in Dollars and in immedi-
ately available funds settled through the New York Clearing House
System by wire transfer to Norwest Bank Iowa, N.A. (Acct. No.
_____________), ABA No. ______________.  Such account will be
established in such fashion as shall ensure that the Bank will be
paid automatically from such account any amounts owing to Bank in
respect of the Aircraft.  

     5.6  Gross-up.

          (a)  All payments by Lessee under or in connection with
this Agreement will be made without set-off or counterclaim, free
and clear of and without deduction for or on account of all Taxes
(other than Lessor Taxes and other than a violation of 7.1);

          (b)  All Taxes (other than Lessor Taxes) in respect of
payments under this Agreement shall be for the account of and


<PAGE>



will be paid by Lessee for its own account prior to the date on
which penalties apply; and

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

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

     5.8  Value Added Tax.

          (a)  For the purposes of this subsection: 

                           (i)     "VAT" means value added tax and any
     sales or turnover tax or imposition of a like nature;

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

          (b)  Lessee will pay to Lessor the amount of any VAT
chargeable in respect of any supply of goods or services for VAT
purposes under this Agreement (other than any Lessor Taxes); and

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

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


<PAGE>



     5.10 Taxation of Indemnity Payments.

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

          (b)  If and to the extent that any sums constituting
(directly or indirectly) an indemnity to Lessor but paid by
Lessee to any person other than Lessor are treated as taxable in
the hands of Lessor (other than Lessor Taxes), Lessee will pay to
Lessor such sum as will after the tax liability has been fully
satisfied indemnify Lessor to the same extent as it would have
been indemnified in the absence of such liability together with
interest on the amount payable by Lessee under this subsection at
the rate of interest stated in Section 5.11 in respect of the
period commencing on the date on which the payment of taxation is
finally due until payment by Lessee (both before and after
judgment) provided however that Lessee will not be liable for any
Lessor Taxes incurred as a result of the payment of the Agreed
Value pursuant to Section 11.

     5.11 Default Interest.  If Lessee fails to pay any amount
payable under this Agreement on the due date, Lessee will pay on
demand from time to time to Lessor interest (both before and
after judgment) on that amount, from the due date to the date of
payment in full by Lessee to Lessor, at the rate calculated by
Lessor to be the Prime Rate plus five percent (5%) per annum. 
All such interest will be compounded monthly and calculated on
the basis of the actual number of days elapsed and a 360 day
year.

     5.12 Contest.  Lessee may, at its own cost and expense,
either in its own name or in Lessor's name, contest the validity,
applicability or assessment of any Taxes by (i) resisting payment
thereof, (ii) paying same under protest, or (iii) using
reasonable efforts to obtain a refund thereof in appropriate
proceedings.  If Lessee disputes the payment of any Taxes payable
by Lessor for which Lessee is responsible under this Agreement,
Lessor will take such action as Lessee may reasonably request, at


<PAGE>



Lessee's expense, to contest that payment but will not be obliged
to take any such action: 

          (a)  Which Lessor considers in its reasonable
discretion may materially prejudice it unless Lessee will have
provided security reasonably satisfactory to Lessor to cover the
liability for the Taxes; or

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

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

If Lessor shall obtain a refund of any amount paid by Lessee
pursuant to Sections 5.7, 5.8, 5.10, Lessor shall pay Lessee the
amount of such refund together with any interest actually
received by Lessor on account of such refund.

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

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

          (b)  Any unavailability of the Aircraft for any reason
other than Lessor's failure to deliver the Aircraft in the
condition required under Schedule 1 and other than a breach by
Lessor of its covenant set forth in Section 7.1, including, but
not limited to, a requisition of the Aircraft or any prohibition
or interruption of or interference with or other restriction
against Lessee's use, operation or possession of the Aircraft;

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

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

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




<PAGE>



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

     5.14 Security.

          (a)  It is intended by Lessor and Lessee that the
Maintenance Reserves payable to Lessor pursuant to Section 5.4
are amounts paid by Lessee to Lessor in consideration for Lessor
acquiring the Aircraft and removing the Aircraft from the market,
the use of the Aircraft by Lessee and the satisfaction of
Lessee's obligations under this Agreement and that, once paid,
those monies irrevocably and unconditionally shall be the
property of Lessor.  Notwithstanding that stated intent, if and
to the extent that those monies or any thereof, under any
applicable law or otherwise, are determined to be security
deposits or otherwise the property of Lessee or if it is so
determined those monies are a debt owed to Lessee or that Lessee
shall have any interest in those monies (the "Maintenance Reserve
Account"), the parties agree that subsections (c), (d) and (e)
below shall apply:

          (b)  It is further intended by Lessor and Lessee that
Aircraft Deposit payable by Lessee to Lessor pursuant to Section
5.1 and, if applicable, the Insurance Security Deposit
contemplated by the first paragraph of Schedule 4 (collectively
the "Deposits") are security deposits to faithfully secure the
satisfaction by Lessee of its obligations under the Agreement.

          (c)  To the fullest extent permitted by law and by way
of continuing security, Lessee grants to Lessor a security-
interest in the Maintenance Reserve Account and the Deposits and
all rights of Lessee to payment thereof, the debt represented
thereby and/or any and all interest of Lessee therein to Lessor
by way of first priority security interest as security for
Lessee's obligations and liabilities under this Agreement and the
Other Agreements (the "Secured Liabilities").  Except as
expressly permitted under Section 7.2 of this Agreement, Lessee
will not be entitled to payment of the Maintenance Reserve
Account.  Lessee will not assign, transfer or otherwise dispose
of all or part of its rights in the Maintenance Reserve Account
or the Deposits, and Lessee agrees that it will enter into any
additional documents and instruments necessary or reasonably
requested by Lessor to evidence, create or perfect Lessor's
rights to the Maintenance Reserve Account and the Deposits.

          (d)  If Lessee fails to comply with any provision of
this Agreement or any Event of Default has occurred and is
continuing Lessor may immediately or at any time thereafter,
without prior notice to Lessee:



<PAGE>


                           (i)     Set-off all or any part of the Secured
     Liabilities against the liabilities of Lessor in respect of
     the Maintenance Reserve Account and/or the Deposits;

                          (ii)     Apply or appropriate the Maintenance
     Reserve Account and/or the Deposits in or towards the
     payment or discharge of the Secured Liabilities in such
     order as Lessor sees fit; and 

          (e)  If Lessor has exercised the set-off described in
sub-clause (d) above, Lessee shall, following a demand in writing
from Lessor, promptly restore the Maintenance Reserve Account
and/or the Deposits to the level at which they stood immediately
prior to such set-off.

6.   MANUFACTURER'S WARRANTIES

     6.1  Assignment.  Notwithstanding this Agreement, Lessor
will remain entitled to the benefit of each warranty, express or
implied, with respect to the Aircraft, any Engine or Part so far
as concerns any manufacturer, vendor, subcontractor or supplier
or any seller from whom Lessor acquired the Aircraft.  Except to
the extent Lessor otherwise directs, Lessor hereby authorizes
Lessee to pursue any claim against any manufacturer, vendor,
subcontractor or supplier (but not any seller of the Aircraft) in
relation to defects affecting the Aircraft, any Engine or Part
and Lessee agrees diligently to pursue any such claim which
arises at its own cost.  Lessee will notify Lessor promptly upon
becoming aware of any such claim.

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

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

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

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

     6.3  Parts.  Except to the extent Lessor otherwise agrees in
a particular case, Lessee will procure all engines, components,
furnishings or equipment provided by the manufacturer, vendor,
subcontractor or supplier in replacement of a defective Engine or
Part pursuant to the terms of any warranty, all of which will be
installed promptly by Lessee such that title thereto free of


<PAGE>



Security Interests vests in Lessor.  On installation those items
will be deemed to be an Engine or Part as applicable.

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

          (a)  Pay the proceeds received by Lessee of any claim
thereunder to Lessor to be applied pursuant to Section 6.2 and
pending such payment will hold the claim and the proceeds on
trust for Lessor; and

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

7.   LESSOR'S COVENANTS

     7.1  Quiet Enjoyment.  Lessor and any person lawfully acting
or claiming by or through Lessor will not interfere with the
quiet use, possession, operation and enjoyment of the Aircraft by
Lessee, but the exercise by Lessor of its rights under or in
connection with this Agreement will not constitute such an
interference.

     7.2  Maintenance Contribution.  Provided no Default has
occurred and is continuing, Lessor will pay promptly to third
party vendors, suppliers, maintenance shops, service facilities
or other contractors, by way of contribution to the cost of
maintenance of the Aircraft, upon submission by Lessee to Lessor
within six (6) months of the commencement of that maintenance and
before thirty (30) days after the Expiration Date of an invoice
and supporting documentation reasonably satisfactory to Lessor,
evidencing with respect to (x) the Airframe, any "D", "Q" , or
"C-7" checks, or (y) any Engine or APU, the performance in
accordance with this Agreement of a Hot Section Refurbishment, a
Cold Section Refurbishment and/or the replacement of Life Limited
Parts or (z) any Landing Gear, work in the nature of overhaul
requiring removal and disassembly (in each case, other than (i)
repairs arising as a result of foreign object damage or
operational or maintenance mishandling; and/or (ii) removal,
installation, maintenance and repair of QEC (Quick Engine Change)
kits; and/or (iii) airworthiness directives) the lesser of (a)
the amount of that invoice and (b) an amount equal to the
aggregate amount of Maintenance Reserves paid in respect of the
Airframe, that Engine or APU or that Landing Gear under this
Agreement at the time of commencement of such maintenance less
the aggregate amount previously paid in respect of the Airframe,
that Engine or APU or the Landing Gear by Lessor under this
subsection.



<PAGE>



     7.3  Lessor Obligations Following Expiration Date.  Within
five (5) Business Days after: 

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

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

or in each case such later time as Lessor is satisfied Lessee has
irrevocably paid to Lessor all amounts which may then be out-
standing or become payable under this Agreement and provided that
no Default shall have occurred and is continuing, Lessor will pay
to Lessee: 

                           (i)     the amount of any Rent received in
     respect of any period falling after the date of redelivery
     of the Aircraft or payment of the Agreed Value, as the case
     may be; and

                          (ii)     the Aircraft Deposit. 

