<PAGE>

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

                                   FORM 10-Q



(Mark One)

[XX]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
      EXCHANGE ACT OF 1934

For the quarterly period ended    March 31, 1997
                               -----------------------------------------------

                                            OR

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

For the transition period from ---------------------- to ----------------------

                               ----------------------

For Quarter Ended March 31, 1997                    Commission File No. 0-19137


                   AIRFUND II International Limited Partnership
-------------------------------------------------------------------------------
              (Exact name of registrant as specified in its charter)

        Massachusetts                                           04-3057290
--------------------------------------                     --------------------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                             Identification No.)

 98 North Washington Street, Boston, MA                            02114
----------------------------------------                   --------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code     (617) 854-5800
                                                    ---------------------------


-------------------------------------------------------------------------------
                (Former name, former address and former fiscal year,
                          if changed since last report.)

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

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

  Indicate by check mark whether the registrant has filed all documents and 
reports required to be filed by Sections 12, 13, or 15(d) of the Securities 
Exchange Act of 1934 subsequent to the distribution of securities under a plan 
confirmed by a court during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports), and (2) has 
been subject to such filing requirements for the past 90 days. Yes ___   No ___

<PAGE>

                   AIRFUND II International Limited Partnership

                                    FORM 10-Q

                                      INDEX

                                                                           Page
                                                                           ----

PART I.  FINANCIAL INFORMATION:

  Item 1.  Financial Statements

    Statement of Financial Position
      at March 31, 1997 and December 31, 1996                                 3

    Statement of Operations
      for the three months ended March 31, 1997 and 1996                      4

    Statement of Cash Flows
      for the three months ended March 31, 1997 and 1996                      5

    Notes to the Financial Statements                                       6-8


  Item 2.  Management's Discussion and Analysis of Financial
      Condition and Results of Operations                                  9-12


PART II.  OTHER INFORMATION:

  Items 1 - 6                                                                13



                                       2

<PAGE>

                   AIRFUND II International Limited Partnership

                         STATEMENT OF FINANCIAL POSITION
                       March 31, 1997 and December 31, 1996

                                    (Unaudited)
<TABLE>
<CAPTION>
                                                           March 31,    December 31,
                                                              1997          1996
                                                          -----------   ------------
<S>                                                       <C>           <C>
ASSETS

Cash and cash equivalents                                 $ 1,717,996    $ 2,347,762
Accounts receivable - affiliate                               151,105        146,567
Equipment at cost, net of accumulated depreciation of
  $40,806,069 and $39,961,731 at March 31, 1997
  and December 31, 1996, respectively                       9,825,145     10,669,483
                                                          -----------    -----------
    Total assets                                          $11,694,246    $13,163,812
                                                          -----------    -----------
                                                          -----------    -----------

LIABILITIES AND PARTNERS' CAPITAL

Notes payable                                             $ 3,288,050    $ 3,419,785
Accrued interest                                               49,524         35,929
Accrued liabilities                                            60,470        541,534
Accrued liabilities - affiliate                                22,781        489,018
Deferred rental income                                             --         74,667
                                                          -----------    -----------
    Total liabilities                                       3,420,825      4,560,933
                                                          -----------    -----------

Partners' capital (deficit):
  General Partner                                          (2,581,785)    (2,565,312)

  Limited Partnership Interests
  (2,714,647 Units; initial purchase price of $25 each)    10,855,206     11,168,191
                                                          -----------    -----------

    Total partners' capital                                 8,273,421      8,602,879
                                                          -----------    -----------

    Total liabilities and partners' capital               $11,694,246    $13,163,812
                                                          -----------    -----------
                                                          -----------    -----------
</TABLE>

                  The accompanying notes are an integral part
                        of these financial statements.

                                      3

<PAGE>

                   AIRFUND II International Limited Partnership

                             STATEMENT OF OPERATIONS
                 for the three months ended March 31, 1997 and 1996

                                    (Unaudited)


                                                        1997          1996
                                                     ----------    ----------
Income:

  Lease revenue                                      $  683,102    $1,483,096

  Interest income                                        30,021        83,727
                                                     ----------    ----------

    Total income                                        713,123     1,566,823
                                                     ----------    ----------

Expenses:

  Depreciation                                          844,338       978,519

  Interest expense                                       73,305        30,234

  Equipment management fees - affiliate                  34,155        74,155

  Operating expenses - affiliate                         90,783       209,052
                                                     ----------    ----------

    Total expenses                                    1,042,581     1,291,960
                                                     ----------    ----------

Net income (loss)                                     $(329,458)   $  274,863
                                                     ----------    ----------
                                                     ----------    ----------

Net income (loss)
  per limited partnership unit                       $    (0.12)   $     0.10
                                                     ----------    ----------
                                                     ----------    ----------

Cash distribution declared
  per limited partnership unit                       $       --    $     0.13
                                                     ----------    ----------
                                                     ----------    ----------

                  The accompanying notes are an integral part
                        of these financial statements.