8.   LESSEE'S COVENANTS

     8.1  Duration.  The obligations in this Section and in
Section 12 will: 

          (a)  Except as otherwise stated, be performed at the
expense of Lessee; and

          (b)  Remain in force until the Expiration Date in
accordance with this Agreement and thereafter to the extent of
any accrued rights of Lessor in relation to those obligations.

     8.2  Information.  Lessee will: 

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

          (b)  Furnish to Lessor:

                           (i)     45 days after the last day of each
     fiscal quarter, the consolidated unaudited financial
      statements of Lessee (comprising a balance sheet and profit
     and loss statement) prepared for the most recent previous
     month or fiscal quarter, certified by Lessee's chief
     financial officer as being true and correct;

                          (ii)     as soon as available but not in any
     event later than one hundred twenty (120) days after the
     last day of each fiscal year of Lessee, its audited


<PAGE>

     consolidated financial statements for the year ending on
     such day;

                         (iii)     at the same time the same are issued to
     the shareholders or creditors of Lessee generally, a copy of
     each report to or filing with the SEC; and

                          (iv)     on request from time to time, such other
     information relevant to the transactions contemplated by
     this Agreement regarding Lessee and its business and affairs
     as Lessor may reasonably request;

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

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

          (e)  On request, within ten (10) days after such
request, furnish to Lessor evidence satisfactory to Lessor of
payment of all Taxes due during the Rental Period most recently
ended or any previous Rental Period the nonpayment of which could
give rise to the imposition of a Security Interest on the
Aircraft;

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

          (g)  Provide Lessor with a monthly report on the Flight
Hours and Cycles accumulated in respect of each Engine and APU
during the preceding month in the form required from time to time
by Lessor;

          (h)  Give Lessor not less than thirty (30) days'
written notice as to the time and location of all Major Checks;
and

          (i)  Promptly notify Lessor of:

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

                          (ii)     Any occurrence reasonably likely to give
     rise to a claim under the Insurance (but in the case of an
     occurrence with respect to the hull, only claims in excess
     of the Damage Notification Threshold) and details of any
     negotiations with the insurance brokers over any such claim.

     8.3  Lawful and Safe Operation.  Lessee will: 

          (a)  Comply with all laws in force in any country or
jurisdiction which may be applicable to the Aircraft or, so far
as concerns the use and operation of the Aircraft or an owner or
operator thereof and take all reasonable steps to ensure that the
Aircraft is not used for any illegal purpose;

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

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

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

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

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

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

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

                          (iv)     any illegal item or substance;

          (f)  Not utilize the Aircraft for purposes of training,
qualifying or reconfirming the status of cockpit personnel except
for the benefit of Lessee's cockpit personnel, and then only if
the use of the Aircraft for such purpose is not disproportionate
to the use for such purpose of other aircraft of the same type
operated by Lessee;

          (g)  Not cause or permit the Aircraft to proceed to, or
remain at, any location which is then the subject of a
prohibition order (or any similar order or directive), sanctions
or restrictions by:

                           (i)     the United Nations Security Council, the
     U.S. International Economic Emergency Powers Act or U.N.
     Security Council directives or the U.S. Export
     Administration Act Regulations (15 C.F.R. Parts 730-799),
     except as may be permitted by operating in accordance with
     the conditions specified by the U.S. Export Administration
     Regulations, General License GATS (15 C.F.R. Part 771.19);

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

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

                          (iv)     any Government Entity having jurisdic-
     tion over Lessor, the Banks or the Aircraft;

          (h)  Obtain and maintain in full force all certifi-
cates, licenses, permits and authorizations required for the use
and operation of the Aircraft for the time being, and for the
making of payments required by, and the compliance by Lessee with
its other obligations under, this Agreement;

          (i)  Not operate or locate the Aircraft or suffer or
permit the Aircraft to be operated or located during the Term in
any area excluded from coverage by any insurance policy issued
pursuant to the requirements of this Agreement; and

          (j)  Not operate or locate the Aircraft in, to or over
any country which is (x) the subject of sanctions under the U.S.
International Economic Emergency Powers Act or United Nations
Security Council Directives and/or (y) restricted under the
United States Trading with the Enemy Act or the United States
Export Administration Act except as may be permitted by operating
in accordance with the conditions specified by the United States
Export Administration Regulations, General License GATS (15 CFR
Part 771.19). 

     8.4  Taxes and Other Payments.  Lessee will promptly pay:

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

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

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

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

     8.6  Inspection.

          (a)  Lessor and any person designated by Lessor may at
any time visit, inspect and survey the Aircraft, any Engine or
any Part and for such purpose may, subject to any applicable Air
Authority regulation, travel on the flight deck as observer;

          (b)  Lessee will pay to Lessor on demand all reasonable
out-of-pocket expenses (but not including the salaries of
Lessor's employees) incurred by Lessor in connection with each
such visit, inspection or survey which takes place during the
continuance of a Default; and

          (c)  Lessor will have no duty or liability to make, or
arising out of any such visit, inspection or survey; and

          (d)  So long as no Default has occurred and is
continuing, Lessor will not exercise such right other than on
reasonable notice and during normal business hours and so as not
to disrupt unreasonably the commercial operations of Lessee.




<PAGE>



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

          (a)  Not do or knowingly permit to be done or omit or
knowingly permit to be omitted to be done any act or thing which
might reasonably be expected to jeopardize the rights of Lessor
as owner and lessor of the Aircraft;

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

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

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

          "This Aircraft/Engine is owned by Interlease
          Aviation Investors III (TACA), L.L.C.
          ("Interlease") and is leased to Vanguard Airlines,
          Inc. and may not be operated by any other person
          without the prior written, consent of Interlease;"

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

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

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

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



<PAGE>



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

     8.8  General.  Lessee will:

          (a)  Not liquidate or dissolve and Lessee shall not
convey, transfer, lease or otherwise dispose of all or
substantially all of its property and other assets, whether in
one or series of related transactions; 

          (b)  Not consolidate with or merge into, any other
corporation, except that:

                           (i)     Lessee may merge with or into any other
     corporation for the sole purpose of reincorporating Lessee
     in another state, provided that the surviving corporation
     shall execute and deliver to Lessor an agreement by which
     such survivor expressly assumes the due and punctual
     performance of all of the covenants and conditions of this
     Agreement; and

                          (ii)     Lessee may merge with or into any other
     corporation, provided that:

                         [A]  the corporation formed by or
     surviving such consolidation or merger (the "Successor
     Entity"):

                              (1)  shall be a corporation
          organized and existing under the laws of the United
          States of America or any state thereof;

                              (2)  immediately after giving
          effect to such transaction, shall be Lessee or shall
          have acquired or succeeded to all or substantially all
          of the property and other assets (including, without
          limitation, all or substantially all of Lessee's
          property and other assets) as an entity; and

                              (3)  shall execute and deliver to
          Lessor an agreement, in form and substance reasonably
          satisfactory to Lessor, which is a legal, valid,
          binding and enforceable assumption by such Successor
          Entity of the due and punctual performance and
          observance of each covenant and condition of this
          Agreement and agreement to be bound thereby, and shall
          execute, deliver and/or file such recordations and
          filings with any Government Entity and such other
          documents as Lessor shall reasonably deem to be
          necessary or advisable (including, without limitation,
          to preserve and protect the interests of Lessor) to



<PAGE>


          evidence, or in connection with, such consolidation,
          merger,sale, lease, transfer or other disposition or
          acquisition and an officer's certificate from a
          responsible officer of the Successor Entity confirming
          the legal, valid, binding and enforceable nature of
          such assumption, and to the effect that the other
          requirements of this paragraph have been satisfied, and
          a legal opinion from counsel confirming the legal,
          valid, binding and enforceable nature of such
          assumption and otherwise in such form and substance
          reasonably satisfactory to Lessor; and

                    [B]  prior to and immediately after giving
     effect to such transaction, no Default or Event of Default
     shall have occurred and be continuing.  

No such permitted transaction involving a Successor Entity shall
relieve or release Lessee of or from any obligations hereunder
which arose or existed prior to such transaction.  Promptly
following the closing of such transaction, Lessee shall provide
Lessor with a certificate signed by Lessee's chief financial
officer to the effect that such transaction, will not have a
material adverse effect on Lessee's ability to perform its
obligations under this Agreement;

          (c)  Ensure that no change will occur in the Habitual
Base of the Aircraft without the prior written consent of Lessor. 
Lessor agrees that it shall not withhold its consent to a change
in the Habitual Base to another state of the United States of
America if Lessee shall have provided Lessor with an opinion of
counsel practicing in the state of the United States of America
proposed by Lessee to be the Habitual Base in form and in
substance reasonably satisfactory to Lessor to the effect that
the rights and interests of Lessor are duly protected; and

          (d)  Not, without giving Lessor thirty (30) days prior
notice (in accordance with this Agreement), change its chief
executive office (as such term is defined in Article 9 of the
Uniform Commercial Code as in effect in the State of Missouri)
from 30 N.W. Rome Circle, Mezzanine Level, Kansas City
International Airport, Kansas City, Missouri 64153;

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



<PAGE>




          (f)  remain a "citizen of the United States" as defined
in 49 U.S.C. Section 40102(15) of the Federal Aviation Act.

     8.9  Records.  Lessee will: 

          (a)  Cause accurate, complete and current records of
all flights made by, and all maintenance carried out on, the
Aircraft (including in relation to each Engine and Part subse-
quently installed, before the installation) to be kept; keep the
records in such manner as the Air Authority may from time to time
require, and ensure that they comply with the recommendations of
any manufacturers of the Aircraft, any Engine or any Part.  The
records will form part of the Aircraft Documents; and 

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

     8.10 Protection:  Lessee will: 

          (a)  Maintain the registration of the Aircraft with the
Air Authority in the name of Lessor and, to the extent permitted
under the laws of the State of Registration, reflecting the
interests of Lessor and not do or suffer to be done anything
which might adversely affect that registration; and

          (b)  Do all acts and things (including, without
limitation, making any filing or registration with the Air
Authority or any other Government Entity) and execute and
deliver, notarize, file, register and record all documents
(including, without limitation, any amendment of this Agreement,
other than an amendment which would alter any of the material
terms hereof in a manner adverse to Lessee) as may be required by
Lessor, which shall be at Lessor's cost with respect to item (i)
and at Lessee's cost with respect to items (ii) and (iii) below:

                           (i)     following any change or proposed change
     in the ownership or financing of the Aircraft or in the
     manner of securing Lessor's obligations to the Banks; or

                          (ii)     following any modification of the
     Aircraft, any Engine or any Part or the permanent
     replacement of any Engine or Part in accordance with this
     Agreement, so as to ensure that the rights of Lessor as
     owner and lessor of the Aircraft and under this Agreement
     apply with the same effect as before; or

                         (iii)     to establish, maintain, preserve,
     perfect and protect the rights of Lessor under this


<PAGE>


     Agreement or the interest of Lessor as owner of the
     Aircraft.

     8.11 Maintenance and Repair.  Lessee will: 

          (a)  Keep the Aircraft airworthy in all respects and in
good repair and condition;

          (b)  Not change the Agreed Maintenance Program or the
schedule of the Agreed Maintenance Program without the written
consent of Lessor;

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

          (d)  Maintain the Aircraft in accordance with FAA
Federal Air Regulations Part 121 and any other rules and regula-
tions of the FAA as may be applicable to passenger category
aircraft and in at least the same manner and with at least the
same care, including, without limitation, maintenance scheduling,
modification status and technical condition, as is the case with
respect to similar aircraft owned or otherwise operated by Lessee
including, without limitation, all maintenance to the Airframe,
any Engine or any Part required to maintain all warranties, per-
formance guarantees or service life policies in full force and
effect and will not discriminate in the care, scheduling, scope,
status or technical condition of maintenance of the Aircraft as
compared with other aircraft included in Lessee's fleet of Boeing
737 Aircraft;

          (e)  Comply with all mandatory inspection and modifi-
cation requirements, airworthiness directives and similar
requirements applicable to the Aircraft, any Engine or Part
having a compliance date during the Term or within sixty (60)
days after the Expiration Date and which are required by the Air
Authority (each of the foregoing being hereinafter referred to as
a "Relevant AD"). 

          The cost of compliance with any single Relevant AD
shall be allocated among Lessor and Lessee as follows:

                      (i)     Lessee shall be responsible for the first
     $200,000 of such cost;

                     (ii)     Lessor and Lessee shall share, on an equal
     basis, the portion of such cost (if any) which exceeds
     $200,000 up to and including $350,000; and

                    (iii)     Lessor shall be wholly responsible for the
     portion of such cost (if any) which exceeds $350,000


<PAGE>


     (subject always to the provisions of the following
     paragraph.

          Notwithstanding the foregoing, in the event that the
total cost of any single Relevant AD (such total cost to be
mutually agreed, in good faith, between Lessor and Lessee)
exceeds $350,000 (the "Threshold Amount"), Lessor may elect not
to make its contribution to the cost of compliance with such
Relevant AD as described in (iii) above.  If Lessor shall so
elect, Lessee shall be entitled, by giving prior written notice
to Lessor, to terminate this Agreement and redeliver the Aircraft
to Lessor in accordance with the terms of Sections 12.1 through
12.8 and Schedule 3 (except for compliance with the Relevant AD
which gave rise to such termination) on the earlier of (x) the
date which is 30 days after the date of such notice from Lessee
to Lessor or (y) the date on which the Aircraft is required to be
removed from service by reason of non-compliance with the
applicable Relevant AD.  Such notice shall specify the proposed
redelivery date of the Aircraft by Lessee and, upon the receipt
of such notice by Lessor, the then current definition of
Expiration Date shall be deemed to have been amended accordingly. 
Upon any termination of this Agreement pursuant to this Section
8.11(e), neither party shall be under any further obligation in
the other hereunder except for (x) accrued obligations of Lessee
hereunder; and (y) obligations hereunder which are expressed to
continue notwithstanding the expiration of the Term; provided,
however, that Lessor shall, if applicable having regard to the
provisions of Section 7.3, make the payments described in Section
7.3(b) but shall be under no obligation to repay, rebate or
otherwise refund any Maintenance Reserves previously paid by
Lessee under this Agreement.  

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

          (g)  Maintain in good standing a current certificate of
airworthiness (in the appropriate category for the nature of the
operations of the Aircraft) for the Aircraft issued by the Air
Authority except where (i) the Aircraft is undergoing
maintenance, modification or repair required or permitted by this
Agreement or (ii) the Aircraft's Certificate of Airworthiness is
withdrawn by the Air Authority for all Aircraft of the same model
as the Aircraft, and will from time to time provide to Lessor a
copy of such certificate of airworthiness on request;

          (h)  If required by the Air Authority, maintain a
current certification as to maintenance issued by or on behalf of


<PAGE>



the Air Authority in respect of the Aircraft and will from time
to time provide to Lessor a copy on request; and

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

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

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

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

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

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

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

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

     8.13 Installation of Engines and Parts.  Lessee will:

          (a)  Ensure that, except as permitted by this Agree-
ment, no engine or part is installed on the Aircraft unless:

                           (i)     in the case of an engine, it is an
     engine of the same model as, or an improved or advanced
     version of the Engine it replaces, which is in the same or
     better operating condition, has substantially similar or
     greater hours available until the next scheduled checks,
     inspections, overhauls and shop visits (taking into account
     for this purpose the hours available in respect of all
     compressor and turbine discs) and has the same or greater
     value and utility as the replaced Engine;



<PAGE>


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

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

                          (iv)     in each case, Lessee has sufficient
     details as to its source and maintenance records to assure
     compliance with applicable Air Authority requirements;;

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

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

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

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

     8.14 Non-Installed Engines and Parts.  Lessee will: 

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

          (b)  Notify Lessor whenever any Engine is removed from
the Aircraft and, from time to time, on request procure that any
person to whom possession of an Engine is given acknowledges in
writing to Lessor, in form and substance satisfactory to Lessor,
that it will respect the interests of Lessor and as owner of the



<PAGE>


Engine and will not seek to exercise any rights whatsoever in
relation to it;

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

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

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

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

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

                         (1)  the terms of any such lease,
          conditional sale agreement or Security Interest will
          not have the effect of prejudicing the interests of
          Lessor as owner and lessor of that Engine or Part; and

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

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

     8.16 Equipment Changes.

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

                           (i)     is expressly permitted by this Agree-
     ment, or



<PAGE>


                          (ii)     has the prior written approval of Lessor
     and which does not diminish the value, utility, condition,
     or airworthiness of the Aircraft; and 

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

     8.17 Title on an Equipment Change.

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

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

          (c)  Except as referred to in Section 8.17(b) any
Engine or Part at any time removed from the Aircraft will remain
the property of Lessor until a replacement has been made in
accordance with this Agreement and until title in that replace-
ment has passed, according to applicable laws, to Lessor subject
to this Agreement free of all Security Interests whereupon title
to the replaced Engine or Part will pass to Lessee.

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

9.   INSURANCE

     9.1  Insurance.  Lessee will maintain in full force during
the Term insurance in respect of the Aircraft in form and
substance satisfactory to Lessor (the "Insurance", which
expression includes, where the context so admits, any relevant
re-insurance(s)) through such brokers and with such insurers and
having such deductibles and being subject to such exclusions as


<PAGE>


may be approved by Lessor.  The Insurance will be effected
either: (a) on a direct basis with insurers of recognized
standing who normally participate in aviation insurance in the
leading international insurance markets and led by reputable
underwriter(s) approved by Lessor; or (b) with a single insurer
or group of insurers approved by Lessor who does not retain the
risk but effects substantial reinsurance with reinsurers in the
leading international insurance markets and through brokers each
of recognized standing and acceptable to Lessor for a percentage
acceptable to Lessor of all risks insured (the "Reinsurance").

     9.2  Requirements.  Lessor's current requirements as to
required Insurance are as specified in this Section and in
Schedule 4.  Lessor may from time to time stipulate other
requirements for the Insurance so that the scope and level of
cover is maintained in line with best industry practice and the
interests of Lessor protected. 

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

     9.4  Insurance Covenants.  Lessee will: 

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

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



<PAGE>




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

                           (i)     invalidates or may invalidate the
     Insurance; or

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

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

          (d)  Not take out without the prior written approval of
Lessor any insurance or reinsurance in respect of the Aircraft
other than those required under this Agreement unless relating
solely to hull total loss, business interruption, profit
commission and deductible risk;

          (e)  Commence renewal procedures within a reasonable
period prior to expiration of any of the Insurance and provide to
Lessor:

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

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

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

          (f)  On request, provide to Lessor copies of documents
evidencing the Insurance; 

          (g)  On request, provide to Lessor evidence that the
Insurance premiums have been paid;

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

          (i)  Be responsible for any deductible under the
Insurance; and



<PAGE>




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

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

          (a)  To pay the premiums due or to effect and maintain
insurance satisfactory to it or otherwise remedy Lessee's failure
in such manner (including, without limitation to effect and
maintain an "owner's interest" policy) as it considers
appropriate.  Any sums so expended by it will become immediately
due and payable by Lessee to Lessor together with interest
thereon at the rate specified in Section 5.11, from the date of
expenditure by it up to the date of reimbursement by Lessee; and

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

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

     9.7  Application of Insurance Proceeds.  As between Lessor
and Lessee: 

          (a)  All insurance payments received as the result of
an Event of Loss occurring during the Term will be paid to
Lessor, and Lessor will pay the balance of those amounts to
Lessee after deduction of all amounts which may be or become
payable by Lessee to Lessor under this Agreement (including under
Section 11.1(b));

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


<PAGE>



Threshold may be paid by the insurer directly to Lessee.  Any
balance remaining may be retained by Lessor;

          (c)  All insurance proceeds in respect of third party
liability will, except to the extent paid by the insurers to the
relevant third party, be paid to Lessor to be paid directly in
satisfaction of the relevant liability or to Lessee in reimburse-
ment of any payment so made; and

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

10.  INDEMNITY

     10.1 General.  Lessee agrees to assume liability for,
defend, indemnify and hold harmless the Indemnitees on an after
tax basis from and against any and all claims, proceedings,
losses, liabilities, damages (whether direct, indirect, special,
incidental or consequential) suits, judgments, costs, expenses
(including, without limitation, reasonable legal fees and
expenses), penalties (whether civil or criminal) or fines (each a
"Claim") (regardless of when the same is made or incurred,
whether during or after the Term): 

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

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

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



<PAGE>



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

but excluding any Claim in relation to a particular Indemnitee to
the extent that that Claim is covered pursuant to another indem-
nity provision of this Agreement or to the extent it arises as a
result of the gross negligence or wilful misconduct of that
Indemnitee, Lessor, Lessor Taxes or a Lessor Lien, or to the
extent it arises out of facts or circumstances occurring after
the Expiration Date, where such facts or circumstances do not
result from acts or omissions of Lessee.