                                      4

<PAGE>

                   AIRFUND II International Limited Partnership

                             STATEMENT OF CASH FLOWS
                 for the three months ended March 31, 1997 and 1996

                                    (Unaudited)

                                                          1997         1996
                                                       ----------   ----------
Cash flows from (used in) operating activities:
Net income (loss)                                      $ (329,458)  $  274,863
Adjustments to reconcile net income (loss) to
  net cash from (used in) operating activities:
    Depreciation                                          844,338      978,519

Changes in assets and liabilities
  Decrease (increase) in:
    rents receivable                                           --      137,700
    accounts receivable - affiliate                        (4,538)     137,690
  Increase (decrease) in:
    accrued interest                                       13,595        2,036
    accrued liabilities                                  (481,064)     139,954
    accrued liabilities - affiliate                      (466,237)      15,837
    deferred rental income                                (74,667)    (343,930)
                                                       ----------   ----------
      Net cash from (used in) operating activities       (498,031)   1,342,669
                                                       ----------   ----------
Cash flows used in investing activities:
  Purchase of equipment                                        --      (72,550)
                                                       ----------   ----------
      Net cash used in investing activities                    --      (72,550)
                                                       ----------   ----------

Cash flows used in financing activities:
  Principal payments - notes payable                     (131,735)    (204,636)
  Distributions paid                                           --     (714,381)
                                                       ----------   ----------
Net cash used in financing activities                    (131,735)    (919,017)
                                                       ----------   ----------
Net increase (decrease) in cash and cash equivalents     (629,766)     351,102
Cash and cash equivalents at beginning of period        2,347,762    3,557,968
                                                       ----------   ----------
Cash and cash equivalents at end of period             $1,717,996   $3,909,070
                                                       ----------   ----------
                                                       ----------   ----------
Supplemental disclosure of cash flow information:
  Cash paid during the period for interest             $   59,710   $   28,198
                                                       ----------   ----------
                                                       ----------   ----------

Supplemental disclosure of investing and financing activities:
    At December 31, 1995, the Partnership held $1,317,392 in a special-purpose 
    escrow account pending the completion of an aircraft exchange (See Results
    of Operations).  The Partnership completed the exchange in March 1996
    obtaining interests in aircraft at an aggregate cost of $4,157,280,
    utilizing cash of $1,389,942 (including the escrowed funds) and third-party
    financing of $2,767,338.

                  The accompanying notes are an integral part
                        of these financial statements.

                                      5

<PAGE>

                   AIRFUND II International Limited Partnership

                         Notes to the Financial Statements
                                  March 31, 1997

                                    (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

  The financial statements presented herein are prepared in conformity with 
generally accepted accounting principles and the instructions for preparing 
Form 10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange 
Commission and are unaudited.  As such, these financial statements do not 
include all information and footnote disclosures required under generally 
accepted accounting principles for complete financial statements and, 
accordingly, the accompanying financial statements should be read in 
conjunction with the footnotes presented in the 1996 Annual Report.  Except 
as disclosed herein, there has been no material change to the information 
presented in the footnotes to the 1996 Annual Report.

  In the opinion of management, all adjustments (consisting of normal and 
recurring adjustments) considered necessary to present fairly the financial 
position at March 31, 1997 and December 31, 1996 and results of operations 
for the three month periods ended March 31, 1997 and 1996 have been made and 
are reflected.

NOTE 2 - CASH

  At March 31, 1997, the Partnership had $1,600,000 invested in reverse 
repurchase agreements secured by U.S. Treasury Bills or interests in U.S. 
Government securities.