     10.2 Duration.  The indemnities contained in this Agreement
will continue in full force after the Expiration Date.  

     10.3 Subrogation.  Lessee shall be subrogated to an
Indemnitee's rights to any matter with respect to which Lessee
has reimbursed such Indemnitee for amounts expended or incurred
by it or has paid such amount directly pursuant to Section 10.1.

     10.4 Notice and Cooperation.  In case any action, suit or
proceeding is brought against an Indemnitee in connection with
any Claim indemnified against under this Agreement, such
Indemnitee will, promptly after receipt of notice of such action,
suit or proceeding, notify Lessee thereof, enclosing a copy of
all papers served upon such Indemnitee.  Lessee may resist or
defend such action, suit or proceeding.  The Indemnitee shall
take all actions reasonably requested by Lessee, at Lessee's cost
and expense, in connection with Lessee's defense or resistance of
such action, suit or proceeding.

11.  EVENTS OF LOSS

     11.1 Events of Loss.

          (a)  If an Event of Loss occurs prior to delivery of
the Aircraft to Lessee, this Agreement will immediately terminate
and, except as expressly stated in this Agreement, neither party
will have any further obligation or liability under this
Agreement except that Lessor will refund to Lessee the amount of
any Aircraft Deposit paid under this Agreement; and 

          (b)  If an Event of Loss occurs after delivery of the
Aircraft to Lessee, Lessee will pay the Agreed Value to Lessor on
or prior to the later of (i) five (5) Business Days after the
Event of Loss and (ii) the date of receipt of insurance proceeds
in respect of that Event of Loss.  Subject to the rights of any
insurers and reinsurers or other third party, upon irrevocable
payment in full to Lessor of that amount and all other amounts
which may be or become payable to Lessor under this Agreement,
Lessor will without recourse or warranty (except as to Lessor's



<PAGE>


Liens) and without further act, be deemed to have transferred to
Lessee all of Lessor's rights to Parts not installed when the
Event of Loss occurred, all on an as-is where-is basis, and will
at Lessee's expense, execute and deliver such bills of sale and
other documents and instruments as Lessee may reasonably request
to evidence (on the public record or otherwise) the transfer and
the vesting of Lessor's rights in such Parts in Lessee, free and
clear of all rights of Lessor and Lessor Liens.

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

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

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

12.  RETURN OF AIRCRAFT. 

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

     12.2 Final Inspection.  Immediately prior to redelivery of
the Aircraft, Lessee will make the Aircraft available to Lessor
for inspection ("Final Inspection") in order to verify that the


<PAGE>



condition of the Aircraft complies with this Agreement.  The
Final Inspection will be long enough to permit Lessor to:

          (a)  Inspect the Aircraft Documents;

          (b)  Inspect the Aircraft and uninstalled Parts;

          (c)  Inspect the Engines, including without limitation
(i) at Lessor's expense, a video boroscope inspection of (A) the
low pressure and high pressure compressors and (B) turbine area
and (ii) at Lessee's expense, engine condition runs; and

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

Provided, however, that such Final Inspection will not exceed
three (3) consecutive days.

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

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

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

     12.4 Redelivery.  Upon redelivery Lessee will provide to
Lessor all documents necessary to export the Aircraft from the
Habitual Base, if any, provided, however, that Lessee will not be
required to provide documents necessary to export the Aircraft to
a place outside the United States.

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

     12.6 Maintenance Program.

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



<PAGE>



          (b)  Lessee will, if requested by Lessor to do so, upon
return of the Aircraft, deliver to Lessor a certified true cur-
rent and complete copy of the Agreed Maintenance Program,
together with a letter authorizing Lessor to use such copy for
"bridging" purposes for the next lessee of the Aircraft.  Lessor
agrees that it will not disclose the contents of the Agreed
Maintenance Program to any person or entity except to the extent
necessary to monitor Lessee's compliance with this Agreement
and/or to bridge the maintenance program for the Aircraft from
the Agreed Maintenance Program to another program after the
Expiration Date; provided, however, that this will not give
Lessor or any third party any rights to use the Agreed
Maintenance Program.  

     12.7 Fuel.  Upon redelivery of the Aircraft to Lessor, an
adjustment will be made in respect of fuel on board on the
Delivery Date and the Expiration Date at the price then
prevailing at the Habitual Base.

     12.8 Aircraft Storage.  During the period of thirty (30)
days after the Expiration Date, Lessor shall have the right to
require Lessee to maintain, store and insure the Aircraft at a
location having a facility capable of performing required
maintenance of the Aircraft (to be mutually agreed by Lessor and
Lessee), at Lessor's sole cost and expense as provided below. 
Any maintenance or insurance cost actually incurred or paid by
Lessee to any third party vendor in connection with the foregoing
shall be payable by Lessor at Lessee's direct cost without
"mark-up".  No later than thirty (30) days prior to the
Expiration Date, Lessor shall advise Lessee as to whether Lessor
requires Lessee to provide the services contemplated by this
Section 12.8.

13.  DEFAULT

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

          (a)  Non-Payment.  Lessee fails to make any payment
under this Agreement on the due date and such failure continues
for five (5) Business Days; or

          (b)  Insurance.  Lessee fails to comply with any
provision of Section 9 or any insurance required to be maintained
under this Agreement is cancelled or terminated or notice of
cancellation is given in respect of any such insurance and such
insurance is not renewed or replaced before cancellation or
termination; or



<PAGE>



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

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

          (e)  Cross Default.  Any other indebtedness of Lessee
in excess of $50,000 owing to Lessor or to Mimi Leasing Corp. is
not paid when due.

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

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

                          (ii)     the registration of the Aircraft (to the
     extent that the same is within the control of Lessee); or

                         (iii)     Lessee's authority to operate the
     Aircraft under Part 121 of the Federal Aviation Regulations
     and Lessee's interstate Certificate of Convenience and
     Necessity issued under Section 401 of the Federal Aviation
     Act; 

is modified in a manner unacceptable to Lessor or is withheld, or
is revoked, suspended, cancelled, withdrawn, terminated or not
renewed, or otherwise ceases to be in full force provided the
foregoing is not the result of any act, omission or breach of
Lessor; or 

          (g)  Bankruptcy, Etc.

                           (i)     Lessee consents to the appointment of a
     custodian, receiver, trustee or liquidator of itself or all
     or any material part of Lessee's property or Lessee's
     consolidated property, or Lessee admits in writing its
     inability to, or is unable to, or does not, pay its debts
     generally as they come due, or makes a general assignment
     for the benefit of creditors, or Lessee files a voluntary
     petition in bankruptcy or a voluntary petition seeking




<PAGE>


     reorganization in a proceeding under any bankruptcy or
     insolvency laws (as now or hereafter in effect), or an
     answer admitting the material allegations of a petition
     filed against Lessee in any such proceeding, or Lessee by
     voluntary petition, answer or consent seeks relief under the
     provisions of any other bankruptcy, insolvency or other
     similar law providing for the reorganization or winding-up
     of corporations, or provides for an agreement, composition,
     extension or adjustment with its creditors, or any corporate
     action (including, without limitation, any board of
     directors or shareholder action) is taken by Lessee in
     furtherance of any of the foregoing, whether or not the same
     is fully effected or accomplished; or

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

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

          (h)  Unlawful.  It becomes unlawful for Lessee to
perform any of its obligations under this Agreement or this
Agreement becomes wholly or partly invalid or unenforceable
[except if the foregoing is the result of an act, omission or
breach by Lessor]; or

          (i)  Suspension of Business.  Lessee or any of its
Subsidiaries suspends or ceases or threatens to suspend or cease
to carry on all or a substantial part of its business as a
Certificated Air Carrier for a period of more than seven (7)
days; or




<PAGE>



          (j)  Disposal.  Except for a reorganization the terms
of which have received the previous consent in writing of Lessor,
Lessee or any of its Subsidiaries disposes, conveys or transfers
or threatens to dispose, convey or transfer of all or a material
part of its assets, liquidates or dissolves or consolidates or
merges with any other Person (other than a consolidation or
merger permitted by the terms of Section 8.8(b) above), whether
by one or a series of transactions, related or not. 

          (k)  Rights.  The existence, validity, enforceability
or priority of the rights of Lessor as owner and lessor in
respect of the Aircraft are challenged by Lessee or any other
person claiming by or through Lessee, except if such challenge is
in connection with a breach by Lessor of Section 7.1; or

          (l)  Delivery.  Lessee fails to accept the Aircraft
when validly tendered for acceptance or delivery by Lessor in the
condition required by and pursuant to this Agreement.

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

          (a)  By written notice to Lessee and with immediate
effect, terminate this lease of the Aircraft (but without
prejudice to the continuing obligations of Lessee under this
Agreement), whereupon all rights of Lessee under this Agreement
shall cease; and/or

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

          (c)  Either:

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

                          (ii)     By serving written notice require Lessee
     to redeliver the Aircraft to Lessor at Dubuque, Iowa (or



<PAGE>


     such other location in the continental U.S. as Lessor may
     require).

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

     13.4 Default Payments.  If:

          (a)  An Event of Default occurs; or 

          (b)  The Aircraft is not delivered on the proposed
Delivery Date by reason of failure of Lessee to satisfy any
conditions to that delivery and such failure is not the result of
Lessor's breach hereunder;

Lessee will indemnify Lessor on demand against any loss, damage,
expense, cost or liability which Lessor may sustain or incur
directly or indirectly as a result including but not limited to: 

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

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

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

14.  ASSIGNMENT

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



<PAGE>



     14.2 Subject to Section 14.4, Lessor may assign or transfer
all of its rights under this Agreement and in the Aircraft,
provided that Lessor will in the case of an assignment other than
by way of security have no further obligation under this
Agreement following the assignment of all its rights under this
Agreement but notwithstanding that assignment will remain
entitled to the benefit of each indemnity and the liability
insurances effected under this Agreement; and provided that such
assignment, novation or transfer does not violate any provision
of the Federal Aviation Act or any rule or regulation thereunder,
or prevent the continued U.S. registration of the Aircraft.  Any
such assignment, transfer or novation will be subject to Lessee's
rights under this Agreement.  Lessee will comply with all
reasonable requests of Lessor, its successors and assigns in
respect of any such assignment, and Lessor will promptly notify
Lessee of any such assignment.

     14.3 If Lessor desires to effect any assignment or transfer
of its rights and obligations under this Agreement, Lessee agrees
to cooperate and take all such steps as Lessor may reasonably
request to give the transferee the benefit of this Agreement. 
Any reasonable expenses incurred by Lessee directly as a result
of any assignment contemplated by Section 14.2 shall be advanced
by Lessor.

     14.4 Any assignment, novation or transfer by Lessor will be
at Lessor's cost and expense and will not result in any increase
in Lessee's obligations hereunder in excess of those which would
exist in the absence of such assignment, novation or transfer.

15.  ILLEGALITY

     If it is or becomes unlawful in any jurisdiction for Lessor
to give effect to any of its obligations as contemplated by this
Agreement or to continue this Agreement Lessor may by notice in
writing to Lessee terminate the leasing of the Aircraft under
this Agreement and Lessee will forthwith redeliver the Aircraft
to Lessor in accordance with Section 12.  Without prejudice to
the foregoing Lessor will consult in good faith with Lessee as to
any steps which may be taken to restructure the transaction to
avoid that unlawfulness but will be under no obligation to take
any such steps.

16.  MISCELLANEOUS

     16.1 Waivers, Remedies Cumulative.  The rights of each party
under this Agreement:

          (a)  May be exercised as often as necessary; 

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


<PAGE>



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

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

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

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

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

     16.5 INTENTIONALLY LEFT BLANK.

     16.6 Set-off.  Lessor may set off any matured obligation
owed by Lessee under this Agreement or the Other Agreements (to
the extent beneficially owned by Lessor) against any obligation
(whether or not matured) owed by Lessor to Lessee, regardless of
the place of payment or currency.  If an obligation is
unascertained or unliquidated, Lessor may in good faith estimate
that obligation and set off in respect of the estimate, subject
to the relevant party accounting to the other when the obligation
is ascertained or liquidated.  Lessor will not be obliged to pay
any amounts to Lessee under this Agreement so long as any sums
which are then due from Lessee under this Agreement or the Other
Agreements remain unpaid and any such amounts which would
otherwise be due will fall due only if and when Lessee has paid
all such sums except to the extent Lessor otherwise agrees or
sets off such amounts against such payment pursuant to the
foregoing.

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

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



<PAGE>



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

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

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

     16.9 Expenses.  Unless this Agreement is terminated by
reason of Lessor's failure to deliver the Aircraft to Lessee
through no breach or default of Lessee of the terms of this
Agreement, Lessee will pay to Lessor on demand, upon the
occurrence of a Default, all reasonable expenses (including
legal, survey and other costs) payable or incurred by Lessor in
contemplation of, or otherwise in connection with, the
enforcement of or preservation of any of Lessor's rights under
this Agreement, or in respect of the repossession of the
Aircraft.

All expenses payable pursuant to this Section 16.9 will be paid
as they are incurred by Lessor.

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

     16.11     Notices.  All notices under, or in connection
with, this Agreement will, unless otherwise stated, be given in
writing.  Any such notice is deemed effectively to be given, if
by letter, by registered mail, return receipt requested, or by an
overnight courier which provides a receipt upon deposit with such
courier, when delivered.

The address of Lessee and Lessor are as follows: 

          Lessee:        Vanguard Airlines, Inc.
                         30 N.W. Rome Circle - Mezzanine Level
                         Kansas City International Airport
                         Kansas City, Missouri 64153
                         Attn:  Brian Gillman


<PAGE>




          Lessor:        Interlease Aviation Investors III
                           (TACA), L.L.C.
                         One Northfield Plaza
                         Suite 525
                         Northfield, Illinois 60093
                         Attn:  Philip Coleman

     16.12     Law and Jurisdiction:

          (a)  THIS AGREEMENT IN ALL RESPECTS IS GOVERNED BY AND
TO BE INTERPRETED IN ACCORDANCE WITH LAWS OF THE STATE OF THE
GOVERNING LAW, WITHOUT REGARD TO ITS CONFLICTS OF LAW PRINCIPLES. 

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

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

                           (i)     Lessee appoints Prentice Hall as its
     agent for service of process relating to any proceedings
     before the Iowa courts in connection with this Agreement and
     agrees to maintain the process agent in Iowa notified to
     Lessor; 

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

                         (iii)     Lessee consents to the service of
     process relating to any such proceedings by prepaid mailing
     of a copy of the process to Lessee's agent at the address
     identified in paragraph (i);

          (d)  Lessee:

                           (i)     waives objection to the federal courts
     in the State of Iowa on grounds of inconvenient forum or
     otherwise as regards proceedings in connection with this
     Agreement; and
 
                          (ii)     agrees that a judgment or order of a
     federal court in the State of Iowa in connection with this
     Agreement is conclusive and binding on it and may be
     enforced against it in the courts of any other jurisdiction;

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



<PAGE>


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

                          (ii)     concurrently in more than one
     jurisdiction; and

          (f)  Lessee and Lessor irrevocably and unconditionally:

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

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

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

     16.13     Entire Agreement.  This Agreement and the Letter
Agreement are the sole and entire agreement between Lessor and
Lessee in relation to the leasing of the Aircraft, and supersede
all previous agreements in relation to that leasing.

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

     16.15     Counterparts.  This Agreement may be executed in
counterparts each of which will constitute one and the same
document.

17.  DISCLAIMERS AND WAIVERS

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



<PAGE>



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

          (b)  ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY
IN TORT, WHETHER OR NOT ARISING FROM LESSOR'S NEGLIGENCE, ACTUAL
OR IMPUTED; OR

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

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

     17.3 Confirmation.  LESSEE CONFIRMS THAT IT IS FULLY AWARE
OF THE PROVISIONS OF THIS SECTION 17 AND ACKNOWLEDGES THAT RENT
AND OTHER AMOUNTS HAVE BEEN CALCULATED BASED ON ITS PROVISIONS.

18.  SECTION 1110

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





<PAGE>




     IN WITNESS whereof the parties hereto have executed this
Agreement on the date shown at the beginning of this Agreement. 

WITNESS:                      Lessor:
                              INTERLEASE AVIATION INVESTORS III
                                (TACA), L.L.C.


______________________        By: _____________________________

                              Name: ___________________________

                              Title: __________________________


WITNESS:                      Lessee:
                              VANGUARD AIRLINES, INC.


_______________________       By: ____________________________

                              Name: __________________________

                              Title: _________________________



<PAGE>




                            SCHEDULE 1

                              PART 1

                      DESCRIPTION OF AIRCRAFT

AIRCRAFT

MANUFACTURER:            Boeing

MODEL:                   737-244

SERIAL NUMBER:           19708

U.S. REGISTRATION NO.    N236TA

ENGINES

ENGINE TYPE AND NO.:     Pratt & Whitney JT8D-9A x 2 with Stage
                         III AvAero Hushkits

SERIAL NOS:              P674343B and P674540B


     At the time for acceptance and on the Delivery Date, Lessor
will tender for delivery the Aircraft to Lessee in the following
condition:

     (1)  General Conditions

          (A)  The Aircraft will be a U.S. registered aircraft in
airworthy condition and ready for flight by Lessee under Part 121
with all of the equipment, components and systems fully
functional and operating within limits and/or guidelines
established by the relevant manufacturers and the FAA.  The
Aircraft shall have installed full complements of engines,
avionics, instruments, parts and other equipment.

          (B)  The Aircraft shall be free of damage, free of
loose, pulled or missing fasteners, free of scab patches, clean
by typical good international airline standards and commensurate
with a deep cleaning of such Aircraft.

          (C)  The Aircraft shall have a valid certificate of
airworthiness issued by the FAA, comply with the manufacturer's
type certificate as revised to the Date of Delivery, and be
delivered in full compliance with all applicable Airworthiness
Directives, mandatory Service Bulletins and FARs affecting such
model aircraft/engine which by their terms require compliance
within two (2) months after the Delivery Date, without waiver,
exemption or extension, including but not limited requirements
relating to TCAS, windshear, flight data recorders, type-3 exits,
aging aircraft, corrosion and handicapped requirements.  



<PAGE>



          (D)  All pilot logbook reports and discrepancies,
deferred maintenance items (including CDL and MEL items) shall
have been corrected without exemption or extension, and neither
the Aircraft nor any engine shall have any open, deferred
continued or placarded maintenance item.  All impact damage will
be repaired in accordance with the Boeing SRM.

     (2)  Airframe.  

          (A)  The Airframe shall be delivered to Lessee with
zero time since B Checks per the Agreed Maintenance Program and
3,113 hours remaining to the next C Check and 10,400 hours
remaining to the next D Check under the TACA International
Airlines (TACA) maintenance program.

          (B)  All hard-time components/inspections will have no
more than 500 fewer hours or cycles and no fewer days remaining
to the next scheduled overhaul per the Boeing MPD than such
components/inspections had at Delivery;

     (3)  Engines/APU.  

          (A)  The Engines shall be delivered to Lessee in the
condition described in pages 8 and 9 of the Executive Summary for
the Aircraft prepared by Av Solutions and dated March 20, 1997.

          (B)  In connection with Lessor's purchase of the
Aircraft from First Security Bank, N.A., as owner trustee for
TACA, each engine of the Aircraft shall have completed a complete
(100% of all stages) boroscope inspection which will cover both
hot and cold sections and Engine condition power assurance runs,
and any defects that exceed the engine manufacturer's limits
shall have been corrected.  

     (4)  Configuration.

          (A)  Lessor will reconfigure the Aircraft in a single-
class service 127-seat all coach configuration (including all
engineering support), with an equivalent number of PSUs, and
provide the Aircraft with closed style bins.

          (B)  The Aircraft will be stripped and painted in
Lessee's livery, provided that Lessee provides stencils to
COOPESA in Costa Rica on or before May 30, 1997.

          (C)  Lessor shall reweigh the Aircraft upon completion
of its pre-Delivery workscope for the Aircraft.

     (5)  Improvements.  Before Delivery, Lessor shall:

          (A)  Install windshear detection system (labor,
materials and engineering including STC).


<PAGE>




          (B)  Install AvAero engine hushkits (labor, materials
and engineering including STC).