NOTE 3 - REVENUE RECOGNITION

  Rents are payable to the Partnership monthly and quarterly and no 
significant amounts are calculated on factors other than the passage of time. 
All leases are accounted for as operating leases and are noncancellable.  
Rents received prior to their due dates are deferred.  Future minimum rents 
of $5,154,043 are due as follows:

  For the year ending March 31, 1998          $    2,719,492  
                                1999               2,119,911    
                                2000                 314,640
                                              --------------
                                Total         $    5,154,043
                                              --------------
                                              --------------

NOTE 4 - EQUIPMENT

  The following is a summary of equipment owned by the Partnership at March 
31, 1997.  In the opinion of Equis Financial Group Limited Partnership 
("EFG"), (formerly American Finance Group), the acquisition cost of the 
equipment did not exceed its fair market value.

                                      6

<PAGE>

                   AIRFUND II International Limited Partnership

                         Notes to the Financial Statements

                                    (Continued)

                                           Lease
                                            Term        Equipment
      Equipment Type                      (Months)       at Cost
--------------------------------------    --------    ------------
One Lockheed L-1011-100                      --         15,879,518
One Boeing 727-208 ADV (ATA)                 36         12,928,710
One Boeing 727-251 ADV (Transmeridian)       28          9,732,714
One Lockheed L-1011-50                       --          6,013,492
Two McDonnell-Douglas MD-82 (Finnair)        36          4,157,280
Three Boeing 737-2H4 (Southwest)             49          1,919,500
                                                     -------------
                           Total equipment cost         50,631,214

                       Accumulated depreciation        (40,806,069)
                                                     -------------
     Equipment, net of accumulated depreciation       $  9,825,145
                                                     -------------
                                                     -------------

    The costs of the Lockheed L-1011-50 aircraft, the two McDonnell-Douglas 
MD-82 aircraft, and the three Boeing 737-2H4 aircraft represent proportionate 
ownership interests.  The remaining interests are owned by other affiliated 
partnerships sponsored by EFG.  All Partnerships individually report, in 
proportion to their respective ownership interests, their respective shares 
of assets, liabilities, revenues, and expenses associated with the aircraft.

    On June 30 and September 30, 1996, the Lockheed L-1011-50 and L-1011-100 
aircraft were returned by the lessee.  Currently, both aircraft are 
undergoing heavy maintenance.  The heavy maintenance on the Lockheed 
L-1011-50 is expected to cost the Partnership approximately $362,000, all of 
which was accrued or incurred at March 31, 1997.  The Partnership entered 
into a new 12-month lease agreement with Aer Lease Limited for the Lockheed 
L-1011-50 aircraft at a base rent to the Partnership of $39,500 per month, 
effective upon completion of the heavy maintenance.  The heavy maintenance on 
the Lockheed L-1011-100 aircraft is expected to cost the Partnership 
approximately $400,000 all of which was accrued or incurred at March 31, 
1997.  The General Partner is actively seeking the re-lease of this aircraft.

NOTE 5 - RELATED PARTY TRANSACTIONS

  All operating expenses incurred by the Partnership are paid by EFG on 
behalf of the Partnership and EFG is reimbursed at its actual cost for such 
expenditures.  Fees and other costs incurred during each of the three month 
periods ended March 31, 1997 and 1996, which were paid or accrued by the 
Partnership to EFG or its Affiliates, are as follows:

                                        1997        1996
                                      --------    --------
  Equipment management fees           $ 34,155    $ 74,155
  Administrative charges                 7,173       5,250
  Reimbursable operating expenses
    due to third parties                83,610     203,802
                                      --------    --------
      Total                           $124,938    $283,207
                                      --------    --------
                                      --------    --------

                                      7

<PAGE>

                   AIRFUND II International Limited Partnership

                         Notes to the Financial Statements

                                    (Continued)

  All rents and proceeds from the sale of equipment are paid directly to EFG. 
EFG temporarily deposits collected funds in a separate interest-bearing 
escrow account prior to remittance to the Partnership.  At March 31, 1997, 
the Partnership was owed $151,105 by EFG for such funds and the interest 
thereon.  These funds were remitted to the Partnership in April 1997.

NOTE 6 - NOTES PAYABLE

  Notes payable at March 31, 1997 consisted of installment notes payable to 
banks of $3,288,050.  All of the installment notes are non-recourse, with 
interest rates ranging between 8.65% and 8.76% and are collateralized by the 
equipment and assignment of the related lease payments.  All of the notes 
were originated in connection with the like-kind exchange transaction 
involving the Southwest Aircraft and the Finnair Aircraft (See Results of 
Operations).  The installment notes related to the Southwest Aircraft will be 
fully amortized by noncancellable rents.  The Partnership has a balloon 
payment obligation at the expiration of the primary lease term related to the 
Finnair Aircraft of $1,411,035.  The carrying amount of notes payable 
approximates fair value at March 31, 1997.

  The annual maturities of the installment notes payable are as follows:

  For the year ending March 31, 1998          $  779,330  
                                1999             825,132  
                                2000           1,683,588
                                              ----------
                                Total         $3,288,050
                                              ----------
                                              ----------

                                      8

<PAGE>

                   AIRFUND II International Limited Partnership

                                     FORM 10-Q

                           PART 1. FINANCIAL INFORMATION

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1996:

OVERVIEW

  As an equipment leasing partnership, the Partnership was organized to 
acquire and lease a portfolio of commercial jet aircraft subject to lease 
agreements with third parties.  During 1990 and 1991, the Partnership 
purchased four commercial jet aircraft and a proportionate interest in two 
additional aircraft which were leased by major carriers engaged in passenger 
transportation.  Initially, each aircraft generated rental revenue pursuant 
to primary-term lease agreements.  In 1995, the Partnership transferred its 
proportionate ownership interest in one aircraft to the existing lessee, 
United Airlines, Inc. ("United"), in exchange for proportionate interests in 
three aircraft leased to Southwest Airlines, Inc., pursuant to lease 
agreements which expire in 1999.  During the first quarter of 1996, the 
Partnership completed the replacement of the United Aircraft with 
proportionate interests in two aircraft leased to Finnair OY, pursuant to 
lease agreements which also expire in 1999.  One of the four commercial 
aircraft held in the Partnership's original portfolio was returned to the 
Partnership in 1995, upon the expiration of its lease term and in September 
1996, upon completion of refurbishments, was re-leased to Transmeridian 
Airlines (see below).  The Partnership continues to own a proportionate 
interest in an aircraft which was returned by the lessee on June 30, 1996 and 
is currently undergoing heavy maintenance.  The Partnership entered into a 
new 12-month lease agreement with Aer Lease Limited with respect to its 
interest in this aircraft, effective upon completion of the heavy 
maintenance.  In 1996, the Partnership sold one of its original aircraft to 
the lessee, Northwest Airlines, Inc. ("Northwest").  At March 31, 1997, the 
Partnership also owned a complete interest in two other aircraft, one of 
which is being leased pursuant to a re-lease agreement which will expire in 
January 1999 (see below), and the second which is currently undergoing heavy 
maintenance.  The second aircraft was returned by the lessee, upon completion 
of its renewal lease term, in September 1996.  The General Partner is 
actively seeking the re-lease of this aircraft.  Upon expiration of the 
current lease agreements, each aircraft will be re-leased or sold depending 
on prevailing market conditions and the assessment of such conditions by EFG 
to obtain the most advantageous economic benefit.  Ultimately, all aircraft 
will be sold and the net proceeds will be distributed to the Partners, after 
all liabilities and obligations of the Partnership have been satisfied.

RESULTS OF OPERATIONS

  For the three months ended March 31, 1997, the Partnership recognized lease 
revenue of $683,102 compared to $1,483,096 for the same period in 1996.  The 
decrease in lease revenue from 1996 to 1997 was due primarily to lease term 
expirations related to the Partnership's Lockheed L-1011-100 aircraft and its 
proportionate interest in a Lockheed L-1011-50 aircraft and the sale of a 
727-200 ADV aircraft (discussed below).  The decrease was partially offset by 
the effects of the Partnership's aircraft exchange which was concluded late 
in the first quarter of 1996.  As a result of the exchange, the Partnership 
replaced its ownership interest in a Boeing 747-SP aircraft, with interests 
in five other aircraft (three Boeing 737 aircraft leased by Southwest 
Airlines, Inc. and two McDonnell Douglas MD-82 aircraft leased by Finnair 
OY).  The Southwest aircraft were exchanged into the Partnership in 1995 
while the Finnair Aircraft were exchanged into the Partnership on March 25, 
1996.  Accordingly, revenue for the period ended March 31, 1996 did not fully 
reflect the rents ultimately earned from the like-kind exchange.  In 
aggregate, the replacement aircraft generated approximately $253,000 of lease 
revenue during the first quarter of 1997 compared to approximately $96,000 
for the same period in 1996.