          (C)  Install new seat covers and carpet, with fire
blocking installed that is compatible with Lessee's seat covers,
provided Lessee provides seat covers and carpet.

          (D)  Configure the Aircraft for 11 Parameter Flight
date recorder and have a 11 Parameter Flight recorder installed.

          (E)  Recondition new crew cockpit seats to include new
cushions and sheepskin seat covers, provided Lessee supplies the
sheepskin covers to be installed pursuant to this section.

          (F)  Ensure that all cockpit windows must be within
Boeing Maintenance Manual limits.

          (G)  Ensure that all door snubbers must be within
Boeing Maintenance limits.

          (H)  Ensure that all gallies and galley attach points
shall be free of corrosion and damage.

          (I)  Ensure that all cabin windows will be serviceable
to normal airline standard and free of exterior over-spray.  

          (J)  Ensure that all flight controls will be within
Boeing Maintenance Manual limits and free from rubbing and leaks. 
Right outboard fore flap leading edge shall have fasteners
replaced as needed.

          (K)  Ensure that Aircraft shall have insulation
blankets installed including aft waste and water tank
compartment.

          (L)  Ensure that aft electronics bay shall have doubler
on left side of door frame replaced and previous lavatory fluid
leak inspected and repaired as necessary.




<PAGE>




                            SCHEDULE 1

                              PART 2

                        AIRCRAFT DOCUMENTS

A.   CERTIFICATES

     o    FAA Certificate of Airworthiness 

B.   AIRCRAFT STATUS RECORDS

     o    Log Books
     o    Airframe Maintenance Status Report
     o    Supplemental Structural Inspection Document Status (if
          applicable)
     o    Manufacturer's Service Bulletin Status Report
     o    Airworthiness Directive Service Bulletin Compliance
          Records and Report (terminated and repetitive),
          including documentation adequate to determine the
          method of compliance, but not limited to current status
     o    Modification Status Report List documents will be
          provided upon request)
     o    Last Weighing Report
     o    List of Life Limited Components with remaining
          hours/cycles, with FAA-approved serviceable tags or
          other documentation or releases approved by the FAA
          under Part 121

C.   AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance visits)

     o    Test Flight Reports 
     o    X-ray pictures 
     o    Last annual check and heaviest maintenance check Work
          Cards 

D.   AIRCRAFT HISTORY RECORDS

     o    Aircraft Maintenance History Cards 
     o    Service Difficulty Report 
     o    Accident or Incident Report (Major Structural Repair) 

E.   ENGINE RECORDS (for each engine)

     o    Engine time and cycle records
     o    Last overhaul and repair documents (including FAA Forms
          337)
     o    Airworthiness Directive Compliance Records and Report
          (terminated and repetitive), including documentation
          adequate to determine the method of compliance, but not
          limited to current status



<PAGE>



     o    Manufacturer's Service Bulletin Status Report including
          documentation adequate to determine the method of
          compliance, but not limited to current status
     o    List of Time Controlled Components with remaining hours
          and cycles with FAA-approved serviceable tags or other
          documentation or releases approved by the FAA under
          Part 121
     o    Modification Status Report
     o    Engine Disc Sheets
     o    Engine Build Specifications

F.   APU RECORDS

     o    Last Overhaul and Repair Documents (including
          modification status)
     o    Airworthiness Directive Compliance Records and Report
          (terminated and repetitive), including documentation
          adequate to determine the method of compliance, but not
          limited to current status
     o    Manufacturer's Service Bulletin Records and Status
          Report
     o    List of Time Controlled Components with remaining
          hours/cycles o Modification Status Report, with FAA-
          approved serviceable tags or other documentation or
          releases approved by the FAA under Part 121 

G.   COMPONENT RECORDS

     o    Time Controlled Component Historical Records with
          Installation and FAA-approved Serviceability Tags or
          other documentation or releases approved by the FAA
          under Part 121

H.   MANUALS

     o    Airplane Flight Manual (Manufacturer Approved, FAA
          Approved)
     o    Flight Crew Operating Manual
     o    Weight and Balance Manual
     o    Wiring Diagram Manual (microfilm and hard copy if
          available)
     o    Illustrated Parts Catalog (microfilm)
     o    Aircraft Maintenance Manual (microfilm)
     o    Manufacturer's Engine Maintenance Manual and any
          approved engineering changes, as applicable

I.   MISCELLANEOUS TECHNICAL DOCUMENTS

     o    Maintenance Program Specifications
     o    Interior Configuration Drawings
     o    Original Delivery Documents
     o    Loose Equipment Inventory



<PAGE>




                            SCHEDULE 1

                              PART 3

                         LEASE SUPPLEMENT


          THIS LEASE SUPPLEMENT is dated as of __________, 1997,
and is executed by Vanguard Airlines, Inc. ("Lessee") and
Interlease Aviation Investors III (TACA), L.L.C. ("Lessor"),
pursuant to Section 3.1(d) of the Aircraft Lease Agreement
between Lessor and Lessee dated as of __________, 1997 (the
"Lease").  All capitalized terms used herein which are not
otherwise defined herein shall have the meaning given to such
terms in the Lease.

          Lessor hereby leases to Lessee, and Lessee hereby
leases from Lessor, the Aircraft described below (the "Aircraft")
upon and subject to all of the terms, conditions and provisions
of the Lease, and Lessor and Lessee further agree and state as
follows:

          1.   Description of the Aircraft:

               (a)  Airframe:  Boeing 737-244

                    Manufacturer's Serial No.:  19708

                    U.S. Registration No. N236TA

               (b)  Engines:  Two (2) Pratt & Whitney engines,
                    Model JT8D-9A, Serial Numbers P674343B and
                    P674540B, each of said engines having 750 or
                    more rated take-off horsepower or the
                    equivalent thereof;

               (c)  All Parts (other than Engines) installed on
                    or associated with the Airframe and Engines;
                    and

               (d)  The Aircraft Documents relating to the
                    Airframe and Engines.

          2.   The main base of the Aircraft is Kansas City,
Missouri.

          3.   The Term for the Lease commences on __________,
1997 (the "Delivery Date") and ends on the day preceding the
numerically corresponding day 60 months after the Delivery Date,
both dates inclusive, unless sooner terminated in accordance with
the provisions of the Lease.

          4.   The Rent for the Aircraft shall be payable in
advance for each calendar month of the Term commencing on the
Delivery Date and shall be the amount set forth in Schedule 1 to
Letter Agreement to the Lease.




<PAGE>




          IN WITNESS WHEREOF, Lessor and Lessee have caused this
Lease Supplement to be executed by their respective corporate
officers as of the date first above written.

                              VANGUARD AIRLINES, INC. (LESSEE)



                              By: _______________________________
                              Title: ____________________________

                              INTERLEASE AVIATION INVESTORS III 
                                (TACA), L.L.C. (LESSOR)



                              By: ______________________________
                              Title: ___________________________


<PAGE>



                            SCHEDULE 2

                    CERTIFICATE OF ACCEPTANCE

     This Certificate of Acceptance is delivered, on the date set
forth below by Vanguard Airlines, Inc. ("Lessee"), to Interlease
Aviation Investors III (TACA), L.L.C. ("Lessor"), pursuant to the
Aircraft Lease Agreement dated as of May __, 1997 between Lessor
and Lessee (the "Agreement").  Capitalized terms used in this
Certificate shall have the meaning given to such terms in the
Agreement.

1.   DETAILS OF ACCEPTANCE

     Lessee hereby confirms to Lessor that Lessee has at
_________ o'clock on this ____ day of _______________, 199_, at
San Jose, Costa Rica, accepted the following, in accordance with
the provisions of the Agreement:

     (a)  Boeing 737-244 airframe, Manufacturer's Serial No.
          19708; U.S. Registration No. N236TA

     (b)  2 Pratt & Whitney JT8D-9A Engines:

               Manufacturer's Serial No. 

               P674343B; and

               P674540B 

(Each of which shall have more than 750 rated takeoff horsepower
or the equivalent of such horsepower).

     (c)  Loose Equipment Check List: as per list signed by
Lessor and Lessee and attached hereto.

2.   HOURS AND CYCLES DATA (as of Acceptance Date)

     (a)  Airframe:

          Number of Hours since last "D" Check (Heaviest Check):
          ____ hours

          "C" Check (or Equivalent):

          Interval: ____________________________

          Time Since: __________________________

     (b)  Landing Gear Overhaul:

          Number of Hours Since Last Overhaul:


<PAGE>



               Left Gear ___________________________ Hours

               Right Gear ___________________________ Hours

               Nose Gear ____________________________ Hours

          Interval:      Left Gear ________________________ 

                         Right Gear _______________________

                         Nose Gear ________________________

     (c)  Engines:


          Total Number of Hours and Cycles:

                S/N ______:_________ hours; _____________ cycles

                S/N ______:_________ hours; _____________ cycles


          Number of Hours Since Last Hot Section Refurbishment:

                S/N ______:_________ hours

                S/N ______:_________ hours

          Number of Hours Since Last Cold Section Refurbishment:

                S/N ______:_________ hours

                S/N ______:_________ hours

          Hot Section Refurbishment: 

               Interval  _________________________________

               Time Since (S/N _________): ______________________

               Time Since (S/N _________): ______________________

          Time Remaining to First Restriction: 

          Engine S/N: ________________

               Hours: ____________ Restriction: ____________

               Cycles: ___________ Restriction: ____________



<PAGE>


          Engine S/N: ________________

               Hours: ____________ Restriction: ____________

               Cycles: ___________ Restriction: ____________

          Average Cycles in Life Limited Parts (see attached
          Schedule): ______________

     (d)  Auxiliary Power Unit:

          Number of APU Hours Since Last Heavy Shop Visit:

               _________ hours     __________ Date accomplished

          Hot Section Refurbishment:

               Interval: _______________________

               Time Since: _____________________

     (e)  Time Controlled Components:  [see attached report]

     (f)  Interior Equipment:

          Number of Passenger Seats
          and Configuration:                      _____     _____

          Number of Galleys and Location:         _____     _____

          Number of Lavatories and Location:      _____     _____

          LOPA - Attached:                        _____     _____

          List of Loose Equipment on Board:

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____



<PAGE>



     (g)  Avionics:
                                                            Part
          Description                             Model      No.