  The Partnership's Boeing 727-251 ADV aircraft, formerly on a renewal rental 
agreement with Northwest was returned upon expiration of its lease term on 
November 30, 1995.  This aircraft underwent heavy maintenance of $984,000, 
all of which was incurred or accrued during the year ended December 31, 1996. 
In September 1996, the Partnership entered into a new 28-month lease 
agreement with Transmeridian Airlines, to re-lease this aircraft


                                      9

<PAGE>

                   AIRFUND II International Limited Partnership

                                     FORM 10-Q

                           PART 1. FINANCIAL INFORMATION

for aggregate rents over the lease term of approximately $1,941,000.  This 
aircraft generated $240,000 of lease revenue during the first quarter of 1997 
and was off lease for all of the first quarter of 1996.

  The Partnership sold a Boeing 727-200 ADV aircraft to Northwest during the 
second half of 1996 and, in addition to the sales proceeds, received lease 
termination rents.  The Partnership recognized aggregate lease revenue of 
approximately $429,000 from this aircraft during the first quarter of 1996.  

  The Partnership owns a whole and a partial interest in two Lockheed L-1011 
aircraft formerly leased to Cathay Pacific Airways Limited ("Cathay").  The 
Partnership's renewal lease agreements with Cathay expired on February 14, 
1996 and were extended until April 11, 1996.  Subsequent to this extension, 
Cathay again extended the lease on one of the aircraft until June 30, 1996 
and on the other until September 30, 1996, both at fixed rates.  In 
aggregate, the Partnership recognized lease revenue of $768,000 related to 
the two Cathay aircraft during the first quarter of 1996.  Cathay 
subsequently returned both aircraft to the Partnership upon the expiration of 
the extensions and both aircraft are currently undergoing heavy maintenance.  
The heavy maintenance on the Lockheed L-1011-50 is expected to cost the 
Partnership approximately $362,000, all of which was accrued or incurred at 
March 31, 1997.  The Partnership entered into a new 12-month lease agreement 
with Aer Lease Limited, with respect to its interest in the L-1011-50 
aircraft, at a base rent to the Partnership of $39,550 per month, effective 
upon completion of the heavy maintenance.  The heavy maintenance on the 
Lockheed L-1011-100 is expected to cost the Partnership approximately 
$400,000 all of which was accrued or incurred at March 31, 1997.  The General 
Partner is actively seeking the re-lease of this aircraft.  Currently, the 
demand for L-1011 aircraft is weak, limited principally to air cargo carriers 
and operators of passenger charters.  Several major airlines have reduced 
their commitment to the L-1011.  Such circumstances have inhibited the 
remarketing of the Partnership's L-1011 aircraft and have required the 
Partnership to incur costs to meet the needs of Aer Lease Limited and other 
potential successor lessees.  Accordingly,  until the Partnership's L-1011 
aircraft are sold, the General Partner will continue to reserve a portion of 
the Partnership's cash for such purposes. 

  The Partnership's Boeing 727-208 aircraft is under a two year renewal 
agreement with American Trans Air, Inc.  The renewal agreement, scheduled to 
expire in January 1999, provides revenue of $63,500 per month to the 
Partnership.  The Partnership recognized lease revenue of approximately 
$191,000 from this aircraft for each of the periods ended March 31, 1996 and 
1997.  

  The Partnership holds a proportionate ownership interest in the L-1011-50 
aircraft and the Southwest and Finnair Aircraft, discussed above.  The 
remaining interests are owned by other affiliated partnerships sponsored by 
EFG.  All partnerships individually report, in proportion to their respective 
ownership interests, their respective shares of assets, liabilities, revenues 
and expenses associated with the aircraft.

  The ultimate realization of residual value for aircraft is dependent upon 
many factors, including EFG's ability to sell and re-lease the aircraft.  
Changing market conditions, industry trends, technological advances, and many 
other events can converge to enhance or detract from asset values at any 
given time.  EFG attempts to monitor these changes in the airline industry in 
order to identify opportunities which may be advantageous to the Partnership 
and which will maximize total cash returns for each aircraft.