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____


     IN WITNESS WHEREOF, Lessee has, by its duly authorized
representative, executed this Certificate on the date in
paragraph 1 above.

                                   LESSEE:  

                                   VANGUARD AIRLINES, INC.


                                   By: __________________________

                                   Title: _______________________


<PAGE>




                            SCHEDULE 3

                OPERATING CONDITION AT REDELIVERY

     On the Expiration Date, the Aircraft shall:

(1)  GENERAL CONDITION

     (a)  Possess a valid Certificate of Airworthiness with
respect to the Aircraft issued by the Air Authority.  The
Aircraft will also meet all requirements for U.S. domestic
operations under FAR Part 121 and will meet the requirements of
FAR Part 36, Appendix C, Stage 3 noise compliance without waiver
or restriction.  There will be no deferred, open or carryover
items on the Aircraft or any Engine on the Expiration Date;

     (b)  Be clean by U.S. airline standards;

     (c)  Have installed the full complement of engines and other
equipment, parts and accessories and loose equipment as is
normally installed in the Aircraft, and be in the same economy
configuration of 127 seats, in accordance with an approved STC,
as at Delivery;

     (d)  If Lessee is on a Q Check system, have undergone,
immediately prior to redelivery, a full C Check (including all
phases and multiples) in accordance with the Approved Maintenance
Program, so that all airframe inspections falling due within the
next following C Check interval, in accordance with the Approved
Maintenance Program, have been accomplished, and have at least
3,000 hours or cycles (whichever is lower) remaining to the next
Q Check; 

     Notwithstanding Paragraph 1(d) above, if Lessee wishes to
redeliver the Airframe to Lessor with less life so remaining,
Lessee shall give written notice to Lessor no later than sixty
(60) days prior to the Expiration Date, and Lessor may, at its
sole option:

                 (i)     Require Lessee to perform a premature Q Check and
utilize the Airframe Maintenance Reserves (if such work qualifies
for contribution by Lessor pursuant to Section 7.2) held by
Lessor under the Lease; or

                (ii)     Accept redelivery of the Airframe in such
condition with an additional payment (in addition to the Airframe
Maintenance Reserves otherwise payable) equal to the number of
Flight Hours or Cycles less than the minimum required by this
Paragraph 1(d) multiplied by the amount of Airframe Maintenance
Reserve per Flight Hour then in effect under the Lease.

     (e)  If Lessee is on a C-1 through C-7 plus D Major Check
system, have undergone, immediately prior to redelivery, a full C


<PAGE>



check (including all phases and multiples) in accordance with the
Approved Maintenance Program, so that all airframe inspections
falling due within the next following C check interval, in
accordance with the Approved Maintenance Program, have been
accomplished, and have at least fifty percent (50%) of the hours
or cycles (whichever is lower) remaining to the next C-1 through
C-7 plus D Major Check per the Boeing MPD.

          Notwithstanding Paragraph 1(e) above, if Lessee wishes
to redeliver the Airframe to Lessor with less life so remaining,
Lessee shall give written notice to Lessor no later than sixty
(60) days prior to the Expiration Date, and Lessor may, at its
sole option:

          (i)  Require Lessee to perform a premature C-1 through
C-7 plus D Major Check and utilize the Airframe Maintenance
Reserves (if such work qualifies for contribution by Lessor
pursuant to Section 7.2 held by Lessor under the Lease; or

         (ii)  Accept redelivery of the Airframe in such
condition with an additional payment (in addition to the Airframe
Maintenance Reserves otherwise payable) equal to the number of
Flight Hours or Cycles less than the minimum required by this
Paragraph 1(c) multiplied by the amount of Airframe Maintenance
Reserve per Flight Hour or Cycle then in effect under the Lease.

     (f)  Be in compliance with all mandatory airworthiness
directives issued by the FAA (ADs) for compliance during the Term
and within 60 days after the Expiration Date, including being
current with all initial tasks of the Corrosion Prevention and
Control Program (CPCP) under the Boeing D6-38528 document, with
no exceptions or deviations and with proper supporting
documentation;

     (g)  Be stripped and freshly painted, with an "all white"
fuselage and gray wings;

     (h)  Have all required signs and decals clean, secure and
legible.

(2)  COMPONENTS

     (a)  All hard time components/inspections (including all
three(3) Landing Gears) shall have the same number of hours,
cycles or days remaining to the next scheduled overhaul per the
Boeing MPD as each had at Delivery, as evidenced by Lessee's
summary prepared within 30 days of Delivery.

     (b)  Each "on-condition" and "condition monitored" component
shall not be less than as on the Delivery Date; and 




<PAGE>




     (c)  The APU will be in the same operational condition as at
the Delivery Date with temperatures and air outputs within the
APU manufacturer's limits at all operational settings; and

(3)  ENGINES

     Each Engine will be installed on the Aircraft and if not the
engines installed on the Delivery Date will be accompanied by all
documentation Lessor may require to evidence that title thereto
is properly vested in Lessor and: 

     (a)  Each Engine and each life limited part within each
Engine will have no less than 3,500 cycles or 7,000 hours until
the next scheduled life limited part replacement, excluding the
C-1 and C-2 discs.

     (b)  Each Engine will, at Lessor's option and expense, have
had a complete hot (including combustion chamber) and cold
section video boroscope inspection, and a power assurance run in
accordance with the Engine manufacturer's maintenance manual and
all items beyond such manufacturer's limits will be repaired at
Lessee's expense.  No Engine will be "on watch" for any reason
requiring any special or out of sequence inspection.

     Notwithstanding Paragraph 3(a) above, if Lessee wishes to
redeliver an Engine to Lessor with less life so remaining, Lessee
shall give written notice to Lessor no later than sixty (60) days
prior to the Expiration Date, and Lessor may, at its sole option:

                 (i)     Require Lessee to perform a premature Hot Section
Refurbishment Inspection and shop visit and utilize the Engine
Maintenance Reserves (if such work qualifies for contribution by
Lessor pursuant to Section 7.2) held by Lessor under the Lease;
or

                (ii)     Accept redelivery of the Engines in such condition
with an additional payment (in addition to Maintenance Reserves
otherwise payable per Engine equal to the number of Flight Hours
or Cycles less than the minimum required by this Schedule 3,
multiplied by the amount of Engine Maintenance Reserves per
Flight Hour then in effect.

(4)  FUSELAGE, WINDOWS AND DOORS

     (a)  The fuselage will be free of major dents outside
allowable Boeing Maintenance or Structural Repair Manual Limits
and abrasions and loose or pulled or missing rivets;

     (b)  Doors will be free moving, correctly rigged and be
fitted with serviceable seals, free from damage as defined by the
Boeing Maintenance or Structural Repair Manual Limits.



<PAGE>



(5)  WINGS AND EMPENNAGE

     (a)  Leading edges will be free from damage, outside
allowance Boeing Maintenance or Structural Repair Manual Limits;

     (b)  Wings will be free of fuel leaks.

(6)  INTERIOR

     (a)  Ceilings, sidewalls and bulkhead panels will be clean
and reasonably free of noticeable cracks and stains.

     (b)  Carpets and seat covers will be in good condition,
clean and reasonably free of noticeable stains and meet FAR burn
certification regulations;

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

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

     (e)  Galleys will contain all equipment installed and
functional including service carts (trolleys), containers and
coffee pots, which will be reasonably clean by airline standards
and shall have all FAA required markings installed;

     (f)  Overhead stowage compartments will be clean by airline
standards and serviceable with proper markings installed; and

     (g)  Lavatories will be clean by airline standards and
serviceable with correct FAA markings installed.

(7)  COCKPIT

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

     (b)  Seat covers will be in good condition, clean and free
of stains and will conform to FAR burn certification regulations;
and

(8)  CARGO COMPARTMENTS

     (a)  Panels will be in good condition; and

     (b)  Nets will be in good condition.



<PAGE>



(9)  LANDING GEAR

     Time since overhaul on the Landing Gear will not be less
than __% remaining until the next scheduled overhaul.  Each life
limited part within the landing gear will have at least the same
time remaining as at the Delivery Date.  The Landing Gear and
wheel wells will be clean, free of leaks and repaired as
necessary.

(10) CORROSION

     (a)  The Aircraft will have been inspected and treated with
respect to corrosion as defined in the Agreed Maintenance Program
and/or Boeing Document No.D6-38528 relative to compliance with
the Corrosion Prevention and Control Program (CPCP).  The entire
fuselage will be substantially free from corrosion and will be
adequately treated and an approved corrosion prevention program
will be in operation; and

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

     Notwithstanding anything contained in this Schedule 3,
Lessor shall not be required to make any payments to Lessee in
the event that the Airframe, the Engines, the Landing Gear, any
time, cycle or calendar controlled component is returned to
Lessor in a condition better than that specified in Section 12
and this Schedule 3.




<PAGE>




                            SCHEDULE 4

                      INSURANCE REQUIREMENTS

     The Insurance required to be maintained are as follows: 

     (a)  HULL ALL RISKS of Loss or Damage (while flying and on
the ground) with respect to the Aircraft on an "agreed value
basis" for the Agreed Value and with a deductible not exceeding
$100,000 (including, without limitation, foreign object damage
coverage with a deductible not exceeding $100,000 per engine per
occurrence), or such other amount agreed by Lessor from time to
time.  Without prejudice to the foregoing, with the prior written
consent of Lessor, Lessee may increase the aforesaid deductible
amount to $500,000 if, prior to doing so, Lessee shall have paid
to Lessor the sum of $250,000 by way of an insurance security
deposit (the "Insurance Security Deposit") (which Insurance
Deposit shall also be available to be applied to deductible
losses between $100,000 and $500,000).  Insurance Security
Deposit (which shall be held by Lessor as security for the
performance by Lessee of its obligations under this Agreement and
the Other Agreements), shall be returned to Lessee on the
Expiration Date if all amounts payable by Lessee under this
Agreement and any Other Agreement shall have been paid in full
and no Default shall have occurred and be continuing.  With
Lessor's prior consent, the Insurance Deposit may be provided by
Lessee by way of letter of credit issued by a bank acceptable to
Lessor and in form and in substance satisfactory to Lessor.

     In the event that the Insurance Security Deposit is applied
to a loss claim thereby reducing the balance thereof, Lessee will
either (a) replace any deficiency in such balance; or (b) lower
the all risk hull insurance deductible to $100,000 within 15 days
after the aforementioned application.

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

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

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


<PAGE>



covered under the Policy to the fullest extent available from the
leading international insurance markets;

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

                      (i)     name Lessor and their respective successors
     and assigns as additional assureds for their respective
     rights and interests, warranted, each as to itself only, no
     operational interest;

                     (ii)     provide that any loss will be settled jointly
     with Lessor and Lessee, subject to final prior approval of
     Lessor and will be payable in Dollars to Lessor, for the
     account of all interests except where the loss does not
     exceed the Damage Notification Threshold, and Lessor has not
     notified the insurers to the contrary, in which case the
     loss will be settled with and paid to Lessee;

                    (iii)     include a notice and/or acknowledgement of
     assignment in a form acceptable to Lessor;

                     (iv)     if separate Hull "all risks" and "war risks"
     insurances are arranged, include a 50/50 provision in
     accordance with market practice (AVS. 103 is the current
     market language);

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

                     (vi)     confirm that the insurers will not obtain a
     valid discharge of the obligations under the Insurance by
     payment to the broker, notwithstanding market practice to
     the contrary;

     (f)  All required liability insurances (specified above)
will:

                      (i)     include Lessor and Norwest Bank Iowa, N.A.
     and their respective successors and assigns, and their
     respective shareholders, subsidiaries, directors, officers,
     agents, employees and indemnitees as additional insureds for
     their respective rights and interests, warranted, each as to
     itself only, no operational interest;

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

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

     (g)  All Insurance will:

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

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

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

                     (iv)     acknowledge the insurer is aware (and has
     seen a copy) of this Agreement and that the Aircraft is
     owned by Lessor;

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

                     (vi)     provide that the insurers will hold harmless
     and waive any rights of recourse and/or subrogation against
     the additional assureds or to be subrogated to any rights of
     the Banks against Lessor or Lessee;

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

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

                     (ix)     contain a provision entitling Lessor or any
     insured party to initiate a claim under any policy in the
     event of the refusal or failure of Lessee to do so; and

                      (x)     accept and insure the indemnity provisions of
     this Agreement to the extent of the risks covered by the
     policies.




<PAGE>


                            SCHEDULE 5

                      FORM OF LEGAL OPINION


 To: [Lessor]

                                        [Date]


Dear Sir or Madam:

          You have asked us to render an opinion in connection
with the transaction governed, inter alia, by the Lease (as
hereinafter defined).  Words and expressions used herein will
have the same meanings as defined in an Aircraft Lease Agreement
(the "Lease") dated as of May __, 1997 between Interlease
Aviation Investors III (TACA), L.L.C. ("Lessor") and Vanguard
Airlines, Inc. ("Lessee") in respect of one Boeing 737 aircraft,
with manufacturer's serial number 19708, together with the 2
installed Pratt & Whitney JT8D-9A engines (the "Aircraft").

     In connection with our opinion, we have reviewed, inter
alia, the following:

          (a)  The Lease;

          (b)  The Articles of Incorporation and Bylaws of
Lessee;

          (c)  All other documents, approvals and consents of
whatever nature and wherever kept which it was, in our judgment
and to our knowledge, necessary or appropriate to examine to
enable us to give the opinion expressed below.

     After reviewing the documents listed in the preceding
paragraph above, and having regard to the relevant laws of the
State of Iowa, we are of the opinion that:

          (a)  Lessee is a corporation duly organized and validly
existing under the laws of ________, is qualified to do business
as a foreign corporation in each jurisdiction where failure to so
qualify would have a materially adverse effect on Lessee's
business or its ability to perform its obligations under the
Lease; 

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

          (c)  The entry into and performance by Lessee of, and
the transactions contemplated by, the Lease do not and will not:


<PAGE>



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

                          (ii)     conflict with the Articles of
     Incorporation or Bylaws of Lessee;

          (d)  No authorizations, consents, licenses, approvals
and registrations (other than those which have been obtained and
of which copies are attached hereto) are necessary or desirable
to be obtained from any federal governmental or other regulatory
authorities in having jurisdiction over Lessee or its properties
to enable Lessee: 

               (1)  To enter into and perform the transactions
     contemplated by the Lease;

               (2)  To import the Aircraft into the United States
     and Missouri for the duration of the Term;

               (3)  To operate the Aircraft in the United States
     for the transport of fare-paying passengers; or

               (4)  To make the payments provided for in the
     Lease;

          (e)  Except for the filing and recordation of the Lease
with the FAA and the filing of the Financing Statements with the
Secretary of State of Missouri (which filing has been duly made
on or before this date), it is not necessary to ensure the
priority, validity and enforceability of all the obligations of
Lessee under the Lease that the Lease be filed, registered,
recorded or notarized in any public office or elsewhere or that
any other instrument relating thereto be signed, delivered,
filed, registered or recorded, that any tax or duty be paid or
that any other action whatsoever be taken;

          (f)  No other steps are necessary to record or perfect
Lessor's interest in the Aircraft in the United States or
Missouri;

          (g)  On termination of the Lease (whether on expiration
or otherwise) as contemplated in the Lease, Lessor will be
entitled;

               (1)  To repossess the Aircraft;

               (2)  To de-register the Aircraft from the aircraft
     registry of the Air Authority; and

               (3)  To export the Aircraft from the United
     States; 

without requiring any further consents, approvals or licenses
from any federal governmental or regulatory authority in the
United States; 



<PAGE>



          (h)  The Lease has been properly signed and delivered
on behalf of Lessee and the obligations on the part of Lessee
contained therein, assuming them to be valid and binding
according to the Governing Law, are valid and legally binding on
and enforceable against Lessee respectively under the laws of
Iowa; 

          (i)  Lessee is a Certificated Air Carrier;

          (j)  Lessee is a "citizen of the United States" as
defined in 49 U.S.C. Section 40102(a)(15).

          (k)  Lessor is entitled to the benefits of Section 1110
of Title 11 of the United States Code with respect to the
Aircraft to the extent the Aircraft constitutes aircraft, engines
and spare parts as defined in 49 U.S.C. Section 40102(a).

          (l)  The consent to the jurisdiction by Lessee
contained in the Lease is valid and binding on Lessee and not
subject to revocation.

                                   Very truly yours,



<PAGE>




                            SCHEDULE 6

                     CERTIFICATE OF DELIVERY

     This Certificate of Delivery is made on the date set forth
below by Vanguard Airlines, Inc. ("Lessee"), to Interlease
Aviation Investors III (TACA), L.L.C. ("Lessor"), pursuant to the
Aircraft Lease Agreement dated as of May __, 1997 between Lessor
and Lessee (the "Agreement").  Capitalized terms used in this
Certificate shall have the meaning given to such terms in the
Agreement.

1.   DETAILS OF ACCEPTANCE

     Lessee hereby confirms to Lessor that Lessee has at
_________ o'clock on this ____ day of _______________, 199_, at
________, delivered the following in the same condition as at
acceptance (except for ferry time), in accordance with the
provisions of the Agreement.

     (a)  Boeing 737-244 airframe, Manufacturer's Serial No.
          19708; U.S. Registration No. N236TA;

     (b)  2 Pratt & Whitney JT8D-9A Engines:

               Manufacturer's Serial No. 

               P674343B; and

               P674540B

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

     (c)  Loose Equipment Check List: as per list signed by
Lessor and Lessee and attached hereto.

2.   CONFIRMATION

     Lessee confirms to Lessor that as at the time indicated
     above, being the Delivery Date:

     (a)  The representations and warranties contained in Section
2 are hereby repeated;

     (b)  The Aircraft is insured as required by the Agreement;

     (c)  Lessee confirms that there have been affixed to the
Aircraft and the Engines the notices required by the Agreement;
and

     (d)  Lessee's authorized technical experts have inspected
the Aircraft to ensure the Aircraft is in accordance with the
conditions required by the Agreement.



<PAGE>



3.   HOURS AND CYCLES DATA (as of Delivery Date)

     (a)  Airframe:

          Number of Hours since last "D" Check (Heaviest Check):
          ____ hours

          "C" Check (or Equivalent):

          Interval: ____________________________

          Time Since: __________________________

     (b)  Landing Gear Overhaul:

          Number of Hours Since Last Overhaul:

               Left Gear ___________________________ Hours

               Right Gear __________________________ Hours

               Nose Gear ___________________________ Hours

          Interval:      Left Gear ________________________ 

                         Right Gear _______________________

                         Nose Gear ________________________

     (c)  Engines:

          Total Number of Hours and Cycles:

                S/N ______:_________ hours; _____________ cycles

                S/N ______:_________ hours; _____________ cycles


          Number of Hours Since Last Hot Section Refurbishment:

                S/N ______:_________ hours

                S/N ______:_________ hours


          Number of Hours Since Last Cold Section Refurbishment:

                S/N ______:_________ hours

                S/N ______:_________ hours



<PAGE>


          Hot Section Refurbishment:

               Interval  _________________________________

               Time Since (S/N _________): ______________________

               Time Since (S/N _________): ______________________

          Time Remaining to First Restriction: 

          Engine S/N: ________________

               Hours: ____________ Restriction: ____________

               Cycles: ___________ Restriction: ____________


          Engine S/N: ________________

               Hours: ____________ Restriction: ____________

               Cycles: ___________ Restriction: ____________

          Average Cycles in Life Limited Parts (see attached
          Schedule): ______________

     (d)  Auxiliary Power Unit:

          Number of APU Hours Since Last Heavy Shop Visit:

               _________ hours     __________ Date accomplished

          Hot Section Refurbishment:

               Interval: _______________________

               Time Since: _____________________

     (e)  Time Controlled Components:  [see attached report]

     (f)  Fuel on Board on Delivery Date:  ______________________

     (g)  Interior Equipment:

          Number of Passenger Seats
          and Configuration:                      _____     _____

          Number of Galleys and Location:         _____     _____

          Number of Lavatories and Location:      _____     _____

          LOPA - Attached:                        _____     _____


<PAGE>



          List of Loose Equipment on Board:

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

     (h)  Avionics:
                                                            Part
          Description                             Model      No.

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

          __________________________________      _____     _____

     IN WITNESS WHEREOF, Lessee has, by its duly authorized
representative, executed this Certificate on the date in
paragraph 1 above.

                                   LESSEE:  

                                   VANGUARD AIRLINES, INC.


                                   By: __________________________

                                   Title: _______________________