  The total economic value realized upon final disposition of each aircraft 
is comprised of all primary lease term revenue generated from that aircraft, 
together with its residual value.  The latter consists of cash proceeds 
realized upon the aircraft's sale in addition to all other cash receipts 
obtained from renting the aircraft on a re-lease, renewal or month-to-month 
basis.  Consequently, the amount of any future gain or loss reported in the 
financial statements will not necessarily be indicative of the total residual 
value the Partnership achieved from leasing the aircraft.  


                                      10

<PAGE>

                   AIRFUND II International Limited Partnership

                                     FORM 10-Q

                           PART 1. FINANCIAL INFORMATION

  Interest income for the three months ended March 31, 1997 was $30,021 
compared to $83,727 for the same period in 1996.  Interest income is 
typically generated from temporary investments of rental receipts and 
equipment sale proceeds in short-term instruments.  Interest income in 1996 
included interest of $39,346 earned on cash held in a special-purpose escrow 
account in connection with the like-kind exchange transaction, discussed 
above.

  For the three months ending March 31, 1997 and 1996 the Partnership 
incurred interest expense of $73,305 and $30,234, respectively.  Interest 
expense in 1997 and 1996 resulted from financing obtained from third-party 
lenders in connection with the Southwest Aircraft and the Finnair Aircraft.  
The financing of the Finnair Aircraft occurred on March 25, 1996.  Therefore, 
interest expense related to the Finnair debt during the first quarter of 1996 
was only incurred from that date through the end of the quarter.  Interest 
expense in future periods will decline as the principal balance of notes 
payable is reduced through the application of rent receipts to outstanding 
debt.

  Management fees were 5% of lease revenue during each of the periods ended 
March 31, 1997 and 1996, and will not change as a percentage of lease revenue 
in future periods.

  Operating expenses consist principally of administrative charges, 
professional service costs, such as audit and legal fees, as well as 
insurance, printing, distribution and remarketing expenses.  Operating 
expenses were high in 1996 due to heavy maintenance costs incurred or accrued 
in connection with the Boeing 727-251 ADV aircraft, discussed above.  The 
amount of future operating expenses cannot be predicted with certainty; 
however, such expenses are usually higher during the acquisition and 
liquidation phases of a partnership.  Other fluctuations will occur in 
relation to the volume and timing of aircraft remarketing activities.  
Depreciation expense was $844,338 for the three months ended March 31, 1997 
compared to $978,519 for the same period in 1996.

LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS

  The Partnership by its nature is a limited life entity which was 
established for specific purposes described in the preceding "Overview".  As 
an equipment leasing program, the Partnership's principal operating 
activities derive from aircraft rental transactions.  Accordingly, the 
Partnership's principal source of cash from operations is generally provided 
by the collection of periodic rents.  These cash inflows are used to satisfy 
debt service obligations associated with leveraged leases, and to pay 
management fees and operating costs.  Operating activities generated a net 
cash outflow of $498,031 for the three months ended March 31, 1997 compared 
to a net cash inflow of $1,342,669 for the same period in 1996.  The 
expiration of the Partnership's lease agreements related to its Lockheed 
L-1011-100 aircraft and its proportionate interest in the Lockheed L-1011-50 
aircraft and the sale of its Boeing 727-200 Advanced aircraft have caused a 
decline in the Partnership's lease revenue and corresponding sources of 
operating cash.  This has been partially offset by rents generated in 
connection with the Southwest, Finnair and Transmeridian aircraft.  In 
addition, the Partnership expended substantial funds in connection with its 
remarketing efforts related to the two L-1011 aircraft.  Overall, expenses 
associated with rental activities, such as management fees, and net cash flow 
from operating activities decline as the Partnership remarkets its aircraft.  
Conversely, the Partnership may incur increased costs to insure the 
successful remarketing of these aircraft.  Ultimately, the Partnership will 
dispose of all aircraft under lease.  This will occur principally through 
sale transactions whereby each aircraft will be sold to the existing lessee 
or to a third party.  Generally, this will occur upon expiration of each 
aircraft's primary or renewal/re-lease term.

  Cash expended for equipment acquisitions is reported under investing 
activities on the accompanying Statement of Cash Flows.  For the three months 
ended March 31, 1996, the Partnership expended $72,550 in cash in connection 
with the like-kind exchange transactions referred to above.  There were no 
equipment acquisitions during the same period in 1997.


                                      11

<PAGE>

                   AIRFUND II International Limited Partnership

                                     FORM 10-Q

                           PART 1. FINANCIAL INFORMATION

  As described in Results of Operations, the Partnership obtained long-term 
financing in connection with the like-kind exchange transactions involving 
the Southwest Aircraft and the Finnair Aircraft.  The corresponding note 
agreements are recourse only to the specific equipment financed and to the 
minimum rental payments contracted to be received during the debt 
amortization period.  As rental payments are collected, a portion or all of 
the rental payment will be used to repay principal and interest.  The 
Partnership also has a balloon payment obligation at the expiration of the 
primary lease term related to the Finnair Aircraft of $1,411,035. 

  Cash distributions paid to the Recognized Owners consist of both a return 
of and a return on capital.  To the extent that cash distributions consist of 
Cash From Sales or Refinancings, substantially all of such cash distributions 
should be viewed as a return of capital.  Cash distributions do not represent 
and are not indicative of yield on investment.  Actual yield on investment 
cannot be determined with any certainty until conclusion of the Partnership 
and will be dependent upon the collection of all future contracted rents, the 
generation of renewal and/or re-lease rents, and the residual value realized 
for each aircraft at its disposal date.  Future market conditions, 
technological changes, the ability of EFG to manage and remarket the 
aircraft, and many other events and circumstances, could enhance or detract 
from individual asset yields and the collective performance of the 
Partnership's aircraft portfolio.  

  Overall, the future liquidity of the Partnership will be greatly dependent 
upon the collection of contractual rents and the outcome of residual 
activities.  The General Partner anticipates that cash proceeds resulting 
from these sources will satisfy the Partnership's future expense obligations. 
 However, the amount of cash available for distribution in future periods is 
expected to fluctuate widely as the General Partner attempts to remarket the 
Partnership's aircraft and possibly upgrade certain aircraft to meet the 
standards of potential successor lessees.

  The Partnership has incurred and accrued significant heavy maintenance 
costs in connection with its remarketing efforts related to the two L-1011 
aircraft and the Transmeridian aircraft. The Partnership also expects to 
incur additional costs in future years as the Partnership's remaining 
aircraft are remarketed.  The amount of such costs will depend upon the 
extent of upgrades or refurbishments necessary to prepare these aircraft for 
sale or re-lease. These costs have presented, and will continue to present, 
demands on the Partnership's cash position.  Accordingly, the General Partner 
will continue to reserve a significant portion of the Partnership's cash for 
such purposes.  The General Partner anticipates that future cash 
distributions will be contingent primarily upon the realization of sale 
proceeds generated from remarketing the Partnership's remaining aircraft and 
the extent of the Partnership's cash reserve requirements.  Accordingly, the 
General Partner did not declare a cash distribution for the first quarter of 
1997 and expects to continue to suspend the declaration of quarterly cash 
distributions between the periods corresponding to major remarketing events.


                                      12

<PAGE>

                   AIRFUND II International Limited Partnership

                                     FORM 10-Q

                           PART 1. FINANCIAL INFORMATION

   Item 1.                  Legal Proceedings
                            Response:  None
    
   Item 2.                  Changes in Securities
                            Response:  None

   Item 3.                  Defaults upon Senior Securities
                            Response:  None

   Item 4.                  Submission of Matters to a Vote of Security Holders
                            Response:  None

   Item 5.                  Other Information
                            Response:  None

   Item 6(a).               Exhibits
                            Response:  None

   Item 6(b).               Reports on Form 8-K
                            Response:  None


                                      13

<PAGE>

                                 SIGNATURE PAGE

  Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below on behalf of the registrant and in the capacity and
on the date indicated.



                            AIRFUND II International Limited Partnership


                       By:  AFG Aircraft Management Corporation, a
                            Massachusetts corporation and the General 
                            Partner of the Registrant.


                       By:   /s/  Michael J. Butterfield  
                            -------------------------------------------------
                             Michael J. Butterfield
                             Treasurer of AFG Aircraft Management Corporation
                             (Duly Authorized Officer and
                             Principal Accounting Officer)


                       Date:  May 15, 1997  
                             -------------------------------------------------


                       By:   /s/  Gary Romano   
                            --------------------------------------------------
                             Gary M. Romano
                             Clerk of AFG Aircraft Management Corporation
                             (Duly Authorized Officer and
                             Principal Financial Officer)


                       Date:  May 15, 1997  
                             -------------------------------------------------



                                      14

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